EX-99.1 8 d615112dex991.htm EX-99.1 EX-99.1
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Exhibit 99.1

 

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Dear DowDuPont Stockholder:

We are pleased to deliver to you this information statement to inform you that on May 6, 2019, the board of directors of DowDuPont Inc. (“DowDuPont”) approved the distribution of all the then issued and outstanding shares of common stock of Corteva, Inc. (“Corteva”), a wholly owned subsidiary of DowDuPont, to DowDuPont stockholders. At the time of the distribution, Corteva will hold DowDuPont’s agriculture business.

As previously announced, DowDuPont intends to separate into three independent, publicly traded companies—one for each of its agriculture, materials science and specialty products businesses. The distribution to DowDuPont stockholders of all the shares of common stock of Corteva is expected to be one of two distributions to effectuate this separation plan. The other distribution, which was completed on April 1, 2019, involved Dow Inc. (“Dow”), the DowDuPont subsidiary that, at the time of its distribution, held the assets and liabilities associated with DowDuPont’s materials science business. It is expected that after the distribution of Corteva, DowDuPont will be renamed “DuPont de Nemours, Inc.” (“New DuPont”). Once renamed, New DuPont is expected to change its symbol to “DD,” and the DowDuPont name and DWDP symbol are expected to be retired. Until such time, DowDuPont will continue to trade on the New York Stock Exchange (the “NYSE”) under the symbol “DWDP.”

The distribution of Corteva common stock will occur on June 1, 2019 by way of a pro rata dividend to DowDuPont stockholders. Each DowDuPont stockholder will be entitled to receive one share of Corteva common stock for every three shares of DowDuPont common stock held by such stockholder at the close of business on May 24, 2019, the record date of the distribution.

Immediately following the distribution of Corteva, DowDuPont stockholders as of the record date for the distribution will own 100% of the Corteva common stock being distributed and Corteva will become a publicly traded company. Immediately following the distribution of Corteva, New DuPont will continue to hold DowDuPont’s specialty products business. The DowDuPont board of directors believes that creating three focused companies is the best way to drive value for all of DowDuPont’s stakeholders. They also believe that the separation of the agriculture business from DowDuPont will better position both companies to capitalize on significant growth opportunities and focus their resources on their respective businesses and strategic priorities.

We expect the distribution of Corteva common stock to be tax-free for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. You should consult your own tax advisor as to the particular tax consequences of the distribution of Corteva common stock to you, including potential tax consequences under state, local and non-U.S. tax laws.

Stockholder approval of the distribution is not required. You are not required to take any action to receive your Corteva common stock and you do not need to pay any consideration or surrender or exchange your DowDuPont shares to receive your Corteva common stock.

Immediately following the distribution, you will own shares in both New DuPont and Corteva. Corteva’s common stock will be listed on the NYSE under the symbol “CTVA.”

The enclosed information statement is being made available to all DowDuPont stockholders who held shares of DowDuPont common stock as of the record date for the distribution of Corteva common stock. This statement describes the distribution in detail and contains important information about DowDuPont, Corteva and the distribution. We urge you to read the information statement carefully.

We want to thank you for your continued support of DowDuPont, and we look forward to your support of Corteva in the future.

 

             Sincerely,

 

   

 

 

Edward D. Breen

Chief Executive Officer

DowDuPont Inc.


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Dear Corteva Shareholder:

Corteva combines the DuPont Pioneer, Dow AgroSciences and DuPont Crop Protection businesses to create a pure-play agriculture company. We are recognized by farmers as a leader in the seed and crop protection markets globally. Our seed platform develops and supplies high quality germplasm combined with advanced traits to produce higher yields for farmers around the world. Our crop protection platform supplies products to protect crop yields against weeds, insects and disease, enabling farmers to achieve optimal results. The combination of these leading platforms creates one of the broadest portfolios of agriculture solutions in the industry, fueling farmer productivity in more than 140 countries and generating pro forma annual sales of $14.3 billion for the year ended December 31, 2018. Our strategy is to provide farmers with the right mix of innovative seeds, crop protection and digital solutions to maximize their yields and improve their profitability, while strengthening customer relationships and ensuring an abundant food supply for a growing global population. We also have the opportunity, through our merger, to drive synergy benefits totaling nearly $1.7 billion, including approximately $1.2 billion in cost synergies and $500 million in growth synergies. Our synergy project, along with our ongoing productivity efforts, are aimed at achieving a best-in-class cost structure versus our peers, as well as a sharper focus on the customer.

We expect to create shareholder value by continuing to advance our science-based innovation focused on delivering a wide range of improved products and services to our customers. Through our merger of the Historical DuPont and Historical Dow innovations pipelines, we have created one of the broadest and most productive new product pipelines in the agriculture industry. We intend to leverage our rich heritage of over 275 combined years of scientific achievement to advance our robust innovation pipeline and continue to shape the future of responsible agriculture. We intend to launch 21 new products, balanced between seeds and crop protection, between 2017 and 2021, including the U.S. launch of Enlist E3 soybeans for 2019 planting and Qrome® corn products. New products are crucial to solving farmers’ productivity challenges amid a growing global population while addressing natural resistance, regulatory changes, safety requirements and competitive dynamics. Our investment in technology-based and solution-based product offerings allow us to meet farmers’ evolving needs while ensuring that our investments generate sufficient returns. Meanwhile, through our unique routes to market, we continue to work face-to-face with farmers around the world to deeply understand their needs.

Corteva common stock will be listed on the NYSE under the symbol “CTVA”.

We believe Corteva will be a unique company in the agriculture industry, with a global footprint, broad product offerings, a lean cost structure and an advantaged route to market that provides unmatched customer access. We strive to make an impact for our customers, while focusing on five priorities for shareholder value creation: (1) instill a strong culture, (2) drive disciplined capital resource allocation, (3) develop innovative solutions, (4) attain best-in-class cost structure and (5) deliver above market growth. We invite you to learn more about Corteva by reviewing the enclosed information statement. We hope it conveys our excitement and allows you to understand our plans to stand and spin Corteva successfully this year. We look forward to our future as an independent, publicly traded company and to your support as a shareholder of Corteva common stock.

Sincerely,

James C. Collins, Jr.

Chief Executive Officer


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Preliminary and Subject to Completion, dated May 6, 2019

 

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INFORMATION STATEMENT

Corteva, Inc.

Common Stock, Par Value $0.01 Per Share

This information statement is being furnished to the holders of common stock of DowDuPont Inc. (“DowDuPont”) in connection with the distribution of shares of common stock of Corteva, Inc. (“Corteva”). Corteva is a wholly owned subsidiary of DowDuPont that, at the time of the distribution, will hold DowDuPont’s agriculture business. DowDuPont will distribute all the outstanding shares of Corteva common stock on a pro rata basis to its common stockholders.

Corteva is organized as a corporation under the laws of the State of Delaware.

For every three shares of DowDuPont common stock held of record by you as of the close of business on May 24, 2019, the record date for the distribution, you will receive one share of Corteva common stock. No fractional shares of Corteva common stock will be issued. Instead, you will receive cash in lieu of any fractional shares. As discussed under “The Distribution—Trading Between the Record Date and Distribution Date,” if you sell your DowDuPont common stock in the “regular-way” market after the record date and before the separation and distribution, you will also be selling your right to receive shares of Corteva common stock in connection with the separation and distribution. We expect the shares of Corteva common stock to be distributed by DowDuPont to you on June 1, 2019. We refer to the date of distribution of Corteva common stock as the “distribution date.” After the distribution, we will be an independent, publicly traded company.

No vote of DowDuPont stockholders is required to effect the distribution. Therefore, you are not being asked for a proxy to vote on the separation or the distribution, and you are requested not to send us a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of DowDuPont common stock or take any other action to receive your shares of Corteva common stock.

The distribution is intended to be tax-free to DowDuPont stockholders for United States federal income tax purposes, except for cash received in lieu of fractional shares. The distribution is subject to the satisfaction or waiver by DowDuPont of certain conditions, including the receipt of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) confirming that the distribution and certain transactions entered into in connection with the distribution generally will be tax-free to DowDuPont and its shareholders for U.S. federal income tax purposes, except for cash received in lieu of fractional shares. Cash received in lieu of any fractional shares of DowDuPont common stock will generally be taxable to you.

DowDuPont currently owns all the outstanding shares of Corteva. Accordingly, there is no current trading market for Corteva common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop as early as the trading day prior to the record date for the distribution, and we expect “regular-way” trading of Corteva common stock to begin on the distribution date (or, if the distribution date is not a trading day, the first trading day after the distribution date). Corteva’s common stock will be listed on the New York Stock Exchange (the “NYSE”) under the symbol “CTVA.”

 

 

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk Factors” beginning on page 30.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

The date of this information statement is May     , 2019

Notice of Internet Availability with instructions for how to access this information statement is first being mailed to DowDuPont stockholders on or about May     , 2019.


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TABLE OF CONTENTS

 

     Page  

MERGER, INTENDED SEPARATIONS, REORGANIZATION AND FINANCIAL STATEMENT PRESENTATION

     3  

INFORMATION STATEMENT SUMMARY

     7  

SUMMARY OF THE SEPARATION AND DISTRIBUTION

     12  

QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION

     17  

RISK FACTORS

     30  

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

     52  

THE DISTRIBUTION

     53  

DIVIDEND POLICY

     61  

CAPITALIZATION

     62  

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

     63  

NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

     71  

SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF PRO FORMA SEGMENT RESULTS

     90  

SUPPLEMENTAL LIQUIDITY & CAPITAL RESOURCES

     94  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     95  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     97  

BUSINESS

     129  

MANAGEMENT

     149  

COMPENSATION DISCUSSION AND ANALYSIS

     159  

EXECUTIVE COMPENSATION

     173  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

     184  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     186  

OUR RELATIONSHIP WITH NEW DUPONT AND DOW FOLLOWING THE DISTRIBUTION

     188  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION

     205  

DESCRIPTION OF MATERIAL INDEBTEDNESS

     209  

DESCRIPTION OF OUR CAPITAL STOCK

     209  

WHERE YOU CAN FIND MORE INFORMATION

     214  


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The following is a summary of material information discussed in this information statement. This summary may not contain all the details concerning the separation and distribution or other information that may be important to you. To better understand the separation, distribution and our business and financial position, you should carefully review this entire information statement.

Unless otherwise indicated or the context otherwise requires, references in this information statement to:

 

   

“Business Realignment” has the meaning set forth in the section titled “Merger, Intended Separations, Reorganization and Financial Statement Presentation;”

 

   

“distribution” refers to the transaction in which DowDuPont will distribute to its stockholders all of the then issued and outstanding shares of Corteva common stock;

 

   

“distribution date” refers to the date of the distribution, which is expected to be on June 1, 2019;

 

   

“Corteva,” “we,” “us,” “our” and “the company” refer to Corteva Parent and its consolidated subsidiaries (including EID) after giving effect to the Internal Reorganization and Business Realignment, resulting in Corteva Parent holding the agriculture business of DowDuPont;

 

   

“Corteva common stock” refers to the shares of common stock, par value $0.01 per share, of Corteva Parent;

 

   

“Corteva Parent” refers to Corteva, Inc., the newly formed holding company for DowDuPont’s agriculture business;

 

   

“Dow” refers to Dow Parent and its consolidated subsidiaries (including TDCC) after giving effect to the Internal Reorganization and Business Realignment, resulting in Dow Parent holding the materials science business of DowDuPont;

 

   

“Dow AgroSciences” refers to the agriculture business of Historical Dow;

 

   

“Dow Parent” refers to Dow Inc., the newly formed holding company for DowDuPont’s materials science business;

 

   

“DowDuPont” refers to DowDuPont Inc., a Delaware corporation, and its consolidated subsidiaries, prior to the distribution of Corteva;

 

   

“DowDuPont stockholders” refers to holders of record of the common stock of DowDuPont in their capacity as such;

 

   

“EID” refers to E. I. du Pont de Nemours and Company, exclusive of its subsidiaries;

 

   

“Historical Dow” refers to TDCC and its consolidated subsidiaries prior to the Business Realignment;

 

   

“Historical DuPont” refers to EID and its consolidated subsidiaries prior to the Business Realignment;

 

   

“Internal Reorganization” has the meaning set forth in the section titled “Merger, Intended Separations, Reorganization and Financial Statement Presentation;”

 

   

“New DuPont” refers to DowDuPont and its consolidated subsidiaries, following the distribution of Corteva, at which time New DuPont will hold the specialty products business of DowDuPont and is expected to be renamed “DuPont de Nemours, Inc.;”

 

   

“record date” refers to the close of business on May 24, 2019, the date set by the DowDuPont board of directors to determine the DowDuPont stockholders eligible to receive the distribution of Corteva common stock;

 

   

“separation” refers to the transaction in which Corteva will be separated from DowDuPont; and

 

   

“TDCC” refers to The Dow Chemical Company, exclusive of its subsidiaries.

 

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Unless otherwise indicated or the context otherwise requires, this information statement describes Corteva as if the Internal Reorganization and Business Realignment have been completed and as if Corteva held the agriculture business of DowDuPont during all periods described. As a result, references in this information statement to Corteva’s historical assets, liabilities, products, businesses or activities are generally references to the applicable assets, liabilities, products, business or activities of Historical DuPont and Historical Dow on a pro forma basis as if the Internal Reorganization and Business Realignment had already occurred and Corteva was a standalone company holding DowDuPont’s agriculture business. See the section entitled “Merger, Intended Separations, Reorganization and Financial Statement Presentation” for further information.

You should carefully read this entire information statement, which forms a part of the registration statement on Form 10 (the “Form 10”), as well as the financial information contained in Historical DuPont’s annual financial statements, and the audited annual combined financial statements of Dow AgroSciences, which are incorporated by reference herein and filed as Exhibits 99.2 and 99.3, respectively, to the Form 10 of which this information statement forms a part. Some of the statements in this information statement constitute forward-looking statements. See the section entitled “Cautionary Statement Concerning Forward-Looking Statements.”

You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations.

Trademarks indicated by use of the symbols ® or ™ are trademarks of Historical DuPont, Pioneer, Dow AgroSciences or their affiliated companies or respective owners.

 

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MERGER, INTENDED SEPARATIONS, REORGANIZATION AND FINANCIAL STATEMENT PRESENTATION

Merger

DowDuPont is a Delaware corporation that was formed on December 9, 2015, for the purpose of effecting the all-stock merger of equals transaction between Historical DuPont and Historical Dow. On August 31, 2017, Historical DuPont and Historical Dow each merged with wholly owned subsidiaries of DowDuPont and, as a result, became subsidiaries of DowDuPont (the “Merger”). Upon completion of the Merger, each share of EID Preferred Stock—$4.50 Series and EID Preferred Stock—$3.50 Series (collectively, the “EID Preferred Stock”) issued and outstanding immediately prior to 11:59 pm Eastern Time on August 31, 2017 (the “Effective Time of the Merger”) remained issued and outstanding and was unaffected by the Merger.

Intended Separations

Prior to the Merger, Historical DuPont and Historical Dow were each publicly traded companies that were listed on the NYSE, with Historical DuPont operating a global business that included agriculture, electronics and communications, industrial biosciences, nutrition and health, performance materials and protection solutions segments, and Historical Dow operating a global business that included agricultural sciences, consumer solutions, infrastructure solutions, performance materials and chemicals and performance plastics segments. In connection with the signing of the agreement and plan of merger for the Merger (the “merger agreement”), Historical DuPont and Historical Dow announced their intention to pursue, subject to the approval of the DowDuPont board of directors and any required regulatory approvals, the separation of the combined company, DowDuPont, into three independent publicly traded companies—one for each of the combined company’s agriculture, materials science and specialty products businesses.

Internal Reorganization

In furtherance of DowDuPont’s planned separation into three independent, publicly traded companies, prior to, but in connection with, the separation and distribution, Historical DuPont and Historical Dow have completed a series of internal reorganization transactions to align their respective businesses into three subgroups: agriculture, materials science and specialty products. DowDuPont also formed two wholly owned subsidiaries: Corteva Parent, to serve as a holding company for its agriculture business, and Dow Parent, to serve as a holding company for its materials science business. Following the distribution of Dow, DowDuPont, as the remaining company, continues to hold the agriculture and specialty products businesses. DowDuPont is expected to complete the distribution of Corteva, resulting in DowDuPont holding the specialty products business of DowDuPont and being renamed “DuPont de Nemours, Inc.”

This series of reorganization transactions, which we refer to as the “Internal Reorganization,” involves:

 

   

the transfer or conveyance by Historical DuPont of its assets and liabilities that are (i) aligned with DowDuPont’s agriculture business to legal entities that remain with us following the Business Realignment, (ii) aligned with DowDuPont’s specialty products business (including Historical DuPont’s specialty products business) to legal entities that will be subsidiaries of New DuPont following the Business Realignment and (iii) aligned with DowDuPont’s materials science business (including Historical DuPont’s ethylene and ethylene copolymers business (other than its ethylene acrylic elastomers business)) to legal entities that became subsidiaries of Dow following the Business Realignment (and prior to the distribution of Dow); and

 

   

the transfer or conveyance by Historical Dow of its assets and liabilities that are (i) aligned with DowDuPont’s agriculture business (including Historical Dow’s agriculture business) to legal entities that remained subsidiaries of DowDuPont at the time of the distribution of Dow and will become our subsidiaries prior to our expected distribution, (ii) aligned with DowDuPont’s specialty products business (including those portions of Historical Dow’s business that are aligned with the specialty

 

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products business) to legal entities that will remain subsidiaries of New DuPont at the time of our expected distribution and (iii) aligned with DowDuPont’s materials science business to legal entities that remained subsidiaries of Dow in connection with the distribution of Dow.

Following the Internal Reorganization, Historical DuPont and Historical Dow transferred and conveyed among us, Dow and legal entities that will be subsidiaries of New DuPont all of the equity interests of the applicable subsidiaries such that, in addition to any assets and liabilities allocated to us, Dow and New DuPont pursuant to the separation agreement, we hold the assets and liabilities related to DowDuPont’s agriculture business, Dow holds the assets and liabilities related to DowDuPont’s materials science business and the legal entities that will comprise New DuPont hold the assets and liabilities related to DowDuPont’s specialty products business (other than certain transactions to be completed by DowDuPont and us prior to the distribution to make the applicable members of Historical Dow and Historical DuPont aligned with the agriculture business our subsidiaries (and to make those aligned with the specialty products business the subsidiaries of DowDuPont but not us)). These transfers and conveyances, which we refer to in this information statement as the “Business Realignment,” include:

 

   

the transfer or conveyance of Historical DuPont’s interests in the capital stock of, or any other equity interests in, the entities that are subsidiaries of Dow or are to be subsidiaries of New DuPont to Dow or the legal entities that will comprise New DuPont, as applicable (which, with respect to Dow, was completed prior to the distribution of Dow);

 

   

the transfer or conveyance of Historical Dow’s interests in the capital stock of, or any other equity interests in, the entities that are to be subsidiaries of us or New DuPont to us or the legal entities that will comprise New DuPont, as applicable (which, with respect to members of Historical Dow, was implemented prior to the distribution of Dow by making such entities subsidiaries of DowDuPont (and not Dow), but which remain to be made our subsidiaries); and

 

   

certain transfers and conveyances of Historical DuPont’s or DowDuPont’s interests in the capital stock of, or any other equity interests in, the entities that are to be subsidiaries of us or New DuPont to us or the legal entities that will comprise New DuPont, as applicable, which may occur after the Business Realignment but prior to our expected distribution.

As a result of the Internal Reorganization and Business Realignment, at the time of the separation and distribution, Corteva Parent will hold all the outstanding common stock of EID. EID will continue to be a subsidiary of Corteva Parent and will remain a reporting issuer with the U.S. Securities and Exchange Commission (the “SEC”). The EID Preferred Stock will be unaffected by the separation and distribution.

The diagrams below depict DowDuPont’s organizational structure after the Merger, DowDuPont’s anticipated organizational structure after the Internal Reorganization and Business Realignment and Corteva’s anticipated organizational structure following its distribution. These diagrams are provided for illustrative purposes only and do not purport to represent all legal entities within the organizational structure of DowDuPont or Corteva, as applicable.

DowDuPont Post-Merger

 

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DowDuPont Post-Internal Reorganization and Business Realignment

 

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Corteva Post-Distribution

 

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For further information, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement.”

Financial Statement Presentation

This information statement generally describes Corteva as if the Internal Reorganization and Business Realignment have already been completed and Corteva holds the agriculture business of DowDuPont that it will hold at the time of the distribution. Accordingly, this information statement includes an unaudited pro forma consolidated balance sheet for Corteva as well as unaudited pro forma consolidated statements of income for Corteva, which present our financial position and results of operations to give pro forma effect to the Merger, the Internal Reorganization, the Business Realignment, the distribution of all the common stock of Corteva, and the other transactions described under “Unaudited Pro Forma Combined Financial Statements.” The unaudited pro forma combined financial statements are presented for illustrative purposes only and should not be viewed as an indication of current or future results of operations, financial position or cash flows as if Corteva had been a separate, standalone company holding DowDuPont’s agriculture business during the periods presented.

This information statement also includes certain historical consolidated financial information related to, and discusses the results of operations, financial condition and business of, Historical DuPont. For example, the historical financial statements incorporated by reference herein reflect Historical DuPont’s business as it has been

 

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conducted prior to the Internal Reorganization and Business Realignment. These financial statements therefore reflect the business of Historical DuPont, which includes those portions of Historical DuPont’s business that form part of DowDuPont’s materials science business that were transferred to Dow and those portions of Historical DuPont’s business that form part of DowDuPont’s specialty products business that will ultimately remain with New DuPont. The financial statements also do not reflect the portions of Historical Dow’s business related to DowDuPont’s agriculture business that will be transferred to us. As such, Historical DuPont’s financial information and results are not representative of the financial results that we would have achieved as a separate, publicly traded company holding DowDuPont’s agriculture business nor indicative of the results we expect for any future period. Information in this information statement that does not reflect Corteva as it will be comprised at the time of the separation and distribution is generally identified by reference to “Historical DuPont.” For further information, see the sections entitled “Selected Historical Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Corteva Parent is a wholly owned subsidiary of DowDuPont that was formed on March 16, 2018 to serve as a holding company for Corteva. Corteva Parent has engaged in no business operations to date and has no assets or liabilities of any kind, other than those incident to its formation.

 

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INFORMATION STATEMENT SUMMARY

Distributing Company

DowDuPont is a holding company comprised of Historical DuPont and Historical Dow. DowDuPont conducts its operations worldwide through the following eight segments: Agriculture; Performance Materials & Coatings; Industrial Intermediates & Infrastructure; Packaging & Specialty Plastics; Electronics & Imaging; Nutrition & Biosciences; Transportation & Advanced Polymers; and Safety & Construction. DowDuPont has approximately 98,000 employees.

In connection with the signing of the merger agreement, Historical DuPont and Historical Dow announced their intention, subject to the approval of the DowDuPont board of directors and any required regulatory approvals, to separate DowDuPont into three independent, publicly traded companies—one for each of the combined company’s agriculture, materials science and specialty products businesses.

The distribution of Dow, which at the time of its distribution on April 1, 2019 held DowDuPont’s materials science business, is the first of the two distributions to effectuate DowDuPont’s plan to separate into three strong, independent, publicly traded companies. The remaining company is expected to complete, subject to the approval of its board of directors, the distribution of Corteva, which will hold the assets and liabilities associated with DowDuPont’s agriculture business, resulting in New DuPont holding the specialty products business of DowDuPont. The separation of Corteva is expected to be completed on June 1, 2019 through the distribution to DowDuPont stockholders of all issued and outstanding shares of Corteva common stock.

The DowDuPont board of directors believes that the completion of these separations will result in three independent, publicly traded companies that will lead their respective industries through productive, science-based innovation to meet the needs of customers and help solve global challenges, and is the best available opportunity to unlock the value of DowDuPont’s businesses.

Our Company

Corteva combines the DuPont Pioneer, Dow AgroSciences and DuPont Crop Protection businesses to create a stronger global provider of agricultural products. We are recognized by farmers as a leader in the seed and crop protection markets globally. Our seed platform develops and supplies high quality germplasm combined with advanced traits to produce higher yields for farmers around the world. Our crop protection platform supplies products to protect crop yields against weeds, insects and disease enabling farmers to achieve optimal results. The combination of these leading platforms creates one of the broadest portfolios of agriculture solutions in the industry, fueling farmer productivity in more than 140 countries and generating pro forma annual sales of $14.3 billion for the year ended December 31, 2018. Our strategy is to provide farmers with the right mix of seeds, crop protection and digital solutions to maximize their yields and improve their profitability, while strengthening customer relationships and ensuring an abundant food supply for a growing global population. We have the opportunity to enhance our returns by completing the delivery of nearly $1.7 billion from merger-related synergies, including approximately $1.2 billion in cost synergies and $500 million in growth synergies. Our goal is to achieve a best-in-class cost structure, versus our peers, creating a lean organization more focused on the customer.

We will operate in two reportable segments: seed and crop protection. Our seed segment is a global leader in developing and supplying advanced germplasm and traits that produce optimum yield for farms around the world. We are a leader in many of our key seed markets, including North America corn and soybeans, Europe corn and sunflower, as well as Brazil, India, South Africa and Argentina corn. We offer trait technologies that improve resistance to weather, disease, insects and weeds, and trait technologies that enhance food and



 

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nutritional characteristics. We also provide digital solutions that assist farmer decision-making with a view to optimize product selection and, ultimately, maximize yield and profitability. We compete in a wide variety of agricultural markets. Our crop protection segment serves the global agricultural input industry with products that protect against weeds, insects and other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-applied technologies. We are a leader in global herbicides, insecticides, below-ground nitrogen stabilizers and pasture and range management herbicides.

We expect to create shareholder value by continuing to work to achieve a best-in-class cost structure versus our peers (as further explained in the section entitled “Business—Our Company”) while advancing our science-based innovation, which is focused on delivering a wide range of improved products and services to our customers. Through our merger of the Historical DuPont and Historical Dow innovations pipelines, we have created one of the broadest and most productive new product pipelines in the agriculture industry. We intend to leverage our rich heritage of over 275 combined years of scientific achievement to advance our robust innovation pipeline and continue to shape the future of responsible agriculture. We intend to launch 21 new products, balanced between seeds and crop protection, between 2017 and 2021. New products are crucial to solving farmers’ productivity challenges amid a growing global population while addressing natural resistance, regulatory changes, safety requirements and competitive dynamics. Our investments in technology-based and solution-based product offerings allow us to meet farmers’ evolving needs while ensuring that our investments generate sufficient returns. Meanwhile, through our unique routes to market, we continue to work face-to-face with farmers around the world to deeply understand their needs.

Our Strengths

We believe the following attributes provide us with a competitive advantage in our industry:

 

   

Leadership position in key markets. We are a leader in many of our key seed markets, including North America corn and soybeans, Europe corn and sunflower, as well as Brazil, India, South Africa and Argentina corn. We are also a crop protection market leader in global herbicides, insecticides, biologics, below-the-ground nitrogen stabilizers and pasture and range management herbicides.

 

   

Strong customer relationships. We are a trusted partner in the global agriculture and food community, having earned the confidence of those who produce as well as those who consume. Our combination of market penetration, strong brand portfolio and robust germplasm allows us to serve as a trusted partner addressing a wide range of farmer needs in all major geographic regions and in many major crops.

 

   

Holistic solutions for farmers. We deliver a complete end-to-end farm management solution with integrated seed and crop protection offerings that provide farmers with an integrated approach to crop management. Through the combination of Historical DuPont’s and Historical Dow’s complementary seed and crop protection portfolios, we are now able to serve farmers year-round, offering products covering more than 100 crops that give farmers expanded choice and greater value.

 

   

Enhanced seed and crop protection pipelines. We have historically invested and will continue to invest significant funds in research and development. By integrating the Historical DuPont and Historical Dow pipelines, we have created one of the broadest and most innovative pipelines in the agricultural input industry.

 

   

Deep industry expertise. We have a strong management team that combines in-depth industry experience and demonstrated leadership. Our leadership team represents leaders from both Historical DuPont and Historical Dow as we retained the top talent during the Merger and separation process.



 

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Our Strategy

Our strategy is to combine our proven innovation capability with our unmatched customer access to provide farmers with a portfolio of products that enable continued improvements in yield and profitability, while improving environmental sustainability. We plan to leverage the work already done by DuPont Pioneer, Dow AgroSciences and DuPont Crop Protection, while enhancing their existing strategies, operating priorities and business focus through a more streamlined, efficient and focused operating structure. We also continue to believe that by operating as a pure play agriculture business, we can be more sharply focused on the needs of farmers and instill a culture that best supports our strategy.

To drive industry-leading value creation, we will continue to pursue the following five priorities:

 

   

Instill a strong, performance-based, inclusive, customer-centric culture.

 

   

Drive disciplined capital and resource allocation with a strong focus on return on invested capital.

 

   

Develop innovative solutions that improve farmer productivity and global food security.

 

   

Work to attain a best-in-class cost structure.

 

   

Deliver above-market growth via our robust new product pipeline and best-in-class routes to market.

More broadly, we believe the following key pillars will enable us to create significant value for our customers while delivering strong financial returns to our shareholders:

 

   

Developing and launching new offerings that address market needs by continuing to leverage our robust pipeline to introduce new proprietary seed traits and crop protection formulations that anticipate and meet evolving customer needs.

 

   

Utilizing our multi-channel and multi-brand capabilities to drive profitable growth by strategically aligning our brands and capabilities across different sales channels and creating a comprehensive multi-channel, multi-brand strategy.

 

   

Continuing to develop and maintain close connections with our customers by working closely with farmers throughout the entire growing season to ensure all their seed and crop protection needs are anticipated and satisfied.

 

   

Focusing on operational excellence by integrating our operations and continuing to drive operating efficiencies, enabling a streamlined, efficient and focused organization while working to achieve a best-in-class cost structure and creating a strong culture based on productivity.

 

   

Furthering our commitment to sustainable and responsible agriculture by focusing on integrating sustainability criteria early in the product discovery and development phases as well as promoting the development of responsible solutions focused on reducing the environmental impact of agriculture over time.

Risks Associated with Our Business

An investment in Corteva common stock is subject to several risks, including the following:

 

   

We participate in an industry that is highly competitive and has undergone consolidation, which could increase competitive pressures.

 

   

The successful development and commercialization of our pipeline products will be necessary for our growth.



 

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We may not be able to obtain or maintain the necessary regulatory approvals for some of our products, including our seed and crop protection products, which could restrict our ability to sell those products in some markets.

 

   

Enforcing our intellectual property rights, or defending against intellectual property claims asserted by others, could adversely affect our business, results of operations and financial condition.

 

   

Our business may be adversely affected by competition from manufacturers of generic products.

 

   

The costs of complying with evolving regulatory requirements could negatively impact our business, results of operations and financial condition.

 

   

The degree of public understanding and acceptance or perceived public acceptance of our biotechnology and other agricultural products and technologies can affect our sales and results of operations by affecting planting approvals, regulatory requirements and customer purchase decisions.

 

   

As a result of our current and past operations, as well as the discontinued and divested businesses and operations of Historical DuPont, we could incur significant environmental liabilities.

 

   

Our results of operations could be adversely affected by litigation and other commitments and contingencies.

 

   

Changes in agricultural and related policies of governments and international organizations may prove unfavorable.

The above list of risk factors is not exhaustive. Please read the information in the section entitled “Risk Factors” for a more thorough description of these and other risks.

The Separation and Distribution

The separation and distribution of Corteva is the second step in DowDuPont’s intended separation of its agriculture, materials science and specialty products divisions into three independent, publicly traded companies. The separation and distribution of Dow, which at the time of its distribution on April 1, 2019 held DowDuPont’s materials science business, preceded the separation and distribution of Corteva.

On May 6, 2019 the DowDuPont board of directors approved the distribution of all the then issued and outstanding shares of common stock of Corteva Parent, the newly formed holding company for Corteva that at the time of the distribution will hold DowDuPont’s agriculture business, to DowDuPont stockholders on the basis of one share of Corteva common stock for every three shares of DowDuPont common stock held at the close of business on May 24, 2019, the record date for the distribution. As a result of the distribution, we will become an independent, publicly traded company. The distribution is intended to be generally tax-free to DowDuPont stockholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares.

The distribution is subject to the satisfaction or waiver of certain conditions. The DowDuPont board of directors has the discretion to abandon the distribution and to alter the terms of the distribution. See the section entitled “The Distribution—Conditions to the Distribution.” As a result, Corteva cannot provide any assurances that the distribution will be completed.

Internal Reorganization

In advance of the distributions, DowDuPont has completed the Internal Reorganization and will continue to undertake the Business Realignment so that (1) Dow held, prior to the distribution of Dow, directly or indirectly, DowDuPont’s materials science business; (2) we will hold, prior to our expected distribution, directly or



 

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indirectly, DowDuPont’s agriculture business; and (3) the legal entities that will comprise New DuPont will hold, prior to our expected distribution, directly or indirectly, DowDuPont’s specialty products business. See the section entitled “Merger, Intended Separations, Reorganization and Financial Statement Presentation—Internal Reorganization” and “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement” for further discussion.

Corteva’s Relationship with New DuPont and Dow Following the Distribution

Substantially simultaneously with the distribution of Dow on April 1, 2019, we entered into a separation and distribution agreement with DowDuPont (which will, after the separation of Corteva, become New DuPont) and Dow, which is referred to in this information statement as the “separation agreement,” to effect the separation (including the Internal Reorganization and Business Realignment) and provide a framework for our relationship with New DuPont and Dow after the separation and distribution. In connection with the separation and distribution, we have also entered and will also enter into various other agreements with DowDuPont and Dow, including a tax matters agreement, an employee matters agreement, intellectual property cross-license agreements, trademark license agreements and certain other intellectual property, services, supply and real estate-related agreements. These agreements collectively provide for the terms of the allocation among us, New DuPont and Dow of the assets, liabilities and obligations of DowDuPont and its subsidiaries (including investments, property and employee benefits and tax-related assets and liabilities) attributable to the periods prior to, at and after Dow’s and our respective separations, and will govern certain relationships among us, New DuPont and Dow after the separation and distribution. In connection with the separation of Dow and us from DowDuPont, we have assumed and will assume, and will indemnify New DuPont and Dow for, certain liabilities including, among others, certain environmental liabilities and litigation liabilities relating to our business and the discontinued and divested businesses and operations of Historical DuPont. Most of these indemnification obligations are uncapped, and may include, among other items, associated defense costs, settlement amounts and judgments. Payments pursuant to these indemnities may be significant and could negatively impact our business, financial condition, results of operations and cash flows. For a discussion of these arrangements, including the indemnification arrangements, see the sections entitled “Risk Factors—Risks Related to the Separation” and “Our Relationship with New DuPont and Dow Following the Distribution.”

Regulatory Approvals

We must complete the necessary registration under U.S. federal securities laws of Corteva common stock to be issued in the distribution, as well as the applicable listing requirements of the NYSE for such shares.

Other than these requirements, we do not believe that any other material governmental or regulatory filings or approvals will be necessary to consummate the distribution.

DowDuPont stockholders will not have any appraisal rights in connection with the distribution.

Corporate Information

Corteva Parent was organized in the State of Delaware on March 16, 2018 as Corteva, Inc. EID was founded in 1802 and was incorporated in the state of Delaware in 1915. The current address of Corteva’s principal executive offices is 974 Centre Road, Wilmington, Delaware 19805. Corteva can be contacted by calling (302) 774-1000.



 

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SUMMARY OF THE SEPARATION AND DISTRIBUTION

The following is a summary of the material terms of the separation, distribution and other related transactions.

 

Distributing company

DowDuPont Inc.

 

Distributed company

Corteva, Inc., a Delaware corporation and a wholly owned subsidiary of DowDuPont that will be the holding company for DowDuPont’s agriculture business. Following the distribution, Corteva will be an independent, publicly traded company.

 

Distribution ratio

Each DowDuPont stockholder will receive one share of Corteva common stock for every three shares of DowDuPont common stock held at the close of business on May 24, 2019, the record date for the distribution. DowDuPont stockholders may also receive cash in lieu of any fractional shares, as described below.

 

Distributed securities

In the distribution, DowDuPont will distribute to DowDuPont stockholders all of the then issued and outstanding shares of Corteva common stock. Following the separation and distribution, Corteva will be a separate company, and New DuPont will not retain any ownership in Corteva.

 

  The actual number of shares of Corteva common stock that will be distributed will depend on the number of shares of DowDuPont common stock outstanding on the record date.

 

  Immediately following the distribution, DowDuPont stockholders will own shares in both Corteva and New DuPont.

 

Fractional shares

DowDuPont will not distribute any fractional shares of Corteva common stock. Instead, if you are a registered holder, Computershare Trust Company, N.A. (“Computershare”), the distribution agent, will aggregate all fractional shares that would have otherwise been issued in the distribution into whole shares and sell the whole shares in the open market at prevailing market prices on behalf of all DowDuPont stockholders entitled to receive a fractional share. The distribution agent will then distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata to those stockholders (net of any required withholding for taxes applicable to each stockholder) who otherwise would have been entitled to receive a fractional share in the distribution. DowDuPont stockholders who receive cash in lieu of fractional shares will not be entitled to any interest on amounts paid in lieu of fractional shares. Any cash received in lieu of fractional shares generally will be taxable to DowDuPont stockholders as described in the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.”

 

Record date

The record date for the distribution is the close of business on May 24, 2019.


 

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Distribution date

The distribution date is expected to be on June 1, 2019.

 

Distribution

On the distribution date, DowDuPont will issue shares of Corteva common stock to all DowDuPont stockholders as of the record date based on the distribution ratio. The shares of Corteva common stock will be issued electronically in direct registration or book-entry form and no certificates will be issued.

 

Commencing on or shortly following the distribution date, the distribution agent will mail to stockholders who hold their shares directly with DowDuPont (registered holders) a direct registration account statement that reflects the shares of Corteva common stock that have been registered in their name.

 

For shares of DowDuPont common stock that are held through a bank, the bank will credit the stockholder’s account with the Corteva common stock they are entitled to receive in the distribution.

 

DowDuPont stockholders will not be required to make any payment, to surrender or exchange their shares of DowDuPont common stock or to take any other action to receive their shares of Corteva common stock in the distribution.

 

If you are a DowDuPont stockholder on the record date and decide to sell your shares on or before the distribution date, you may choose to sell your DowDuPont common stock with or without your entitlement to receive Corteva common stock in the distribution. Beginning on or shortly before the record date and continuing through the last trading day prior to the distribution, it is expected that there will be two markets in DowDuPont common stock: a “regular-way” market and an “ex-distribution” market. Shares of DowDuPont common stock that are traded in the “regular-way” market will trade with the entitlement to receive the Corteva common stock that is distributed pursuant to the distribution. Shares that trade in the “ex-distribution” market will trade without the entitlement to receive the shares of Corteva common stock distributed pursuant to the distribution. Consequently, if you sell your shares of DowDuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you will also be selling your right to receive Corteva common stock in the distribution.

 

Conditions to the distribution

The distribution is subject to the satisfaction of the following conditions, among other conditions described in this information statement:

 

   

The SEC having declared effective the Form 10 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (or the Form 10 having otherwise become effective pursuant to and in accordance with Section 12(d) of the Exchange Act), no stop order relating to the Form 10 being in effect, no proceedings seeking such a stop order being pending



 

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before or threatened by the SEC and this information statement (or notice of interest availability hereof) having been distributed to DowDuPont stockholders;

 

   

the listing of Corteva common stock on the NYSE having been approved, subject to official notice of issuance;

 

   

the DowDuPont board of directors having received an opinion from a nationally recognized independent appraisal firm, to the effect that, following the distribution, Corteva and DowDuPont will each be solvent and adequately capitalized, and that DowDuPont has adequate surplus under Delaware law to declare the dividend of Corteva common stock;

 

   

the Internal Reorganization and Business Realignment as they relate to Corteva having been effectuated prior to the distribution date;

 

   

the DowDuPont board of directors having declared the dividend of Corteva common stock to effect the distribution and having approved the distribution and all related transactions, which approval may be given or withheld in the board’s absolute and sole discretion (and such declaration or approval not having been withdrawn);

 

   

DowDuPont having elected the individuals to be members of our board of directors following the distribution, and certain directors as set forth in the separation agreement having resigned from the DowDuPont board of directors;

 

   

each of us, DowDuPont and Dow and each of our or their applicable subsidiaries having entered into all ancillary agreements to which it and/or any such subsidiary is contemplated to be a party;

 

   

no events or developments having occurred or existing that make it inadvisable to effect the distribution or that would result in the distribution and related transactions not being in the best interest of DowDuPont or its stockholders;

 

   

no order, injunction or decree by any governmental entity of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the related transactions, including the transfers of assets and liabilities contemplated by the separation agreement, shall be pending, threatened, issued or in effect, and no other event outside of DowDuPont’s control having occurred that prevents the consummation of the distribution;

 

   

the receipt by DowDuPont of an opinion of Skadden, in form and substance satisfactory to DowDuPont (in its sole discretion) (the “Tax Opinion”), substantially to the effect that, among other things, the distribution, together with certain related transactions, will qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes; and



 

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the Internal Revenue Service (“IRS”) not having revoked the IRS Ruling (as described in the section entitled “Risk Factors—Risks Related to the Separation”).

 

  The fulfillment of these conditions does not create any obligation on DowDuPont’s part to effect the distribution, and the DowDuPont board of directors has the ability, in its sole discretion, to amend, modify or abandon the distribution and related transactions at any time prior to the distribution date.

 

Stock exchange listing

Corteva common stock will be listed on the NYSE under the symbol “CTVA.”

 

  We anticipate that as early as the trading day prior to the record date, trading in shares of Corteva common stock will begin on a “when-issued” basis and that this “when-issued” trading market will continue through the last trading day prior to the distribution date. See the section entitled “The Distribution—Trading Between the Record Date and Distribution Date.”

 

Transfer agent

After the distribution, the transfer agent and registrar for Corteva common stock will be Computershare.

 

Corteva’s indebtedness

For additional information relating to our anticipated indebtedness following the separation and distribution, see the section entitled “Description of Material Indebtedness” included elsewhere in this information statement.

 

Risks relating to Corteva, ownership of Corteva common stock and the distribution

Our business is subject to both general and specific risks, including risks relating to our business, to our relationship with New DuPont and Dow following the separation and distribution and to us being a separate, publicly traded company. You should read carefully the section entitled “Risk Factors.”

 

Tax considerations

Assuming the distribution, together with certain related transactions, qualifies as a tax-free transaction for U.S. federal income tax purposes under Section 368(a)(1)(D) and Section 355 of the Code, no gain or loss will be recognized by DowDuPont stockholders, and no amount will be included in the income of a DowDuPont stockholder, upon the receipt of shares of Corteva common stock pursuant to the distribution. However, any cash payments made in lieu of fractional shares will generally be taxable to the stockholder. For a more detailed description, see the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.”

 

Certain agreements with DowDuPont and Dow

Substantially simultaneously with the distribution of Dow on April 1, 2019, we entered into the separation agreement with DowDuPont



 

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(which will, after the separation of Corteva, become New DuPont) and Dow to effect the separation and distribution and provide a framework for our relationship with New DuPont and Dow after the separation and distribution. We also have entered and will enter into various other agreements with DowDuPont and Dow, including a tax matters agreement, an employee matters agreement, intellectual property cross-license agreements, trademark license agreements and certain other intellectual property, services, supply and real-estate agreements. These agreements provide, among other things, for the allocation among us, New DuPont and Dow of the assets, liabilities and obligations of DowDuPont (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after Dow’s and our respective separations from DowDuPont and will govern certain relationships among us, New DuPont and Dow. For a discussion of these arrangements, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution.”



 

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QUESTIONS AND ANSWERS ABOUT THE SEPARATION AND DISTRIBUTION

 

What is Corteva and why is DowDuPont separating
its agriculture business and distributing Corteva common stock?

Prior to the completion of the Merger on August 31, 2017, each of Historical DuPont and Historical Dow was a standalone, publicly traded company. Historical DuPont operated a global business that included agriculture, electronics and communications, industrial biosciences, nutrition and health, performance materials and protection solutions segments. Historical Dow operated a global business that included agriculture sciences, consumer solutions, infrastructure solutions, performance materials and chemicals and performance plastics segments.

 

  As a result of the Merger, each of Historical DuPont and Historical Dow became a subsidiary of DowDuPont. In connection with their entry into the merger agreement, Historical DuPont and Historical Dow announced their intention to pursue the separation of DowDuPont into three independent, publicly traded companies—one for each of the combined company’s agriculture, materials science and specialty products businesses, subject to the approval of the DowDuPont board of directors and any required regulatory approvals.

 

  The separation of DowDuPont’s agriculture business, Corteva, is the second step in this process and was preceded by the distribution of Dow, DowDuPont’s materials science business. In connection with the separation of DowDuPont’s businesses, DowDuPont has completed the Internal Reorganization and will continue to undertake the Business Realignment, such that, at the time of distribution, Corteva will hold, directly or indirectly, DowDuPont’s agriculture business. Corteva Parent is a newly formed holding company for Corteva and the separation will be effected by way of a pro rata dividend of Corteva common stock to DowDuPont stockholders. Following the separation and distribution, Corteva will be a separate company, and the remaining company will not retain any ownership interest in Corteva.

 

  The separations of Dow and us from DowDuPont and the distributions of Dow common stock and Corteva common stock are each intended to provide DowDuPont stockholders with equity investments in separate companies that will be able to focus their respective businesses, with Corteva being a leading, pure-play agriculture company. The separations are expected to enhance the long-term performance of each business for the reasons discussed in the sections entitled “The Distribution—Background of the Distribution” and “The Distribution—Reasons for the Separation and Distribution.”

 

Why am I receiving this document?

We are making this document available to you because you are a DowDuPont stockholder as of the close of business on May 24,



 

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2019, the record date for the distribution. As a DowDuPont stockholder as of the record date, you are entitled to receive one share of Corteva common stock for every three shares of DowDuPont common stock that you hold at the close of business on such date. This document will help you understand how the separation and distribution will affect your investment in DowDuPont and your investment in Corteva after the separation.

 

What are the reasons for the separation?

The DowDuPont board of directors believes that the separation of DowDuPont into three, independent, publicly traded companies through the separation of DowDuPont’s agriculture, materials science and specialty products businesses is in the best interests of DowDuPont and its stockholders and is the best available opportunity to unlock the value of DowDuPont’s business.

 

  The DowDuPont board of directors, in consultation with its advisory committees (as described in the section entitled “The Distribution—Background of the Distribution”), considered a wide variety of factors in evaluating the separation and distribution of Dow and the planned separation and distribution of Corteva and in deciding to proceed with the distributions, including the risk that one or more of the distributions is abandoned and not completed. Among other things, the DowDuPont board of directors and its advisory committees considered the following potential benefits of the separations and distributions:

 

   

Attractive Investment Profile. The creation of separate companies with strong, focused businesses and each with a distinct financial profile and clear investment thesis is expected to drive significant long-term value for all stockholders and reduce the complexities surrounding investor understanding, enabling investors to invest in each company separately based on its distinct characteristics.

 

   

Enhanced Means to Evaluate Financial Performance. Investors should be better able to evaluate the business condition, strategy and financial performance of each company within the context of its industry and markets. It is believed that, over time following the completion of the separations, the aggregate market value of Corteva, Dow and New DuPont will be higher, on a fully distributed basis and assuming the same market conditions, than if DowDuPont were to remain under its current configuration.

 

   

Distinct Position. The separations are expected to create three independent companies with tailored growth strategies and differentiated technologies, resulting in: Corteva, a leading global agricultural company with one of the most comprehensive and diverse portfolios in the industry; Dow, a leading global materials science company that will be a low-cost, innovation-driven leader; and New DuPont, a leading global specialty products company that will be a technology driven innovation



 

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leader. Each company will provide investors with a distinct investment option that may be more attractive to current investors and will allow the company to attract different investors than the current investment option available to DowDuPont stockholders of one combined company.

 

   

Focused Capital Allocation. Each independent, publicly traded company will have a capital structure that is expected to be best suited to its specific needs and will be able to make capital allocation decisions that better align with its streamlined business. In addition, after the separations, the respective businesses within each company will no longer need to compete internally for capital and other corporate resources with businesses allocated to another company.

 

   

Ability to Adapt to Industry Changes. Each company is expected to be able to maintain a sharper focus on its core business and growth opportunities, which will allow each company to respond better and more quickly to developments in its industry.

 

   

Dedicated Management Team with Enhanced Strategic Focus. Each company’s management team will be able to design and implement corporate policies and strategies that are tailored to such company’s specific business characteristics and to focus on maximizing the value of its business.

 

   

Improved Management Incentive Tools. The separation will permit the creation of equity securities, including options and restricted stock units, for each publicly traded company with values more closely linked to the performance of such company’s business than would be readily available under the current configuration of businesses within DowDuPont as a single public company. The DowDuPont board of directors believes such equity-based compensation arrangements should provide enhanced incentives for performance and improve the ability for each publicly traded company to attract, retain and motivate qualified personnel.

 

   

Direct Access to Capital Markets and Ability to Pursue Strategic Opportunities. Each company’s business will have direct access to the capital markets, and is expected to be better situated to pursue future acquisitions, joint ventures and other strategic opportunities as well as internal expansion that is more closely aligned with such company’s strategic goals and expected growth opportunities.

 

 

The DowDuPont board of directors also considered a number of potentially negative factors, including the loss of synergies and joint purchasing power from ceasing to operate as part of a larger, more diversified company, risks relating to the creation of a new public company, such as increased costs from operating as a separate public company, potential disruptions to the businesses and loss or dilution of brand identities, possible increased administrative costs and



 

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one-time separation costs, restrictions on each company’s ability to pursue certain opportunities that may have otherwise been available in order to preserve the tax-free nature of the distributions and related transactions for U.S. federal income tax purposes, the fact that each company will be less diversified than the current configuration of DowDuPont’s businesses prior to the separations and distributions, and the potential inability to realize the anticipated benefits of the separations.

 

  The DowDuPont board of directors concluded that the potential benefits of pursuing each separation and each distribution outweighed the potentially negative factors in connection therewith. For more information, see the sections entitled “The Distribution—Reasons for the Separation and Distribution” and “Risk Factors.”

 

  The DowDuPont board of directors also considered these potential benefits and potentially negative factors in light of the risk that one or more of the distributions is abandoned or otherwise not completed, resulting in DowDuPont separating into fewer than the intended three separate publicly traded companies. The DowDuPont board of directors believes that the potential benefits to DowDuPont stockholders discussed above apply to the separation of each of the intended three businesses and that the creation of each independent company, with its distinctive business and capital structure and ability to focus on its specific growth plan, will provide DowDuPont stockholders with greater long-term value than retaining one investment in the combined company.

 

Why is the separation of Corteva structured as a distribution?

DowDuPont currently believes the separation by way of distribution is the most efficient way to separate its agriculture business from DowDuPont for various reasons, including that a separation will (i) offer a high degree of certainty of completion in a timely manner, lessening disruption to current business operations; (ii) provide a high degree of assurance that decisions regarding Corteva’s capital structure will align with its business objectives and provide the continued financial flexibility and financial stability to support its long-term growth and generate stockholder returns; and (iii) generally be a tax-free distribution of shares of Corteva common stock to DowDuPont stockholders for U.S. federal income tax purposes (except for any cash received in lieu of fractional shares). DowDuPont believes that a tax-free separation will enhance the value of both DowDuPont and Corteva. See the section entitled “The Distribution—Reasons for the Separation and Distribution.”

 

What do I have to do to participate in the
distribution
?

You are not required to take any action to receive your Corteva common stock, although you are urged to read this entire document carefully. No approval of the distribution by DowDuPont stockholders is required and DowDuPont is not seeking your



 

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approval. Therefore, Corteva is not asking you for a proxy to vote on the separation or the distribution, and Corteva requests that you do not send Corteva a proxy. You will not be required to pay anything for the shares of Corteva common stock you will receive in the distribution nor will you be required to surrender or exchange any shares of DowDuPont common stock to participate in the distribution. For more detailed information on the treatment of fractional shares, see “—How will fractional shares be treated in the distribution?”

 

What is the record date for the distribution?

DowDuPont will determine record ownership as of the close of business on May 24, 2019, which we refer to as the “record date.”

 

What will happen to my shares of EID Preferred Stock?

Nothing. EID will continue to be a subsidiary of Corteva Parent and will remain a reporting issuer with the SEC. The EID Preferred Stock will be unaffected by the separation and distribution.

 

What will I receive in distribution?

If you hold DowDuPont common stock as of the record date, on the distribution date you will receive one share of Corteva common stock for every three shares of DowDuPont common stock you held on the record date, as well as a cash payment in lieu of any fractional shares (as discussed below). You will receive only whole shares of Corteva common stock in the distribution. For a more detailed description, see the section entitled “The Distribution.”

 

How will fractional shares be treated in the distribution?

No fractional shares of Corteva common stock will be distributed. Consequently, you will not receive any fractional shares of Corteva common stock and instead will receive a cash payment in lieu of any fractional shares you would otherwise have been entitled to receive in the distribution.

 

  DowDuPont has engaged Computershare as its distribution agent. The distribution agent will aggregate all fractional shares that would have otherwise been issued in the distribution into whole shares and will sell the whole shares in the open market at prevailing market prices on behalf of all DowDuPont stockholders entitled to receive a fractional share. The distribution agent will then distribute the aggregate cash proceeds of the sales, net of brokerage fees and other costs, pro rata to those stockholders (net of any required withholding for taxes applicable to such stockholder). You will not be entitled to any interest on the amount of payment made to you in lieu of fractional shares.

 

Will the number of DowDuPont shares I own change as a result of the distribution?

No, the number of shares you own will not change as a result of the distribution. Immediately following the distribution, you will hold the same number of shares of DowDuPont (which will, after the



 

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separation of Corteva, become New DuPont) that you held immediately prior to the distribution. Your proportionate interest will also not change, so you will own the same proportionate amount of New DuPont immediately following the separation and distribution that you owned of DowDuPont immediately prior to the separation and distribution.

 

How many shares of Corteva common stock will be distributed?

The actual number of shares of Corteva common stock that will be distributed will depend on the number of shares of DowDuPont common stock outstanding on the record date. The shares of Corteva common stock that are distributed will constitute all the then issued and outstanding shares of Corteva common stock immediately prior to the distribution and DowDuPont (which will, after the separation of Corteva, become New DuPont) will not retain any ownership interest in Corteva following the distribution. For a more detailed description, see the section entitled “Description of Our Capital Stock.”

 

When will the distribution occur?

It is expected that the distribution will be effected at 12:01 a.m. ET on the distribution date, subject to the satisfaction or waiver of certain conditions. On or shortly after the distribution date, the whole shares of Corteva common stock will be credited in book-entry accounts for each stockholder entitled to receive the shares of Corteva common stock in the distribution. We expect DowDuPont’s distribution agent to take approximately two weeks after the distribution date to fully distribute to stockholders any cash they are entitled to receive in lieu of fractional shares. See “—How will I receive my shares of Corteva common stock?” for more information.

 

If I sell my shares of DowDuPont common stock
on or before the distribution date, will I still be entitled to receive shares of Corteva common
stock in the distribution?

If you are a DowDuPont stockholder on the record date and decide to sell your shares before the distribution date, you may choose to sell your DowDuPont common stock with or without your entitlement to receive Corteva common stock in the distribution. Beginning on or shortly before the record date and continuing through the distribution, it is expected that there will be two markets in DowDuPont common stock: a “regular-way” market and an “ex-distribution” market. Shares of DowDuPont common stock that are traded in the “regular-way” market will trade with the entitlement to receive the Corteva common stock that is distributed pursuant to the distribution. Shares that trade in the “ex-distribution” market will trade without the entitlement to receive the shares of Corteva common stock distributed pursuant to the distribution. Consequently, if you sell your shares of DowDuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you are also selling your right to receive Corteva common stock in the distribution.


 

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  You should discuss these alternatives with your bank, broker or other nominee. See the section entitled “The Distribution—Trading Between the Record Date and Distribution Date.”

 

How will I receive my shares of Corteva common stock?

Registered stockholders: If you are a registered stockholder (meaning you own your shares of DowDuPont common stock directly through an account with DowDuPont’s transfer agent, Computershare), the distribution agent will credit the whole shares of Corteva common stock you receive in the distribution to your book-entry account with our transfer agent on or shortly after the distribution date. Approximately two weeks after the distribution date, the distribution agent will mail you a book-entry account statement that reflects the number of whole shares of Corteva common stock you own, along with a check for any cash in lieu of fractional shares you are entitled to receive. You will be able to access information regarding your book-entry account holding the shares of Corteva common stock at Computershare using the same credentials that you use to access your DowDuPont account. You may also contact Computershare at 1-833-388-2882 or 1-781-575-3120 (outside the U.S.).

 

  Beneficial stockholders: If you own your shares of DowDuPont common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the whole shares of Corteva common stock you receive in the distribution on or shortly after the distribution date. Your bank, broker or other nominee will also be responsible for transmitting to you any cash payment you are entitled to receive in lieu of fractional shares. Please contact your bank, broker or other nominee for further information about your account and the payment of any cash you are entitled to receive in lieu of fractional shares.

 

  The shares of Corteva common stock will not be certificated. As a result, no physical stock certificates will be issued to any stockholders. See the section entitled “The Distribution—When and How You Will Receive the Distribution” for a more detailed explanation.

 

What are the conditions to the distribution?

The distribution is subject to several conditions, including, among others:

 

   

the SEC having declared effective the Form 10 under the Exchange Act, no stop order relating to the Form 10 being in effect (or the Form 10 having otherwise become effective pursuant to and in accordance with Section 12(d) of the Exchange Act), no proceedings seeking such stop order is pending before or threatened by the SEC and this information statement (or a notice of availability hereof) having been distributed to DowDuPont stockholders;



 

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the listing of Corteva common stock on the NYSE having been approved, subject to official notice of issuance;

 

   

the DowDuPont board of directors having received an opinion from a nationally recognized independent appraisal firm to the effect that, following the distribution, we and DowDuPont will each be solvent and adequately capitalized, and that DowDuPont has adequate surplus under Delaware law to declare the dividend of Corteva common stock;

 

   

the Internal Reorganization and Business Realignment as they relate to us having been effectuated prior to the distribution date;

 

   

the DowDuPont board of directors having declared the dividend of Corteva common stock to effect the distribution and having approved the distribution and all related transactions, which approval may be given or withheld in the board’s absolute and sole discretion (and such declaration or approval not having been withdrawn);

 

   

DowDuPont having elected the individuals to be the members of our board of directors following the distribution, and certain directors as set forth in the separation agreement having resigned from the DowDuPont board of directors;

 

   

each of us, DowDuPont and Dow and each of our and their applicable subsidiaries having entered into all ancillary agreements to which it and/or such subsidiary is contemplated to be a party;

 

   

no events or developments having occurred or existing that make it inadvisable to effect the distribution or that would result in the distribution and related transactions not being in the best interest of DowDuPont or its stockholders;

 

   

no order, injunction or decree by any governmental entity of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the related transactions, including the transfers of assets and liabilities contemplated by the separation agreement, shall be pending, threatened, issued or in effect, and no other event outside of DowDuPont’s control having occurred that prevents the consummation of the distribution;

 

   

the receipt by DowDuPont of the Tax Opinion; and

 

   

the IRS not having revoked the IRS Ruling (as described in the section entitled “Risk Factors—Risks Related to the Separation”).

 

  The fulfillment of these conditions does not create any obligation on DowDuPont’s part to effect the distribution, and the DowDuPont board of directors has the ability, in its sole discretion, to amend, modify or abandon the distribution and related transactions at any time prior to the distribution date.


 

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Can DowDuPont decide to cancel the distribution even if all the conditions have been met?

Yes. The distribution is subject to the satisfaction of certain conditions. See the section entitled “The Distribution—Conditions to the Distribution.” Even if all such conditions are met, DowDuPont has the ability, in its sole discretion, not to complete the distribution if, at any time prior to the distribution, the DowDuPont board of directors determines, in its sole discretion, that the distribution is not in the best interests of DowDuPont or its stockholders, that a sale or other alternative is in the best interests of DowDuPont or its stockholders, or that market conditions or other circumstances are such that it is not advisable at that time to separate the agriculture business from DowDuPont.

 

What are the U.S. federal income tax consequences
of the distribution to me?

The distribution is conditioned on the continued validity of the IRS Ruling, which DowDuPont has received from the IRS, and the receipt of the Tax Opinion, in form and substance acceptable to DowDuPont, substantially to the effect that, among other things, the distribution, together with certain related transactions, will qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) of the Code. Assuming the distribution so qualifies, for U.S. federal income tax purposes, no gain or loss will be recognized by you, and no amount will be included in your income, upon the receipt of shares of Corteva common stock pursuant to the distribution. However, any cash payments made instead of fractional shares will generally be taxable to you. For a more detailed description, see the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.”

 

How will the distribution affect my tax basis in my shares of DowDuPont common stock?

Assuming that the distribution is tax-free to DowDuPont stockholders (except for taxes related to any cash received in lieu of fractional shares), your tax basis in the DowDuPont common stock held by you immediately prior to the distribution will be allocated between your shares of DowDuPont common stock and the Corteva common stock that you receive in the distribution in proportion to the relative fair market values of each immediately following the distribution. For a more detailed description, see the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.”

 

Will my shares of DowDuPont common stock continue to trade following the distribution?

Your DowDuPont common stock, which will now represent ownership of New DuPont, will continue to trade on the NYSE.


 

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How will the distributions affect the operations of DowDuPont?

It is expected that after the distribution of Corteva, DowDuPont will be renamed “DuPont de Nemours, Inc.” The remaining company will continue to operate the specialty products business of DowDuPont.

 

How will Corteva common stock trade?

Corteva common stock will trade on the NYSE under the symbol “CTVA.”

 

  We anticipate that trading in Corteva common stock will begin on a “when-issued” basis as early as the trading day prior to the record date for the distribution and will continue through the last trading day prior to the distribution date. When-issued trading in the context of a separation refers to a sale or purchase made conditionally on or before the distribution date because the securities of the separated entity have not yet been distributed. When-issued trades generally settle within two days after the distribution date. On the distribution date (or, if the distribution date is not a trading day, the first trading day after the distribution date), any when-issued trading of Corteva common stock will end and “regular-way” trading will begin. Regular-way trading refers to trading after the security has been distributed and typically involves a trade that settles on the second full trading day following the date of the trade. See the section entitled “The Distribution—Trading Between the Record Date and Distribution Date.” We cannot predict the trading prices for Corteva common stock before, on or after the distribution date.

 

What indebtedness will Corteva have following the separation?

At the time of the separation, we expect to have access to approximately $7.3 billion in committed and uncommitted credit lines, including revolving credit facilities. These credit lines will support our commercial paper borrowings and can be used for general corporate purposes. At the time of the separation, we do not expect to have any material long-term debt. We expect that our short term capital needs due to the seasonality of our business may result in commercial paper borrowings, which we expect would be repaid in the ordinary course of our business. See the sections entitled “Supplemental Liquidity & Capital Resources,” “Description of Material Indebtedness” and “Unaudited Pro Forma Combined Financial Information” for more information.

 



 

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Will the separations affect the trading price of my DowDuPont common stock?

We expect the trading price of shares of New DuPont common stock immediately following the distribution to be lower than the trading price of DowDuPont common stock immediately prior to the distribution because the trading price will no longer reflect the value of the agriculture business. Furthermore, until the market has fully analyzed the value of New DuPont without Corteva and Dow (whose distribution preceded ours) and the value of Corteva or Dow as standalone companies, the trading price of shares of all three companies may fluctuate. There can be no assurance that, following the distributions, the combined trading prices of the common stock of us, Dow and New DuPont will equal or exceed what the trading price of DowDuPont common stock would have been in the absence of DowDuPont’s pursuit of the separations, and it is possible the aggregate equity value of the three independent companies will be less than DowDuPont’s equity value prior to the distribution of Dow and us.

 

Are there risks associated with owning shares of Corteva common stock?

Yes. Our business is subject to both general and specific risks, including risks relating to our business, our relationship with New DuPont and Dow following the separation and distribution and of us being a separate, publicly traded company. Accordingly, you should read carefully the information set forth in the section entitled “Risk Factors” in this information statement.

 

Does Corteva intend to pay cash dividends?

We expect that we will pay a quarterly dividend following the distribution beginning in the third quarter of 2019 (as DowDuPont’s dividends for the first two quarters of 2019 included amounts attributable to Corteva). Corteva is targeting a competitive dividend policy and expects to declare dividends of approximately 25-35% of annual net income. We intend to issue annual dividend payouts of $400 million. However, the declaration, payment and amount of any dividends following the distribution will be subject to the sole discretion of our post-distribution, independent board of directors and, in the context of our financial policy, will depend upon many factors, including our financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legal requirements and other factors that our board of directors may deem relevant, and there can be no assurances that we will continue to pay a dividend in the future. In addition, there can be no assurance that, after the distribution, the combined annual dividends, if any, on the common stock of us, New DuPont and Dow will be at least equal to the annual dividends paid on DowDuPont common stock prior to the distribution of Dow and Corteva common stock.


 

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What will Corteva’s relationship be with New DuPont and Dow following the separation and distribution?

On April 1, 2019, we entered into the separation agreement with DowDuPont and Dow to effect the separations (including the Internal Reorganization and Business Realignment) and distributions of Dow and Corteva. We have also entered and will also enter into certain other agreements with DowDuPont and Dow, including a tax matters agreement, an employee matters agreement, intellectual property cross-license agreements, trademark license agreements and certain other intellectual property, services, supply and real estate-related agreements. These agreements collectively provide for the terms of the allocation among us, New DuPont and Dow of the assets, liabilities and obligations of DowDuPont and its subsidiaries (including its investments, property and employee benefits and tax-related assets and liabilities) and will govern the relationship among us, New DuPont and Dow subsequent to the completion of the separations and distributions. For additional information regarding the separation agreement and other transaction agreements, see the sections entitled “Risk Factors—Risks Related to the Separation” and “Our Relationship with New DuPont and Dow Following the Distribution.”

 

Do I have appraisal rights in connection with the separation and distribution?

DowDuPont stockholders are not entitled to appraisal rights in connection with the separation and distribution.

 

Who is the transfer agent and registrar for Corteva common stock?

Following the separation and distribution, Computershare will serve as transfer agent and registrar for Corteva common stock.

 

  Computershare currently serves as DowDuPont’s transfer agent and registrar. In addition, Computershare will serve as the distribution agent in the distribution and will assist DowDuPont in the distribution of Corteva common stock to DowDuPont stockholders.

 

Where can I get more information?

If you have any questions relating to the mechanics of the distribution, you should contact Computershare, as the distribution agent at:

 

1-833-388-2882 or 1-781-575-3120 (outside the U.S.)

Before the separation and distribution, if you have any questions relating to Corteva, you should contact Corteva at:

 

  Investor Relations

 

  1-302-774-1000


 

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Before the separation and distribution, if you have any questions relating to DowDuPont, you should contact DowDuPont at:

 

  Investor Relations

 

  1-302-774-4994 (for Institutional Holders)

 

  1-302-774-3034 (for Individual Holders)

 

  After the separation and distribution, if you have any questions relating to New DuPont, you should contact New DuPont at:

 

  Investor Relations

 

  1-302-774-4994 (for Institutional Holders)

 

  1-302-774-3034 (for Individual Holders)


 

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RISK FACTORS

You should carefully consider the following risks and other information in this information statement in evaluating us and Corteva common stock. The risk factors generally have been separated into three groups: risks related to our business, risks related to the separation and risks related to Corteva common stock.

Any of the following risks, as well as additional risks and uncertainties not currently known to us or that we currently deem immaterial, could materially and adversely affect our business, results of operations or financial condition. Our operations could be affected by various risks, many of which are beyond our control. Based on current information, we believe that the following identifies the most significant risks that could affect our business, results of operations or financial condition. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods. See the section entitled “Cautionary Statement Concerning Forward-Looking Statements” for more details.

Risks Related to Our Business

We participate in an industry that is highly competitive and has undergone consolidation, which could increase competitive pressures.

We currently face significant competition in the markets in which we operate. In most segments of the market, the number of products available to the grower is steadily increasing as new products are introduced. At the same time, certain products are coming off patent and are thus available to generic manufacturers for production and commercialization. Additionally, data analytic tools and web-based new direct purchase models offer increased transparency and comparability, which creates price pressures. We cannot predict the pricing or promotional actions of our competitors. Aggressive marketing or pricing by our competitors could adversely affect our business, results of operations and financial conditions. As a result, we anticipate that we will continue to face significant competitive challenges.

The successful development and commercialization of our pipeline products will be necessary for our growth.

We use advanced breeding technologies to produce hybrids and varieties with superior performance in farmers’ fields, and we use biotechnology to introduce traits that enhance specific characteristics of our crops. We also use advanced analytics, software tools, mobile communications and new planting and monitoring equipment to provide agronomic recommendations to growers. Additionally, we conduct research into biological and chemical products to protect farmers’ crops from pests and diseases and enhance plant productivity.

New product concepts may be abandoned for many reasons, including greater anticipated development costs, technical difficulties, lack of efficacy, regulatory obstacles or inability to market under regulatory frameworks, competition, inability to prove the original concept, lack of demand and the need to divert focus, from time to time, to other initiatives with perceived opportunities for better returns. The processes of active ingredient development or discovery, breeding, biotechnology trait discovery and development and trait integration are lengthy, and a very small percentage of the chemicals, genes and germplasm we test is selected for commercialization. Furthermore, the length of time and the risk associated with the breeding and biotech pipelines are interlinked because both are required as a package for commercial success in markets where biotech traits are approved for growers. In countries where biotech traits are not approved for widespread use, our seed sales depend on the quality of our germplasm.

Speed in discovering, developing, protecting and responding to new technologies, including new technology-based distribution channels that could facilitate our ability to engage with customers and end users, and bringing related products to market is a significant competitive advantage. Commercial success frequently depends on being the first company to the market, and many of our competitors are also making considerable investments in similar new biotechnology products, improved germplasm products, biological and chemical products and agronomic recommendation products.

 

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We may not be able to obtain or maintain the necessary regulatory approvals for some of our products, including our seed and crop protection products, which could restrict our ability to sell those products in some markets.

Regulatory and legislative requirements affect the development, manufacture and distribution of our products, including the testing and planting of seeds containing our biotechnology traits and the import of crops grown from those seeds, and non-compliance can harm our sales and profitability.

Seed products incorporating biotechnology derived traits and crop protection products must be extensively tested for safety, efficacy and environmental impact before they can be registered for production, use, sale or commercialization in a given market. In certain jurisdictions, we must periodically renew our approvals for both biotechnology and crop protection products, which typically require us to demonstrate compliance with then-current standards which generally are more stringent since the prior registration. The regulatory approvals process is lengthy, costly, complex and in some markets unpredictable, with requirements that can vary by product, technology, industry and country. The regulatory approvals process for products that incorporate novel modes of action or new technologies can be particularly unpredictable and uncertain due to the then-current state of regulatory guidelines and objectives, as well as governmental policy considerations and non-governmental organization and other stakeholder considerations.

Furthermore, the detection of biotechnology traits or chemical residues from a crop protection product not approved in the country in which we sell or cultivate our product, or in a country to which we import our product, may affect our ability to supply our products or export our products, or even result in crop destruction, product recalls or trade disruption, which could result in lawsuits and termination of licenses related to biotechnology traits and raw material supply agreements. Delays in obtaining regulatory approvals to import, including those related to the importation of crops grown from seeds containing certain traits or treated with specific chemicals, may influence the rate of adoption of new products in globally traded crops.

Additionally, the regulatory environment may be impacted by the activities of non-governmental organizations and special interest groups and stakeholder reaction to actual or perceived impacts of new and existing technology, products or processes on safety, health and the environment. Obtaining and maintaining regulatory approvals requires submitting a significant amount of information and data, which may require participation from technology providers. Regulatory standards and trial procedures are continuously changing. In addition, we have seen an increase in recent years in the number of lawsuits filed by those who identify themselves as public or environmental interest groups seeking to invalidate pesticide product registrations and/or challenge the way federal or state governmental entities apply the rules and regulations governing pesticide produce use. The pace of change together with the lack of regulatory harmony could result in unintended noncompliance. Responding to these changes and meeting existing and new requirements may involve significant costs or capital expenditures or require changes in business practice that could result in reduced profitability. The failure to receive necessary permits or approvals could have near- and long-term effects on our ability to produce and sell some current and future products.

Enforcing our intellectual property rights, or defending against intellectual property claims asserted by others, could adversely affect our business, results of operations and financial condition.

Intellectual property rights, including patents, plant variety protection, trade secrets, confidential information, trademarks, tradenames and other forms of trade dress, are important to our business. We endeavor to protect our intellectual property rights in jurisdictions in which our products are produced or used and in jurisdictions into which our products are imported. However, we may be unable to obtain protection for our intellectual property in key jurisdictions. Further, changes in government policies and regulations, including changes made in reaction to pressure from non-governmental organizations, or the public generally, could impact the extent of intellectual property protection afforded by such jurisdictions.

We have designed and implemented internal controls to restrict use of, access to and distribution of our intellectual property. Despite these precautions, our intellectual property is vulnerable to infringement,

 

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misappropriation and other unauthorized access, including through employee or licensee error or actions, theft and cybersecurity incidents, and other security breaches. When unauthorized access and use or counterfeit products are discovered, we report such situations to governmental authorities for investigation, as appropriate, and take measures to mitigate any potential impact. Protecting intellectual property related to biotechnology is particularly challenging because theft is difficult to detect and biotechnology can be self-replicating.

Competitors are increasingly challenging intellectual property positions and the outcomes can be highly uncertain. Third parties may claim our products violate their intellectual property rights. Defending such claims, even those without merit, could be time-consuming and expensive. In addition, any such claim could result in our having to enter into license agreements, develop non-infringing products or engage in litigation that could be costly. If challenges are resolved adversely, it could negatively impact our ability to obtain licenses on competitive terms, develop and commercialize new products and generate sales from existing products.

In addition, because of the rapid pace of technological change, the confidentiality of patent applications in some jurisdictions and/or the uncertainty in predicting the outcome of complex proceedings relating to ownership and the scope of patents relating to certain emerging technologies, competitors may be issued patents related to our business unexpectedly. These patents could reduce the value of our commercial or pipeline products or, to the extent they cover key technologies on which we have relied, require us to seek to obtain licenses (and we cannot ensure we would be able to obtain such a license on acceptable terms) or cease using the technology, no matter how valuable to our business.

Legislation and jurisprudence on patent protection is evolving and changes in laws could affect our ability to obtain or maintain patent protection for, and otherwise enforce our patents related to, our products.

Our business may be adversely affected by competition from manufacturers of generic products.

Competition from manufacturers of generic products is a challenge for our branded products around the world, and the loss or expiration of intellectual property rights can have a significant adverse effect on our revenues. The date at which generic competition commences may be different from the date that the patent or regulatory exclusivity expires. However, upon the loss or expiration of patent protection for one of our products or of a product that we license, or upon the “at-risk” launch (despite pending patent infringement litigation against the generic product) by a generic manufacturer of a generic version of one of our patented products or of a product that we license, we can lose a major portion of revenues for that product, which can adversely affect our business.

We are dependent on our relationships or contracts with third parties with respect to certain of our raw materials or licenses and commercialization.

We are dependent on third parties in the research, development and commercialization of our products and enter into transactions including, but not limited to, supply agreements and licensing agreements in connection with our business. The majority of our corn hybrids and soybean varieties sold to customers contain biotechnology traits that we license from third parties under long-term licenses. If we lose our rights under such licenses, it could negatively impact our ability to obtain future licenses on competitive terms, commercialize new products and generate sales from existing products. To maintain such licenses, we may elect to out-license our technology, including germplasm. There can be no guarantee that such out-licensing will not ultimately strengthen our competition thereby adversely impacting our results of operations.

While we rely heavily on third parties for multiple aspects of our business and commercialization activities, we do not control many aspects of such third parties’ activities. Third parties may not complete activities on schedule or in accordance with our expectations. Failure by one or more of these third parties to meet their contractual or other obligations to us or to comply with applicable laws or regulations, or any disruption in the relationship between us and one or more of these third parties could delay or prevent the development, approval

 

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or commercialization of our products and could also result in non-compliance or reputational harm, all with potential negative implications for our business.

In addition, our agreements with third parties may obligate us to meet certain contractual or other obligations to third parties. For example, we may be obligated to meet certain thresholds or abide by certain boundary conditions. If we were to fail to meet such obligations to the third parties, our relationship with such third parties may be disrupted. Such a disruption could negatively impact certain of our licenses on which we depend, could cause reputational harm, and could negatively affect our business, results of operations and financial condition.

The costs of complying with evolving regulatory requirements could negatively impact our business, results of operations and financial condition. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.

We are subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, waste water discharges, the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials and the use of genetically modified seeds and crop protection active ingredients by growers.

Environmental and health and safety laws, regulations and standards expose us to the risk of substantial costs and liabilities, including liabilities associated with our business and the discontinued and divested businesses and operations of Historical DuPont. As is typical for businesses such as ours, soil and groundwater contamination has occurred in the past at certain sites, and may be identified at other sites in the future. Disposal of waste from our business at off-site locations also exposes us to potential remediation costs. Consistent with past practice, we are continuing to monitor, investigate and remediate soil and groundwater contamination at several of these sites.

Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt our operations, or require modifications to our facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities, which may be materially higher than our accruals.

The degree of public understanding and acceptance or perceived public acceptance of our biotechnology and other agricultural products and technologies can affect our sales and results of operations by affecting planting approvals, regulatory requirements and customer purchase decisions.

Concerns and claims regarding the safe use of seeds with biotechnology traits and crop protection products in general, their potential impact on health and the environment, and the perceived impacts of biotechnology on health and the environment, reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These include concerns and claims that increased use of crop protection products, drift, inversion, volatilization and the use of biotechnology traits meant to reduce the resistance of weeds or pests to control by crop protection products, could increase or accelerate such resistance and otherwise negatively impact health and the environment. These and other concerns could manifest themselves in stockholder proposals, preferred purchasing, delays or failures in obtaining or retaining regulatory approvals, delayed product launches, lack of market acceptance, product discontinuation, continued pressure for and adoption of more stringent regulatory intervention and litigation, termination of raw material supply agreements and legal claims. These and other concerns could also influence public perceptions, the viability or continued sales of certain of our products, our reputation and the cost to comply with regulations. As a result, such concerns could adversely affect our business, results of operations, financial condition and cash flows.

 

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Changes in agricultural and related policies of governments and international organizations may prove unfavorable.

In many markets there are various pressures to reduce government subsidies to farmers, which may inhibit the growth in these markets of products used in agriculture. In addition, government programs that create incentives for farmers (for example, the U.S. Renewable Fuel Standard) may be modified or discontinued. However, it is difficult to predict accurately whether, and if so when, such changes will occur. We expect that the policies of governments and international organizations will continue to affect the planting choices made by growers as well as the income available to growers to purchase products used in agriculture and, accordingly, the operating results of the agriculture industry.

Our business, results of operations and financial condition could be adversely affected by disruptions to our supply chain, information technology or network systems.

Business and/or supply chain disruptions, plant and/or power outages and information technology system and/or network disruptions, regardless of cause including acts of sabotage, employee error or other actions, geo-political activity, weather events and natural disasters could seriously harm our operations as well as the operations of our customers and suppliers. For example, a pandemic in locations where we have significant operations or sales could have a material adverse effect on our results of operations. In addition, terrorist attacks and natural disasters have increased stakeholder concerns about the security and safety of chemical production and distribution.

Business and/or supply chain disruptions may also be caused by security breaches, which could include, for example, attacks on information technology and infrastructure by hackers, viruses, breaches due to employee error or actions or other disruptions. We and/or our suppliers may fail to effectively prevent, detect and recover from these or other security breaches and, as a consequence, such breaches could result in misuse of our assets, business disruptions, loss of property including trade secrets and confidential business information, legal claims or proceedings, reporting errors, processing inefficiencies, negative media attention, loss of sales and interference with regulatory compliance.

Like most major corporations, we are the target of industrial espionage, including cyber-attacks, from time to time. We have determined that these attacks have resulted, and could result in the future, in unauthorized parties gaining access to at least certain confidential business information. However, to date, we have not experienced any material financial impact, changes in the competitive environment or impact on business operations that we attribute to these attacks. Although management does not believe that we have experienced any material losses to date related to security breaches, including cybersecurity incidents, there can be no assurance that we will not suffer such losses in the future.

We actively manage the risks within our control that could lead to business disruptions and security breaches. As these threats continue to evolve, particularly around cybersecurity, we may be required to expend significant resources to enhance our control environment, processes, practices and other protective measures. Despite these efforts, such events could have a material adverse effect on our business, financial condition or results of operations.

Our sales to our customers may be adversely affected should a company successfully establish an intermediary platform for the sale of our products or otherwise position itself between us and our customers.

We expect our distribution model will service customers primarily through the DuPont Pioneer direct sales channel in key agricultural geographies, including the United States. In addition, we expect to supplement this approach with strong retail channels, including distributors, agricultural cooperatives and dealers, and with digital solutions that assist farmer decision-making with a view to optimize their product selection and maximize their yield and profitability. While we expect the indirect channels and our digital platform will extend our reach

 

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and increase exposure of our products to other potential customers, including smaller farmers or farmers in less concentrated areas, there can be no assurance that we will be successful in this regard. If a competitor were to successfully establish an intermediary platform for distribution of our products, especially with respect to our digital platform, it may disrupt our distribution model and inhibit our ability to provide a complete go-to-market strategy covering the direct, dealer and retail channels. In such a circumstance, our sales may be adversely affected.

Volatility in our input costs, which include raw materials and production costs, could have a significant impact on our business, results of operations and financial condition.

Our input costs are variable based on the costs associated with production or with raw materials we use. For example, our production costs vary, especially on a seasonal basis where changes in weather influence supply and demand. In addition, our manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand as well as other factors beyond our control. We refer to these costs collectively as input costs. Significant variations in input costs affect our operating results from period to period.

When possible, we purchase raw materials through negotiated long-term contracts to minimize the impact of price fluctuations. We also enter into over-the-counter and exchange traded derivative commodity instruments to hedge our exposure to price fluctuations on certain raw material purchases. In addition, we take actions to offset the effects of higher input costs through selling price increases, productivity improvements and cost reduction programs. Success in offsetting higher raw material costs with price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the market served. If we are not able to fully offset the effects of higher input costs, it could have a significant impact on our financial results.

We may be unable to achieve all the benefits that we expect to achieve from the Internal Reorganization. Combining the agriculture businesses of Historical DuPont and Historical Dow may be more difficult, costly or time-consuming than expected, which may adversely affect our results and negatively affect the value of Corteva common stock.

Since the Merger, we have benefitted from and expect to continue to benefit from significant cost synergies through the DowDuPont Cost Synergy Program (the “Synergy Program”) which is designed to integrate and optimize the organization in preparation for the separation of DowDuPont’s materials science business through the separation and distribution of Dow (which occurred on April 1, 2019) and the intended separation of DowDuPont’s agriculture business through our separation and distribution. This integration and optimization is designed to be achieved through production cost efficiencies, enhancement of the agricultural supply chain, elimination of duplicative agricultural research and development programs, optimization of our global footprint across manufacturing, sales and research and development, the reduction of corporate and leveraged services costs, and the realization of significant procurement synergies. In addition, our management also expects we will achieve growth synergies and other meaningful savings and benefits as a result of our separation and distribution.

Combining Historical DuPont and Historical Dow’s independent agriculture businesses and preparing for our separation and distribution are complex, costly and time-consuming processes and management may face significant challenges in implementing or realizing the currently expected synergies from our separation and distribution, many of which may be beyond the control of management, including, without limitation:

 

   

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;

 

   

the possibility of faulty assumptions underlying expectations regarding the integration or separation process, including with respect to the intended tax efficient transactions;

 

   

unanticipated issues in integrating, replicating or separating information technology, communications programs, financial procedures and operations, and other systems, procedures and policies;

 

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addressing differences in business culture and retaining key personnel;

 

   

unanticipated changes in applicable laws and regulations;

 

   

managing tax costs or inefficiencies associated with integrating the operations of the combined agriculture company and the intended tax efficient separation transactions;

 

   

coordinating geographically separate organizations;

 

   

failing to successfully optimize our facilities footprint;

 

   

failing to take advantage of our global supply chain;

 

   

failing to identify and eliminate duplicative programs; and

 

   

failing to otherwise integrate Historical DuPont’s or Historical Dow’s respective agriculture businesses, including their technology platforms.

Some of these factors will be outside of our control and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue which could materially impact our business, financial condition and results of operations.

If the anticipated benefits and cost savings from the Synergy Program are not realized fully or take longer to realize than expected, the value of our common stock, our revenues, levels of expenses and results of operations may be affected adversely. There can be no assurance that we, as an independent, separate public company, will be able to sustain any or all the cost savings generated from actions under the Synergy Program.

Our liquidity, business, results of operations and financial condition could be impaired if we are unable to raise capital through the capital markets or short-term debt borrowings.

Any limitation on our ability to raise money in the capital markets or through short-term debt borrowings could have a substantial negative effect on our liquidity. Our ability to affordably access the capital markets and/or borrow short-term debt in amounts adequate to finance our activities could be impaired as a result of a variety of factors, including factors that are not specific to us, such as a severe disruption of the financial markets and, in the case of debt securities or borrowings, interest rate fluctuations. Due to the seasonality of our business and the credit programs we may offer our customers, net working capital investment and corresponding debt levels will fluctuate over the course of the year.

We regularly extend credit to our customers to enable them to purchase seeds or crop protection products at the beginning of the growing season. The customer receivables may be used as collateral for short-term financing programs. Any material adverse effect upon our ability to own or sell such customer receivables, including seasonal factors that may impact the amount of customer receivables we own, may materially impact our access to capital.

We have additional agreements with financial institutions to establish programs that provide financing for select customers of our seed and crop protection products in the United States, Latin America, Europe and Asia. The programs are renewed on an annual basis. In most cases, Historical DuPont or the agriculture business of Historical Dow guarantees the extension of such credit to such customers. If we are unable to renew these agreements or access the debt markets to support customer financing our sales may be negatively impacted, which could result in increased borrowing needs to fund working capital.

Our earnings, operations and business, among other things, will impact our credit ratings, costs and availability of financing. A decrease in the ratings assigned to us by the ratings agencies may negatively impact our access to the debt capital markets and increase our cost of borrowing and the financing of our seasonal working capital.

 

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There can be no assurance that we will maintain our current or prospective credit ratings. Any actual or anticipated changes or downgrades in such credit ratings may have a negative impact on our liquidity, capital position or access to capital markets.

Our customers may be unable to pay their debts to us.

We offer our customers financing programs with credit terms generally less than one year from invoicing in alignment with the growing season. Due to these credit practices as well as the seasonality of our operations, we may need to issue short-term debt at certain times of the year to fund our cash flow requirements. Our customers may be exposed to a variety of conditions that could adversely affect their ability to pay their debts. For example, customers in economies experiencing an economic downturn or in a region experiencing adverse growing conditions may be unable to repay their obligations to us, which could adversely affect our results.

Increases in pension and other post-employment benefit plan funding obligations may impair our liquidity or financial condition.

Through our ownership of EID and other members of Historical DuPont, we maintain certain Historical DuPont defined benefit pension and other post-employment benefit plans. For some of these plans, including Historical DuPont’s principal U.S. pension plan, we will continue as sponsor for the entire plan regardless of whether participants, including retirees, are or were associated with Historical DuPont’s agriculture business. We use many assumptions in calculating our expected future payment obligations under these plans. Significant adverse changes in credit or market conditions could result in actual rates of returns on pension investments being lower than assumed. In addition, expected future payment obligations may be adversely impacted by changes in assumptions regarding participants, including retirees. We may be required to make significant contributions to our pension plans in the future, which could adversely affect our results of operations, liquidity and financial condition.

Our business, results of operations and financial condition could be adversely affected by environmental, litigation and other commitments and contingencies.

As a result of our operations, including past operations and those related to divested businesses and discontinued operations of Historical DuPont, we incur environmental operating costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring and obtaining permits. We also incur environmental operating costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials. In addition, we maintain and periodically review and adjust our accruals for probable environmental remediation and restoration costs.

We expect to continue to incur environmental operating costs since we will operate global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations. These rules are subject to change by the implementing governmental agency, which we monitor closely. Our policy will require that our operations fully meet or exceed legal and regulatory requirements. In addition, we expect to continue certain voluntary programs, and could consider additional voluntary actions, to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the generation of persistent, bioaccumulative and toxic materials. Costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, are significant and we expect these costs will continue to be significant for the foreseeable future. Over the long term, such expenditures are subject to considerable uncertainty and could fluctuate significantly.

We accrue for environmental matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. As remediation activities vary substantially in duration and cost from site to site, it is

 

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difficult to develop precise estimates of future site remediation costs. We expect to base such estimates on several factors, including the complexity of the geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (“PRPs”) at multi-party sites and the number of, and financial viability of, other PRPs. Considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances, the potential liability may be materially higher than our accruals.

We face risks arising from various unasserted and asserted litigation matters arising out of the normal course of our current and former business operations, including intellectual property, commercial, product liability, environmental and antitrust lawsuits. We have noted a trend in public and private suits being filed on behalf of states, counties, cities and utilities alleging harm to the general public and the environment, including waterways and watersheds. It is not possible to predict the outcome of these various proceedings. An adverse outcome in any one or more of these matters could be material to our financial results. Various factors or developments can lead to changes in current estimates of liabilities. Such factors and developments may include, but are not limited to, additional data, safety or risk assessments, as well as a final adverse judgment, significant settlement or changes in applicable law. A future adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on us.

In the ordinary course of business, we may make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third party obligations. If we were required to make payments as a result, they could exceed the amounts accrued, thereby adversely affecting our results of operations.

Our operations outside the United States are subject to risks and restrictions, which could negatively affect our business, results of operations and financial condition.

Our operations outside the United States are subject to risks and restrictions, including fluctuations in foreign-currency exchange rates; exchange control regulations; changes in local political or economic conditions; import and trade restrictions; import or export licensing requirements and trade policy; and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad. Although we have operations throughout the world, pro forma sales outside the United States in 2018 were principally to customers in Eurozone countries, Brazil and Canada. Further, our largest currency exposures are the European euro and the Brazilian real. Market uncertainty or an economic downturn in these geographic areas could reduce demand for our products and result in decreased sales volume, which could have a negative impact on our results of operations. In addition, changes in exchange rates may affect our results of operations, financial condition and cash flows in future periods. We actively manage currency exposures that are associated with net monetary asset positions, committed currency purchases and sales, foreign currency-denominated revenues and other assets and liabilities created in the normal course of business.

Additionally, our ability to export our products and our sales outside the United States may be adversely affected by significant changes in trade, tax or other policies, including the risk that other countries may retaliate through the imposition of their own trade restrictions and/or increased tariffs in response to substantial changes to U.S. trade and tax policies.

Climate change and unpredictable seasonal and weather factors could impact our sales and earnings.

The agriculture industry is subject to seasonal and weather factors, which can vary unpredictably from period to period. Weather factors can affect the presence of disease and pests on a regional basis and, accordingly, can positively or adversely affect the demand for crop protection products, including the mix of products used. The weather also can affect the quality, volume and cost of seed produced for sale as well as demand and product mix. Seed yields can be higher or lower than planned, which could lead to higher inventory and related write-offs. Climate change may increase the frequency or intensity of extreme weather such as storms, floods, heat

 

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waves, droughts and other events that could affect the quality, volume and cost of seed produced for sale as well as demand and product mix. Climate change may also affect the availability and suitability of arable land and contribute to unpredictable shifts in the average growing season and types of crops produced.

Our business may be adversely affected by the availability of counterfeit products.

A counterfeit product is one that has been deliberately and fraudulently mislabeled as to its identity and source. A counterfeit Corteva product, therefore, is one manufactured by someone other than us, but which appears to be the same as an authentic Corteva product. The prevalence of counterfeit products is a significant and growing industry-wide issue due to a variety of factors, including, but not limited to, the following: the widespread use of the Internet, which has greatly facilitated the ease by which counterfeit products can be advertised, purchased and delivered to individual consumers; the availability of sophisticated technology that makes it easier for counterfeiters to make counterfeit products; and the relatively modest risk of penalties faced by counterfeiters compared to the large profits that can be earned by them from the sale of counterfeit products. Further, laws against counterfeiting vary greatly from country to country, and the enforcement of existing laws varies greatly from jurisdiction to jurisdiction. For example, in some countries, counterfeiting is not a crime; in others, it may result in only minimal sanctions. In addition, those involved in the distribution of counterfeit products use complex transport routes to evade customs controls by disguising the true source of their products.

Our global reputation makes our products prime targets for counterfeiting organizations. Counterfeit products pose a risk to consumer health and safety because of the conditions under which they are manufactured (often in unregulated, unlicensed, uninspected and unsanitary sites) as well as the lack of regulation of their contents. Failure to mitigate the threat of counterfeit products, which is exacerbated by the complexity of the supply chain, could adversely impact our business by, among other things, causing the loss of consumer confidence in our name and in the integrity of our products, potentially resulting in lost sales and an increased threat of litigation.

We undertake significant efforts to counteract the threats associated with counterfeit products, including, among other things, working with regulatory authorities and multinational coalitions to combat the counterfeiting of products and supporting efforts by law enforcement authorities to prosecute counterfeiters; assessing new and existing technologies to seek to make it more difficult for counterfeiters to copy our products and easier for consumers to distinguish authentic from counterfeit products; working diligently to raise public awareness about the dangers of counterfeit products; working collaboratively with wholesalers, customs offices and law enforcement agencies to increase inspection coverage, monitor distribution channels and improve surveillance of distributors; and working with other members of an international trade association of agrochemical companies to promote initiatives to combat counterfeiting activity. No assurance can be given, however, that our efforts and the efforts of others will be entirely successful, and the presence of counterfeit products may continue to increase.

Failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions could adversely impact our future results.

From time to time we evaluate acquisition candidates that may strategically fit our business and/or growth objectives. If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on our financial results. We continually review our portfolio of assets for contributions to our objectives and alignment with our growth strategy. However, we may not be successful in separating underperforming or non-strategic assets and gains or losses on the divestiture of, or lost operating income from, such assets may affect our earnings. Moreover, we might incur asset impairment charges related to acquisitions or divestitures that reduce our earnings. In addition, if the execution or implementation of acquisitions, divestitures, alliances, joint ventures and other portfolio actions is not successful, it could adversely impact our financial condition, cash flows and results of operations.

 

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An impairment of goodwill or intangible assets could require us to record a significant non-cash charge and negatively impact our financial results.

We assess both goodwill and indefinite-lived intangible assets for impairment on an annual basis, or more frequently if conditions indicate that an impairment may have occurred. An impairment is recorded when the carrying value of a reporting unit exceeds its fair value. As a result of the Merger, the carrying value of Historical DuPont net assets was adjusted from historical cost to fair value, therefore increasing the risk of impairments. Future impairments of goodwill or intangible assets could be recorded as a non-cash charge in results of operations due to changes in assumption, estimates or circumstances and there can be no assurance that such impairments would be immaterial to us. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates of Historical DuPont” for a discussion of the impairment charge recorded for Historical DuPont during the year ended December 31, 2018.

Risks Related to the Separation

We may be unable to achieve some or all of the benefits that we expect to achieve from our separation from DowDuPont.

We believe that, as an independent, publicly traded company, we will be better positioned to, among other things, focus our financial and operational resources on our specific business, growth profile and strategic priorities, design and implement corporate strategies and policies targeted to our operational focus and strategic priorities, guide our processes and infrastructure to focus on our core strengths, implement and maintain a capital structure designed to meet our specific needs and more effectively respond to industry dynamics. However, we may be unable to achieve some or all of these benefits. For example, to position ourselves for the separation, we are undertaking a series of strategic, structural, process and system realignment and restructuring actions within our operations. These actions may not provide the benefits we currently expect, and could lead to disruption of our operations, loss of, or inability to recruit, key personnel needed to operate and grow our businesses following the separation, weakening of our system of internal controls or procedures and impairment of our key customer and supplier relationships. In addition, completion of the separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing our businesses. If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be materially and adversely affected.

If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax and indemnification liability and stockholders receiving Corteva common stock in the distribution could be subject to significant tax liability.

It is a condition to the distribution that DowDuPont receives the Tax Opinion from Skadden, in form and substance acceptable to DowDuPont, substantially to the effect that, among other things, the distribution and certain related transactions will qualify as a tax-free transaction under Section 355 and Section 368(a)(1)(D) of the Code. The Tax Opinion will rely on certain facts, assumptions, and undertakings, and certain representations from DowDuPont and us, regarding the past and future conduct of both respective businesses and other matters, including those discussed in the risk factor immediately below, as well as the IRS Ruling (as described below). Notwithstanding the Tax Opinion and the IRS Ruling, the IRS could determine on audit that the distribution or certain related transactions should be treated as a taxable transaction if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions of the Tax Opinion.

If the distribution ultimately is determined to be taxable, then a stockholder of DowDuPont that received shares of Corteva common stock in the distribution would be treated as having received a distribution of property in an amount equal to the fair market value of such shares (including any fractional shares sold on behalf of such

 

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stockholder) on the distribution date and could incur significant income tax liabilities. Such distribution would be taxable to such stockholder as a dividend to the extent of DowDuPont’s current and accumulated earnings and profits, which would include any earnings and profits attributable to the gain recognized by DowDuPont on the taxable distribution and could include earnings and profits attributable to certain internal transactions preceding the distribution. Any amount that exceeded DowDuPont’s earnings and profits would be treated first as a non-taxable return of capital to the extent of such stockholder’s tax basis in its shares of DowDuPont stock with any remaining amount being taxed as a gain on the DowDuPont stock. In the event the distribution is ultimately determined to be taxable, DowDuPont would recognize corporate level taxable gain on the distribution in an amount equal to the excess, if any, of the fair market value of Corteva common stock distributed to DowDuPont stockholders on the distribution date over DowDuPont’s tax basis in such stock. In addition, if certain related transactions fail to qualify for tax-free treatment under U.S. federal, state, local tax and/or foreign tax law, we and DowDuPont could incur significant tax liabilities under U.S. federal, state, local and/or foreign tax law. For a more detailed discussion, see the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.”

Generally, taxes resulting from the failure of the separation and distribution to qualify for non-recognition treatment for U.S. federal income tax purposes would be imposed on DowDuPont or DowDuPont stockholders. Under the tax matters agreement that we entered into with DowDuPont and Dow, subject to the exceptions described below, we are generally obligated to indemnify DowDuPont against such taxes imposed on DowDuPont. However, if the distribution fails to qualify for non-recognition treatment for U.S. federal income tax purposes for certain reasons relating to the overall structure of the Merger and the distribution, then under the tax matters agreement, DowDuPont and Dow would share the tax liability resulting from such failure in accordance with their relative equity values on the first full trading day following the distribution of Dow. We and New DuPont will share any liabilities of DowDuPont described in the preceding sentence in accordance with our relative equity values on the first full trading day following the distribution of Corteva. Furthermore, under the terms of the tax matters agreement, we also generally will be responsible for any taxes imposed on New DuPont or Dow that arise from the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of Section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to our, or our affiliates’, stock, assets or business, or any breach of our representations made in any representation letter provided to Skadden in connection with the Tax Opinion. New DuPont and Dow will be separately responsible for any taxes imposed on Corteva that arise from the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of Section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to such company’s or its affiliates’ stock, assets or business, or any breach of such company’s representations made in connection with the IRS Ruling or in the representation letter provided to counsel in connection with the Tax Opinion. Events triggering an indemnification obligation under the tax matters agreement include events occurring after the distribution that cause DowDuPont to recognize a gain under Section 355(e) of the Code, as discussed further below. Such tax amounts could be significant. To the extent that we are responsible for any liability under the tax matters agreement, there could be a material adverse impact on our business, financial condition, results of operations and cash flows in future reporting periods. For a more detailed discussion, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Tax Matters Agreement.”

The IRS may assert that the Merger causes the distributions and other related transactions to be taxable to DowDuPont, in which case we could be subject to significant indemnification liability.

Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, DowDuPont may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of the Merger or other transactions considered part of a plan with the distribution, there is a 50 percent or greater change of ownership in DowDuPont or us. In

 

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connection with the Merger, DowDuPont sought and received a private letter ruling from the IRS regarding the proper time, manner and methodology for measuring common ownership in the stock of DowDuPont, Historical DuPont and Historical Dow for purposes of determining whether there has been a 50 percent or greater change of ownership under Section 355(e) of the Code as a result of the Merger (the “IRS Ruling”). The Tax Opinion will rely on the continued validity of the IRS Ruling, as well as certain factual representations from DowDuPont as to the extent of common ownership in the stock of Historical DuPont and Historical Dow immediately prior to the Merger. In addition, it is a condition to the distribution that the IRS has not revoked the IRS Ruling. Based on the representations made by DowDuPont as to the common ownership in the stock of Historical DuPont and Historical Dow immediately prior to the Merger and assuming the continued validity of the IRS Ruling, the Tax Opinion will conclude that there was not a 50 percent or greater change of ownership in DowDuPont, Historical DuPont or Historical Dow for purposes of Section 355(e) as a result of the Merger. Notwithstanding the Tax Opinion and the IRS Ruling, the IRS could determine that the distribution or a related transaction should nevertheless be treated as a taxable transaction to DowDuPont if it determines that any of the facts, assumptions, representations or undertakings of DowDuPont is not correct or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions in the Tax Opinion that are not covered by the IRS Ruling. If DowDuPont is required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code, then under the tax matters agreement, we may be required to indemnify New DuPont and/or Dow for all or a portion of such taxes, which could be a significant amount, if such taxes were the result of either direct or indirect transfers of Corteva common stock or certain reasons relating to the overall structure of the Merger and the distribution. For a more detailed description, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Tax Matters Agreement.”

We will be subject to continuing contingent tax-related liabilities of DowDuPont following the distribution.

After the distribution, there will be several significant areas where the liabilities of DowDuPont may become our obligations either in whole or in part. For example, under the Code and the related rules and regulations, each corporation that was a member of DowDuPont’s consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the distribution is jointly and severally liable for the U.S. federal income tax liability of the entire consolidated tax reporting group for such taxable period. Additionally, to the extent that any subsidiary of ours was included in the consolidated tax reporting group of either Historical DuPont or Historical Dow for any taxable period or portion of any taxable period ending on or before the effective date of the Merger, such subsidiary is jointly and severally liable for the U.S. federal income tax liability of the entire consolidated tax reporting group of Historical DuPont or Historical Dow, as applicable, for such taxable period. In connection with the distribution, and the distribution of Dow on April 1, 2019, we entered into a tax matters agreement with DowDuPont and Dow that allocates the responsibility for prior period consolidated taxes among Corteva, New DuPont and Dow. In connection with the distribution of Corteva, the parties intend to enter into an amendment to the tax matters agreement in order to allocate certain rights and obligations of DowDuPont between us and New DuPont. For a more detailed description, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Tax Matters Agreement.” If New DuPont or Dow were unable to pay any prior period taxes for which it is responsible, however, we could be required to pay the entire amount of such taxes, and such amounts could be significant. Other provisions of federal, state, local, or foreign law may establish similar liability for other matters, including laws governing tax-qualified pension plans, as well as other contingent liabilities.

We will agree to numerous restrictions to preserve the tax-free treatment of the transactions in the United States, which may reduce our strategic and operating flexibility.

Our ability to engage in certain transactions could be limited or restricted after the distribution to preserve, for U.S. federal income tax purposes, the tax-free nature of the distribution by DowDuPont, and certain aspects of the Internal Reorganization and Business Realignment. As discussed above, even if the distribution otherwise qualifies for tax-free treatment under Section 355 of the Code, the distribution may result in corporate-level taxable gain to DowDuPont under Section 355(e) of the Code if a transaction results in a change of ownership of

 

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50 percent or greater in us as part of a plan or series of related transactions that includes the distribution. The process for determining whether an acquisition or issuance triggering these provisions has occurred, the extent to which any such acquisition or issuance results in a change of ownership and the cumulative effect of any such acquisition or issuance together with any prior acquisitions or issuances (including the Merger) is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. Any acquisitions or issuances of Corteva common stock within a two-year period after the distribution generally are presumed to be part of such a plan that includes the distribution, although such presumption may be rebutted. As a result of these limitations, under the tax matters agreement that we entered into with DowDuPont and Dow, for the two-year period following the distribution, we are prohibited, except in certain circumstances, from, among other things:

 

   

entering into any transaction resulting in acquisitions of a certain percentage of our assets, whether by merger or otherwise;

 

   

dissolving, merging, consolidating or liquidating;

 

   

undertaking or permitting any transaction relating to Corteva stock, including issuances, redemptions or repurchases other than certain, limited, permitted issuances and repurchases;

 

   

affecting the relative voting rights of Corteva stock, whether by amending Corteva Parent’s certificate of incorporation or otherwise; or

 

   

ceasing to actively conduct our business.

These restrictions may significantly limit our ability to pursue certain strategic transactions or other transactions that we may believe to otherwise be in the best interests of our stockholders or that might increase the value of our business.

Following the separation and distribution we will need to provide or arrange for certain services to be provided that are currently provided by DowDuPont and/or Historical Dow.

Following the separation and distribution, we will need to provide internally or obtain from unaffiliated third parties certain services we currently receive from DowDuPont and/or Historical Dow. These services include certain information technology, research and development, finance, legal, insurance, compliance and human resources activities, the effective and appropriate performance of which is critical to our operations. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we currently receive from DowDuPont and/or Historical Dow. In particular, information technology networks and systems are complex and duplicating these networks and systems will be challenging. Because certain portions of our business previously received these services from DowDuPont and/or Historical Dow, we may be unable to successfully establish the infrastructure or implement the changes necessary to effectively perform these activities within the context of our consolidated business, or we may incur additional costs in doing so that could adversely affect our business. For example, following the separation and distribution, we will consist of three heritage organizations (DuPont Pioneer, Dow AgroSciences and DuPont Crop Protection) that will continue to operate on three different enterprise resource planning (“ERP”) systems, and we will incur incremental costs to operate the three ERP systems, as compared to what was historically allocated to the DowDuPont Agriculture Division (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”). In addition, if New DuPont and/or Dow do not continue to perform effectively the transition services and the other services that are called for under the services and other related agreements entered into in connection with the separation, we may not be able to operate our business effectively and our profitability may decline. If we fail to obtain the quality of administrative services necessary to operate effectively or incur greater costs in obtaining these services, our profitability, financial condition and results of operations may be materially and adversely affected.

 

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Neither Historical DuPont’s financial information nor our unaudited pro forma combined financial information are necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.

The financial information of Historical DuPont and the unaudited pro forma financial information included herein may not reflect what our financial condition, results of operations and cash flows would have been had we been an independent, publicly traded company comprised solely of DowDuPont’s agriculture business during the periods presented or what our financial condition, results of operations and cash flows will be in the future when we are an independent company. This is primarily because:

 

   

The historical financial information of Historical DuPont reflects Historical DuPont and does not reflect the changes that we expect to experience in connection with the separation, including the distribution of Historical DuPont’s businesses aligned with DowDuPont’s non-agriculture businesses.

 

   

Prior to the separation, our business was operated under the corporate umbrella of DowDuPont. As part of the DowDuPont corporate organization, our business was principally operated by Historical DuPont, with certain portions of our business being operated by Historical Dow as part of its internal corporate organization, rather than our being operated as part of a consolidated agriculture business.

 

   

The historical financial information of Historical DuPont and Dow AgroSciences reflects only corporate expenses of Historical DuPont and allocated corporate expenses from Historical Dow, and thus is not necessarily representative of the costs we will incur for similar services as an independent company following the separation and distribution.

 

   

Our business has historically principally satisfied our working capital requirements and obtained capital for our general corporate purposes, including acquisitions and capital expenditures, as part of Historical DuPont’s company-wide cash management practices, with certain portions of our business having satisfied such requirements through the practices of Historical Dow. Although these practices have historically generated sufficient cash to finance the working capital and other cash requirements of our business, following the separation and distribution, we will no longer have access to Historical Dow’s cash pools nor will our cash generating revenue streams mirror those of Historical DuPont and/or Historical Dow. We may therefore need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities or other arrangements.

 

   

Traditionally, our business has been operated under the umbrella of DowDuPont’s corporate organization, with portions of our businesses being integrated with the businesses of Historical DuPont and Historical Dow. This integration has historically permitted our business (or portions thereof) to enjoy economies of scope and scale in costs, employees, vendor relationships and customer relationships, both as part of the DowDuPont organization and within the Historical DuPont and Historical Dow internal corporate structures. Although we expect to enter into short-term transition agreements that will govern certain commercial and other relationships among us, New DuPont and Dow after the separation, those temporary arrangements may not capture the benefits our businesses have enjoyed in the past as a result of this integration. The loss of these benefits could have an adverse effect on our business, results of operations and financial condition following the completion of the separation.

 

   

We have entered and will enter into transactions with New DuPont and Dow that did not exist prior to the separation. See the section entitled “Our Relationship with New DuPont and Dow Following the Distribution” for information regarding these transactions.

 

   

Other significant changes may occur in our cost structure, management, financing and business operations as a result of the separation and distribution and our operating as a company separate from DowDuPont.

In addition, the unaudited pro forma financial information included in this information statement is based on the best information available, which in part includes a number of estimates and assumptions. These estimates and assumptions may prove to be inaccurate, and accordingly, our unaudited pro forma financial information should

 

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not be assumed to be indicative of what our financial condition or results of operations actually would have been as a standalone company during the time periods presented nor to be a reliable indicator of what our financial condition or results of operations actually may be in the future.

For additional information about the unaudited pro forma financial statements, Historical DuPont’s past financial performance and the basis of presentation of Historical DuPont’s financial statements, see the sections entitled “Unaudited Pro Forma Combined Financial Statements,” “Selected Historical Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Following the separation and distribution, we may not enjoy the same benefits of diversity, leverage and market reputation that we enjoyed as a part of DowDuPont.

Following the separation and distribution, we will hold DowDuPont’s agriculture business, while our business (or portions thereof) has historically benefited from DowDuPont’s (and, prior to the Merger, Historical DuPont’s and Historical Dow’s) operating diversity and purchasing power as well as opportunities to pursue integrated strategies with DowDuPont’s (and, prior to the Merger, Historical DuPont’s and Historical Dow’s) other businesses, including those businesses that form part of DowDuPont’s materials science and specialty products businesses that will be allocated to Dow and New DuPont, respectively, in connection with the separation. Following the separation and distribution, we will not have similar diversity or integration opportunities and may not have similar purchasing power or access to the capital markets.

Additionally, following the separation and distribution, we may become more susceptible to market fluctuations and other adverse events than if we had remained part of the current DowDuPont organizational structure. As part of DowDuPont (and, prior to the Merger, as part of Historical DuPont and Historical Dow, as applicable), our business has been able to leverage the DowDuPont, Historical DuPont and Historical Dow historical market reputation and performance as well as those businesses’ brand identities, which has allowed us to, among other things, recruit and retain key personnel to run our business. Following the separation and distribution, we may not enjoy the same historical market reputation as DowDuPont or Historical DuPont nor the same performance or brand identity, which may make it more difficult for us to recruit or retain such key personnel.

We will retain significant indebtedness in connection with the separation and distribution, and the degree to which we will be leveraged following completion of the distribution may materially and adversely affect our business, financial condition and results of operations.

We will retain significant indebtedness in connection with the separation and distribution. Historical DuPont has historically satisfied its indebtedness obligations as well as its short-term working capital requirements and financial support functions through the earnings, assets and cash flows generated by Historical DuPont’s operations. Following the separation and distribution, however, we will not be able to rely on any of the earnings, assets or cash flows that are attributable to Historical DuPont’s materials science and specialty products businesses, which have been transferred from Historical DuPont to Dow and either have or will be transferred to the legal entities that will comprise New DuPont after the distribution of Corteva common stock, respectively, in connection with the Internal Reorganization and Business Realignment.

Our ability to make payments on and to refinance our indebtedness, to obtain and maintain sufficient working capital, and to meet any dividend obligations will depend exclusively on our ability to generate cash in the future from our own operations, financings or asset sales following the separation and distribution. Our ability to generate cash is further subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes due, we may be forced to take disadvantageous actions, including reducing spending on marketing, retail trade incentives, advertising and new product innovation, reducing financing in the future for working capital, capital expenditures and general corporate purposes, selling assets or dedicating an

 

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unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in our industry could be impaired. The lenders who hold our debt could also accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt.

Restrictions under the intellectual property cross-license agreements will limit our ability to develop and commercialize certain products and services and/or prosecute, maintain and enforce certain intellectual property.

We will be dependent to a certain extent on New DuPont and Dow to maintain and enforce certain of the intellectual property licensed under the intellectual property cross-license agreements. For example, New DuPont and Dow will be responsible for filing, prosecuting and maintaining (at their respective discretion) patents on trade secrets and know-how that New DuPont and Dow, respectively, license to us. New DuPont or Dow, as applicable, will also have the first right to enforce their respective trade secrets and know-how licensed to us. If New DuPont or Dow, as applicable, fails to fulfill its obligations or chooses to not enforce the licensed patents, trade secrets or know-how under the intellectual property cross-license agreements, we may not be able to prevent competitors from making, using and selling competitive products and services.

In addition, our use of the intellectual property licensed to us under the intellectual property cross-license agreements is restricted to certain fields, which could limit our ability to develop and commercialize certain products and services. For example, the licenses granted to us under the agreement will not extend to all fields of use that we may in the future decide to enter into. These restrictions may make it more difficult, time consuming and/or expensive for us to develop and commercialize certain new products and services, or may result in certain of our products or services being later to market than those of our competitors.

Our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on a standalone basis is sufficient to satisfy their requirements for doing or continuing to do business with them.

Some of our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on a standalone basis is sufficient to satisfy their requirements for doing or continuing to do business with them, and may require us to provide additional credit support, such as letters of credit or other financial guarantees. Any failure of parties to be satisfied with our financial stability could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may have received better terms from unaffiliated third parties than the terms received in the commercial agreements we will enter into with DowDuPont and Dow.

In connection with the separation and distribution, we have entered and will enter into certain commercial agreements with DowDuPont and Dow, including, but not limited to, certain services, supply and real estate related agreements, which will govern the provision of services and use of assets following the separation and distribution that were previously provided within DowDuPont, Historical DuPont and/or Historical Dow. These agreements were negotiated in the context of the separation of Corteva and Dow from DowDuPont, while Corteva and Dow were each still part of DowDuPont and, accordingly, may not reflect terms that would have resulted from negotiations among unaffiliated third parties and we may have received better terms from third parties. See the section entitled “Our Relationship with New DuPont and Dow Following the Distribution.”

 

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In connection with our separation we have assumed and will assume, and will indemnify New DuPont and Dow for, certain liabilities. If we are required to make payments pursuant to these indemnities, we may need to divert cash to meet those obligations and our financial results could be negatively impacted. In addition, New DuPont and Dow will indemnify us for certain liabilities. These indemnities may not be sufficient to insure us against the full amount of liabilities we incur, and New DuPont and/or Dow may not be able to satisfy their indemnification obligations in the future.

Pursuant to the separation agreement, the employee matters agreement and the tax matters agreement with DowDuPont and Dow, we agreed to assume, and indemnify New DuPont and Dow for, certain liabilities for uncapped amounts, which may include, among other items, associated defense costs, settlement amounts and judgments, as discussed further in “Our Relationship with New DuPont and Dow Following the Distribution.” Payments pursuant to these indemnities may be significant and could negatively impact our business, particularly indemnities relating to our actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us responsible for any of the liabilities allocated to New DuPont and Dow, including those related to DowDuPont’s specialty products and/or materials science businesses, respectively, and those related to discontinued and/or divested businesses and operations of Historical Dow, which have been allocated to Dow. New DuPont and/or Dow, as applicable, will agree to indemnify us for such liabilities, but such indemnities may not be sufficient to protect us against the full amount of such liabilities. In addition, New DuPont and/or Dow, as applicable, may not be able to fully satisfy their indemnification obligations with respect to the liabilities we incur. Even if we ultimately succeed in recovering from New DuPont and/or Dow, as applicable, any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

Additionally, we generally have assumed and will assume and be responsible for the payment of our share of (i) certain liabilities of DowDuPont relating to, arising out of or resulting from certain general corporate matters of DowDuPont, (ii) certain liabilities of Historical DuPont relating to, arising out of or resulting from general corporate matters of Historical DuPont and discontinued and/or divested businesses and operations of Historical DuPont and (iii) certain separation expenses not otherwise allocated to New DuPont or Dow (or allocated specifically to us) pursuant to the separation agreement, and third parties could seek to hold us responsible for New DuPont’s or Dow’s share of any such liabilities. For more information, see the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement.” New DuPont and/or Dow, as applicable, will indemnify us for their share of any such liabilities; however, such indemnities may not be sufficient to protect us against the full amount of such liabilities, and/or New DuPont and/or Dow may not be able to fully satisfy their respective indemnification obligations. In addition, even if we ultimately succeed in recovering from New DuPont and/or Dow any amounts for which we are held liable in excess of our agreed share, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

Until the distribution occurs, DowDuPont has the sole discretion to change the terms of the distribution.

Until the distribution occurs, DowDuPont will have the sole and absolute discretion to determine and change the terms of the distribution, including the establishment of the record date and distribution date. These changes could be unfavorable to us. In addition, DowDuPont may decide at any time not to proceed with the distribution.

The business separation and related transactions may expose us to potential liabilities arising out of state and federal fraudulent conveyance laws and legal distribution requirements.

Although we will receive a solvency opinion from an investment bank confirming that we and New DuPont will each be adequately capitalized following the distribution, the separation could be challenged under various state and federal fraudulent conveyance laws. Fraudulent conveyances or transfers are generally defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was

 

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insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due. Any unpaid creditor could claim that DowDuPont did not receive fair consideration or reasonably equivalent value in the separation and distribution, and that the separation and distribution left New DuPont insolvent or with unreasonably small capital or that DowDuPont intended or believed it would incur debts beyond its ability to pay such debts as they mature. If a court were to agree with such a plaintiff, then such court could void the separation and distribution as a fraudulent transfer or impose substantial liabilities on us, which could adversely affect our financial condition and our results of operations. Among other things, the court could return some of our assets or your shares of Corteva common stock to New DuPont, provide New DuPont with a claim for money damages against us in an amount equal to the difference between the consideration received by New DuPont and the fair market value of us at the time of the distribution, or require us to fund liabilities of other companies involved in the Internal Reorganization and Business Realignment for the benefit of creditors.

The distribution is also subject to review under state corporate distribution statutes. Under the Delaware General Corporation Law (the “DGCL”), a corporation may only pay dividends to its stockholders either (i) out of its surplus (net assets minus capital) or (ii) if there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although the DowDuPont board of directors intends to make the distribution out of DowDuPont’s surplus and will receive an opinion that DowDuPont has adequate surplus under Delaware law to declare the dividend of Corteva common stock in connection with the distribution, there can be no assurance that a court will not later determine that some or all of the distribution was unlawful.

Risks Related to Corteva Common Stock

We cannot be certain that an active trading market for Corteva common stock will develop or be sustained after the distribution, and following the distribution, our stock price may fluctuate significantly.

A public market for Corteva common stock does not currently exist. We expect that a limited market, commonly known as a “when-issued” trading market, will develop as early as the trading day prior to the record date for the distribution, and we expect “regular-way” trading of Corteva common stock to begin on the distribution date (or, if the distribution date is not a trading day, the first trading day after the distribution date). However, we cannot guarantee that an active trading market will develop or be sustained for Corteva common stock after the distribution. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an attractive price, or at all. In addition, we cannot predict the prices at which shares of Corteva common stock may trade after the distribution.

Similarly, DowDuPont cannot predict the effect of the distribution on the trading prices of its common stock. Immediately following the distribution, you will own shares in both New DuPont and Corteva. We cannot predict the price at which Corteva common stock will trade after the distribution. After the distribution of the shares of Corteva common stock, the combined trading prices of Corteva common stock and DowDuPont common stock may not equal the “regular-way” trading price of a share of DowDuPont common stock immediately prior to the distribution of Corteva common stock. The price at which Corteva common stock trades may fluctuate significantly, particularly until an orderly public market develops. Trading prices for Corteva common stock will be determined in the public markets and may be influenced by many factors.

The market price of Corteva common stock may fluctuate significantly due to a number of factors, some of which may be beyond our control, including:

 

   

our business profile and market capitalization may not fit the investment objectives of DowDuPont’s current stockholders, causing a shift in our initial investor base, and Corteva common stock may not be included in some indices in which DowDuPont common stock is included, causing certain holders to be mandated to sell their shares of Corteva common stock;

 

   

our quarterly or annual earnings, or those of other companies in our industry;

 

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the failure of securities analysts to cover Corteva common stock after the distribution;

 

   

actual or anticipated fluctuations in our operating results;

 

   

changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance;

 

   

the operating and stock price performance of other comparable companies;

 

   

overall market fluctuations and domestic and worldwide economic conditions; and

 

   

other factors described in these “Risk Factors” and elsewhere in this information statement.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of Corteva common stock.

A number of shares of Corteva common stock are or will be eligible for future sale, which may cause our stock price to decline.

Any sales of substantial amounts of shares of Corteva common stock in the public market or the perception that such sales might occur, in connection with the distribution or otherwise, may cause the market price of Corteva common stock to decline. Upon completion of the distribution, we expect that we will have an aggregate of approximately 750 million shares of Corteva common stock issued and outstanding. These shares will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), unless the shares are owned by one of our “affiliates,” as that term is defined in Rule 405 under the Securities Act.

We are unable to predict whether large amounts of Corteva common stock will be sold in the open market following the distribution. We are also unable to predict whether a sufficient number of buyers would be in the market at that time. In this regard, a portion of DowDuPont common stock is held by index funds tied to stock indices. If we are not included in these indices at the time of distribution, these index funds may be required to sell Corteva common stock.

We cannot guarantee the timing, amount or payment of dividends on Corteva common stock in the future.

There can be no assurance that we will have sufficient surplus under Delaware law to be able to pay any dividends. We expect that we will pay a quarterly dividend following the distribution beginning in the third quarter of 2019 (as DowDuPont’s dividends for the first two quarters of 2019 included amounts attributable to Corteva). As an independent company following the distribution, we expect to pay quarterly dividends of approximately 25-35% of annual net income. We intend to issue annual dividend payouts of $400 million. However, there can be no assurance we will be able to pay such dividends. The declaration, payment and amount of any subsequent dividend will be subject to the sole discretion of our post-distribution, independent board of directors and, in the context of our financial policy, will depend upon many factors, including our financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legal requirements and other factors that our board of directors may deem relevant, and there can be no assurances that we will continue to pay a dividend in the future. In addition there can be no assurance that, after the distribution, the combined annual dividends, if any, on Corteva common stock, New DuPont common stock and Dow common stock, will be at least equal to the annual dividends paid on DowDuPont common stock prior to the distribution of Dow and Corteva common stock. For more information, see the section entitled “Dividend Policy.”

Your percentage of ownership in us may be diluted in the future.

Your percentage ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including, without limitation, equity awards that we may be granting to our directors,

 

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officers and employees. Our employees may have options to purchase shares of Corteva common stock after the distribution as a result of conversion of their DowDuPont stock options (in whole or in part) to our stock options.

In addition, our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over Corteva common stock with respect to dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of Corteva common stock. For example, we could grant the holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of Corteva common stock. See the section entitled “Description of Our Capital Stock.”

Certain provisions in our amended and restated certificate of incorporation and by-laws, Delaware law and in the tax matters agreement may prevent or delay an acquisition of us, which could decrease the trading price of Corteva common stock.

Our amended and restated certificate of incorporation and by-laws will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. These provisions include, among others:

 

   

the inability of our stockholders to act by written consent;

 

   

the limited ability of our stockholders to call a special meeting;

 

   

the right of our board of directors to issue preferred stock without stockholder approval;

 

   

rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings; and

 

   

the ability of our directors, but not our stockholders, to expand the size of our board of directors and to fill vacancies on our board of directors (including those resulting from an enlargement of our board of directors).

In addition, following the distribution, we will be subject to Section 203 of the DGCL. Section 203 of the DGCL provides that, subject to limited exceptions, persons that (without prior board approval) acquire, or are affiliated with a person that acquires, more than 15 percent of the outstanding voting stock of a Delaware corporation shall not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or its affiliate becomes the holder of more than 15 percent of the corporation’s outstanding voting stock.

We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if an acquisition proposal or offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in our and our stockholders’ best interests. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

Several of the agreements that we have entered or will enter into with DowDuPont or Dow require DowDuPont’s or Dow’s consent to any assignment by us of our rights and obligations, or a change of control of us, under the agreements. The consent rights set forth in these agreements might discourage, delay or prevent a change of control that you may consider favorable. See the sections entitled “Our Relationship with New DuPont and Dow Following the Distribution” for a more detailed description of these agreements and provisions.

 

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In addition, an acquisition or further issuance of our stock could trigger the application of Section 355(e) of the Code. For a discussion of Section 355(e), see the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution.” Under the tax matters agreement, we would be required to indemnify New DuPont for the tax imposed under Section 355(e) of the Code resulting from an acquisition or issuance of our stock, even if we did not participate in or otherwise facilitate the acquisition, and this indemnity obligation might discourage, delay or prevent a change of control that you may consider favorable.

Our amended and restated by-laws will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us and our stockholders, which could limit our stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or employees.

Our amended and restated by-laws will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of us, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim arising pursuant to any provision of the DGCL, or any action asserting a claim governed by the internal affairs doctrine. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us or our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated by-laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions. Our amended and restated by-laws will provide that the exclusive forum provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Exchange Act or the Securities Act or the respective rules and regulations promulgated thereunder.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This information statement and other materials DowDuPont and we have filed or will file with the SEC contain, or will contain, forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the Securities Act, which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company’s strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures, and financial results, and timing of, as well as expected benefits from, the separation of us and Dow from DowDuPont, are forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the company’s control. While the list of factors presented here is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. 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 disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on our business, results of operations and financial condition. Some of the important factors that could cause the company’s actual results to differ materially from those projected in any such forward-looking statements are:

 

   

effect of competition and consolidation in our industry;

 

   

failure to successfully develop and commercialize our pipeline;

 

   

failure to obtain or maintain the necessary regulatory approvals for some our products;

 

   

failure to enforce our intellectual property rights or defend against intellectual property claims asserted by others;

 

   

effect of competition from manufacturers of generic products;

 

   

costs of complying with evolving regulatory requirements;

 

   

effect of the degree of public understanding and acceptance or perceived public acceptance of our biotechnology and other agricultural products;

 

   

effect of changes in agricultural and related policies of governments and international organizations;

 

   

impact of our dependence on our relationships or contracts with third parties;

 

   

effect of disruptions to our supply chain, information technology or network systems;

 

   

effect of volatility in our input costs; and

 

   

failure to realize the anticipated benefits of the Internal Reorganization, including failure to benefit from significant cost synergies through the Synergy Program.

Additionally, there may be other risks and uncertainties that we are unable to currently identify or that we do not currently expect to have a material impact on our business.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Factors that could cause actual results or events to differ materially from those anticipated include the matters described under the sections entitled “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We disclaim and do not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law.

 

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THE DISTRIBUTION

Background of the Distribution

DowDuPont is a holding company comprised of Historical DuPont and Historical Dow. DowDuPont conducts its operations worldwide through the following eight segments: Agriculture; Performance Materials & Coatings; Industrial Intermediates & Infrastructure; Packaging & Specialty Plastics; Electronics & Imaging; Nutrition & Biosciences; Transportation & Advanced Polymers; and Safety & Construction. DowDuPont has approximately 98,000 employees.

In connection with the signing of the merger agreement, Historical DuPont and Historical Dow announced their intention to pursue, subject to the approval of the DowDuPont board of directors and any required regulatory approvals, the separation of the combined company, DowDuPont, into three, independent publicly traded companies—one for each of its agriculture, materials science and specialty products businesses—with the belief that these companies would lead their respective industries through science-based innovation to meet the needs of customers and help solve global challenges. Upon the consummation of the Merger, DowDuPont reiterated this intention and the DowDuPont board of directors established three committees (collectively, the “advisory committees”), one to oversee the business and affairs of each of its agriculture, materials science and specialty products divisions, including each business’s preparation for the intended separations.

On September 12, 2017, the DowDuPont board of directors announced the composition of the agriculture business, Corteva, which is expected to be the second business separated and will hold DowDuPont’s agriculture business.

The distribution of Corteva common stock is expected to be the second of two distributions to effectuate DowDuPont’s plan to separate DowDuPont into three independent, publicly traded companies. The separation of Dow occurred on April 1, 2019. The separation of Dow was completed through the distribution to DowDuPont stockholders of all the then issued and outstanding shares of common stock of Dow, a wholly owned subsidiary of DowDuPont that at the time of Dow’s distribution held DowDuPont’s materials science business. The remaining company, which holds DowDuPont’s agriculture and specialty products business, is expected to, subject to the approval of its board of directors, complete the distribution of Corteva. The separation of Corteva is expected to be completed on June 1, 2019 through the distribution to DowDuPont stockholders of all the Corteva common stock.

Prior to these distributions, DowDuPont has completed the Internal Reorganization and will continue to undertake the Business Realignment, as described in the section entitled “Merger, Intended Separations, Reorganization and Financial Statement Presentation—Internal Reorganization” and as contemplated by the separation agreement, which is further discussed in the section entitled “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement.” As a result of these transactions, at the time of its distribution, Dow held the assets and liabilities associated with DowDuPont’s materials science business (in addition to any assets and liabilities allocated to Dow pursuant to the separation agreement), Corteva will hold the assets and liabilities associated with DowDuPont’s agriculture business (in addition to any assets and liabilities allocated to Corteva pursuant to the separation agreement), and after the final distribution, New DuPont will continue to hold the assets and liabilities associated with DowDuPont’s specialty products business (in addition to any assets and liabilities allocated to New DuPont pursuant to the separation agreement).

The DowDuPont board of directors believes that the completion of these separations will result in three independent, publicly traded companies that will lead their respective industries through productive, science-based innovation to meet the needs of customers and help solve global challenges and is the best available opportunity to unlock the value of DowDuPont’s businesses.

On May 6, 2019 the DowDuPont board of directors approved the distribution of all the then-issued and outstanding shares of Corteva common stock to DowDuPont stockholders on the basis of one share of Corteva common stock for every three shares of DowDuPont common stock held at the close of business on the record

 

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date for the distribution. As a result of the distribution, Corteva will become an independent, publicly traded company. The distribution of Corteva common stock as described in this information statement is subject to the satisfaction or waiver of certain conditions. For a more detailed description of these conditions, see this section under “—Conditions to the Distribution.” DowDuPont stockholders may also receive cash in lieu of any fractional shares of Corteva common stock that they would have received in the distribution. The distribution is intended to be generally tax-free to DowDuPont stockholders for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. DowDuPont stockholders will not be required to make any payment, surrender or exchange their DowDuPont common stock or take any other action to receive their shares of Corteva common stock in the distribution.

The DowDuPont board of directors has the discretion to abandon the intended distribution and to alter the terms of distribution. As a result, we cannot provide any assurances that the distribution will be completed.

Reasons for the Separation and Distribution

Since the Merger, the DowDuPont board of directors has met regularly to review DowDuPont’s businesses, has consulted regularly with the advisory committees and has evaluated the strategic opportunities available to the combined company and its businesses. The DowDuPont board of directors believes that the separation of DowDuPont into three independent, publicly traded companies through the separation of its agriculture, materials science and specialty products businesses is the best available opportunity to unlock the value of DowDuPont. The DowDuPont board of directors, in consultation with the advisory committees, has considered a wide variety of factors in evaluating the separation and distribution of Dow and the planned separation and distribution of Corteva, including the risk that the distribution is abandoned and not completed. The DowDuPont board of directors believes that the potential benefits to DowDuPont stockholders of the separation of each of its three businesses into independent companies with their own distinctive business and capital structures and ability to focus on their respective specific growth plans will provide DowDuPont stockholders with certain opportunities and benefits not available to the combined company.

The DowDuPont board of directors believes that the separation of the agriculture business from DowDuPont is in the best interests of DowDuPont and its stockholders. Among other things, the DowDuPont board of directors considered the following potential benefits of the separations and distributions:

 

   

Attractive Investment Profile. The creation of separate companies with strong, focused businesses and each with a distinct financial profile and clear investment thesis is expected to drive significant long-term value for all stockholders and also reduce the complexities surrounding investor understanding, enabling investors to invest in each company separately based on its distinct characteristics.

 

   

Enhanced Means to Evaluate Financial Performance. Investors should be better able to evaluate the business condition, strategy and financial performance of each company within the context of its particular industry and markets. It is expected that, over time following the completion of the separations, the aggregate market value of us, Dow and New DuPont will be higher, on a fully distributed basis and assuming the same market conditions, than if DowDuPont were to remain under its current configuration.

 

   

Distinct Position. The separations are expected to create three independent companies with tailored growth strategies and differentiated technologies, resulting in: Corteva, a leading global agricultural company with one of the most comprehensive and diverse portfolios in the industry; Dow, a leading global materials science company that will be a low-cost, innovation-driven leader; and New DuPont, a leading global specialty products company that will be a technology driven innovation leader. Each company will provide investors with a distinct investment option that may be more attractive to current investors and will allow the company to attract different investors than the current investment option available to DowDuPont stockholders of one combined company.

 

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Focused Capital Allocation. Each independent, publicly traded company will have a capital structure that is expected to be best suited to its specific needs and will be able to make capital allocation decisions that better align with its streamlined business. In addition, after the separations, the respective businesses within each company will no longer need to compete internally for capital and other corporate resources with businesses allocated to another company.

 

   

Ability to Adapt to Industry Changes. Each company is expected to be able to maintain a sharper focus on its core business and growth opportunities, which will allow each company to respond better and more quickly to developments in its industry.

 

   

Dedicated Management Team with Enhanced Strategic Focus. Each company’s management team will be able to design and implement corporate policies and strategies that are tailored to such company’s specific business characteristics and to focus on maximizing the value of its business.

 

   

Improved Management Incentive Tools. The separation will permit the creation of equity securities, including options and restricted stock units, for each publicly traded company with values more closely linked to the performance of such company’s business than would be readily available under the current configuration of businesses within DowDuPont as a single public company. The DowDuPont board of directors believes such equity-based compensation arrangements should provide enhanced incentives for performance and improve the ability for each publicly traded company to attract, retain and motivate qualified personnel.

 

   

Direct Access to Capital Markets and Ability to Pursue Strategic Opportunities. Each company’s business will have direct access to the capital markets, and is expected to be better situated to pursue future acquisitions, joint ventures and other strategic opportunities as well as internal expansion that is more closely aligned with such company’s strategic goals and expected growth opportunities.

The DowDuPont board of directors also considered a number of potentially negative factors, including the loss of synergies and joint purchasing power from ceasing to operate as part of a larger, more diversified company, risks relating to the creation of a new public company, such as increased costs from operating as a separate public company, potential disruptions to the businesses and loss or dilution of brand identities, possible increased administrative costs and one-time separation costs, restrictions on each company’s ability to pursue certain opportunities that may have otherwise been available in order to preserve the tax-free nature of the distributions and related transactions for U.S. federal income tax purposes, the fact that each company will be less diversified than the current configuration of DowDuPont’s businesses prior to the separations and distributions and the potential inability to realize the anticipated benefit of the separation.

The DowDuPont board of directors concluded that the potential benefits of pursuing each separation and distribution outweighed the potential negative factors in connection therewith. Neither DowDuPont nor we can assure you that, following the separation and distribution, any of the benefits described above or otherwise will be realized to the extent anticipated or at all. For more information see the section entitled “Risk Factors.”

The DowDuPont board of directors also considered these potential benefits and potentially negative factors in light of the risk that one or more of the distributions is abandoned or otherwise not completed, resulting in DowDuPont separating into fewer than the intended three independent, publicly traded companies. The DowDuPont board of directors believes that the potential benefits to DowDuPont stockholders discussed above apply to the separation of each of the intended three businesses and that the creation of each independent company, with its distinctive business and capital structure and ability to focus on its specific growth plan, will provide DowDuPont stockholders with greater long-term value than retaining one investment in the combined company.

In view of the wide variety of factors considered in connection with the evaluation of the separation and the complexity of these matters, the DowDuPont board of directors did not find it useful to, and did not attempt to, quantify, rank or otherwise assign relative weights to the factors considered. The individual members of the DowDuPont board of directors may have given different weights to different factors.

 

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History of Corteva and Formation of a Holding Company Prior to the Distribution

EID was initially incorporated in Delaware in 1915 as the successor to a company that was founded in 1802. On August 31, 2017, as a result of the completion of the Merger, Historical DuPont became a subsidiary of DowDuPont. Prior to the Merger, Historical DuPont was a publicly traded company that was listed on the NYSE and operated a global business that included agriculture, electronics and communications, industrial biosciences, nutrition and health, performance materials and protection solutions segments.

As part of DowDuPont’s plan to separate its agriculture business, on March 16, 2018, DowDuPont formed Corteva Parent to serve as a holding company for Corteva. Corteva Parent is a direct, wholly owned subsidiary of DowDuPont and at the time of the distribution will be the direct parent of EID. In connection with the separation and distribution, DowDuPont has and will continue to transfer the assets and liabilities of the agriculture business not currently held by Corteva, to Corteva (see the sections entitled “Merger, Intended Separations, Reorganization and Financial Statement Presentation—Internal Reorganization” and “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement”). DowDuPont will then complete the separation through a distribution of Corteva common stock by way of a pro rata dividend to DowDuPont stockholders as of the record date. Following the separation and distribution, Corteva will be a separate company and the remaining company, New DuPont, will not retain any ownership interest in Corteva. As a result of the Internal Reorganization and Business Realignment, at the time of the distribution, Corteva Parent will hold, among certain other assets and liabilities, the agriculture business of Historical DuPont (“Historical DuPont Agriculture”) and Dow AgroSciences (in addition to any assets and liabilities allocated to it pursuant to the separation agreement).

The Number of Shares of Corteva Common Stock You Will Receive

For every three shares of DowDuPont common stock that you own at the close of business on May 24, 2019, the record date, you will receive one share of Corteva common stock on the distribution date. DowDuPont will not distribute any fractional shares of Corteva common stock. Instead, if you are a registered holder, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate cash proceeds (net of discounts and commissions) of the sales pro rata (based on the fractional share such stockholder would otherwise have been entitled to receive) to each stockholder who otherwise would have been entitled to receive a fractional share in the distribution. The distribution agent, in its sole discretion, without any influence by DowDuPont or us, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Neither we nor DowDuPont will be able to guarantee any minimum sale price in connection with the sale of these shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts received in lieu of fractional shares.

The aggregate net cash proceeds of these sales will be taxable for U.S. federal income tax purposes. See the section entitled “Material U.S. Federal Income Tax Consequences of the Distribution” for an explanation of the material U.S. federal income tax consequences of the distribution. If you are a registered holder of DowDuPont common stock, you will receive a check from the distribution agent in an amount equal to your pro rata share of the aggregate net cash proceeds of the sales. We estimate that it will take approximately two weeks from the distribution date for the distribution agent to complete the distributions of the aggregate net cash proceeds. If you hold your DowDuPont common stock through a bank or brokerage firm, your bank or brokerage firm will receive, on your behalf, your pro rata share of the aggregate net cash proceeds of the sales and will be responsible for transmitting to you your share of such proceeds.

When and How You Will Receive the Distribution

With the assistance of the distribution agent, subject to the satisfaction or waiver of certain conditions, the distribution of Corteva common stock is expected to occur on June 1, 2019, the distribution date, to all holders of outstanding DowDuPont common stock on the record date. Computershare will serve as the distribution agent in

 

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connection with the distribution, and will also serve as the transfer agent and registrar for the Corteva common stock. DowDuPont stockholders may receive cash in lieu of any fractional shares of Corteva common stock which they would have been entitled to receive.

If you own DowDuPont common stock as of the close of business on the record date, the shares of Corteva common stock that you are entitled to receive in the distribution will be issued to you electronically, as of the distribution date, in direct registration or book-entry form. If you are a registered holder, the distribution agent will credit the whole shares of Corteva common stock you receive in the distribution to a book-entry account with our transfer agent on or shortly following the distribution date. Approximately two weeks after the distribution date, the distribution agent will mail you a direct registration account statement that reflects the shares of Corteva common stock that have been registered in book-entry form in your name as well as a check reflecting any cash you are entitled to receive in lieu of fractional shares. “Direct registration form” refers to a method of recording share ownership when no physical share certificates are issued to stockholders, as is the case in this distribution.

Most DowDuPont stockholders own their shares beneficially through a bank, broker or other nominee. In such cases, the bank, broker or other nominee would be said to hold the shares in “street name” and the shares of Corteva common stock you are entitled to receive in the distribution will be issued electronically to your bank or broker and your ownership would be recorded on the bank or brokerage firm’s books. If you hold your DowDuPont common stock through a bank, broker or other nominee, your bank or brokerage firm will credit your account for the shares of Corteva common stock that you are entitled to receive in the distribution, and will be responsible for transmitting to you any cash in lieu of fractional shares you are entitled to receive. If you have any questions concerning the mechanics of the distribution and you hold your shares of DowDuPont in street name, please contact your bank or brokerage firm.

If you sell your DowDuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you will be selling your right to receive shares of Corteva common stock in the distribution.

Transferability of Shares You Receive

The shares of Corteva common stock distributed to DowDuPont stockholders in connection with the distribution will be transferable without registration under the Securities Act, except for shares received by persons who may be deemed to be our affiliates. Persons who may be deemed to be our affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with us, which may include certain of our executive officers, directors or principal stockholders. Securities held by Corteva affiliates will be subject to resale restrictions under the Securities Act. Corteva affiliates will be permitted to sell shares of Corteva common stock only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.

Results of the Distribution

After our separation from DowDuPont, we will be an independent, publicly traded company. The actual number of shares to be distributed will be determined by DowDuPont at the close of business on the record date for the distribution based on the distribution ratio. The distribution will not affect the number of outstanding shares of DowDuPont common stock, which will now reflect ownership of New DuPont, or any rights of DowDuPont stockholders. DowDuPont will not distribute any fractional shares of Corteva common stock.

Substantially simultaneously with the distribution of Dow on April 1, 2019, we entered into the separation agreement with DowDuPont and Dow to effect the separation and provide a framework for our relationship with New DuPont and Dow after the separation and distribution. In connection with the separation and distribution, we have also entered and will also enter into various other agreements with DowDuPont and Dow, including a

 

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tax matters agreement, an employee matters agreement, intellectual property cross-license agreements, trademark license agreements and certain other intellectual property, services, supply and real estate-related agreements. These agreements collectively provide for the allocation among us, New DuPont and Dow of the assets, liabilities and obligations of DowDuPont and its subsidiaries (including its investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after our and Dow’s respective separations from DowDuPont and will govern certain relationships among us, New DuPont and Dow. For a more detailed description of these agreements, see the sections entitled “Risk Factors—Risks Related to the Separation” and “Our Relationship with New DuPont and Dow Following the Distribution.”

Market for Corteva common stock

There is currently no public trading market for Corteva common stock. Corteva common stock will be listed on the NYSE under the symbol “CTVA.” We have not and will not set the initial price of Corteva common stock. The initial price will be established by the public markets.

Corteva cannot predict the price at which its common stock will trade after the distribution. The combined trading prices, after the distribution, of the shares of Corteva common stock that each DowDuPont stockholder will receive in the distribution and the shares of DowDuPont common stock held at the record date may not equal the “regular-way” trading price of a share of DowDuPont common stock immediately prior to the distribution. The price at which Corteva common stock trades may fluctuate significantly, particularly until an orderly public trading market develops. Trading prices for Corteva common stock will be determined in the public markets and may be influenced by many factors. See the section entitled “Risk Factors—Risks Related to Corteva Common Stock.”

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the record date and continuing through the last trading day prior to the distribution date, DowDuPont expects that there will be two markets in DowDuPont common stock: a “regular-way” market and an “ex-distribution” market. Shares of DowDuPont common stock that trade on the “regular-way” market will trade with an entitlement to receive the shares of Corteva common stock distributed pursuant to the distribution. Shares of DowDuPont common stock that trade on the “ex-distribution” market will trade without an entitlement to receive the Corteva common stock distributed pursuant to the distribution. Therefore, if you sell DowDuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you will be selling your right to receive Corteva common stock in the distribution. If you own DowDuPont common stock at the close of business on the record date and sell those shares on the “ex-distribution” market on or prior to the last trading day prior to the distribution date, you will receive the shares of Corteva common stock that you are entitled to receive pursuant to your ownership of DowDuPont common stock as of the record date.

Furthermore, we anticipate that trading in Corteva common stock will begin on a “when-issued” basis as early as the trading day prior to the record date for the distribution and will continue through the last trading day prior to the distribution date. “When-issued” trading in the context of a separation refers to a sale or purchase made conditionally on or before the distribution date because the securities of the separated entity have not yet been distributed. The “when-issued” trading market will be a market for Corteva common stock that will be distributed to holders of DowDuPont common stock on the distribution date. If you owned DowDuPont common stock at the close of business on the record date, you would be entitled to Corteva common stock distributed pursuant to the distribution. You may trade this entitlement to shares of Corteva common stock, without DowDuPont common stock you own, on the “when-issued” market. We anticipate that trading on a “when-issued” basis will continue through the last trading day prior to the distribution date. At the open of trading on the distribution date (or, if the distribution date is not a trading day, the first trading day after the distribution date), “regular-way” trading will begin.

 

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Conditions to the Distribution

We expect that the distribution will be effective on June 1, 2019, the distribution date, provided that, among other conditions described in this information statement, the following conditions shall have been satisfied:

 

   

the SEC having declared effective the Form 10 under the Exchange Act (or the Form 10 having otherwise become effective pursuant to and in accordance with Section 12(d) of the Exchange Act), no stop order relating to the Form 10 being in effect, no proceedings seeking such a stop order being pending before or threatened by the SEC and this information statement (or notice of interest availability hereof) having been distributed to DowDuPont stockholders;

 

   

the listing of Corteva common stock on the NYSE having been approved, subject to official notice of issuance;

 

   

the DowDuPont board of directors having received an opinion from a nationally recognized independent appraisal firm to the effect that, following the distribution, we and DowDuPont will each be solvent and adequately capitalized, and that DowDuPont has adequate surplus under Delaware law to declare the dividend of Corteva common stock;

 

   

the Internal Reorganization and Business Realignment as they relate to us having been effectuated prior to the distribution date;

 

   

the DowDuPont board of directors having declared the dividend of Corteva common stock to effect the distribution and having approved the distribution and all related transactions, which approval may be given or withheld in the board’s absolute and sole discretion (and such declaration or approval not having been withdrawn);

 

   

DowDuPont having elected the individuals to be members of our board of directors following the distribution, and certain directors as set forth in the separation agreement having resigned from the DowDuPont board of directors;

 

   

each of us, DowDuPont and Dow and each of our or their applicable subsidiaries having entered into all ancillary agreements to which it and/or such subsidiary is contemplated to be a party;

 

   

no events or developments having occurred or existing that make it inadvisable to effect the distribution or that would result in the distribution and related transactions not being in the best interest of DowDuPont or its stockholders;

 

   

no order, injunction or decree by any governmental entity of competent jurisdiction or other legal restraint or prohibition preventing consummation of the distribution or any of the related transactions, including the transfers of assets and liabilities contemplated by the separation agreement, shall be pending, threatened, issued or in effect, and no other outside event having occured that prevents the consummation of the distribution;

 

   

the receipt by DowDuPont of the Tax Opinion; and

 

   

the IRS not having revoked the IRS Ruling (as described in the section entitled “Risk Factors—Risks Related to the Separation”).

The fulfillment of the foregoing conditions does not create any obligations on DowDuPont’s part to effect the distribution, and the DowDuPont board of directors has the ability, in its sole discretion, to amend, modify or abandon the distribution and related transactions at any time prior to the distribution date.

Regulatory Approvals

We must complete the necessary registration under U.S. federal securities laws of Corteva common stock, as well as the applicable listing requirements of the NYSE for such shares.

Other than the requirements discussed above, we do not believe that any other material governmental or regulatory filings or approvals will be necessary to consummate the distribution.

 

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No Appraisal Rights

DowDuPont stockholders will not have any appraisal rights in connection with the distribution.

Reasons for Furnishing this Information Statement

We are furnishing this information statement solely to provide information to DowDuPont stockholders who will receive shares of Corteva common stock in the distribution. You should not construe this information statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of DowDuPont. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and neither DowDuPont nor we undertake any obligation to update the information except in the normal course of DowDuPont’s and our public disclosure obligations and practices.

 

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DIVIDEND POLICY

We expect that we will pay a quarterly dividend following the distribution beginning in the third quarter of 2019 (as DowDuPont’s dividends for the first two quarters of 2019 included amounts attributable to Corteva). Corteva is targeting a competitive dividend policy and expects to declare dividends of approximately 25-35% of annual net income. We intend to issue annual dividend payouts of $400 million. However, the declaration, payment and amount of any dividends following the distribution will be subject to the sole discretion of our post-distribution, independent board of directors and, in the context of our financial policy, will depend upon many factors, including our financial condition and prospects, our capital requirements and access to capital markets, covenants associated with certain of our debt obligations, legal requirements and other factors that our board of directors may deem relevant, and there can be no assurances that we will continue to pay a dividend in the future. In addition, there can be no assurance that, after the distribution, the combined annual dividends, if any, on the common stock of us, New DuPont and Dow will be at least equal to the annual dividends paid on DowDuPont common stock prior to the distribution of Dow and Corteva common stock.

 

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CAPITALIZATION

The following table sets forth Corteva’s cash and cash equivalents and capitalization as of December 31, 2018, on a historical and on a pro forma basis giving effect to the Business Realignment, the Internal Reorganization, Debt Retirement Transactions (see further discussion in “Unaudited Pro Forma Combined Financial Statements”) and the separation and distribution, as if they occurred on December 31, 2018. The historical cash and cash equivalents and capitalization for Corteva are derived from the audited Historical DuPont consolidated balance sheet as of December 31, 2018. Explanations for the pro forma adjustments can be found under “Unaudited Pro Forma Combined Financial Statements.” The following table should be reviewed in conjunction with “Unaudited Pro Forma Combined Financial Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the consolidated financial statements and accompanying notes incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part.

 

     As of December 31, 2018  
(In millions)    Historical(1)      Pro Forma(2)  

Cash and cash equivalents

   $ 4,466      $ 2,128  
  

 

 

    

 

 

 

Borrowings and capital lease obligations:

     

Short-term

   $ 2,160      $ 1,889  

Long-term

     5,812        179  
  

 

 

    

 

 

 

Total borrowings and capital lease obligations

     7,972        2,068  

Equity:

     

Common stock

            7  

Preferred stock

     239         

Additional paid-in capital

     79,790        25,965  

Accumulated deficit

     (7,669      (1

Accumulated other comprehensive loss

     (2,503      (2,412

Noncontrolling interests

     231        265  

Total equity

     70,088        23,824  
  

 

 

    

 

 

 

Total capitalization

   $ 78,060      $ 25,892  
  

 

 

    

 

 

 

 

(1)

Represents cash and cash equivalents, debt and equity of Historical DuPont, and is not indicative of Corteva’s future capitalization.

(2)

The above pro forma amounts do not include approximately $6 billion of net defined pension plan and other post-employment benefit obligations, as of December 31, 2018, that are expected to be retained by Corteva.

 

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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

Historical DuPont operated a global business that included agriculture, materials science and specialty products businesses, and has been determined to best represent the predecessor entity to Corteva. As such, the unaudited pro forma combined financial statements (“pro forma financial statements”) are derived from the audited annual consolidated financial statements of Historical DuPont and the audited annual combined financial statements of Dow AgroSciences, which are incorporated by reference herein and filed as Exhibits 99.2 and 99.3, respectively, to the Form 10 of which this information statement forms a part.

As part of the Internal Reorganization and Business Realignment, effective as of 5:00 p.m. ET on April 1, 2019, DowDuPont completed the separation of its materials science business into a separate and independent public company by way of the distribution of Dow through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock to holders of the DowDuPont’s common stock as of the close of business on March 21, 2019.

Prior to the distribution of Dow, Historical Dow conveyed or transferred the assets and liabilities aligned with Historical Dow’s agriculture business to separate legal entities (the “Dow AgroSciences entities”) and the assets and liabilities associated with its specialty products business to separate legal entities (the “Dow Specialty Products entities”). On April 1, 2019, the Dow AgroSciences entities and the Dow Specialty Products entities were transferred and conveyed to DowDuPont. In furtherance of the Internal Reorganization and Business Realignment:

 

   

the assets and liabilities aligned with Historical DuPont’s materials science business, including Historical DuPont’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“ECP business”), were transferred or conveyed to separate legal entities (the “DuPont Materials Science entities”) that were ultimately conveyed by DowDuPont to Dow;

 

   

the assets and liabilities aligned with Historical DuPont’s specialty products business were transferred or conveyed to separate legal entities (the “DuPont Specialty Products entities”) that were ultimately distributed to DowDuPont;

 

   

on April 1, 2019, Historical DuPont distributed the DuPont Materials Science entities to DowDuPont, which DowDuPont then conveyed to Dow;

 

   

on May 1, 2019, Historical DuPont distributed the DuPont Specialty Products entities to DowDuPont; and

 

   

on May 2, 2019, DowDuPont conveyed the Dow AgroSciences entities to Historical DuPont; in connection with the foregoing, Historical DuPont issued additional shares of its common stock to DowDuPont.

As a result of the foregoing, at May 2, 2019, Historical DuPont held all or substantially all the assets and liabilities associated with DowDuPont’s combined agriculture business.

In contemplation of the separations and distributions and to achieve the respective credit profiles of each of the intended future companies, DowDuPont completed a series of financing transactions, which included an offering of senior unsecured notes and the establishment of new term loan facilities (the “financing transactions”). DowDuPont has contributed a portion of the net proceeds of the notes offering to Historical DuPont to pay off or retire a portion of Historical DuPont’s existing debt liabilities (the “Debt Retirement Transactions”), with additional contributions to either Corteva or Historical DuPont expected before the separation and distribution.

The following pro forma financial statements reflect the Historical DuPont materials science and specialty products divestitures as discontinued operations and the receipt of Dow AgroSciences as a common control combination. Beginning in the second quarter of 2019, the historical financial statements of Corteva will be recast to reflect the discontinued operations for each period presented, as well as to include Dow AgroSciences from the Effective Time of the Merger.

 

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For purposes of DowDuPont’s financial statement presentation, Historical Dow was determined to be the accounting acquirer in the Merger and Historical DuPont’s assets and liabilities are reflected at fair value as of the close of the Merger in the historical financial statements of DowDuPont. In connection with the Merger and the related accounting determination, Historical DuPont elected to apply push down accounting and reflect in its historical financial statements the fair value of its assets and liabilities. For purposes of Historical DuPont’s financial statement presentation, periods following the closing of the Merger are labeled “Successor” and reflect DowDuPont’s basis in the fair values of the assets and liabilities of Historical DuPont. All periods prior to the closing of the Merger reflect the historical accounting basis in Historical DuPont’s assets and liabilities and are labeled “Predecessor.” Historical DuPont’s historical financial statements include a black line division between the columns titled “Predecessor” and “Successor” to signify that the amounts shown for the periods prior to and following the Merger are not comparable.

The pro forma financial statements give effect to the following:

 

   

The unaudited pro forma combined balance sheet as of December 31, 2018 gives effect to the Business Realignment, Internal Reorganization, Debt Retirement Transactions and the separation and distribution as if they had been consummated on December 31, 2018.

 

   

The unaudited pro forma combined statements of income for the years ended December 31, 2018, 2017 and 2016 give effect to the Merger, the Business Realignment, Internal Reorganization, Debt Retirement Transactions and the separation and distribution as if they had been consummated on January 1, 2016.

The pro forma financial statements are presented for informational purposes only, and do not purport to represent what the results of operations or financial position would have been had the Merger, Business Realignment, Internal Reorganization, Debt Retirement Transactions and the separation and distribution been consummated on the dates indicated, nor do they purport to project the results of operations or financial position for any future period or as of any future date.

The pro forma financial statements include leveraged functional costs previously allocated to Historical DuPont’s materials science and specialty products businesses that did not meet the definition of expenses from discontinued operations in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 205, “Presentation of Financial Statements” (“ASC 205”). Additionally, the financial statements of Dow AgroSciences include costs representing allocations of certain leveraged functional and corporate overhead expenses for services from Historical Dow. These costs of Historical DuPont and Dow AgroSciences include, but are not limited to, general corporate expenses related to finance, legal, information technology and human resources. Based on management’s current estimates of costs we expect to incur as a stand-alone company, we believe there are approximately $115 million to $135 million of annual leveraged functional and corporate expenses reflected in Corteva’s 2018 pro forma loss from continuing operations that are not expected to continue post-separation.

One-time transaction-related costs incurred prior to, or concurrent with, the closing of the Merger and the expected distribution transactions are not included in the unaudited pro forma combined statements of income. The pro forma financial statements do not reflect restructuring or integration activities or other costs following the separation and distribution transactions that may be incurred to achieve cost or growth synergies of Corteva. As no assurance can be made that these costs will be incurred or the growth synergies will be achieved, no adjustment has been made.

The unaudited pro forma combined balance sheet as of December 31, 2018 does not yet reflect certain tax asset and liability balances that may differ from balances presented in the unaudited pro forma combined balance sheet below, pursuant to the implementation of the tax matters agreement. In connection with the separation and distribution of Corteva, the parties have finalized the material terms of an amendment to the agreement to allocate certain liabilities and other items between Corteva and DowDuPont. An adjustment to reflect

 

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indemnification receivables and payables required under the terms of the tax matters agreement related to tax payables and receivables has been included in Corteva’s pro forma combined balance sheet as of December 31, 2018. See Note 3 for further details. Management anticipates additional impacts from the amendment to the tax matters agreement, however, the full financial impact cannot be determined at this time and will depend on, among other factors, the income of, and tax attributes generated and utilized by, each of Corteva, DowDuPont and their respective subsidiaries, which, in each case, will be determined on or before the filing of the consolidated U.S. federal income tax return for the 2018 calendar year.

 

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Corteva, Inc. Unaudited Pro Forma Combined Balance Sheet as of December 31, 2018

 

(in millions)    Successor
Corteva
Continuing
Operations(1)
    Separation
and Debt
Retirement
Pro Forma
Adjustments
         Pro Forma
Corteva
 
     Note 6     Note 3             
Assets          

Current assets

         

Cash and cash equivalents

   $ 2,269     $ (141   (j)    $ 2,128  

Marketable securities

     5                5  

Accounts and notes receivable—net

     5,355       54     (a)(e)      5,409  

Inventories

     5,260       (10   (a)      5,250  

Other current assets

     1,044                1,044  

Total current assets

     13,933       (97        13,836  

Investment in nonconsolidated affiliates

     138                138  

Net property

     4,533                4,533  

Goodwill

     10,193                10,193  

Other intangible assets

     12,055                12,055  

Deferred income tax assets

     306       (11   (d)      295  

Other assets

     1,830                1,830  

Total assets

   $ 42,988     $ (108      $ 42,880  
Liabilities and Equity          

Current liabilities

         

Short-term borrowings and capital lease obligations

   $ 2,153     $ (264   (k)    $ 1,889  

Accounts payable

     3,804       (21   (a)      3,783  

Income taxes payable

     187       (38   (e)      149  

Accrued and other current liabilities

     4,016       157     (a)(b)(e)(l)      4,173  

Total current liabilities

     10,160       (166        9,994  

Long-term debt

     5,784       (5,605   (k)      179  

Other noncurrent liabilities

         

Deferred income tax liabilities

     1,475       26     (m)      1,501  

Pension and other postemployment benefits—noncurrent

     5,676       (71   (d)      5,605  

Other noncurrent obligations

     1,780       (3   (c)      1,777  

Total noncurrent liabilities

     14,715       (5,653        9,062  

Stockholders’ equity

         

Common stock(2)

           7     (f)      7  

Additional paid-in capital

     20,201       5,764     (f)(q)      25,965  

Retained earnings (accumulated deficit)

     59       (60   (q)      (1

Accumulated other comprehensive loss

     (2,412              (2,412

Total stockholders’ equity

     17,848       5,711          23,559  

Noncontrolling interests

     265                265  

Total equity

     18,113       5,711          23,824  

Total liabilities and equity

   $ 42,988     $ (108      $ 42,880  

 

(1)

Represents the company’s current best estimate of Corteva’s pro forma historical balance sheet, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. See note 6 for further details. Actual results could differ from these estimates.

(2)

Represents the expected common stock outstanding as of the record date of the distribution.

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

for the Year Ended December 31, 2018

 

(in millions, except per share amounts)    Successor
Corteva
Continuing
Operations(1)
    Pro Forma
Adjustments
           Pro Forma
Corteva
 
   Note 6                     

Net sales

   $ 14,287     $ —         3(a)      $ 14,287  

Cost of goods sold

     10,020       (1,499     3(a)3(h)4(b)        8,521  

Research and development expense

     1,435       (3     3(a)        1,432  

Selling, general and administrative expenses

     2,901       1       3(a)3(h)        2,902  

Amortization of intangibles

     391       —            391  

Restructuring and asset-related charges—net

     694       —            694  

Integration and separation costs

     992       (421     3(g)        571  

Goodwill impairment charge

     4,503       —            4,503  

Sundry income—net

     249       —            249  

Loss on early extinguishment of debt

     81       (81     3(n)        —    

Interest expense

     337       (261     3(o)        76  

(Loss) income from continuing operations before income taxes

     (6,818     2,264          (4,554

(Benefit from) provision for income taxes on continuing operations

     (34     442      

3(a)3(g)3(h)3(i)
3(p)4(g)
 
 
     408  

(Loss) income from continuing operations after income taxes

     (6,784     1,822          (4,962

Net income from continuing operations attributable to noncontrolling interests

     29       —            29  

Net (loss) income from continuing operations attributable to Corteva common stockholders

   $ (6,813   $ 1,822        $ (4,991

Loss per common share from continuing operations (note 5):

         

Basic

          $ (6.68

Diluted(2)

          $ (6.68

Weighted average common shares outstanding (note 5):

         

Basic

            747.2  

Diluted(2)

            747.2  

 

(1)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. See note 6 for further details. Actual results could differ from these estimates.

(2)

Diluted earnings per share does not consider the impact of potentially dilutive securities because the inclusion of the potential common shares would have an anti-dilutive effect.

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

for the Year Ended December 31, 2017

 

(in millions, except
per share amounts)
  Predecessor
Corteva
Continuing
Operations(1)
    Dow
AgroSciences(2)
    Successor
Corteva
Continuing
Operations(3)
    Dow
AgroSciences
Adjustments
    Merger Pro
Forma
Adjustments
          Adjusted
Corteva
Continuing
Operations
    Separation
and Debt
Retirement
Pro Forma
Adjustments
          Pro Forma
Corteva
 
  Note 6           Note 6     Note 2     Note 4           (subtotal)     Note 3              

Net sales

  $ 6,954     $ 3,761     $ 3,785     $ (200   $ (60     (a)     $ 14,240     $ —         (a)     $ 14,240  

Cost of goods sold

    3,591       2,485       2,936       (200     (465     (a)(b)(c)       8,347       55       (a)(h)       8,402  

Research and development expense

    634       370       511       (14     10       (c)       1,511       (2     (a)       1,509  

Selling, general and administrative expenses

    1,542       538       870       10       11       (c)       2,971       1       (a)(h)       2,972  

Amortization of intangibles

    40       11       97       —         122       (d)       270       —           270  

Restructuring and asset-related charges (benefit)—net

    12       (1     270       —         (10     (e)       271       —           271  

Integration and separation costs

    354       —         255       25       (168     (e)       466       (249     (g)       217  

Sundry (expense) income—net

    (597     (428     805       (679     —           (899     —           (899

Interest expense

    254       2       115       —         (80     (f)       291       (217     (o)       74  

(Loss) Income from continuing operations before income taxes

    (70     (72     (464     (700     520         (786     412         (374

(Benefit from) provision for income taxes on continuing operations

    (430     (12     (2,207     (238     173       (g)       (2,714     (229     (a)(g)(h)(i)(p)       (2,943

Income (loss) from continuing operations after income taxes

    360       (60     1,743       (462     347         1,928       641         2,569  

Net income from continuing operations attributable to noncontrolling interests

    8       17       10       —         —           35       —           35  

Net income (loss) from continuing operations attributable to Corteva common stockholders

  $ 352     $ (77   $ 1,733     $ (462   $ 347       $ 1,893     $ 641       $ 2,534  

Earnings per common share from continuing operations (note 5):

                   

Basic

                    $ 3.39  

Diluted

                    $ 3.36  

Weighted average common shares outstanding (note 5):

                   

Basic

                      747.2  

Diluted

                      754.6  

 

(1)

For the period January 1, 2017 through August 31, 2017. Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses; adjusted for certain reclassification adjustments to align the financial statement presentation of Historical DuPont to that of Corteva. See note 6 for further details. Actual results could differ from these estimates.

(2)

For the period January 1, 2017 through August 31, 2017.

(3)

For the period September 1, 2017 through December 31, 2017. Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. See note 6 for further details. Actual results could differ from these estimates.

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

for the Year Ended December 31, 2016

 

(in millions, except per share amounts)   Predecessor
Corteva
Continuing
Operations(1)
    Dow
AgroSciences
    Dow
AgroSciences
Adjustments
    Merger Pro
Forma
Adjustments
        Adjusted
Corteva
Continuing
Operations
    Separation
and Debt
Retirement
Pro Forma
Adjustments
          Pro Forma
Corteva
 
  Note 6     As Reported     Note 2     Note 4         (subtotal)     Note 3              

Net sales

  $ 8,265     $ 6,144     $ (290   $ (78   (a)   $ 14,041     $ —         (a)     $ 14,041  

Cost of goods sold

    4,603       4,020       (225     (49   (a)(c)     8,349       42       (a)(h)       8,391  

Research and development expense

    925       586       (15     15     (c)     1,511       (4     (a)       1,507  

Selling, general and administrative expenses

    2,066       845       8       17     (c)     2,936       1       (a)(h)       2,937  

Amortization of intangibles

    45       18       —         184     (d)     247       —           247  

Restructuring and asset-related charges—net

    438       11       4       —           453       —           453  

Integration and separation costs

    285       —         27       (147   (e)     165       (91     (g)       74  

Sundry expense—net

    (48     (18     (7     —           (73     —           (73

Interest expense

    370       7       —         (120   (f)     257       (156     (o)       101  

(Loss) Income from continuing operations before income taxes

    (515     639       (96     22         50       208         258  

(Benefit from) provision for income taxes on continuing operations

    (275     (48     (33     9     (g)     (347     77       (a)(g)(h)(p)       (270 )  

(Loss) income from continuing operations after income taxes

    (240     687       (63     13         397       131         528  

Net income from continuing operations attributable to noncontrolling interests

    11       14       —         —           25       —           25  

Net (loss) income from continuing operations attributable to Corteva common stockholders

  $ (251   $ 673     $ (63   $ 13       $ 372     $ 131       $ 503  

Earnings per common share from continuing operations (note 5):

                 

Basic

                  $ 0.67  

Diluted

                  $ 0.67  

Weighted average common shares outstanding (note 5):

                 

Basic

                    747.2  

Diluted

                    754.1  

 

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(1)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses; adjusted for certain reclassification adjustments to align the financial statement presentation of Historical DuPont to that of Corteva. See note 6 for further details. Actual results could differ from these estimates.

See accompanying Notes to the Unaudited Pro Forma Combined Financial Statements.

 

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NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

NOTE 1—DESCRIPTION OF THE TRANSACTIONS AND BASIS OF PRESENTATION

The pro forma financial statements include adjustments related to the Merger, the Business Realignment, the Internal Reorganization, the Debt Retirement Transactions and the separation and distribution, as required by Article 11 of SEC Regulation S-X. Historical DuPont has been determined to best represent the predecessor entity to Corteva. As a result, the historical financial statements of Corteva reflected in the pro forma financial statements are those of Historical DuPont. The historical consolidated financial information has been adjusted to give effect to events that are (1) directly attributable to the Merger, the Business Realignment, the Internal Reorganization, the Debt Retirement Transactions and the separation and distribution, (2) factually supportable and (3) with respect to the unaudited pro forma combined statements of income, expected to have a continuing impact on the consolidated results. Further, these pro forma adjustments contain estimates, which are based on information currently available to management and are subject to change, which could have a material impact on these pro forma financial statements.

The Merger

At the Effective Time of the Merger, pursuant to the merger agreement, Historical DuPont and Historical Dow each merged with subsidiaries of DowDuPont and, as a result, Historical DuPont and Historical Dow became subsidiaries of DowDuPont.

One-time transaction-related expenses incurred prior to, or concurrent with, the closing of the Merger are not included in the unaudited pro forma combined statements of income.

The Internal Reorganization and the Business Realignment

Historical DuPont was founded in 1802 and was incorporated in Delaware in 1915. Immediately prior to the Merger, Historical DuPont was comprised of agriculture, materials science and specialty products businesses. As a result of the Merger, these businesses, as well as the agriculture, materials science and specialty products businesses of Historical Dow were, prior to the distribution of Dow, held indirectly by DowDuPont through its combined ownership of Historical DuPont and Historical Dow. Through the Internal Reorganization, Historical DuPont and Historical Dow have realigned their respective businesses into three subgroups: agriculture, materials science and specialty products. DowDuPont, Historical DuPont and Historical Dow have and will continue to transfer and receive entities and businesses such that, prior to the Corteva distribution, Corteva will hold either directly or indirectly Historical DuPont Agriculture and Dow AgroSciences, along with the assets and liabilities allocated to each group pursuant to the separation agreement (as described in more detail in “Our Relationship with New DuPont and Dow Following the Distribution—Separation Agreement—Transfer of Assets and Assumption of Liabilities”).

As a result of the Internal Reorganization and Business Realignment, Corteva will own 100% of the outstanding common stock of Historical DuPont. Preferred stockholders of Historical DuPont will continue to hold such shares following the separation and distribution. After the separation and distribution, Historical DuPont will remain a subsidiary of Corteva, will continue to be a reporting company and expects to comply with the requirements of the Exchange Act. Further, as a result of the Internal Reorganization, Historical DuPont will own 100% of Dow AgroSciences on a consolidated basis.

Distribution of Historical DuPont’s Materials Science and Specialty Products Businesses

Beginning in the second quarter of 2019, Corteva’s distributions of Historical DuPont’s materials science and specialty products businesses will be accounted for as discontinued operations. As such, pro forma adjustments related to the distributions have been prepared in accordance with the discontinued operations guidance in ASC 205 and therefore do not allocate any general corporate overhead expenses of Historical DuPont to the materials science and specialty products businesses and include only those costs that are directly related to the discontinued businesses and are not expected to continue. The company’s current estimates for discontinued operations are

 

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preliminary and could change as the company finalizes discontinued operations accounting. As such, the pro forma financial statements do not reflect what Corteva’s results of operations or financial position would have been on a stand-alone basis and are not necessarily indicative of Corteva’s future results of operations. See note 6 for additional information.

Common Control Combination of Dow AgroSciences

Corteva’s acquisition of Dow AgroSciences will be treated as a transfer between entities under common control. As such, the company will record the assets, liabilities, and equity of the Dow AgroSciences business on its balance sheet at their historical basis. Transfers of businesses between entities under common control requires the financial statements to be presented as if the transaction had occurred at the point at which common control first existed (the Effective Time of the Merger). Corteva’s historical financial statements and related notes will, beginning in the second quarter of 2019, be revised to include the historical balances of Dow AgroSciences from September 1, 2017 onward.

The unaudited pro forma combined balance sheet as of December 31, 2018 is presented as if the common control combination of Dow AgroSciences had occurred on December 31, 2018 and the unaudited pro forma combined statements of income are presented as if the common control combination of Dow AgroSciences had occurred on January 1, 2016. Transactions between Dow AgroSciences and Historical DuPont Agriculture have been eliminated as if Dow AgroSciences and Historical DuPont Agriculture were consolidated affiliates since January 1, 2016.

Debt Retirement Transactions

At the time of the separation and distribution, it is expected that Corteva will have a credit profile substantially similar to that of Historical DuPont prior to the Merger. Corteva is targeted to have an A- credit rating (expressed in Standard & Poor’s (“S&P”) nomenclature) primarily reflecting obligations relating to certain Historical DuPont defined pension plans, including Historical DuPont’s principal U.S. pension plan, certain non-U.S. pension plans and other post-employment benefit liabilities. In contemplation of the separations and distributions and in preparation to achieve the respective credit profiles of each of the intended future companies, DowDuPont completed a series of financing transactions, which included an offering of senior unsecured notes and the establishment of new term loan facilities. Corteva expects DowDuPont to use approximately $10.1 billion of the proceeds from its financing transactions to reduce Corteva’s outstanding liabilities in line with Corteva’s target credit profile (the “Liabilities Reduction”). Therefore, the unaudited pro forma combined balance sheet as of December 31, 2018 reflects adjustments assuming the Liabilities Reduction was achieved through the retirement of certain of Historical DuPont’s outstanding debt securities and term loans based on short-term and long-term debt balances and pension obligations outstanding as of December 31, 2018. The unaudited pro forma combined statements of income reflect adjustment assuming the Liabilities Reduction was achieved on January 1, 2016.

Certain Debt Retirement Transactions were undertaken by Historical DuPont in November and December of 2018 as part of the Liabilities Reduction. Specifically, Historical DuPont offered to purchase for cash any and all outstanding debt securities listed in the table below from each registered holder of the applicable series of debt securities (the “Tender Offers”).

 

(in millions)    Amount  

5.750% Senior Notes due 2019

   $ 500  

4.625% Senior Notes due 2020

     1,000  

3.625% Notes due 2021

     1,000  

4.250% Notes due 2021

     500  

2.800% Notes due 2023

     1,250  

6.500% Debentures due 2028

     300  

5.600% Senior Notes due 2036

     400  

4.900% Notes due 2041

     500  

4.150% Notes due 2043

     750  
  

 

 

 

Total

   $ 6,200  

 

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In the fourth quarter of 2018, Historical DuPont retired $4,409 million of such debt securities in connection with the Tender Offers, which expired on December 11, 2018. Historical DuPont paid a total of $4,849 million, which included breakage fees and all applicable accrued and unpaid interest. DowDuPont contributed cash (generated from the financing transactions) to Historical DuPont to fund the settlement of the Tender Offers and payment of associated fees.

On March 22, 2019, Historical DuPont issued notices of redemption in full of all of its remaining outstanding fixed-rate notes other than the fixed-rate SMR Notes (as defined below) (the “Make Whole Notes”). The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forth in the respective Make Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the Make Whole Notes ceased to accrue and all rights of the holders of the Make Whole Notes were terminated.

On May 2, 2019 Historical DuPont terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus accrued and unpaid interest through and including May 1, 2019.

In connection with the foregoing, Historical DuPont paid a total of $4.6 billion, which included breakage fees and accrued and unpaid interest on the Make Whole Notes and Term Loan Facility. Historical DuPont funded the payments with cash from operations and cash contributions from DowDuPont to Corteva.

In addition, as part of the separations and distribution, Historical DuPont’s $1,250 million aggregate principal amount of 2.200% Notes due 2020 and $750 million aggregate principal amount of Floating Rate Notes due 2020 (collectively, the “SMR Notes”) are expected to be redeemed. The date of redemption will be on or before May 24, 2019. On the date of redemption, Historical DuPont will be required to redeem all of the SMR Notes at a redemption price equal to 100% of the aggregate principal amount of the SMR Notes plus accrued and unpaid interest, if any, up to but excluding the date of redemption. Following the redemption, the SMR Notes will no longer be outstanding and will cease to bear interest and all rights of the holders of the SMR Notes will terminate.

As noted above, for purposes of the pro forma financial statements in this presentation, Corteva has assumed that the remaining aggregate principal amount of these debt securities will be satisfied through future Debt Retirement Transactions. This illustrates a possible use of proceeds from the above financing transactions, however, the actual pay off or retirement across Historical DuPont’s outstanding liabilities could be different than the Debt Retirement Transactions described above. In furtherance of achieving the company’s credit profile target, Corteva and DowDuPont may take various steps, which may include further retirement of financial debt, maintenance of meaningful intra-year debt supporting seasonality and/or contributions of cash funded by DowDuPont. Any specific future actions, including an expected second quarter 2019 issuance of commercial paper by DowDuPont, related to the Liabilities Reduction will depend on various factors existing at that time, including results of operations, market conditions and capital structure considerations.

The Separation and Distribution of Corteva

The distribution of Corteva common stock will occur by way of a pro rata distribution to DowDuPont stockholders. Each DowDuPont stockholder will be entitled to receive one share of Corteva common stock for every three shares of DowDuPont common stock held by such stockholder at the close of business on May 24, 2019, the record date of the distribution. The actual number of shares of Corteva common stock that DowDuPont will distribute will depend on the number of shares of DowDuPont common stock outstanding on the record date.

In connection with the separation and distribution, Corteva has entered into and will enter into certain agreements that will effect the separation and provide a framework for Corteva’s relationship with New DuPont and Dow. In connection with the separation and distribution, Corteva has entered and will enter into certain other agreements with DowDuPont and Dow, including a tax matters agreement, an employee matters agreement, intellectual property cross-license agreements, trademark license agreements and certain other intellectual property, services, supply and real

 

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estate-related agreements. These agreements will provide for the terms of the separation between Corteva, New DuPont and Dow of the assets, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) of DowDuPont and its subsidiaries attributable to the periods prior to, at and after Corteva’s and Dow’s respective separations from DowDuPont and will govern the relationship among Corteva, New DuPont and Dow subsequent to the completion of the separations and distributions.

One-time transaction-related expenses incurred relating to the separation and distribution of Corteva are not included in the unaudited pro forma combined statements of income.

NOTE 2—DOW AGROSCIENCES ADJUSTMENTS

As a condition of Brazil’s Administrative Council for Economic Defense regulatory approval of the Merger, Historical Dow divested a select portion of Dow AgroSciences’ corn seed business in Brazil, including some seed processing plants and seed research centers, a copy of Dow AgroSciences’ Brazilian corn germplasm bank, the Morgan™ brand and a license for the use of the Dow Sementes™ brand for a certain period of time (collectively, the “DAS Brazil Assets”). On July 11, 2017, Historical Dow announced it had entered into a definitive agreement to sell the DAS Brazil Assets to CITIC Agri Fund. During the fourth quarter of 2017, Dow AgroSciences completed the disposition of the DAS Brazil Assets. The below represents amounts that were removed from the unaudited pro forma combined statements of income to reflect this divestiture.

 

(in millions)    For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Net sales

   $ (200    $ (290

Cost of goods sold

     (144      (166

Research and development expense

     (12      (12

Selling, general and administrative expenses

     (23      (23

Sundry (expense) income—net

     (679      (7

Income from continuing operations before income taxes

     (700      (96

Provision for income taxes on continuing operations

     (238      (33

Income from continuing operations after income taxes

   $ (462    $ (63

Additionally, in order to align the financial statement presentation of Dow AgroSciences to that of Corteva’s continuing operations, certain reclassification adjustments have been made to the unaudited pro forma combined statements of income as follows:

 

(in millions)    For the Period
January 1 –
August 31,
2017
     For the
Year Ended
December 31,
2016
 

Cost of goods sold

   $   —          $ (2  

Selling, general and administrative expenses

   $ —          $ (2  

Restructuring and asset-related charges – net

       $   —            $       4  
   

Cost of goods sold

   $ (13      $ (12  

Research and development expense

   $ (2      $ (3  

Selling, general and administrative expenses

   $ (10      $ (12  

Integration and separation costs

       $ 25          $ 27  
   

Cost of goods sold(1)

   $ (43      $ (45  

Selling, general and administrative expenses(1)

       $ 43          $ 45  

 

  (1)

Reflects reclassification of certain allocated Historical Dow leveraged function costs out of cost of goods sold to selling, general and administrative expenses in order to align with Corteva’s presentation of similar costs.

 

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NOTE 3—SEPARATION AND DEBT RETIREMENT RELATED PRO FORMA ADJUSTMENTS

Separation Pro Forma Adjustments

The pro forma financial statements reflect the following adjustments related to the separation and distribution transactions:

 

(a)

The Telone® Soil Fumigant business (“Telone®”) will not transfer to Corteva as part of the common control combination of Dow AgroSciences. A distribution agreement was entered into between Corteva and Dow that allows for Corteva to become the exclusive distributor of Telone® products for Dow after the separation and distribution transactions. This adjustment reflects the impact to the pro forma financial statements of the removal of Telone® balances that will not transfer to Corteva as well as the impact of the Telone® distribution agreement.

The below represents amounts that were removed from the pro forma financial statements:

Balance Sheet

 

(in millions)    As of December 31,
2018
 

Accounts and notes receivable—net

   $ (125

Inventories

     (10

Total assets

   $ (135

Accounts payable

   $ (21

Accrued and other current liabilities

     (68

Total liabilities

   $ (89

Statements of Income

 

(in millions)    For the
Year Ended
December 31,
2018
     For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Net sales

   $ (151    $ (149    $ (145

Cost of goods sold

     (54      (51      (61

Research and development expense

     (3      (2      (4

Selling, general and administrative expenses

     (18      (18      (18

Income from continuing operations before income taxes

     (76      (78      (62

Provision for income taxes on continuing operations(1)

     (19 )        (19      (15

Income from continuing operations after income taxes

   $ (57    $ (59    $ (47

 

  (1)

Adjustment to record the income tax impacts of the pro forma adjustments using a blended statutory tax rate of 25%. This rate does not reflect Corteva’s effective tax rate, which will include other items and may be significantly different than the rates assumed for purposes of preparing these pro forma financial statements.

The below represents the impact of the related distribution agreement between Corteva and Dow:

 

(in millions)    For the
Year Ended
December 31,
2018
     For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Net sales

   $ 151      $ 149      $ 145  

Cost of goods sold

     98        97        94  

Selling, general and administrative expenses

     15        15        15  

Income from continuing operations before income taxes

     38        37        36  

Provision for income taxes on continuing operations(1)

     9        9        9  

Income from continuing operations after income taxes

   $ 29      $ 28      $ 27  

 

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  (1)

Adjustment to record the income tax impacts of the pro forma adjustments using a blended statutory tax rate of 25%. This rate does not reflect Corteva’s effective tax rate, which will include other items and may be significantly different than the rates assumed for purposes of preparing these pro forma financial statements.

 

(b)

Adjustment to include a $63 million amount due to Dow related to an indemnification outlined in the Separation Agreement.

 

(c)

Adjustment to remove $3 million of liabilities related to litigation matters that are included in the financial statements of Dow AgroSciences, but will not transfer to Corteva as part of the common control combination.

 

(d)

Adjustment reflects removal of $71 million of pension and other employee liabilities and $11 million of related deferred tax assets that will not transfer between Corteva and Dow in connection with the separation.

 

(e)

Adjustment to include indemnification receivables and payables of $193 million recorded to accounts and notes receivable – net and $203 million recorded to accrued and other current liabilities, respectively, required under the terms of the tax matters agreement as well as to remove historical income tax receivables and payables of $14 million from accounts and notes receivable – net and $38 million from income taxes payable, respectively, for Dow AgroSciences that will not transfer to Corteva as part of the common control combination.

 

(f)

Adjustment to reflect the number of common shares expected to be outstanding upon completion of the separation and related transactions. As of the distribution date, equity will be adjusted to reflect the distribution of Corteva shares of common stock to DowDuPont shareholders, at a distribution ratio of one share of Corteva common stock for every three shares of DowDuPont common stock.

 

(g)

Adjustment to eliminate one-time transaction costs directly attributable to the expected distribution transactions. The below represents the impact to the respective pro forma combined statements of income:

 

(in millions)    For the
Year Ended
December 31,
2018
     For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Integration and separation costs

   $ (421    $ (249    $ (91

Provision for income taxes on continuing operations(1)

   $ 98      $ 84      $ 30  

 

  (1)

Represents the income tax effect of the elimination of one-time transaction costs directly attributable to the expected distribution transactions calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.

 

(h)

Adjustment reflects the impact of certain manufacturing, leasing and supply agreements executed in connection with the separation:

 

(in millions)    For the
Year Ended
December 31,
2018
     For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Costs of goods sold

   $ 11      $ 9      $ 9  

Selling, general and administrative expenses

   $ 4      $ 4      $ 4  

Provision for income taxes on continuing operations(1)

   $ (4    $ (3    $ (3

 

  (1)

Represents the income tax effect of the supply agreements calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.

 

(i)

Reflects the impact on the (benefit from) provision for income taxes on continuing operations for Corteva, as if Historical DuPont and Dow AgroSciences were consolidated affiliates for the Successor periods. For the year ended December 31, 2017, an income tax benefit was recorded to reflect the removal of a $378 million valuation allowance for Dow AgroSciences that was established during the period, and which will not transfer to Corteva as part of the common control combination of Dow AgroSciences. The valuation allowance was

 

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  primarily related to a change in Dow AgroSciences’ ability, as a direct result of the Tax Cuts and Jobs Act (the “TCJA”), to generate and rely on sufficient levels of future foreign source income when assessing its foreign tax credits for realizability. For the year ended December 31, 2018, the consolidating adjustment reflects a benefit of $33 million resulting from the U.S. tax consolidation, inclusive of the impact of the TCJA.

Debt Retirement Transactions Pro Forma Adjustments

The pro forma financial statements reflect the following adjustments related to the Debt Retirement Transactions:

 

(j)

Adjustment to cash represents the following:

 

(in millions)    As of December 31,
2018
 

Cash contribution from DowDuPont

   $ 5,771  

Payment of fees and expenses

     (79

Pay off or retirement of outstanding liabilities

   $ (5,792

Pay off of accrued interest

     (41

Total adjustment to cash

   $ (141

 

(k)

Adjustment to short-term borrowings and capital lease obligations and long-term debt represents the following:

 

(in millions)    As of December 31,
2018
 

Pay off of outstanding liabilities

   $ (262

Write-off of associated fair value adjustment

     (2

Total adjustment to short-term borrowings and capital lease obligations

   $ (264

Pay off of outstanding liabilities

   $ (5,530

Write-off of associated debt issuance costs

     1  

Write-off of associated fair value adjustment

     (76

Total adjustment to long-term debt

   $ (5,605

 

(l)

Reflects the pay off of $41 million of accrued interest related to the above noted outstanding liabilities.

 

(m)

Adjustment to derecognize a $26 million deferred tax asset associated with the pay off of the company’s long-term borrowings. The deferred tax asset was recognized in relation to the fair value determination of the company’s long-term borrowings as a result of the Merger and is included within deferred tax liabilities of Historical DuPont due to jurisdictional netting.

 

(n)

Represents the removal of the loss on early debt extinguishment of $81 million for the year ended December 31, 2018, as it is directly attributable to the Debt Retirement Transactions and will not have a continuing impact.

 

(o)

Adjustment to interest expense represents the following:

 

(in millions)    For the
Year Ended
December 31,
2018
     For the
Year Ended
December 31,
2017
     For the
Year Ended
December 31,
2016
 

Removal of amortization of the fair value adjustment to debt(1)

   $ 87      $ 110      $ 120  

Removal of Historical DuPont interest expense

     (347      (322      (271

Removal of amortization of Historical DuPont debt issuance costs

     (1      (5      (5

Total adjustment to interest expense

   $ (261    $ (217    $ (156

 

  (1)

See note 4(f) for further details regarding the merger related interest expense pro forma adjustments.

 

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(p)

Adjustment to record the income tax impact of the debt retirement pro forma adjustments using a blended federal and state rate of 23% for the year ended December 31, 2018 and 36% for the years ended December 31, 2017 and 2016.

 

(q)

Adjustment to equity for the separation and Debt Retirement Transactions pro forma adjustments represents the following:

 

     As of December 31, 2018  
(in millions)    Retained
Earnings
     Additional
Paid-In Capital
    Common
Stock
 

Removal of Telone® business

   $ (46    $ —         —    

Adjustment to include amount due to Dow for indemnification

     (63      —         —    

Removal of Dow AgroSciences litigation liabilities

     3        —         —    

Removal of Dow AgroSciences Pension Liability (net of tax)

     60        —         —    

Adjustment to include tax indemnifications and remove Dow AgroSciences tax receivables and payables

     14       

Adjustment to include expected common shares

     —          (7     7  

Cash contribution from DowDuPont

     —          5,771       —    

Payment of fees and expenses

     (79      —         —    

Write-off of associated fair value adjustment

     78        —         —    

Write-off of unamortized debt issuance costs

     (1      —         —    

Adjustment to deferred tax liabilities

     (26      —         —    

Total adjustment to equity

   $ (60    $ 5,764       7  

NOTE 4—MERGER-RELATED PRO FORMA ADJUSTMENTS

The unaudited pro forma combined statements of income reflect the following adjustments that are directly attributable to the Merger and expected to have a continuing impact on Corteva:

 

(a)

Transactions between Dow AgroSciences and Historical DuPont have been eliminated as if Dow AgroSciences and Historical DuPont were consolidated affiliates for the entire period presented. Adjustment reflects the elimination of sales and cost of goods sold of $60 million for the period January 1 through August 31, 2017 and $78 million for the year ended December 31, 2016.

 

(b)

Represents the removal of cost of goods sold of $1,554 million for the year ended December 31, 2018 and $425 million for the period September 1 through December 31, 2017, related to the amortization of Historical DuPont’s agriculture business’ inventory step-up recognized in connection with the Merger, as the incremental amortization is directly attributable to the Merger and will not have a continuing impact.

 

(c)

Represents estimated additional depreciation expense related to the fair value adjustment to net property, plant and equipment of Historical DuPont’s agriculture business. The table below is a summary of the information used to calculate the pro forma increase in depreciation expense.

 

(in millions)    For the Period
January 1 –
August 31,
2017
     For the Year
Ended
December 31,
2016
 

Cost of goods sold

   $ 20      $ 29  

Research and development expense

   $ 10      $ 15  

Selling, general and administrative expenses

   $ 11      $ 17  

 

 

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(d)

Represents estimated additional amortization expense of $122 million for the period January 1 through August 31, 2017 and $184 million for the year ended December 31, 2016 related to the fair value adjustment to Historical DuPont’s agriculture business’ intangible assets.

 

(e)

Represents the elimination of one-time transaction costs directly attributable to the Merger. Transaction costs of $168 million for the year ended December 31, 2017 and $147 million for the year ended December 31, 2016 were eliminated from integration and separation costs and $10 million was eliminated from restructuring and asset-related charges (benefits)—net for the period January 1 through August 31, 2017.

 

(f)

Represents a reduction of interest expense of $80 million for the period January 1 through August 31, 2017 and $120 million for the year ended December 31, 2016 related to the amortization of the fair value adjustment to Historical DuPont’s long-term debt.

 

(g)

Represents the income tax effect of the pro forma adjustments related to the Merger calculated using enacted statutory tax rates applicable in each period at the legal entity in which the pre-tax adjustments were made.

NOTE 5—CORTEVA EARNINGS (LOSS) PER SHARE INFORMATION

Pro forma net income (loss) attributable to Corteva common stockholders is used as the numerator for basic and diluted pro forma net income (loss) per share in each respective period.

The table below contain reconciliations of the denominator for basic and diluted earnings per share calculations for the periods indicated:

 

(Shares in millions)    For the Year
Ended
December 31,
2018
     For the Year
Ended
December 31,
2017
     For the Year
Ended
December 31,
2016
 

DowDuPont common shares outstanding(1)

     2,241.7        2,241.7        2,241.7  

Distribution ratio

     1:3        1:3        1:3  
  

 

 

    

 

 

    

 

 

 

Corteva pro forma common shares outstanding – basic

     747.2        747.2        747.2  
  

 

 

    

 

 

    

 

 

 

Dilutive impact of Historical Dow equity-based awards(2)

     —          12.2        15.1  

Dilutive impact of Historical DuPont equity-based awards(3)

     —          3.9        5.7  

Dilutive impact of DowDuPont equity-based awards(4)

     —          6.1        —    

Pro forma diluted impact of DowDuPont common shares outstanding

     —          22.2        20.8  

Distribution ratio

     1:3        1:3        1:3  

Pro forma diluted impact of Corteva common shares outstanding(5)

     —          7.4        6.9  
  

 

 

    

 

 

    

 

 

 

Corteva pro forma common shares outstanding – diluted

     747.2        754.6        754.1  

 

  (1)

Based on 2,246.3 million DowDuPont common shares outstanding at March 31, 2019, less 4.6 million ESOP shares that had not been released and were not considered outstanding.

  (2)

Reflects share amounts as reported by Historical Dow for the periods presented. The share amount in the year ended December 31, 2017, reflects a weighted averaging effect of Historical Dow shares outstanding prior to August 31, 2017. On December 30, 2016, Historical Dow converted 4 million shares of Historical Dow preferred stock into 96.8 million shares of Historical Dow common stock.

 

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  (3)

Reflects share amounts as reported by Historical DuPont in its Annual Report on Form 10-K for the periods presented, multiplied by the merger agreement conversion ratio of 1.2820. The share amount shown in the year ended December 31, 2017, reflects a weighted averaging effect of Historical DuPont shares outstanding prior to August 31, 2017.

  (4)

The DowDuPont share amount for the year ended December 31, 2017, reflects a weighted averaging effect of DowDuPont shares outstanding after August 31, 2017.

  (5)

For the year ended December 31, 2018, diluted earnings per share does not consider the impact of potentially dilutive securities because the inclusion of the potential common shares would have an anti-dilutive effect.

The unaudited pro forma diluted earnings per common share and pro forma weighted-average diluted shares outstanding give effect to the potential dilution from common shares related to stock-based awards granted to our employees under Historical Dow and Historical DuPont’s stock-based compensation programs for periods prior to the Merger, and under DowDuPont’s stock-based compensation programs for periods subsequent to the consummation of the Merger. This calculation may not be indicative of the dilutive effect that will actually result from Corteva’s stock-based awards issued in connection with the adjustment of outstanding DowDuPont stock-based awards or the grant of new stock-based awards. The number of dilutive shares of common stock underlying Corteva’s stock-based awards issued in connection with the adjustment of outstanding DowDuPont stock-based awards will not be determined until the distribution date or shortly thereafter. For the purposes of preparing the unaudited pro forma diluted earnings per common share and pro forma weighted-average diluted shares, we believe an estimate based on applying the distribution ratio to the weighted-average pro forma DowDuPont diluted shares outstanding for each respective period provides a reasonable approximation of the potential dilutive effect of the stock-based awards.

NOTE 6—INTERNAL REORGANIZATION AND BUSINESS REALIGNMENT

The pro forma financial statements, as shown below, present the pro forma results of operations and financial position of Historical DuPont, after giving effect to the following transactions:

 

   

Internal Reorganization and Business Realignment of Historical DuPont’s materials science and specialty products businesses, which are reflected in all periods below as discontinued operations, in accordance with ASC 205.

 

   

Acquisition of Dow AgroSciences, which is reflected from September 1, 2017 onward as a transfer between entities under common control.

Pro forma adjustments reflecting the above transactions are expected to be reflected in Corteva’s retrospectively revised historical financial statements, beginning in the second quarter of 2019. The pro forma financial statements do not reflect what Corteva’s results of operations or financial position would have been on a stand-alone basis and are not necessarily indicative of Corteva’s future results of operations or financial position.

 

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Corteva, Inc. Unaudited Pro Forma Combined Balance Sheet as of December 31, 2018

 

(in millions)   Successor
Historical
DuPont
    Dow
AgroSciences
    Discontinued
Operations
    Historical
Adjustments(1)
          Successor
Corteva
Continuing
Operations(2)
 
    As Reported     As Reported                          

Assets

           

Current assets

           

Cash and cash equivalents

  $ 4,466     $ 58     $ (2,255   $ —         $ 2,269  

Marketable securities

    34       —         (29     —           5  

Accounts and notes receivable—net

    5,534       2,715       (2,635     (259     (a)(b)       5,355  

Inventories

    7,407       1,811       (3,917     (41     (a)       5,260  

Other current assets

    1,165       124       (253     8       (a)       1,044  

Total current assets

    18,606       4,708       (9,089     (292       13,933  

Investment in nonconsolidated affiliates

    1,381       50       (1,293     —           138  

Net property

    12,186       1,267       (8,920     —           4,533  

Goodwill

    40,686       1,344       (31,837     —           10,193  

Other intangible assets

    26,053       183       (14,181     —           12,055  

Deferred income tax assets

    303       140       (135     (2     (c)       306  

Other assets

    1,810       81       (103     42       (b)       1,830  

Total assets

  $ 101,025     $ 7,773     $ (65,558   $ (252     $ 42,988  

Liabilities and Equity

           

Current liabilities

           

Short-term borrowings and capital lease obligations

  $ 2,160     $ 10     $ (17   $ —         $ 2,153  

Accounts payable

    4,982       1,386       (2,197     (367     (a)       3,804  

Income taxes payable

    66       154       (33     —           187  

Accrued and other current liabilities

    4,233       665       (918     36       (a)(b)       4,016  

Total current liabilities

    11,441       2,215       (3,165     (331       10,160  

Long-term debt

    5,812       5       (33     —           5,784  

Other noncurrent liabilities

           

Deferred income tax liabilities

    5,381       168       (4,052     (22     (c)       1,475  

Pension and other postemployment benefits—noncurrent

    6,683       124       (1,131     —           5,676  

Other noncurrent obligations

    1,620       202       (84     42       (b)       1,780  

Total noncurrent liabilities

    19,496       499       (5,300     20         14,715  

Stockholders’ equity

           

Preferred stock

    239       —         —         (239     (d)       —    

Additional paid-in capital

    79,790       —         (59,589     —           20,201  

(Accumulated deficit) retained earnings

    (7,669     5,893       1,776       59       (f)       59  

Accumulated other comprehensive loss

    (2,503     (858     949       —           (2,412

Total stockholders’ equity

    69,857       5,035       (56,864     (180       17,848  

Noncontrolling interests

    231       24       (229     239       (d)       265  

Total equity

    70,088       5,059       (57,093     59         18,113  

Total liabilities and equity

  $ 101,025     $ 7,773     $ (65,558   $ (252     $ 42,988  

 

(1)

See disclosures following these pro forma financial statements for further details regarding the Historical Adjustments.

(2)

Represents the company’s current best estimate of Corteva’s pro forma historical balance sheet, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. Actual results could differ from these estimates.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

For the Year Ended December 31, 2018

 

     Successor
Historical
DuPont
    Dow
AgroSciences
    Discontinued
Operations
    Historical
Adjustments(1)
          Successor
Corteva
Continuing
Operations(2)
 
(in millions)    As Reported     As Reported                          

Net sales

   $ 26,279     $ 5,646     $ (17,275   $ (363     (a)     $ 14,287  

Cost of goods sold

     18,182       3,893       (11,594     (461     (a)(g)       10,020  

Research and development expense

     1,524       492       (571     (10     (g)       1,435  

Selling, general and administrative expenses

     3,853       770       (1,748     26       (g)       2,901  

Amortization of intangibles

     1,281       22       (912     —           391  

Restructuring and asset-related charges—net

     485       308       (109     10       (g)       694  

Integration and separation costs

     1,375       —         (475     92       (g)       992  

Goodwill impairment charge

     4,503       —         —         —           4,503  

Sundry income (expense)—net

     543       (40     (254     —           249  

Loss on early extinguishment of debt

     81       —         —         —           81  

Interest expense

     331       6       —         —           337  

(Loss) income from continuing operations before income taxes

     (4,793     115       (2,120     (20       (6,818

Provision for (benefit from) income taxes on continuing operations

     220       124       (373     (5     (a)       (34

(Loss) income from continuing operations after income taxes

     (5,013     (9     (1,747     (15       (6,784

Net income from continuing operations attributable to noncontrolling interests

     11       17       (9     10       (e)       29  

Net (loss) income from continuing operations attributable to Corteva

     (5,024     (26     (1,738     (25       (6,813

Preferred stock dividends

     10       —         —         (10     (e)       —    

Net (loss) income from continuing operations attributable to Corteva common stockholders

   $ (5,034   $ (26   $ (1,738   $ (15     $ (6,813

 

(1)

See disclosures following these pro forma financial statements for further details regarding the Historical Adjustments.

(2)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. Actual results could differ from these estimates.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

For the Period January 1 Through August 31, 2017

 

(in millions, except per share amounts)   Predecessor
Historical
DuPont
    Discontinued
Operations
    Historical
Adjustments(1)
          Predecessor
Continuing
Operations(2)
    Reclassification
Adjustments(1)
    Predecessor
Corteva
Continuing
Operations
 
    As Reported                       (subtotal)           As Adjusted  

Net sales

  $ 17,281     $ (10,387   $ —         $ 6,894     $ 60     $ 6,954  

Cost of goods sold

    10,052       (6,602     —           3,450       141       3,591  

Other operating charges

    504       (309     —           195       (195     —    

Research and development expense

    1,022       (388     —           634       —         634  

Selling, general and administrative expenses

    3,222       (1,340     —           1,882       (340     1,542  

Amortization of intangibles

    —         —         —           —         40       40  

Restructuring and asset-related charges—net

    323       (311     —           12       —         12  

Integration and separation costs

    —         —         —           —         354       354  

Sundry expense—net

    (113     (388     —           (501     (96     (597

Interest expense

    254       —         —           254       —         254  

Income (loss) from continuing operations before income taxes

    1,791       (1,825     —           (34     (36     (70

Provision for (benefit from) income taxes on continuing operations

    149       (543     —           (394     (36     (430

Income from continuing operations after income taxes

    1,642       (1,282     —           360       —         360  

Net income from continuing operations attributable to noncontrolling interests

    18       (17     7       (e)       8       —         8  

Net income from continuing operations attributable to Corteva

    1,624       (1,265     (7       352       —         352  

Preferred stock dividends

    7       —         (7     (e)       —         —         —    

Net income from continuing operations attributable to Corteva common stockholders

  $ 1,617     $ (1,265   $ —         $ 352     $ —       $ 352  

Earnings per common share from continuing operations:

             

Basic

  $ 1.86               $ 0.41  

Diluted

  $ 1.85               $ 0.40  

Weighted average common shares outstanding:

             

Basic

    867.9                 867.9  

Diluted

    872.4                 872.4  

 

(1)

See disclosures following these pro forma financial statements for further details regarding the Historical Adjustments and Reclassification Adjustments.

(2)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses. Actual results could differ from these estimates.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

For the Period September 1 Through December 31, 2017

 

(in millions)   Successor
Historical
DuPont
    Dow
AgroSciences(1)
    Discontinued
Operations
    Historical
Adjustments(2)
        Successor
Corteva
Continuing
Operations(3)
 
    As Reported                              

Net sales

  $ 7,053     $ 2,214     $ (5,455   $ (27   (a)   $ 3,785  

Cost of goods sold

    6,240       1,510       (4,753     (61   (a)(g)     2,936  

Research and development expense

    492       211       (187     (5   (g)     511  

Selling, general and administrative expenses

    1,141       298       (557     (12   (g)     870  

Amortization of intangibles

    389       7       (299     —           97  

Restructuring and asset-related charges—net

    180       182       (109     17     (g)     270  

Integration and separation costs

    314       —         (110     51     (g)     255  

Sundry income—net

    224       647       (66     —           805  

Interest expense

    107       8       —         —           115  

(Loss) income from continuing operations before income taxes

    (1,586     645       494       (17       (464

(Benefit from) provision for income taxes on continuing operations

    (2,673     471       1       (6   (a)     (2,207

Income from continuing operations after income taxes

    1,087       174       493       (11       1,743  

Net income from continuing operations attributable to noncontrolling interests

    —         7       —         3     (e)     10  

Net income from continuing operations attributable to Corteva

    1,087       167       493       (14       1,733  

Preferred stock dividends

    3       —         —         (3   (e)     —    

Net income from continuing operations attributable to Corteva common stockholders

  $ 1,084     $ 167     $ 493     $ (11     $ 1,733  

 

(1)

For the post-Merger period September 1, 2017 through December 31, 2017.

(2)

See disclosures following these pro forma financial statements for further details regarding the Historical Adjustments.

(3)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses, as well as the common control combination of Dow AgroSciences. Actual results could differ from these estimates.

 

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Corteva, Inc. Unaudited Pro Forma Combined Statement of Income

For the Year Ended December 31, 2016

 

(in millions, except per share amounts)   Predecessor
Historical
DuPont
    Discontinued
Operations
    Historical
Adjustments(1)
          Predecessor
Continuing
Operations(2)
    Reclassification
Adjustments(1)
    Predecessor
Corteva
Continuing
Operations
 
    As Reported                       (subtotal)           As Adjusted  

Net sales

  $ 23,209     $ (15,076   $ —         $ 8,133     $ 132     $ 8,265  

Cost of goods sold

    13,937       (9,550     —           4,387       216       4,603  

Other operating charges

    667       (416     —           251       (251     —    

Research and development expense

    1,496       (571     —           925       —         925  

Selling, general and administrative expenses

    4,127       (1,766     —           2,361       (295     2,066  

Amortization of intangibles

    —         —         —           —         45       45  

Restructuring and asset-related charges—net

    556       (118     —           438       —         438  

Integration and separation costs

    —         —         —           —         285       285  

Sundry income (expense)—net

    667       (591     —           76       (124     (48

Interest expense

    370       —         —           370       —         370  

Income (loss) from continuing operations before income taxes

    2,723       (3,246     —           (523     8       (515

Provision for (benefit from) income taxes on continuing operations

    641       (924     —           (283     8       (275

Income (loss) from continuing operations after income taxes

    2,082       (2,322     —           (240     —         (240

Net income from continuing operations attributable to noncontrolling interests

    10       (9     10       (e)       11       —         11  

Net income (loss) from continuing operations attributable to Corteva

    2,072       (2,313     (10       (251     —         (251

Preferred stock dividends

    10       —         (10     (e)       —         —         —    

Net income (loss) from continuing operations attributable to Corteva common stockholders

  $ 2,062     $ (2,313   $ —         $ (251   $ —       $ (251

Earnings per common share from continuing operations:

             

Basic

  $ 2.36               $ (0.29

Diluted(3)

  $ 2.35               $ (0.29

Weighted average common shares outstanding (note 5):

             

Basic

    872.6                 872.6  

Diluted(3)

    877.0                 872.6  

 

(1)

See disclosures following these pro forma financial statements for further details regarding the Historical Adjustments and Reclassification Adjustments.

 

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(2)

Represents the company’s current best estimate of Corteva’s retrospectively revised historical financial statements, reflecting the discontinued operations of Historical DuPont’s materials science and specialty products businesses. Actual results could differ from these estimates.

 

(3)

Diluted earnings per share does not consider the impact of potentially dilutive securities because the inclusion of the potential common shares would have an anti-dilutive effect.

 

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Historical Adjustments

The following pro forma adjustments are expected to be reflected in Corteva’s retrospectively revised historical financial statements:

 

(a)

Adjustment primarily relates to the elimination of intercompany transactions between Historical DuPont and Dow AgroSciences for the Successor periods, as if they were combined affiliates. The following tables summarize the intercompany elimination adjustments in the unaudited pro forma combined balance sheet and the unaudited pro forma combined statements of income:

Balance Sheet

 

(in millions)    As of
December 31,
2018
 

Accounts and notes receivable—net

   $ (284

Inventories

     (41

Other current assets

     8  
  

 

 

 

Total current assets

   $ (317

Accounts payable

   $ (367

Accrued and other current liabilities

     11  
  

 

 

 

Total current liabilities

   $ (356

Statements of Income

 

(in millions)    For the
Year Ended
December 31,
2018
     For the Period
September 1 -
December 31,
2017
 

Net sales

   $ (363    $ (27

Cost of goods sold

     (343      (10

(Loss) income from continuing operations before income taxes

     (20      (17

(Benefit from) income taxes on continuing operations(1)

     (5      (6

(Loss) income from continuing operations after income taxes

   $ (15    $ (11

 

  (1) 

Represents the income tax effect of the elimination of inventory transfers calculated using enacted statutory taxes rates applicable in each period at the legal entity in which the pre-tax adjustments were made.

 

(b)

New DuPont will indemnify Corteva against certain litigation, environmental and employee-related liabilities that arose prior to the distribution. Within the unaudited pro forma combined balance sheet, these liabilities are included in the Successor Historical DuPont column and are removed in the Discontinued Operations column. The indemnified liabilities of $25 million and $42 million are included in accrued and other current liabilities and other noncurrent obligations, respectively, and the related indemnification assets of $25 million and $42 million are included in accounts and notes receivable—net and other assets, respectively.

 

(c)

Reflects the impact on deferred tax assets and deferred tax liabilities from jurisdictional netting and a reduction in deferred tax asset valuation allowances due to the assessment of Historical DuPont and Dow AgroSciences deferred tax assets, as if they were consolidated affiliates.

 

(d)

Adjustment to reflect the reclassification of the EID Preferred Stock from preferred stock to noncontrolling interests on the balance sheet, which remain outstanding and unaffected by the Merger, Business Realignment, Internal Reorganization and separation and distribution of Corteva.

 

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(e)

Adjustment to reflect the reclassification of the dividends for EID Preferred Stock from preferred stock dividends to net income from continuing operations attributable to noncontrolling interests in the unaudited pro forma combined statements of income, which remain outstanding and unaffected by the Merger, Business Realignment, Internal Reorganization and separation and distribution of Corteva.

 

(f)

Reflects the impact to Corteva’s retained earnings from pro forma adjustments described above.

 

(g)

In order to align the financial statement presentation of Dow AgroSciences to that of Corteva’s continuing operations, certain reclassification adjustments have been made to the unaudited pro forma combined statements of income as follows:

 

(in millions)    For the
year
Ended
December 31,
2018
     For the Period
September 1 –
December 31,
2017
 

Cost of goods sold

   $ (5      $ (9  

Research and development expense

   $ (1      $ (1  

Selling, general and administrative expenses

   $ (4      $ (7  

Restructuring and asset-related charges—net

       $ 10          $ 17  
   

Cost of goods sold

   $ (46      $ (27  

Research and development expense

   $ (9      $ (4  

Selling, general and administrative expenses

   $ (37      $ (20  

Integration and separation costs

       $ 92          $ 51  
   

Cost of goods sold(1)

   $ (67      $ (15  

Selling, general and administrative expenses(1)

       $ 67          $ 15  

 

(1)

Reflects reclassification of certain allocated Historical Dow leveraged function costs out of cost of goods sold to selling, general and administrative expenses in order to align with Corteva’s presentation of similar costs.

Predecessor Reclassification Adjustments

For periods subsequent to the Merger, Successor Historical DuPont’s historical statement of income conforms to the financial statement presentation of Corteva. In order to align the pro forma financial statement presentation of Predecessor Historical DuPont’s continuing operations for periods prior to the Merger to that of Corteva’s continuing operations, certain reclassification adjustments have been made to the Predecessor periods in the unaudited pro forma combined statements of income.

 

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The following table summarizes reclassifications made to the Predecessor periods in the unaudited pro forma combined statements of income to conform to Corteva’s Successor period pro forma statement of income presentation, and are presented for pro forma presentation alignment only and have not and will not be adjusted in the historical financial statements of Corteva for periods prior to the Merger:

 

(in millions)    For the Period
January 1 –
August 31, 2017
     For the
Year Ended
December 31,
2016
 

Other operating charges (Predecessor Historical DuPont continuing operations)

   $ (195      $ (251  

Cost of goods sold

       $ 156          $ 225  

Selling, general and administrative expenses

       $ 39          $ 26  
   

Sundry (expense) income—net (Predecessor Historical DuPont continuing operations)

   $ (96      $ (124  

Net sales

       $ 60          $ 132  

Benefit from (provision for) income taxes on continuing operations(1)

       $ 36          $ (8
   

Predecessor Historical DuPont amortization of intangibles, continuing operations:

             

Cost of goods sold

   $ (15      $ (9  

Selling, general and administrative expenses

   $ (25      $ (36  

Amortization of intangibles

       $ 40          $ 45  
   

Predecessor Historical DuPont integration and separation costs, continuing operations:

             

Selling, general and administrative expenses

   $ (354      $ (285  

Integration and separation costs(2)

       $ 354          $ 285  

 

(1)

Reflects the reclassification of interest associated with uncertain tax positions to “(Benefit from) provision for income taxes on continuing operations.”

(2)

Reflects the reclassification of expenses related to the Merger as “Integration and separation costs.” Merger-related costs include costs incurred to prepare for and close the Merger, post-Merger integration expenses, and costs incurred to prepare for the separation of the agriculture business, specialty products business and materials science business. These costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with preparation and execution of these activities.

 

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SUPPLEMENTAL MANAGEMENT’S DISCUSSION AND ANALYSIS OF

PRO FORMA SEGMENT RESULTS

The information below presents the pro forma segment results of Corteva, after giving effect to the Merger, Business Realignment, Internal Reorganization, Debt Retirement Transactions and separation and distribution transactions, as if they occurred on January 1, 2016.

The unaudited pro forma segment information was prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma segment results provide shareholders with summary financial information and historical data that is on a basis consistent with how we will report financial information in the future. The unaudited pro forma segment information is for informational purposes only and does not purport to represent what the segment results would have been had the Merger, the Business Realignment, the Internal Reorganization, the Debt Retirement Transactions and the separation and distribution transactions occurred on the dates indicated, or to project the financial performance for any future periods.

Corteva’s operating segments will be Seed and Crop Protection as this represents the level at which the chief operating decision maker (“CODM”) will assess performance and allocate resources. Operating EBITDA will be the primary measure of segment profitability used by Corteva’s CODM. For purposes of the years ended December 31, 2018, 2017 and 2016 Operating EBITDA is calculated on a pro forma basis. The company defines Operating EBITDA as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating costs—net and foreign exchange gains (losses), excluding the impact of adjusted significant items. Non-operating costs—net consists of non-operating pension and other post-employment benefit (OPEB) costs, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont.

Seed

 

(in millions)    For the
Year Ended
December 31, 2018
     For the
Year Ended
December 31, 2017
     For the
Year Ended
December 31, 2016
 

Pro forma net sales

   $ 7,842      $ 8,056      $ 7,835  

Pro forma Operating EBITDA

   $ 1,139      $ 1,170      $ 997  

 

     For the
Year Ended
December 31, 2018
    For the
Year Ended
December 31, 2017
 

Change in pro forma net sales from prior period due to:

    

Local price and product mix

     1     1

Currency

     (1 )%      1

Volume

     (3 )%      1

Portfolio and other

            

Total

     (3 )%      3

2018 versus 2017

Seed pro forma net sales were $7,842 million in 2018, down from $8,056 million in 2017. Pro forma net sales declined 3 percent, reflecting a 1 percent gain in local price and product mix, offset by volume declines of 3 percent and currency declines of 1 percent. Increases in local price and product mix were driven by continued penetration of new corn hybrids and A-Series soybeans. Volume declines represented lower planted area in the U.S. & Canada and Latin America.

 

 

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Pro forma Operating EBITDA was $1,139 million in 2018, down 3 percent from $1,170 million in 2017. Cost synergies were more than offset by lower volume, higher raw material costs and royalty expense, and investments to support new product launches and digital platforms.

2017 versus 2016

Seed pro forma net sales were $8,056 million in 2017, up from $7,835 million in 2016. Pro forma net sales growth of 3 percent was driven by 1 percent gains in local price and product mix, volume and currency. Increases in local prices were driven by continued penetration of Pioneer® brand hybrids with Leptra® insect protection technology, Pioneer Protector® products for sunflower, and Pioneer brand Optimum® AQUAmax® corn hybrids. Volume growth was driven by an increase in sunflower and corn seed sales in Europe and increased soybean sales in North America. These volume increases were partially offset by a reduction in global corn planted area, particularly in North America.

Pro forma Operating EBITDA was $1,170 million in 2017, up 17 percent from $997 million in 2016. Pro forma Operating EBITDA increased on growth in local prices and product mix, improved volume, currency and cost savings. Increases were partially offset by higher product costs, including higher soybean royalties.

Crop Protection

 

(in millions)    For the
Year Ended
December 31, 2018
     For the
Year Ended
December 31, 2017
     For the
Year Ended
December 31, 2016
 

Pro forma net sales

   $ 6,445      $ 6,184      $ 6,206  

Pro forma Operating EBITDA

   $ 1,055      $ 933      $ 919  

 

     For the Year
Ended
December 31, 2018
    For the Year
Ended
December 31, 2017
 

Change in pro forma net sales from prior period due to:

    

Local price and product mix

     3     (3 )% 

Currency

     (2 )%       

Volume

     3     3

Portfolio and other

            

Total

     4      

2018 versus 2017

Crop Protection pro forma net sales were $6,445 million in 2018, up from $6,184 million in 2017. The 4 percent increase in pro forma net sales was driven by 3 percent gains in local price and product mix and 3 percent gains in volumes, partially offset by a 2 percent decline in currency. Increases in local prices were driven by continuing efforts to capture value in established brands across the Crop Protection portfolio globally. Increases in volumes were driven by new product launches such as VESSARYATM fungicides, ENLISTTM products, and ISOCLAST®, Pyraxalt™ and Spinosyn™ insecticides and were partly offset by lower demand for nitrogen stabilizers in the U.S. & Canada and currency pressures in Latin America.

Pro forma Operating EBITDA was $1,055 million in 2018, up 13 percent from $933 million in 2017. Pro forma Operating EBITDA increased on cost synergies and sales gains from new product launches, partly offset by growth investments, including new product launches, higher raw material costs and the unfavorable impact of currency.

 

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2017 versus 2016

Crop Protection pro forma net sales were $6,184 million in 2017, compared to $6,206 million in 2016. Pro forma net sales were essentially flat driven by a 3 percent decline in local price and product mix, mostly offset by volume gains of 3 percent. The decrease in local price and product mix was driven by competitive pressures in Latin America, while volume growth was driven by continued penetration of new crop protection products Vessarya™ and Zorvec® fungicides and continued demand for Arylex® herbicide, Isoclast® insecticide, and novel seed treatment solutions. These volume increases were partially offset by higher inventory levels in China.

Pro forma Operating EBITDA was $933 million in 2017, up 2 percent from $919 million in 2016. Pro forma Operating EBITDA increased on improved volume and cost savings and was partially offset by lower local prices due to competitive crop protection pricing pressure.

Reconciliation of Pro Forma Income from Continuing Operations After Income Taxes to Segment Pro Forma Operating EBITDA

 

     For the
Year Ended December 31,
 
(in millions)    2018      2017      2016  

Pro forma (loss) income from continuing operations after income taxes

   $ (4,962    $ 2,569      $ 528  

Provision for (benefit from) income taxes on continuing operations

    
408
 
     (2,943      (270

Pro forma (loss) income from continuing operations before income taxes

     (4,554      (374      258  

+ Depreciation and amortization

     903        766        705  

– Interest income

     (87      (109      (109

+ Interest expense

     76        74        101  

+ Exchange losses—net

     127        373        207  

+ Corporate expenses

     141        151        186  

+ Non-operating (benefits) costs—net

     (211      265        92  

+ Goodwill impairment charge

     4,503                

+ Significant items

     1,296        957        476  
  

 

 

    

 

 

    

 

 

 

Segment Pro Forma Operating EBITDA

   $ 2,194      $ 2,103      $ 1,916  

Adjusted Significant Items

 

(in millions)    For the Year Ended December 31, 2018  
   Crop
Protection
     Seeds      Corporate  

Gain on sale of assets

   $ —        $ (22    $ —    

Loss on deconsolidation of subsidiary

     —          53        —    

Integration costs

     —          —          571  

Restructuring and asset-related charges—net

     58        368        268  

Total significant items

   $ 58      $ 399      $ 839  

 

(in millions)    For the Year Ended December 31, 2017  
   Crop
Protection
     Seeds      Corporate  

Bayer CropScience arbitration

   $ —        $ 469      $ —    

Integration costs

     —          —          217  

Restructuring and asset-related (benefits) charges—net

     (2      133        140  

Total significant items

   $ (2    $ 602      $ 357  

 

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(in millions)    For the Year Ended December 31, 2016  
   Crop
Protection
     Seeds      Corporate  

Customer claim adjustment/recovery

   $ (53    $ —        $ —    

Environmental charges

     2        —          —    

Integration costs

     —          —          74  

Restructuring and asset-related charges—net

     69        27        357  

Total significant items

   $ 18      $ 27      $ 431  

 

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SUPPLEMENTAL LIQUIDITY & CAPITAL RESOURCES

The company believes its ability to generate cash from operations and access to capital markets and commercial paper markets will be adequate to meet anticipated cash requirements to fund its operations, including seasonal working capital, capital spending and pension obligations. Corteva is committed to maintaining a strong credit profile and has targeted an A- credit rating (expressed in S&P nomenclature). The company believes its strong financial position, liquidity and targeted credit rating will provide access as needed to capital markets and commercial paper markets to fund seasonal working capital needs. The company expects its liquidity needs can be met through a variety of sources, including cash provided by operating activities, commercial paper, syndicated credit lines, bilateral credit lines, long-term debt markets, bank financing and committed receivable repurchase facilities.

At separation, the company expects to have access to approximately $7.3 billion in committed and uncommitted credit lines, including a $3.0 billion five year revolving credit facility and a $3.0 billion three year revolving credit facility (the “2018 Revolving Credit Facilities”). These credit lines will support our commercial paper borrowings and can be used for general corporate purposes, including supporting the company’s liquidity needs, funding of seasonal working capital, contributions to certain benefit plans, severance payments and capital expenditures. In November 2018, Historical DuPont entered into the 2018 Revolving Credit Facilities, to which Corteva will become a party at the time of separation and distribution. For a more detailed description of the 2018 Revolving Credit Facilities, see the section entitled “Description of Material Indebtedness.”

In February 2019, Historical DuPont entered into a committed receivable repurchase facility of up to $1,300 million (the “2019 Repurchase Facility”) which expires in December 2019. Under the 2019 Repurchase Facility, Historical DuPont may sell a portfolio of available and eligible outstanding customer notes receivables within the agriculture product line to participating institutions and simultaneously agree to repurchase at a future date. The 2019 Repurchase Facility is considered a secured borrowing with the customer notes receivables (inclusive of those that are sold and repurchased) equal to 105% of the outstanding amounts borrowed utilized as collateral. Borrowings under the 2019 Repurchase Facility will have an interest rate of LIBOR + 0.75%.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following table presents Corteva’s selected historical condensed consolidated financial data based on that of Historical DuPont. The selected historical condensed consolidated financial data has been derived from the financial information contained in Historical DuPont’s annual financial statements for the periods shown, including those incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part. In connection with the Merger, the assets and liabilities of Historical DuPont were measured at fair value under the acquisition method of accounting. Historical DuPont elected to apply pushdown accounting, thereby requiring that the assets and liabilities reflect their fair value at the date of the Merger. As a result of the change in the cost basis of these assets and liabilities, and the alignment of our accounting policies and financial statement presentation to DowDuPont’s, the historical financial statements and the related disclosures of Corteva, which are that of Historical DuPont, present pre-Merger activity as the “Predecessor” and post-Merger activity as the “Successor.” Accordingly, the financial position, results of operations, and cash flows and related disclosures for the Predecessor and Successor periods are separated by a black line division, indicating that the pre-Merger and post-Merger periods are not comparable.

For a better understanding, this section should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the unaudited pro forma combined financial statements and accompanying notes, and the annual financial statements and accompanying notes, which are incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part.

 

(in millions, except per share amounts)   Successor     Predecessor  
  For the Year
Ended
December 31,
2018
    For the
Period
September 1
through
December 31,
2017
    For the
Period
January 1
through
August 31,
2017
    For the Year
Ended
December 31,
2016
    For the Year
Ended
December 31,
2015
    For the Year
Ended
December 31,
2014
(unaudited)
 

Summary of operations:

             

Net sales

  $ 26,279     $ 7,053     $ 17,281     $ 23,209     $ 23,657     $ 26,612  

Restructuring and asset related charges—net

  $ 485     $ 180     $ 323     $ 556     $ 795     $ 472  

(Loss) income from continuing operations before income taxes

  $ (4,793   $ (1,586   $ 1,791     $ 2,723     $ 2,022     $ 3,564  

Provision for (benefit from) income taxes on continuing operations

  $ 220     $ (2,673   $ 149     $ 641     $ 575     $ 1,021  

Net income attributable to Historical DuPont

  $ (5,029   $ 1,010     $ 1,741     $ 2,513     $ 1,953     $ 3,625  

Basic earnings per share of common stock from continuing operations

        $ 1.86     $ 2.36     $ 1.60     $ 2.76  

Diluted earnings per share of common stock from continuing operations

        $ 1.85     $ 2.35     $ 1.59     $ 2.74  

General:

             

Purchases of property, plant and equipment and investments in affiliates

  $ 1,319     $ 431     $ 709     $ 1,038     $ 1,705     $ 2,062  

Depreciation

  $ 1,308     $ 426     $ 589     $ 907     $ 948     $ 975  

Research and development expense

  $ 1,524     $ 492     $ 1,022     $ 1,496     $ 1,735     $ 1,779  

Weighted-average number of common shares outstanding:

             

Basic

          868       873       894       915  

Diluted

          872       877       900       922  

Dividends per common share

        $ 1.14     $ 1.52     $ 1.72     $ 1.84  

 

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(Dollars in millions)   Successor     Predecessor  

As of December 31,

  2018     2017     2016     2015     2014
(unaudited)
 

Financial position:

           

Working capital(1)

  $ 7,165     $ 10,912     $ 7,866     $ 6,618     $ 7,756  

Total assets

  $ 101,025     $ 112,964     $ 39,964     $ 41,166     $ 50,490  

Borrowings and capital lease obligations

           

Current

  $ 2,160     $ 2,779     $ 429     $ 1,165     $ 1,422  

Long term

  $ 5,812     $ 10,291     $ 8,107     $ 7,642     $ 9,233  

Total equity

  $ 70,088     $ 74,932     $ 10,196     $ 10,200     $ 13,378  

 

(1)

Working capital has been restated to exclude the assets and liabilities related to the Performance Chemicals segment and the Divested Ag Business. The assets and liabilities related to the Performance Chemicals business are presented as assets of discontinued operations and liabilities of discontinued operations, respectively, in the consolidated balance sheets for all periods presented. The assets and liabilities related to the Divested Ag Business are presented as assets held for sale and liabilities held for sale, respectively, in the consolidated balance sheets for all periods presented. See note 4 to the annual consolidated financial statements, which are incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part, for further information.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

You should read the following in conjunction with the sections in this information statements entitled “Risk Factors,” “Cautionary Statement Concerning Forward-Looking Statements,” “Selected Historical Consolidated Financial Data,” “Merger, Intended Separations, Reorganization and Financial Statement Presentation,” “The Distribution,” “Unaudited Pro Forma Combined Financial Statements,” “Business” and “Our Relationship with New DuPont and Dow Following the Distribution” as well as the Historical DuPont annual financial statements and related notes thereto, which are incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part.

The management’s discussion and analysis (“MD&A”) of Corteva’s historical financial condition and results of operations presented below is that of Historical DuPont. The following refers to and should be read in conjunction with the annual consolidated financial statements and accompanying notes, which are incorporated by reference herein and filed as Exhibit 99.2 to the Form 10 of which this information statement forms a part. This MD&A has been included to help provide an understanding of Historical DuPont’s financial condition, changes in financial condition and results of operations.

The financial information and results of operations that are discussed in this section relate to Historical DuPont (unless otherwise specifically stated). Consequently, the discussion in this section relates to Historical DuPont as it is currently comprised, without giving effect to the Internal Reorganization and Business Realignment and the other transactions that will occur in connection with the separation and distribution. The discussion in this section therefore includes Historical DuPont’s materials science and specialty products businesses, and does not reflect Corteva as it will be constituted following the separation as a pure-play agriculture company. As a result, the discussion does not necessarily reflect the expected financial position, results of operations or cash flows of Corteva following the separation or what Corteva’s financial position, results of operations and cash flows would have been had Corteva been an independent, publicly traded company during the periods presented. See the section entitled “Merger, Reorganization and Financial Statement Presentation,” “The Separation” and “Our Relationship with New DuPont and Dow Following the Distribution” for a discussion of the Internal Reorganization and Business Realignment and the related transactions in connection with the separation and distribution.

The following discussion may contain forward-looking statements that reflect the plans, estimates and beliefs of Historical DuPont. The words “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning and similar expressions, among others, generally identify “forward-looking statements,” which speak only as of the date the statements were made. The matters discussed in these forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those set forth in the forward-looking statements.

Factors that could cause actual results or events to differ materially from those anticipated include the matters described under the sections entitled “Risk Factors,” “Business,” and “Cautionary Statement Concerning Forward-Looking Statements.” We disclaim and do not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law.

 

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Recent Developments

Intended Business Separations

Effective as of 5:00 p.m. ET on April 1, 2019, DowDuPont completed the separation of its materials science business into a separate and independent public company by way of the distribution of Dow through a pro rata dividend in-kind of Dow’s common stock to holders of record of DowDuPont common stock as of the close of business on March 21, 2019. Prior to the distribution of Dow, Historical Dow conveyed or transferred the assets and liabilities aligned with Historical Dow’s agriculture business to the Dow AgroSciences entities and the assets and liabilities associated with its specialty products business to the Dow Specialty Products entities. On April 1, 2019, the Dow AgroSciences entities and the Dow Specialty Products entities were transferred and conveyed to DowDuPont.

DowDuPont expects to complete the previously announced intended separation of its agriculture business into a separate and independent public company on June 1, 2019 by way of a distribution of Corteva, a Delaware corporation and wholly-owned subsidiary of DowDuPont, through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Corteva’s common stock to holders of DowDuPont common stock as of the close of business on May 24, 2019.

In furtherance of the Intended Business Separations, Historical DuPont engaged in the Internal Reorganization to realign its businesses into three subgroups: agriculture, materials science and specialty products. As part of the Internal Reorganization:

 

   

the assets and liabilities aligned with Historical DuPont’s materials science business, including Historical DuPont’s ECP business, were transferred or conveyed to the DuPont Materials Science entities that were ultimately conveyed by DowDuPont to Dow;

 

   

the assets and liabilities aligned with Historical DuPont’s specialty products business were transferred or conveyed to the DuPont Specialty Products entities that were ultimately distributed to DowDuPont;

 

   

on April 1, 2019, Historical DuPont distributed the DuPont Materials Science entities to DowDuPont which DowDuPont then conveyed to Dow;

 

   

on May 1, 2019, Historical DuPont distributed the DuPont Specialty Products entities to DowDuPont;

 

   

on May 2, 2019, DowDuPont conveyed the Dow AgroSciences entities to Historical DuPont in connection with the foregoing, Historical DuPont issued additional shares of its Common Stock to DowDuPont; and

As