EX-99.2 3 a93019enr.htm EX-99.2 Exhibit
1
Corteva, Inc.
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)


 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net sales
$
1,911

 
$
1,947

 
$
10,863

 
$
11,472

Cost of goods sold
1,349

 
1,485

 
6,607

 
7,924

Research and development expense
289

 
325

 
857

 
1,010

Selling, general and administrative expenses
646

 
633

 
2,318

 
2,347

Amortization of intangibles
100


88


314


284

Restructuring and asset related charges - net
46

 
235

 
167

 
466

Integration and separation costs
152

 
253

 
694

 
697

Goodwill impairment charge
—


4,503


—


4,503

Other income - net
59

 
7

 
90

 
118

Loss on early extinguishment of debt
—

 
—

 
13

 
—

Interest expense
19

 
82

 
112

 
251

Loss from continuing operations before income taxes
(631
)

(5,650
)

(129
)

(5,892
)
(Benefit from) provision for income taxes on continuing operations
(104
)

(8
)

99


(187
)
Loss from continuing operations after income taxes
(527
)

(5,642
)

(228
)

(5,705
)
Income (loss) from discontinued operations after income taxes
22

 
526

 
(695
)
 
1,200

 
 
 
 
 
 
 
 
Net loss
(505
)
 
(5,116
)
 
(923
)
 
(4,505
)
 
 
 
 
 
 
 
 
Net (loss) income attributable to noncontrolling interests
(11
)

5


15


29

 
 
 
 
 
 
 
 
Net loss attributable to Corteva
$
(494
)
 
$
(5,121
)
 
$
(938
)
 
$
(4,534
)
 
 
 
 
 
 
 
 
Basic loss per share of common stock:
 
 
 
 
 
 
 
Basic loss per share of common stock from continuing operations
$
(0.69
)
 
$
(7.54
)
 
$
(0.32
)
 
$
(7.64
)
Basic earnings (loss) per share of common stock from discontinued operations
0.03

 
0.71

 
(0.93
)
 
1.59

Basic loss per share of common stock
$
(0.66
)
 
$
(6.83
)
 
$
(1.25
)
 
$
(6.05
)
 
 
 
 
 
 
 
 
Diluted loss per share of common stock:
 
 
 
 
 
 
 
Diluted loss per share of common stock from continuing operations
$
(0.69
)
 
$
(7.54
)
 
$
(0.32
)
 
$
(7.64
)
Diluted earnings (loss) per share of common stock from discontinued operations
0.03

 
0.71

 
(0.93
)
 
1.59

Diluted loss per share of common stock
$
(0.66
)
 
$
(6.83
)
 
$
(1.25
)
 
$
(6.05
)
 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation (in millions)1
 
 
 
 
 
 
 
  Basic
749.5

 
749.4

 
749.4

 
749.4

  Diluted
749.5

 
749.4

 
749.4

 
749.4

1.
On June 1, 2019, DuPont de Nemours, Inc. ("DuPont") distributed 748,815,000 shares of Corteva, Inc. common stock to holders of its common stock. Basic and diluted (loss) earnings per common share for the three and nine months ended September 30, 2018 were calculated using the shares distributed on June 1, 2019 plus 582,000 of additional shares in which accelerated vesting conditions have been met.




2
Corteva, Inc.
Condensed Consolidated Balance Sheets
(Dollars in millions, except per share amounts)

 
 
 
 
 
 
 
September 30,
2019
 
December 31,
2018
 
September 30,
2018
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
1,980

 
$
2,270

 
$
1,657

Marketable securities
 
117

 
5

 
142

Accounts and notes receivable, net
 
6,574

 
5,260

 
6,547

Inventories
 
4,403

 
5,310

 
4,898

Other current assets
 
1,043

 
1,038

 
1,041

Assets of discontinued operations - current
 
—

 
9,089

 
9,055

Total current assets
 
14,117

 
22,972

 
23,340

Investment in nonconsolidated affiliates
 
70

 
138

 
144

Property, plant and equipment, net of accumulated depreciation
 September 30, 2019 - $3,186, December 31, 2018 - $2,796 and September 30, 2018- $2,694)
 
4,503

 
4,544

 
4,384

Goodwill
 
10,168

 
10,193

 
10,203

Other intangible assets
 
11,667

 
12,055

 
12,138

Deferred income taxes
 
270

 
304

 
366

Other assets
 
2,440

 
1,932

 
1,888

Assets of discontinued operations - noncurrent
 
—

 
56,545

 
57,185

Total Assets
 
$
43,235

 
$
108,683

 
$
109,648

 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
Short-term borrowings and finance lease obligations
 
$
3,604

 
$
2,154

 
$
4,371

Accounts payable
 
3,014

 
3,798

 
3,642

Income taxes payable
 
126

 
186

 
224

Accrued and other current liabilities
 
2,249

 
4,005

 
2,117

Liabilities of discontinued operations - current
 
—

 
3,167

 
2,888

Total current liabilities
 
8,993

 
13,310

 
13,242

Long-Term Debt
 
116

 
5,784

 
10,215

Other Noncurrent Liabilities
 


 


 


Deferred income tax liabilities
 
1,328

 
1,480

 
1,594

Pension and other post employment benefits - noncurrent
 
5,405

 
5,677

 
5,267

Other noncurrent obligations
 
2,132

 
1,795

 
1,799

Liabilities of discontinued operations - noncurrent
 
—

 
5,484

 
5,532

Total noncurrent liabilities
 
8,981

 
20,220

 
24,407

 
 
 
 
 
 
 
Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' equity
 
 
 
 
 
 
Common stock, $0.01 par value; 1,666,666,667 shares authorized;
issued at September 30, 2019 - 748,390,000
 
7

 
—

 
—

Additional paid-in capital
 
28,072

 
—

 
—

Divisional equity
 
—

 
78,020

 
73,767

Accumulated deficit
 
(397
)
 
—

 
—

Accumulated other comprehensive loss
 
(2,667
)
 
(3,360
)
 
(2,271
)
Total Corteva stockholders' equity
 
25,015

 
74,660

 
71,496

Noncontrolling interests
 
246

 
493

 
503

Total equity
 
25,261

 
75,153

 
71,999

Total Liabilities and Equity
 
$
43,235

 
$
108,683

 
$
109,648


3
Corteva, Inc.
Pro Forma Consolidated Statements of Operations1 
(Dollars in millions, except per share amounts)

 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended
September 30,
 
2019 2
 
2018
 
2019
 
2018
Net sales
$
1,911

 
$
1,947

 
$
10,863

 
$
11,472

Cost of goods sold
1,349

 
1,388

 
6,418

 
6,543

Research and development expense
289

 
324

 
857

 
1,008

Selling, general and administrative expenses
646

 
633

 
2,321

 
2,348

Amortization of intangibles
100


88


314


284

Restructuring and asset related charges - net
46

 
235

 
167

 
466

Integration and separation costs
152

 
134

 
582

 
384

Goodwill impairment charge
—


4,503


—


4,503

Other income - net
59

 
7

 
90

 
118

Loss on early extinguishment of debt
—

 
—

 
13

 
—

Interest expense
19


13


67


51

(Loss) income from continuing operations before income taxes
(631
)

(5,364
)

214


(3,997
)
(Benefit from) provision for income taxes on continuing operations
(104
)

(28
)

146


194

(Loss) income from continuing operations after income taxes
(527
)

(5,336
)

68


(4,191
)
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to noncontrolling interests
(11
)

5


10


23

 
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to Corteva
$
(516
)

$
(5,341
)
 
$
58


$
(4,214
)
 
 
 
 
 
 
 
 
Basic (loss) earnings per share of common stock from continuing operations
$
(0.69
)
 
$
(7.13
)
 
$
0.08

 
$
(5.62
)
 
 
 

 
 
 
 
Diluted (loss) earnings per share of common stock from continuing operations
$
(0.69
)

$
(7.13
)
 
$
0.08


$
(5.62
)
 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation (in millions) 3
 
 
 
 
 
 
 
  Basic
749.5

 
749.4

 
749.4

 
749.4

  Diluted
749.5


749.4


749.4


749.4


1.
See Article 11 Pro Forma Combined Statements of Operations beginning on page 14.
2.
The three months ended September 30, 2019 are on an as reported basis.
3.
On June 1, 2019, DuPont distributed 748,815,000 shares of Corteva, Inc. common stock to holders of its common stock. Basic and diluted (loss) earnings per common share for the three and nine months ended September 30, 2018 were calculated using the shares distributed on June 1, 2019 plus 582,000 of additional shares in which accelerated vesting conditions have been met.




4
Corteva, Inc.
Consolidated Segment Information
(Dollars in millions)


 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
SEGMENT NET SALES - SEED
 
2019
 
2018
 
2019
 
2018
    Corn
 
$
372

 
$
344

 
$
4,149

 
$
4,289

    Soybean
 
168

 
54

 
1,297

 
1,449

    Other oilseeds
 
44

 
57

 
469

 
514

    Other
 
97

 
96

 
432

 
464

Seed
 
$
681

 
$
551

 
$
6,347

 
$
6,716

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
SEGMENT NET SALES - CROP PROTECTION
 
2019
 
2018
 
2019
 
2018
    Herbicides
 
$
584

 
$
648

 
$
2,399

 
$
2,579

    Insecticides
 
322

 
334

 
1,158

 
1,111

    Fungicides
 
254

 
292

 
776

 
839

    Other
 
70

 
122

 
183

 
227

Crop Protection
 
$
1,230

 
$
1,396

 
$
4,516

 
$
4,756

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
GEOGRAPHIC NET SALES - SEED
 
2019
 
2018
 
2019
 
2018
North America 1
 
$
226


$
112


$
4,238


$
4,590

EMEA 2
 
122


133


1,200


1,222

Asia Pacific
 
62


52


273


272

Latin America
 
271


254


636


632

Rest of World 3
 
455

 
439

 
2,109

 
2,126

Net Sales
 
$
681

 
$
551

 
$
6,347

 
$
6,716

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
GEOGRAPHIC NET SALES - CROP PROTECTION
 
2019
 
2018
 
2019
 
2018
North America 1
 
$
397


$
425


$
1,562


$
1,844

EMEA 2
 
183


163


1,136


1,157

Asia Pacific
 
159


187


674


653

Latin America
 
491


621


1,144


1,102

Rest of World 3
 
833

 
971

 
2,954

 
2,912

Net Sales
 
$
1,230

 
$
1,396

 
$
4,516

 
$
4,756

 
 
 
 
 
 
 
 
 
1. Reflects U.S. & Canada
 
 
 
 
 
 
 
 
2. Reflects Europe, Middle East, and Africa
 
 
 
 
 
 
 
 
3. Reflects EMEA, Latin America, and Asia Pacific
 
 
 
 
 
 
 
 



5
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)

 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
OPERATING EBITDA
 
As Reported
 
Pro Forma
 
Pro Forma
 
Pro Forma
Seed
 
$
(295
)
 
$
(372
)
 
$
1,066

 
$
1,226

Crop Protection
 
119

 
159

 
789

 
905

Corporate Expenses
 
(31
)
 
(38
)
 
(92
)
 
(109
)
Operating EBITDA (Non-GAAP)
 
$
(207
)
 
$
(251
)
 
$
1,763

 
$
2,022

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS AFTER INCOME TAXES TO OPERATING EBITDA
 
As Reported
 
Pro Forma
 
Pro Forma
 
Pro Forma
(Loss) income from continuing operations after income taxes (GAAP)
 
$
(527
)

$
(5,336
)

$
68


$
(4,191
)
(Benefit from) provision for income taxes on continuing operations
 
(104
)

(28
)

146


194

(Loss) income from continuing operations before income taxes (GAAP)
 
(631
)
 
(5,364
)
 
214

 
(3,997
)
Depreciation and amortization
 
226


215


711


667

Interest income
 
(13
)

(12
)

(46
)

(63
)
Interest expense
 
19


13


67


51

Exchange (gains) losses - net
 
(22
)
 
74

 
37

 
140

Non-operating benefits - net1
 
(32
)

(49
)
 
(106
)
 
(155
)
Goodwill impairment charge
 
—


4,503


—


4,503

Significant items charge
 
246


369

 
886

 
876

Operating EBITDA (Non-GAAP)
 
(207
)

(251
)

1,763


2,022

1.
Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) (benefit) costs, tax indemnification adjustments, environmental remediation and legal costs associated with legacy EID businesses and sites. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense.


6
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)

PRICE - VOLUME - CURRENCY ANALYSIS
REGION
 
 
 
Q3 2019 vs. Q3 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &
 
 
Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
86

16
 %
$
86

16
 %
(15
)%
31
 %
—
 %
—
%
EMEA
9

3
 %
22

8
 %
1
 %
7
 %
(5
)%
—
%
Asia Pacific
(18
)
(8
)%
(14
)
(6
)%
(4
)%
(2
)%
(2
)%
—
%
Latin America
(113
)
(13
)%
(101
)
(11
)%
4
 %
(15
)%
(2
)%
—
%
Rest of World
(122
)
(9
)%
(93
)
(7
)%
2
 %
(9
)%
(2
)%
—
%
Total
$
(36
)
(2
)%
$
(7
)
—
 %
(3
)%
3
 %
(2
)%
—
%
 
 
 
 
 
 
 
 
 
SEED
 
 
 
 
 
 
 
 
 
Q3 2019 vs. Q3 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &
 
 
Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
114

102
 %
$
114

102
 %
(63
)%
165
 %
—
 %
—
%
EMEA
(11
)
(8
)%
(5
)
(3
)%
2
 %
(5
)%
(5
)%
—
%
Asia Pacific
10

19
 %
12

23
 %
5
 %
18
 %
(4
)%
—
%
Latin America
17

7
 %
21

9
 %
14
 %
(5
)%
(2
)%
—
%
Rest of World
16

4
 %
28

7
 %
10
 %
(3
)%
(3
)%
—
%
Total
$
130

24
 %
$
142

26
 %
(5
)%
31
 %
(2
)%
—
%
 
 
 
 
 
 
 
 
 
CROP PROTECTION
 
Q3 2019 vs. Q3 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &
 
 
Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
(28
)
(7
)%
$
(28
)
(7
)%
(3
)%
(4
)%
—
 %
—
%
EMEA
20

12
 %
27

16
 %
—
 %
16
 %
(4
)%
—
%
Asia Pacific
(28
)
(15
)%
(26
)
(14
)%
(6
)%
(8
)%
(1
)%
—
%
Latin America
(130
)
(21
)%
(122
)
(20
)%
(1
)%
(19
)%
(1
)%
—
%
Rest of World
(138
)
(14
)%
(121
)
(12
)%
(1
)%
(11
)%
(2
)%
—
%
Total
$
(166
)
(12
)%
$
(149
)
(11
)%
(2
)%
(9
)%
(1
)%
—
%


7
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)

PRICE - VOLUME - CURRENCY ANALYSIS
REGION
 
 
 
Nine Months 2019 vs. Nine Months 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &


Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
(634
)
(10
)%
$
(606
)
(10
)%
(3
)%
(7
)%
—
 %
—
%
EMEA
(43
)
(2
)%
164

7
 %
1
 %
6
 %
(9
)%
—
%
Asia Pacific
22

2
 %
66

7
 %
4
 %
3
 %
(5
)%
—
%
Latin America
46

3
 %
114

7
 %
4
 %
3
 %
(4
)%
—
%
Rest of World
25

—
 %
344

6
 %
2
 %
4
 %
(6
)%
—
%
Total
$
(609
)
(5
)%
$
(262
)
(2
)%
—
 %
(2
)%
(3
)%
—
%
 
 
 
 
 
 
 
 
 
SEED
 
 
 
 
 
 
 
 
 
Nine Months 2019 vs. Nine Months 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &


Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
(352
)
(8
)%
$
(338
)
(8
)%
(4
)%
(4
)%
—
 %
—
%
EMEA
(22
)
(2
)%
93

7
 %
1
 %
6
 %
(9
)%
—
%
Asia Pacific
1

—
 %
18

6
 %
2
 %
4
 %
(6
)%
—
%
Latin America
4

1
 %
29

5
 %
6
 %
(1
)%
(4
)%
—
%
Rest of World
(17
)
(1
)%
140

6
 %
3
 %
3
 %
(7
)%
—
%
Total
$
(369
)
(5
)%
$
(198
)
(3
)%
(1
)%
(2
)%
(2
)%
—
%
 
 
 
 
 
 
 
 
 
CROP PROTECTION
 
Nine Months 2019 vs. Nine Months 2018
Percent Change Due To:
 
Net Sales Change (GAAP)
Organic Change 1 (Non-GAAP) 
Local Price &


Portfolio /
 
$
%
$
%
Product Mix
Volume
Currency
Other
North America
$
(282
)
(15
)%
$
(268
)
(15
)%
(2
)%
(13
)%
—
 %
—
%
EMEA
(21
)
(2
)%
71

6
 %
1
 %
5
 %
(8
)%
—
%
Asia Pacific
21

3
 %
48

7
 %
4
 %
3
 %
(4
)%
—
%
Latin America
42

4
 %
85

8
 %
2
 %
6
 %
(4
)%
—
%
Rest of World
42

1
 %
204

7
 %
2
 %
5
 %
(6
)%
—
%
Total
$
(240
)
(5
)%
$
(64
)
(1
)%
1
 %
(2
)%
(4
)%
—
%

1.
Organic sales is defined as price and volume and excludes currency and portfolio impacts.



8
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)

SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX)
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
 
As Reported
 
Pro Forma
 
Pro Forma
 
Pro Forma
Seed
$
(62
)
 
$
(190
)
 
$
(214
)
 
$
(249
)
Crop Protection
1

 
(30
)
 
(24
)
 
(42
)
Corporate
(185
)
 
(149
)
 
(648
)
 
(585
)
Total significant items before income taxes
$
(246
)

$
(369
)

$
(886
)

$
(876
)
 
 
 
 
 
 
 
 
SIGNIFICANT ITEMS - PRE-TAX, AFTER-TAX AND EPS IMPACTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pre-tax
 
After-tax9
 
($ Per Share)10
 
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
1st Quarter
Pro Forma

 
Pro Forma

 
Pro Forma

 
Pro Forma

 
Pro Forma

 
Pro Forma

Integration costs 1
$
(100
)
 
$
(124
)
 
$
(16
)
 
$
(93
)
 
$
(0.02
)
 
$
(0.12
)
Restructuring and asset related charges, net 2
(61
)
 
(130
)
 
(53
)
 
(100
)
 
(0.07
)
 
(0.13
)
Loss on divestiture 3
(24
)
 
—

 
(24
)
 
—

 
(0.03
)
 
—

Income tax items 4
—

 
(50
)
 
—

 
(102
)
 
—

 
(0.14
)
1st Quarter - Total
$
(185
)
 
$
(304
)
 
$
(93
)
 
$
(295
)
 
$
(0.12
)
 
$
(0.39
)
 
 
 
 
 
 
 
 
 
 
 
 
 
2nd Quarter
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
Integration and separation costs 1
$
(330
)
 
$
(126
)
 
$
(436
)
 
$
(97
)
 
$
(0.58
)
 
$
(0.13
)
Restructuring and asset related charges, net 2
(60
)
 
(101
)
 
(48
)
 
(81
)
 
(0.06
)
 
(0.11
)
Gain on sale of assets 5
—

 
24

 
—

 
19

 
—

 
0.03

Amortization of inventory step up 6
(52
)
 
—

 
(41
)
 
—

 
(0.06
)
 
—

Loss on early extinguishment of debt 7
(13
)
 
—

 
(10
)
 
—

 
(0.01
)
 
—

Income tax items 4
—

 
—

 
—

 
(7
)
 
—

 
(0.01
)
2nd Quarter - Total
$
(455
)

$
(203
)
 
$
(535
)
 
$
(166
)
 
$
(0.71
)
 
$
(0.22
)
 
 
 
 
 
 
 
 
 
 
 
 
 
3rd Quarter
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
 
As Reported
 
Pro Forma
Integration and separation costs 1
$
(152
)
 
$
(134
)
 
$
(119
)
 
$
(162
)
 
$
(0.16
)
 
$
(0.22
)
Restructuring and asset related charges, net 2
(46
)
 
(235
)
 
(34
)
 
(192
)
 
(0.04
)
 
(0.26
)
Amortization of inventory step up 6
(15
)
 
—

 
(15
)
 
—

 
(0.02
)
 
—

Argentina currency devaluation 8
(33
)
 
—

 
(38
)
 
—

 
(0.05
)
 
—

Income tax items4
—

 
—

 
38

 
(2
)
 
0.05

 
—

3rd Quarter - Total
$
(246
)
 
$
(369
)
 
$
(168
)
 
$
(356
)
 
$
(0.22
)
 
$
(0.48
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Year-to-date Total 10
$
(886
)
 
$
(876
)
 
$
(796
)
 
$
(817
)
 
$
(1.06
)
 
$
(1.09
)

1.
Integration and separation costs is included in "Integration and separation costs" on the Consolidated Statement of Operations. Beginning in Q2 2019, this includes both integration and separation costs. Included in the after-tax charges are net tax charges of $(32) million and $(114) million related to U.S. state blended tax rate changes associated with the Business Separations for the first and second quarter 2019, respectively.  Also, included in the after-tax charges are a net tax charge of $(96) million and a net tax benefit of $13 million related to application of the U.S. tax reform’s foreign tax provisions for the second and third quarter 2019, respectively, and a tax benefit of $102 million related to an internal legal entity restructuring associated with the Business Separations for the second quarter 2019.


9
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)


2.
Third quarter, second quarter, and first quarter 2019 included restructuring and asset related charges of $(46) million, $(60) million and $(61) million, respectively. The charge for the third quarter included a $(54) million non-cash asset impairment related to certain intangible assets that primarily relate to heritage Dow AgroSciences intangibles previously acquired from Cooperativa Central de Pesquisa Agrícola's ("Coodetec"), classified as developed technology, other intangible assets and in-process research and development ("IPR&D"), partially offset by a benefit of $8 million associated with the DowDuPont Cost Synergy Program. The charge for the first and second quarter is primarily related to the DowDuPont Cost Synergy Program.

Third quarter, second quarter, and first quarter 2018 included restructuring and asset related charges of $(235) million, $(101) million and $(130) million, respectively. The charges for the first and second quarter primarily related to the DowDuPont Cost Synergy Program. The charges for the third quarter included a $(109) million charge related to the DowDuPont Cost Synergy Program, an $(85) million non-cash asset impairment related to certain IPR&D intangibles, and a $(41) million other than temporary non-cash impairment related to an investment in nonconsolidated affiliates in China.

3.
First quarter 2019 included a loss of $(24) million included in other income - net related to Historical Dow's sale of a joint venture related to synergy actions.

4.
First quarter 2018 includes a $(50) million pre-tax foreign exchange loss related to adjustments to foreign currency exchange contracts as a result of U.S. tax reform and a $(64) million after tax charge related to effects of U.S. tax reform.

Second quarter 2018 relates to effects of U.S. tax reform.

Third quarter 2018 includes an after tax benefit related to the impacts of a tax valuation allowance recorded against the net deferred tax asset position of a Brazilian legal entity ($75 million expense), a tax charge related to an internal legal entity restructuring associated with the Business Separations ($25 million expense), and U.S. Tax Reform ($16 million expense), which were almost entirely offset by the impact of the company's discretionary pension contribution in 2018 which was deducted on a 2017 tax return ($114 million benefit).

Third quarter 2019 includes an after tax benefit related to Swiss Tax Reform.

5.
Second quarter 2018 includes a gain of $24 million included in other income - net related to an asset sale.

6.
Third quarter and second quarter 2019 include amortization of inventory step up of $(15) million and $(52) million, respectively, included in cost of goods sold related to the amortization of the inventory step-up in connection with the Merger.

7.
Second quarter 2019 includes a loss on the early extinguishment of debt related to the difference between the redemption price and the par value of the Make Whole Notes and Term Loan Facility, partially offset by the write-off of unamortized step-up related to the fair value step-up of EID’s debt.

8.
Third quarter 2019 includes a $(33) million loss included in other income - net associated with remeasuring the company’s Argentine Peso net monetary assets, resulting from an unexpected August primary election result in Argentina.  Throughout the three months ended September 30, 2019, the Argentine Peso dropped approximately a third of its value against the U.S. dollar and in September of 2019, the country’s central bank announced new restrictions on foreign currency transactions. The after tax charge of $(38) million includes a tax valuation allowance recorded against the net deferred tax asset position of an Argentine legal entity.

9.
Unless specifically addressed in notes above, the income tax effect on significant items was calculated based upon the enacted tax laws and statutory income tax rates applicable in the tax jurisdiction(s) of the underlying non-GAAP adjustment.

10.
Earnings per share for the year may not equal the sum of quarterly earnings per share due to rounding and the changes in average share calculations.

10
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)

Operating (Loss) Earnings Per Share (Non-GAAP)
 
 
 
 
 
 
 
 
Operating earnings (loss) per share is defined as earnings per share from continuing operations – diluted, excluding non-operating benefits - net, amortization of intangibles (existing as of Separation), significant items, and goodwill impairment charges.
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
 
2019
 
20182
 
2019
 
20182
 
 
$
 
$
 
EPS (diluted)
 
EPS (diluted)
Net loss from continuing operations attributable to Corteva (GAAP)
 
$
(516
)

$
(5,341
)
 
(0.69
)

(7.13
)
Less: Non-operating benefits - net, after tax 1
 
23

 
38

 
0.03

 
0.05

Less: Amortization of intangibles (existing as of Separation), after tax
 
(80
)
 
(71
)
 
(0.11
)
 
(0.09
)
Less: Goodwill impairment charge, after tax
 
—

 
(4,503
)
 
—

 
(6.01
)
Less: Significant items charge, after tax
 
(168
)
 
(356
)
 
(0.22
)
 
(0.48
)
Operating Loss (Non-GAAP)
 
$
(291
)
 
$
(449
)
 
$
(0.39
)
 
$
(0.60
)
 
 
Nine Months Ended
September 30,
 
 
20192
 
20182
 
20192
 
20182
 
 
$
 
$
 
EPS (diluted)
 
EPS (diluted)
Net income (loss) from continuing operations attributable to Corteva (GAAP)
 
58


(4,214
)
 
0.08


(5.62
)
Less: Non-operating benefits - net, after tax 1
 
84


121

 
0.11

 
0.16

Less: Amortization of intangibles (existing as of Separation), after tax
 
(250
)

(227
)
 
(0.33
)
 
(0.30
)
Less: Goodwill impairment charge, after tax
 
—


(4,503
)
 
—

 
(6.01
)
Less: Significant items charge, after tax
 
(796
)

(817
)
 
(1.06
)
 
(1.09
)
Operating Earnings (Non-GAAP)
 
$
1,020

 
$
1,212

 
$
1.36

 
$
1.62

1.
Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) (benefit) costs, tax indemnification adjustments, and environmental remediation and legal costs associated with legacy EID businesses and sites. Tax indemnification adjustments relate to changes in indemnification balances, as a result of the application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the company as pre-tax income or expense.
2.
Periods are presented on a Pro Forma Basis

11
Corteva, Inc.
Operating EBITDA to Operating Earnings Per Share
(Dollars in millions, except per share amounts)


Operating EBITDA to Operating Earnings Per Share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
 
 
As Reported
 
Pro Forma
 
Pro Forma
 
Pro Forma
Operating EBITDA (Non-GAAP)1
 
$
(207
)
 
$
(251
)
 
1,763

 
2,022

Depreciation
 
(126
)
 
(127
)
 
(397
)
 
(383
)
Interest Income
 
13

 
12

 
46

 
63

Interest Expense
 
(19
)
 
(13
)
 
(67
)
 
(51
)
Benefit from (provision for) income taxes on operating earnings, excluding exchange losses (Non-GAAP)
 
40

 
9

 
(265
)
 
(290
)
Base income tax rate from continuing operations (Non-GAAP)1
 
11.8
%
 
2.4
%
 
19.7
%
 
17.6
%
Exchange losses - net, after tax
 
(3
)
 
(74
)
 
(50
)
 
(126
)
Net loss (income) attributable to non-controlling interests
 
11

 
(5
)
 
(10
)
 
(23
)
Operating (Loss) Earnings (Non-GAAP)1
 
$
(291
)
 
$
(449
)
 
$
1,020

 
$
1,212

Diluted Shares (in millions)
 
749.5

 
749.4

 
749.4

 
749.4

Operating (Loss) Earnings Per Share (Non-GAAP)1
 
$
(0.39
)
 
$
(0.60
)
 
$
1.36

 
$
1.62

1.
Refer to pages 5, 10, and 12 for Non-GAAP reconciliations.



12
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions)


Reconciliation of Base Income Tax Rate to Effective Income Tax Rate
Base income tax rate is defined as the effective income tax rate less the effect of exchange gains (losses), significant items, goodwill impairment charges, amortization of intangibles (existing as of Separation), and non-operating benefits - net.
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
 
As Reported
 
Pro Forma
 
Pro Forma
 
Pro Forma
(Loss) income from continuing operations before income taxes (GAAP)
$
(631
)

$
(5,364
)

$
214


$
(3,997
)
Add: Significant items - charge 1
246


369


886


876

           Goodwill impairment charge
—


4,503


—


4,503

           Non-operating benefits - net
(32
)

(49
)

(106
)

(155
)
           Amortization of intangibles (existing as of Separation)
100


88


314


284

Less: Exchange gains (losses), net 2
22


(74
)

(37
)

(140
)
(Loss) income from continuing operations before income taxes, significant items, goodwill impairment charges, non-operating benefits - net, amortization of intangibles (existing as of Separation), and exchange losses, net (Non-GAAP)
$
(339
)
 
$
(379
)
 
$
1,345

 
$
1,651

 
 
 
 
 
 
 
 
(Benefit from) provision for income taxes on continuing operations (GAAP)
$
(104
)

$
(28
)

$
146


$
194

Add: Tax benefits on significant items charge
78


13


90


59

          Tax expenses on goodwill impairment charge
—

 
—

 
—

 
—

          Tax expenses on non-operating benefits - net
(9
)

(11
)

(22
)

(34
)
          Tax benefits on amortization of intangibles (existing as of Separation)
20


17


64


57

          Tax (expenses) benefits on exchange gains (losses), net
(25
)

—


(13
)

14

(Benefit from) provision for income taxes on operating earnings, excluding exchange gains (losses), net (Non-GAAP)
$
(40
)

$
(9
)

$
265


$
290

 
 
 
 
 
 
 
 
Effective income tax rate (GAAP)
16.5
 %
 
0.5
%
 
68.2
 %
 
(4.9
)%
Significant items, goodwill impairment charge, non-operating benefits, and amortization of intangibles (existing as of Separation) effect
(11.8
)%
 
1.5
%
 
(46.9
)%
 
23.2
 %
Tax rate from continuing operations before significant items, goodwill impairment charge, non-operating benefits - net, and amortization of intangibles (existing as of Separation)
4.7
 %
 
2.0
%
 
21.3
 %
 
18.3
 %
Exchange gains (losses), net effect
7.1
 %
 
0.4
%
 
(1.6
)%
 
(0.7
)%
Base income tax rate from continuing operations (Non-GAAP)
11.8
 %

2.4
%

19.7
 %

17.6
 %
 
 
 
 
 
 
 
 
1. See Significant Items table for further detail.
2. Pre-tax exchange gains (losses), net for the three and nine months ended September 30, 2019, on an operating earnings basis (Non-GAAP), exclude a $(33) million exchange loss associated with the devaluation of the Argentine peso. Pre-tax exchange loss, net for the nine months ended September 30, 2018, on an operating earnings basis (Non-GAAP), excludes a $(50) million exchange loss related to adjustments to foreign currency exchange contracts as a result of U.S. tax reform.



13
Corteva, Inc.
(Dollars in millions, except per share amounts)


Exchange Gains/Losses
 
 
 
 
 
 
 
 
The company routinely uses forward exchange contracts to offset its net exposures, by currency, related to the foreign currency denominated monetary assets and liabilities of its operations. The objective of this program is to maintain an approximately balanced position in foreign currencies in order to minimize, on an after-tax basis, the effects of exchange rate changes. The net pre-tax exchange gains and losses are recorded in other income - net and the related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the Consolidated Statements of Operations.
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2019
 
2018
 
2019
 
2018
Subsidiary Monetary Position Loss
 
 
 
 
 
 
 
 
Pre-tax exchange losses 
 
$
(33
)
 
$
(105
)
 
$
(26
)
 
$
(217
)
Local tax (expenses) benefits
 
(12
)
 
7

 
(15
)
 
32

Net after-tax impact from subsidiary exchange losses
 
$
(45
)
 
$
(98
)
 
$
(41
)

$
(185
)
 
 
 
 
 
 
 
 
 
Hedging Program Gain (Loss)
 
 
 
 
 
 
 
 
Pre-tax exchange gains (losses) 
 
$
55

 
$
31

 
$
(11
)
 
$
77

Tax (expenses) benefits
 
(13
)
 
(7
)
 
2

 
(18
)
Net after-tax impact from hedging program exchange gains (losses)
 
$
42

 
$
24

 
$
(9
)
 
$
59

 
 
 
 
 
 
 
 
 
Total Exchange (Loss) Gain
 
 
 
 
 
 
 
 
Pre-tax exchange gains (losses) 1
 
$
22


$
(74
)

$
(37
)

$
(140
)
Tax (expenses) benefits
 
(25
)
 
—

 
(13
)
 
14

Net after-tax exchange losses
 
$
(3
)
 
$
(74
)
 
$
(50
)
 
$
(126
)
 
 
 
 
 
 
 
 
 
As shown above, the "Total Exchange (Loss) Gain" is the sum of the "Subsidiary Monetary Position Loss" and the "Hedging Program Gain (Loss)."
 
1.
Pre-tax exchange gains (losses), net for the three and nine months ended September 30, 2019, on an operating earnings basis (Non-GAAP), exclude a $(33) million exchange loss associated with the devaluation of the Argentine peso. Pre-tax exchange loss, net for the nine months ended September 30, 2018, on an operating earnings basis (Non-GAAP), excludes a $(50) million exchange loss related to adjustments to foreign currency exchange contracts as a result of U.S. tax reform.



14
Corteva, Inc.
Article 11 Pro Forma Combined Statement of Operations
(Dollars in millions, except per share amounts)


 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30, 2018
 
As Reported Corteva
 
Adjustments
 
Pro Forma Corteva
 
 
Merger1
 
Debt Retirement2
 
Separations Related3
 
Net sales
$
1,947

 
$
—

 
$
—

 
$
—

 
$
1,947

Cost of goods sold
1,485

 
(109
)
 
—

 
12

 
1,388

Research and development expense
325

 
—

 
—

 
(1
)
 
324

Selling, general and administrative expenses
633

 
—

 
—

 
—

 
633

Amortization of intangibles
88

 
—

 
—

 
—

 
88

Restructuring and asset related charges - net
235

 
—

 
—

 
—

 
235

Integration and separation costs
253

 
—

 
—

 
(119
)
 
134

Goodwill impairment charge
4,503

 
—

 
—

 
—

 
4,503

Other income - net
7

 
—

 
—

 
—

 
7

Interest expense
82

 
—

 
(69
)
 
—

 
13

(Loss) income from continuing operations before income taxes
(5,650
)
 
109

 
69

 
108

 
(5,364
)
(Benefit from) provision for income taxes on continuing operations
(8
)
 
24

 
15

 
(59
)
 
(28
)
(Loss) income from continuing operations after income taxes
(5,642
)
 
85

 
54

 
167

 
(5,336
)
Net income from continuing operations attributable to noncontrolling interests
5

 
—

 
—

 
—

 
5

 
 
 
 
 
 
 
 
 
 
Net loss from continuing operations attributable to Corteva
$
(5,647
)
 
$
85

 
$
54

 
$
167

 
$
(5,341
)
 
 
 
 
 
 
 
 
 
 
Basic loss per share of common stock from continuing operations
$
(7.54
)
 
 
 
 
 
 
 
$
(7.13
)
 
 
 
 
 
 
 
 
 

Diluted loss per share of common stock from continuing operations
$
(7.54
)
 
 
 
 
 
 
 
$
(7.13
)
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation (in millions):
 
 
 
 
 
 
 
 
 
  Basic
749.4

 
 
 
 
 
 
 
749.4

  Diluted
749.4

 
 
 
 
 
 
 
749.4

1.
Related to the amortization of EID’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.
2.
Represents removal of interest expense related to the debt redemptions/repayments.
3.
Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.


15
Corteva, Inc.
Article 11 Pro Forma Combined Statement of Operations
(Dollars in millions, except per share amounts)


 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2019
 
As Reported Corteva
 
Adjustments
 
Pro Forma Corteva
 
 
Merger1
 
Debt Retirement2
 
Separations Related3
 
Net sales
$
10,863

 
$
—

 
$
—

 
$
—

 
$
10,863

Cost of goods sold
6,607

 
(205
)
 
—

 
16

 
6,418

Research and development expense
857

 
—

 
—

 
—

 
857

Selling, general and administrative expenses
2,318

 
—

 
—

 
3

 
2,321

Amortization of intangibles
314

 
—

 
—

 
—

 
314

Restructuring and asset related charges - net
167

 
—

 
—

 
—

 
167

Integration and separation costs
694

 
—

 
—

 
(112
)
 
582

Other income - net
90

 
—

 
—

 
—

 
90

Loss on early extinguishment of debt
13

 
—

 
—

 
—

 
13

Interest expense
112

 
—

 
(45
)
 
—

 
67

(Loss) income from continuing operations before income taxes
(129
)
 
205

 
45

 
93

 
214

Provision for income taxes on continuing operations
99

 
36

 
10

 
1

 
146

(Loss) income from continuing operations after income taxes
(228
)
 
169

 
35

 
92

 
68

Net income from continuing operations attributable to noncontrolling interests
10

 
—

 
—

 
—

 
10

 
 
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to Corteva
$
(238
)
 
$
169

 
$
35

 
$
92

 
$
58

 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share of common stock from continuing operations
$
(0.32
)
 
 
 
 
 
 
 
$
0.08

 
 
 
 
 
 
 
 
 
 
Diluted (loss) earnings per share of common stock from continuing operations
$
(0.32
)
 
 
 
 
 
 
 
$
0.08

 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation (in millions):
 
 
 
 
 
 
 
 
 
  Basic
749.4

 
 
 
 
 
 
 
749.4

  Diluted
749.4

 
 
 
 
 
 
 
749.4

1.
Related to the amortization of EID’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.
2.
Represents removal of interest expense related to the debt redemptions/repayments.
3.
Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.


16
Corteva, Inc.
Article 11 Pro Forma Combined Statement of Operations
(Dollars in millions, except per share amounts)


 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
September 30, 2018
 
As Reported Corteva
 
Adjustments
 
Pro Forma Corteva
 
 
Merger1
 
Debt Retirement2
 
Separations Related3
 
Net sales
$
11,472

 
$
—

 
$
—

 
$
—

 
$
11,472

Cost of goods sold
7,924

 
(1,424
)
 
—

 
43

 
6,543

Research and development expense
1,010

 
—

 
—

 
(2
)
 
1,008

Selling, general and administrative expenses
2,347

 
—

 
—

 
1

 
2,348

Amortization of intangibles
284

 
—

 
—

 
—

 
284

Restructuring and asset related charges - net
466

 
—

 
—

 
—

 
466

Integration and separation costs
697

 
—

 
—

 
(313
)
 
384

Goodwill impairment charge
4,503

 
—

 
—

 
—

 
4,503

Other income - net
118

 
—

 
—

 
—

 
118

Interest expense
251

 
—

 
(200
)
 
—

 
51

Loss from continuing operations before income taxes
(5,892
)
 
1,424

 
200

 
271

 
(3,997
)
(Benefit from) provision for income taxes on continuing operations
(187
)
 
264

 
46

 
71

 
194

Loss from continuing operations after income taxes
(5,705
)
 
1,160

 
154

 
200

 
(4,191
)
Net income from continuing operations attributable to noncontrolling interests
23

 
—

 
—

 
—

 
23

 
 
 
 
 
 
 
 
 
 
Net (loss) income from continuing operations attributable to Corteva
$
(5,728
)
 
$
1,160

 
$
154

 
$
200

 
$
(4,214
)
 
 
 
 
 
 
 
 
 
 
Basic loss per share of common stock from continuing operations
$
(7.64
)
 
 
 
 
 
 
 
$
(5.62
)
 
 
 
 
 
 
 
 
 
 
Diluted loss per share of common stock from continuing operations
$
(7.64
)
 
 
 
 
 
 
 
$
(5.62
)
 
 
 
 
 
 
 
 
 
 
Average number of shares outstanding used in earnings per share (EPS) calculation (in millions):
 
 
 
 
 
 
 
 
 
  Basic
749.4

 
 
 
 
 
 
 
749.4

  Diluted
749.4

 
 
 
 
 
 
 
749.4

1.
Related to the amortization of EID’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.
2.
Represents removal of interest expense related to the debt redemptions/repayments.
3.
Adjustments directly attributable to the separations and distributions of Corteva Inc. includes the following: elimination of the Telone balances that will not transfer to Corteva as a result of the distribution agreement; elimination of one-time transaction costs directly attributable to the distribution; elimination of the impact of certain manufacturing, leasing and supply agreements entered into in connection with the separation; and the related tax impacts.