REVENUE

Revenue Recognition

Products

Substantially all of Historical DuPont's revenue is derived from product sales. Product sales consist of sales of Historical DuPont's products to supply manufacturers, distributors, and farmers. Historical DuPont considers purchase orders, which in some cases are governed by master supply agreements, to be a contract with a customer. Contracts with customers are considered to be short-term when the time between order confirmation and satisfaction of the performance obligations is equal to or less than one year.

Licenses of Intellectual Property

Historical DuPont enters into licensing arrangements with customers under which it licenses its intellectual property, such as patents and trademarks. Revenue from the majority of intellectual property licenses is derived from sales-based royalties. The company estimates the expected amount of sales-based royalties based on historical sales by customer. Revenue for licensing agreements that contain sales-based royalties is recognized at the later of (i) when the subsequent sale occurs or (ii) when the performance obligation to which some or all of the royalty has been allocated is satisfied.

Contract Balances

Contract liabilities primarily reflect deferred revenue from prepayments under agriculture product line contracts with customers where the company receives advance payments for products to be delivered in future periods. Historical DuPont classifies deferred revenue as current or noncurrent based on the timing of when the company expects to recognize revenue. Contract assets primarily include amounts related to contractual rights to consideration for completed performance not yet invoiced within the industrial biosciences product line. Accounts receivable are recorded when the right to consideration becomes unconditional.



Contract Balances	March 31, 2019		December 31, 2018
(In millions)	March 31, 2019		December 31, 2018
Accounts and notes receivable - trade¹	$	5,619	$	4,130
Contract assets - current²	$	36	$	48
Deferred revenue - current³	$	2,033	$	1,927
Deferred revenue - noncurrent⁴	$	28	$	30


^1.	Included in accounts and notes receivable - net in the Consolidated Balance Sheets.


^2.	Included in other current assets in the Consolidated Balance Sheets.


^3.	Included in accrued and other current liabilities in the Consolidated Balance Sheets.


^4.	Included in other noncurrent obligations in the Consolidated Balance Sheets.

The change in deferred revenue from December 31, 2018 to March 31, 2019 was substantially due to the receipt of customer prepayments under agriculture product line contracts, partially offset by agriculture seed deliveries to customers for the North America growing season, which were delayed due to weather conditions. Revenue recognized during the three months ended March 31, 2019 from amounts included in deferred revenue - current at the beginning of the period was approximately $460 million.

Disaggregation of Revenue

Effective with the Merger, Historical DuPont’s business activities are components of DowDuPont’s business operations. Historical DuPont’s business activities, including the assessment of performance and allocation of resources, are reviewed and managed by DowDuPont. Information used by the chief operating decision maker of Historical DuPont relates to the company in its entirety. Accordingly, there are no separate reportable business segments for Historical DuPont under ASC 280 “Segment Reporting” and Historical DuPont's business results are reported in this Form 10-Q as a single operating segment.

The company has one reportable segment with the following principal product lines: agriculture, packaging and specialty plastics, electronics and imaging, nutrition and health, industrial biosciences, transportation and advanced polymers, and safety and construction. The company believes disaggregation of revenue by principal product line best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows. Net sales by principal product line are included below:



	Three Months Ended March 31,
(In millions)	2019		2018
Agriculture	$	2,108	$	2,343
Packaging and Specialty Plastics	363		419
Electronics and Imaging	455		527
Nutrition and Health	1,014		1,024
Industrial Biosciences	376		406
Transportation and Advanced Polymers	1,071		1,121
Safety and Construction	899		855
Other	2		4
Total	$	6,288	$	6,699

Sales are attributed to geographic regions based on customer location. Net sales by geographic region are included below:



	Three Months Ended March 31,
(In millions)	2019		2018
U.S. & Canada	$	2,250	$	2,515
EMEA¹	2,110		2,166
Asia Pacific	1,459		1,535
Latin America	469		483
Total	$	6,288	$	6,699


^1.	Europe, Middle East, and Africa ("EMEA").