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Divestitures and Other Transactions

12 Months Ended

Dec. 31, 2019

Discontinued Operations and Disposal Groups [Abstract]

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

DIVESTITURES AND OTHER TRANSACTIONS

Separation Agreements

In connection with the Distributions, DuPont, Corteva, and Dow (together, the “Parties” and each a “Party”) have entered into certain agreements to effect the separation, provide for the allocation of DowDuPont’s assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) among the Parties, and provide a framework for Corteva's relationship with Dow and DuPont following the separations and Distributions (collectively, the "Separation Agreements"). The Parties entered into, among other agreements, the following agreements:

•

Separation and Distribution Agreement - Effective April 1, 2019, the Parties entered into an agreement that sets forth, among other things, the agreements among the Parties regarding the principal transactions necessary to effect the Distributions. It also sets forth other agreements that govern certain aspects of the Parties’ ongoing relationships after the completion of the Distributions (the "Corteva Separation Agreement").


•	Tax Matters Agreement - The Parties entered into an agreement effective as of April 1, 2019 as amended on June 1, 2019 that governs their respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.


•	Employee Matters Agreement - The Parties entered into an agreement that identifies employees and employee-related liabilities (and attributable assets) to be allocated (either retained, transferred and accepted, or assigned and assumed, as applicable) to the Parties as part of the Distributions and describes when and how the relevant transfers and assignments will occur.

•

Intellectual Property Cross-License Agreement - Effective as of April 1, 2019 Corteva and Dow, and effective June 1, 2019 Corteva and DuPont entered into Intellectual Property Cross-License Agreements. The Intellectual Property Cross-License Agreements set forth the terms and conditions under which the applicable Parties may use in their respective businesses, following each of the Distributions, certain know-how (including trade secrets), copyrights, and software, and certain patents and standards, allocated to another Party pursuant to the Corteva Separation Agreement.

•

Letter Agreement - DuPont and Corteva entered into a Letter Agreement. The Letter Agreement sets forth certain additional terms and conditions related to the Separation, including certain limitations on each party’s ability to transfer certain businesses and assets to third parties without assigning certain of such party’s indemnification obligations under the Corteva Separation Agreement to the other party to the transferee of such businesses and assets or meeting certain other alternative conditions.

DuPont

Pursuant to the Separation Agreements, DuPont and Corteva indemnifies the other against certain litigation, environmental, tax, workers' compensation and other liabilities that arose prior to the Corteva Distribution. The term of this indemnification is generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. In connection with the recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed probable. At December 31, 2019, the indemnification assets are $22 million within accounts and notes receivable - net and $57 million within other assets in the Consolidated Balance Sheet. At December 31, 2019, the indemnification liabilities are $4 million within accrued and other current liabilities and $69 million within other noncurrent obligations in the Consolidated Balance Sheet.

Dow

Pursuant to the Separation Agreements, Dow and Corteva indemnifies the other against certain litigation, environmental, tax and other liabilities that arose prior to the Corteva Distribution. The term of this indemnification is generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. In connection with the recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed probable. At December 31, 2019, the indemnification assets are $44 million within accounts and notes receivable - net in the Consolidated Balance Sheet. At December 31, 2019, the indemnification liabilities are $115 million within accrued and other current liabilities and $85 million within other noncurrent obligations in the Consolidated Balance Sheet.

EID ECP Divestiture

As discussed in Note 1 - Background and Basis of Presentation, on April 1, 2019, EID completed the transfer of the entities and related assets and liabilities of EID ECP to Dow.

As a result, the financial results of EID ECP are reflected as discontinued operations, as summarized below:



	Successor							Predecessor
(In millions)	For the Year Ended December 31, 2019		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
Net sales	$	362	$	1,564	$	539		$	1,066
Cost of goods sold	259		1,082		491			634
Research and development expense	4		23		8			16
Selling, general and administrative expenses	9		43		17			101
Amortization of intangibles	23		96		31
Restructuring and asset related charges - net	2		12		16			—
Integration and separation costs	44		135		31
Other income - net	2		13		6			23
Income (loss) from discontinued operations before income taxes	23		186		(49		)	338
Provision for (benefit from) income taxes on discontinued operations	4		35		(51		)	108
Income from discontinued operations after income taxes	$	19	$	151	$	2		$	230

The following table presents the depreciation, amortization of intangibles, and capital expenditures of the discontinued operations related to EID ECP:



	Successor						Predecessor
(In millions)	For the Year Ended December 31, 2019		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
Depreciation	$	28	$	133	$	44	$	38
Amortization of intangibles	$	23	$	96	$	31	$	—
Capital expenditures	$	16	$	77	$	31	$	49

The carrying amount of major classes of assets and liabilities classified as assets and liabilities of discontinued operations at December 31, 2018 related to EID ECP consist of the following:



(In millions)	December 31, 2018
Cash and cash equivalents	$	55
Accounts and notes receivable - net	194
Inventories	465
Other current assets	12
Total current assets of discontinued operations	726
Investment in nonconsolidated affiliates	108
Property, plant and equipment - net	770
Goodwill	3,587
Other intangible assets	1,143
Deferred income taxes	13
Other assets	1
Non-current assets of discontinued operations	5,622
Total assets of discontinued operations	$	6,348
Short-term borrowings and finance lease obligations	2
Accounts payable	214
Accrued and other current liabilities	36
Total current liabilities of discontinued operations	252
Long-term Debt	4
Deferred income tax liabilities	432
Pension and other post employment benefits - noncurrent	6
Other noncurrent obligations	2
Non-current liabilities of discontinued operations	444
Total liabilities of discontinued operations	$	696

EID Specialty Products Divestiture

As discussed in Note 1 - Background and Basis of Presentation, on May 1, 2019, the company completed the transfer of the entities and related assets and liabilities of the EID Specialty Products Entities to DuPont.

As a result, the financial results of the EID Specialty Products Entities are reflected as discontinued operations, as summarized below:



	Successor								Predecessor
(In millions)	For the Year Ended December 31, 2019			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
Net sales	$	5,030		$	15,711	$	4,916		$	9,321
Cost of goods sold	3,352			10,533		4,269			5,978
Other operating charges									309
Research and development expense	204			626		205			414
Selling, general and administrative expenses	573			1,599		505			1,184
Amortization of intangibles	267			815		268
Restructuring and asset related charges - net	115			97		93			311
Integration and separation costs	253			340		79
Goodwill impairment	1,102			—		—			—
Other income - net	57			241		60			365
(Loss) income from discontinued operations before income taxes	(779		)	1,942		(443		)	1,490
Provision for income taxes on discontinued operations	80			340		50			436
(Loss) income from discontinued operations after income taxes	$	(859	)	$	1,602	$	(493	)	$	1,054

EID Specialty Products Impairment

As a result of the Merger and related acquisition method of accounting, Historical DuPont's assets and liabilities were measured at fair value resulting in increases to the company’s goodwill and other intangible assets. The fair value valuation increased the risk that any declines in financial projections, including changes to key assumptions, could have a material, negative impact on the fair value of the company’s reporting units and assets, and therefore could result in an impairment.

As a result of the Internal Reorganization, in the second quarter of 2019, EID assessed the recoverability of the goodwill within the electronics and communications, protection solutions, nutrition and health, transportation and advanced polymers, packaging and specialty plastics, industrial biosciences, and clean technologies reporting units, and the overall carrying value of the net assets in the disposal group that was distributed to DowDuPont on May 1, 2019. As a result of this analysis, the company determined that the fair value of certain reporting units related to the EID specialty products businesses were below carrying value resulting in pre-tax, non-cash goodwill impairment charges totaling $1,102 million reflected in loss from discontinued operations after income taxes. Revised financial projections reflect unfavorable market conditions, driven by slowed demand in the biomaterials business unit, coupled with challenging conditions in U.S. bioethanol markets. These revised financial projections resulted in a reduction in the long-term forecasts of sales and profitability as compared to prior projections.

The company’s analyses above using discounted cash flow models (a form of the income approach) utilized Level 3 unobservable inputs. The company’s significant assumptions in these analyses include, but are not limited to, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate. The company’s estimates of future cash flows are based on current regulatory and economic climates, recent operating results, and planned business strategies. These estimates could be negatively affected by changes in federal, state, or local regulations or economic downturns. Future cash flow estimates are, by their nature, subjective and actual results may differ materially from the company’s estimates. The company also used a form of the market approach (utilizes Level 3 unobservable inputs), which is derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. As such, the company believes the current assumptions and estimates utilized are both reasonable and appropriate.

In addition, the company performed an impairment analysis related to the equity method investments held by the EID specialty products businesses, as of May 1, 2019. The company applied the net asset value method under the cost approach to determine the fair value of the equity method investments in the EID specialty products businesses. Based on updated projections, the company determined the fair value of an equity method investment was below the carrying value and had no expectation the fair value would recover in the short-term due to the current economic environment. As a result, management concluded the impairment was other-than-temporary and recorded an impairment charge of $63 million, reflected in loss from discontinued operations after income taxes. Additionally, this impairment is reflected within restructuring and asset related charges - net in the year ended December 31, 2019, within the table above.

The following table presents the depreciation, amortization of intangibles, and capital expenditures of the discontinued operations related to the EID Specialty Products Entities:



	Successor						Predecessor
(In millions)	For the Year Ended December 31, 2019		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
Depreciation	$	281	$	837	$	273	$	396
Amortization of intangibles¹	267		815		268		$	100
Capital expenditures	481		911		271		$	429


1.	Included within cost of goods sold, selling, general and administrative expenses, other operating charges, and research and development expenses in the Predecessor period.

The carrying amount of major classes of assets and liabilities classified as assets and liabilities of discontinued operations at December 31, 2018 related to the EID Specialty Products Entities consist of the following:



(In millions)	December 31, 2018
Cash and cash equivalents	$	2,199
Marketable securities	29
Accounts and notes receivable - net	2,441
Inventories	3,452
Other current assets	242
Total current assets of discontinued operations	8,363
Investment in nonconsolidated affiliates	1,185
Property, plant and equipment - net	8,138
Goodwill	28,250
Other intangible assets	13,037
Deferred income taxes	122
Other assets	191
Non-current assets of discontinued operations	50,923
Total assets of discontinued operations	$	59,286
Short-term borrowings and finance lease obligations	15
Accounts payable	1,983
Income taxes payable	33
Accrued and other current liabilities	884
Total current liabilities of discontinued operations	2,915
Long-term Debt	29
Deferred income tax liabilities	3,624
Pension and other post employment benefits - noncurrent	1,125
Other noncurrent obligations	262
Non-current liabilities of discontinued operations	5,040
Total liabilities of discontinued operations	$	7,955

Merger Remedy - Divested Ag Business

As discussed in Note 1 - Background and Basis of Presentation, on November 1, 2017, EID completed the FMC Transactions through the disposition of the Divested Ag Business and the acquisition of the H&N Business. The fair value as determined by EID of the H&N Business was $1,970 million. The FMC Transactions included a cash consideration payment to EID of approximately $1,200 million, which reflected the difference in value between the Divested Ag Business and the H&N Business, as well as favorable contracts with FMC of $495 million. Due to the proximity of the Merger and the closing of the sale, the carrying value of the Divested Ag Business approximated the fair value of the consideration received, thus no resulting gain or loss was recognized on the sale.

For the year ended December 31, 2019, the company recorded income from discontinued operations after income taxes related to the Divested Ag Business of $80 million related to changes in accruals for certain prior year tax positions. For the year ended December 31, 2018, the company recorded a loss from discontinued operations before income taxes related to the Divested Ag Business of $10 million ($5 million after tax).

The following table summarizes the results of operations of the Divested Ag Business presented as discontinued operations for the period September 1 through December 31, 2017 and the period January 1 through August 31, 2017, respectively:



	Successor			Predecessor
(In millions)	For the Period September 1 through December 31, 2017¹			For the Period January 1 through August 31, 2017
Net sales	$	199		$	1,068
Cost of goods sold	194			412
Other operating charges				17
Research and development expenses	30			95
Selling, general and administrative expenses²	102			146
Other income - net	—			7
(Loss) income from discontinued operations before income taxes	(127		)	405
(Benefit from) provision for income taxes	(50		)	79
(Loss) income from discontinued operations after income taxes	$	(77	)	$	326


^1.	Includes results of operations for the period September 1 through October 31, 2017, as the Divested Ag Business was disposed of on November 1, 2017.


^2.	Successor period includes $44 million of transaction costs associated with the disposal of the Divested Ag Business.

The following table presents depreciation and capital expenditures of the discontinued operations related to the Divested Ag Business:

There was no amortization related to the Divested Ag Business for the period September 1 through December 31, 2017 or the period January 1 through August 31, 2017.

Upon closing and pursuant to the terms of the FMC Transaction Agreement, EID and FMC entered into favorable supply agreements and certain ancillary agreements, including manufacturing service agreements and transition service agreements. Under the terms of the favorable supply agreements, FMC will supply product to EID at cost for a period of up to five years and, as a result, EID recorded an intangible asset of $495 million upon closing that will be amortized over a period of five years.

Divestiture of a Portion of DAS Brazil Corn Seed Business

On July 11, 2017, as a condition of regulatory approval of the Merger between Historical Dow and Historical DuPont, Historical Dow announced it had entered into a definitive agreement with CITIC Agro Fund to sell a portion of DAS Brazil corn seed business (the “DAS Divested Ag Business”), including four corn seed production sites and four research centers, a copy of Historical Dow AgroSciences' Brazilian corn germplasm bank, certain commercial and pipeline hybrids, the MORGAN™ trademark and a license to the DOW SEMENTES™ trademark for 12 months. On November 30, 2017, the sale was completed for $1,129 million, net of working capital adjustments, costs to sell and other adjustments, with proceeds subject to customary post-closing adjustments.

In 2017, the company recognized a pretax gain of $671 million on the sale, included in other income (expense) - net in the company's Consolidated Statement of Operations for the period September 1 through December 31, 2017.

Other Discontinued Operations Activity

For the year ended December 31, 2019, the company recorded income from discontinued operations after income taxes of $89 million related to the adjustment of certain unrecognized tax benefits for positions taken on items from prior years from previously divested businesses.

Performance Chemicals

On July 1, 2015, Historical DuPont completed the separation of its Performance Chemicals segment through the spin-off of all of the issued and outstanding stock of The Chemours Company (the "Chemours Separation"). In connection with the Chemours Separation, Historical DuPont and The Chemours Company ("Chemours") entered into a Separation Agreement (as amended, the "Chemours Separation Agreement"), discussed below, a Tax Matters Agreement and certain ancillary agreements, including an employee matters agreement, agreements related to transition and site services, and intellectual property cross licensing arrangements. In addition, the companies have entered into certain supply agreements.

Separation Agreement

The Chemours Separation Agreement sets forth, among other things, the agreements between the company and Chemours regarding the principal transactions necessary to effect the Chemours Separation and also sets forth ancillary agreements that govern certain aspects of the company’s relationship with Chemours after the separation. Among other matters, the Chemours Separation Agreement and the ancillary agreements provide for the allocation between Historical DuPont and Chemours of assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) attributable to periods prior to, at and after the completion of the Chemours Separation.

Pursuant to the Chemours Separation Agreement, Chemours indemnifies the company against certain litigation, environmental, workers' compensation and other liabilities that arose prior to the distribution. The term of this indemnification is generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. In 2017, EID and Chemours amended the Chemours Separation Agreement to provide for a limited sharing of potential future perfluorooctanoic acid (“PFOA”) liabilities for a period of five years beginning July 6, 2017. In connection with the recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed probable. At December 31, 2019, the indemnified assets are $54 million within accounts and notes receivable - net and $302 million within other assets along with the corresponding liabilities of $54 million within accrued and other current liabilities and $302 million within other noncurrent obligations on the Consolidated Balance Sheet. See Note 18 - Commitments and Contingent Liabilities, for further discussion of the amendment to the Chemours Separation Agreement and certain litigation and environmental matters indemnified by Chemours.

The results of operations of the Performance Chemicals segment are presented as discontinued operations as summarized below:



	Predecessor
(In millions)	For the Period January 1 through August 31, 2017
Other operating charges	$	335
Other income - net	3
Loss from discontinued operations before income taxes	(332		)
Benefit from income taxes on discontinued operations	(125		)
Loss from discontinued operations after income taxes	$	(207	)

Income from discontinued operations after income taxes in the company's Consolidated Statement of Operations for the period January 1 through August 31, 2017 includes a charge of $335 million ($214 million net of tax) in connection with the PFOA multi-district litigation settlement.

Predecessor

(In millions)

For the Period September 1 through December 31, 2017¹

For the Period January 1 through August 31, 2017

Depreciation

Capital expenditures