Restructuring and Asset Related Charges

3 Months Ended

Mar. 31, 2020

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

RESTRUCTURING AND ASSET RELATED CHARGES - NET

Execute to Win Productivity Program

During the first quarter of 2020, Corteva approved restructuring actions designed to improve productivity through optimizing certain operational and organizational structures primarily related to the Execute to Win Productivity Program. As a result of these actions, the company expects to record total pre-tax restructuring charges of approximately $185 million, comprised of approximately $125 million of asset related charges (of which $30 million relates to asset retirement obligations), and $60 million of severance and related benefit costs. Of the $185 million, approximately $110 million relates to crop protection, $15 million relates to seed, and $60 million relates to corporate expenses. Future cash payments related to this charge are anticipated to be approximately $90 million, primarily related to the payment of severance and related benefits and asset retirement obligations.

The Execute to Win Productivity Program charges related to the segments, as well as corporate expenses, were as follows:

	Three Months Ended March 31,
(In millions)	2020
Seed	$	3
Crop Protection	18
Corporate expenses	42
Total	$	63

A reconciliation of the December 31, 2019 to the March 31, 2020 liability balances related to the Execute to Win Productivity Program is summarized below:

(In millions)	Severance and Related Benefit Costs		Asset Related Charges			Total
Balance at December 31, 2019	$	—	$	—		$	—
Charges to income from continuing operations for the three months ended March 31, 2020	42		21			63
Asset write-offs	—		(15		)	(15		)
Balance at March 31, 2020	$	42	$	6		$	48

In addition to the above, the company has recorded asset retirement obligations of $27 million as of March 31, 2020. The asset retirement obligations relate to the company’s required demolition and removal for buildings and equipment at third party leased sites and will be recognized as asset related charges over the remaining useful lives of the related assets.  The company’s leases require these assets be removed from leased land within 12-24 months of operations being ceased. The company expects operations will cease in 2020 and the assets will be removed within the contractual timeframe.

DowDuPont Cost Synergy Program

In September and November 2017, DowDuPont and EID approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the “Synergy Program”), adopted at the time by the DowDuPont Board of Directors. The Synergy Program was designed to integrate and optimize the organization following the Merger and in preparation for the Distributions. The company recorded pre-tax restructuring charges of $842 million inception-to-date under the Synergy Program, consisting of severance and related benefit costs of $319 million, contract termination costs of $193 million, and asset write-downs and write-offs of $330 million. The company does not anticipate any additional material charges under the Synergy Program. Actions associated with the Synergy Program, including employee separations, were substantially complete by the end of 2019.

The Synergy Program (benefits) charges related to the segments, as well as corporate expenses, were as follows:

	Three Months Ended March 31,
(In millions)	2020			2019
Seed	$	(3	)	$	24
Crop Protection	—			27
Corporate expenses	—			11
Total	$	(3	)	$	62

The below is a summary of (benefits) charges incurred related to the Synergy Program for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
(In millions)	2020			2019
Severance and related benefit costs	$	—		$	14
Contract termination charges	—			20
Asset related (benefits) charges	(3		)	28
Total restructuring and asset related (benefits) charges - net	$	(3	)	$	62

A reconciliation of the December 31, 2019 to the March 31, 2020 liability balances related to the Synergy Program is summarized below:

(In millions)	Severance and Related Benefit Costs			Costs Associated with Exit and Disposal Activities1		Asset Related (Benefits) Charges			Total
Balance at December 31, 2019	$	29		$	40	$	—		$	69
Payments	(6		)	—		2			(4		)
Asset write-offs	—			—		(2		)	(2		)
Balance at March 31, 2020	$	23		$	40	$	—		$	63

^1.  Relates primarily to contract terminations charges.

Other Asset Related Charges

During the three months ended March 31, 2020, the company recognized $10 million in restructuring and asset related charges, net in the interim consolidated statement of operations, from non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield^® and Roundup Ready 2 Xtend^® herbicide tolerance traits.