Restructuring and Asset Related Charges

6 Months Ended

Jun. 30, 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 $86 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 June 30,		Six Months Ended June 30,
(In millions)	2020		2020
Seed	$	—	$	3
Crop Protection	37		55
Corporate expenses	4		46
Total	$	41	$	104

The below is a summary of charges incurred related to the Execute to Win Productivity Program for the three and six months ended June 30, 2020:

	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2020		2020
Severance and related benefit costs	$	4	$	46
Asset related charges	37		58
Total restructuring and asset related charges - net	$	41	$	104

A reconciliation of the December 31, 2019 to the June 30, 2020 liability balances related to the Execute to Win Productivity Program is summarized below:

(In millions)	Severance and Related Benefit Costs			Asset Related			Total
Balance at December 31, 2019	$	—		$	—		$	—
Charges to income from continuing operations for the six months ended June 30, 2020	46			58			104
Payments	(2		)	(2		)	(4		)
Asset write-offs	—			(52		)	(52		)
Balance at June 30, 2020	$	44		$	4		$	48

In addition to the above, the company has recorded asset retirement obligations of $30 million as of June 30, 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 charges (benefits) related to the segments, as well as corporate expenses, were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
(In millions)	2020			2019		2020			2019
Seed	$	(3	)	$	49	$	(6	)	$	73
Crop Protection	3			2		3			29
Corporate expenses	—			9		—			20
Total	$	—		$	60	$	(3	)	$	122

The below is a summary of charges (benefits) incurred related to the Synergy Program for the six months ended June 30, 2020 and three and six months ended 2019:

	Three Months Ended June 30,		Six Months Ended June 30,
(In millions)	2019		2020			2019
Severance and related benefit costs	$	—	$	—		$	14
Contract termination charges	49		—			69
Asset related (benefits) charges	11		(3		)	39
Total restructuring and asset related charges (benefits) - net	$	60	$	(3	)	$	122

A reconciliation of the December 31, 2019 to the June 30, 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			Total
Balance at December 31, 2019	$	29		$	40		$	69
Payments	(13		)	(1		)	(14		)
Balance at June 30, 2020	$	16		$	39		$	55

^1.  Relates primarily to contract terminations charges.

Other Asset Related Charges

During the three and six months ended June 30, 2020, the company recognized $138 million and $148 million, respectively, 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.