UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 20192020
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 001-38710
Corteva, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware  82-4979096 
(State or other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
974 Centre Road,Wilmington,Delaware19805 (302)485-3000 
(Address of Principal Executive Offices) (Zip Code) (Registrant’s Telephone Number, including area code)
Commission File Number 1-815
E. I. du Pont de Nemours and Company
(Exact Name of Registrant as Specified in Its Charter)
Delaware  51-0014090 
(State or other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
974 Centre Road,Wilmington,Delaware19805 (302)485-3000 
(Address of Principal Executive Offices) (Zip Code) (Registrant’s Telephone Number, including area code)


Securities registered pursuant to Section 12(b) of the Act for Corteva, Inc.:
DelawareTitle of each classTrading Symbol(s)82-4979096Name of each exchange on which registered
(State or other Jurisdiction ofCommon Stock, par value $0.01 per shareCTVA(I.R.S. Employer
Incorporation or Organization)Identification No.)New York Stock Exchange
974 Centre Road, Wilmington, Delaware 19805
(AddressSecurities registered pursuant to Section 12(b) of Principal Executive Offices)the Act for E. I. du Pont de Nemours and Company:
(302) 485-3000
Title of each classTrading Symbol(s)Name of each exchange on which registered
$3.50 Series Preferred StockCTAPrANew York Stock Exchange
$4.50 Series Preferred StockCTAPrBNew York Stock Exchange
(Registrant’s Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  
Corteva, Inc.                                          Yes  ox   No  x*o
* The registrant became subject to such requirement on May 7, 2019E. I. du Pont de Nemours and it has filed all reports so required since that date.Company                          Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)  
Corteva, Inc.                                       Yes  x   No  o

E. I. du Pont de Nemours and Company                           Yes  x   No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Corteva, Inc.
Large Accelerated Filerxx
Accelerated Filer o
Non-Accelerated Filero
Smaller reporting company o
Emerging growth company o
   
Non-Accelerated Filer o
 
Smaller reporting company o
   
E. I. du Pont de Nemours and CompanyLarge Accelerated Filero
Accelerated Filer o
Non-Accelerated Filer
x

Smaller reporting company o
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Corteva, Inc.                                                 
E. I. du Pont de Nemours and Company                                  

Indicate by check mark whether the registrant is a shell company (as defined byin Rule 12b-2 of the Exchange Act). 
Corteva, Inc.                                          Yes  o   No  x

E. I. du Pont de Nemours and Company                          Yes     No  x
Securities registered pursuant to Section 12(b) of the Act: 
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareCTVANew York Stock Exchange
The RegistrantCorteva, Inc. had 100748,370,000 shares of common stock, $0.01 par value $0.01 per share, outstanding at March 31, 2019,April 30, 2020.
E. I. du Pont de Nemours and Company had 200 shares of common stock, par value $0.30 per share, outstanding at April 30, 2020, all of which are held by DowDuPontCorteva, Inc.


The RegistrantE. I. du Pont de Nemours and Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q (as modified by a grant of no-action relief dated February 12, 2018) and is therefore filing this form with reduced disclosure format.




CORTEVA, INC.

E. I. DU PONT DE NEMOURS AND COMPANY

Table of Contents
The terms “Historical DuPont” or the “company” as used herein refer to E. I. du Pont de Nemours and Company and its consolidated subsidiaries, or to E. I. du Pont de Nemours and Company, as the context may indicate. 
  Page
 
   
 
 
 
 
 
 
 
   
 
 
 
   
   
 
   
 


1




Explanatory Note
DowDuPont Inc. ("DowDuPont") was formed on December 9, 2015, to effect an all-stock merger of equals strategic combination between The Dow Chemical Company ("Historical Dow") and E. I. du Pont de Nemours and Company ("Historical DuPont"). On August 31, 2017 at 11:59 pm ET, (the "Merger Effectiveness Time") pursuant to the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 (the "Merger Agreement"), Historical Dow and Historical DuPont each merged with wholly owned subsidiaries of DowDuPont ("Mergers") and, as a result of the Mergers, Historical Dow and Historical DuPont became subsidiaries of DowDuPont (collectively, the "Merger"). Prior to the Merger, DowDuPont did not conduct any business activities other than those required for its formation and matters contemplated by the Merger Agreement. DowDuPont completed, as of April 1, 2019 the separation of its materials science business (the “Dow Distribution”).
In connection with the Dow Distribution and the Corteva Distribution (defined below), DowDuPont formed two wholly-owned subsidiaries: Dow Inc. (“Dow”), to serve as a holding company for its materials science business, and Corteva, Inc., to serve as a holding company for its agriculture business. As a result of the Internal Reorganization (defined in Note 18 to the interim consolidated financial statements), on May 31, 2019 Historical DuPont will be contributed to Corteva, Inc. and Corteva, Inc. will own 100% of the outstanding common stock of Historical DuPont. Stockholders of Historical DuPont's preferred stock will continue to hold such shares following the Corteva Distribution. After the Corteva Distribution, Historical DuPont will remain a subsidiary of Corteva, Inc., will continue to be a reporting company and will comply with the requirements of the Exchange Act.
As of March 31, 2019, Corteva, Inc. had engaged in no business operations to date and had no assets or liabilities of any kind, other than those incident to its formation. Refer to Recent Developments within management’s discussion and analysis of financial condition and results of operations ("MD&A"), for further discussion of events occurring after March 31, 2019.
On June 1, 2019, (the “distribution date”), DuPont de Nemours,Corteva, Inc. (formerly known as DowDuPont Inc.), (“DuPont”) is expected to completebecame an independent, publicly traded company through the previously announced separation (the “Separation”) of itsthe agriculture business ("Corteva Distribution").of DowDuPont. The separation is expected to be completed by way ofwas effectuated through a pro rata distribution (the “Corteva Distribution”) of all of the then-issued and outstanding shares of common stock, par value $0.01 per share, of Corteva, Inc. (“Corteva”), which was then a Delaware corporation and wholly ownedwholly-owned subsidiary of DuPont,DowDuPont, to holders of record of DuPontDowDuPont common stock as of the close of business on May 24, 2019 (the “record date”).2019.
Historical DuPont has been determined
Corteva owns 100% of the outstanding common stock of EID, and EID owns, directly or indirectly, 100% of DAS. EID is a subsidiary of Corteva, Inc. and continues to best representbe a reporting company, subject to the predecessor entityrequirements of the Securities Exchange Act of 1934, as amended.

Unless otherwise indicated or the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

• "Corteva" or "the company" refers to Corteva. As such,Corteva, Inc. and its consolidated subsidiaries (including EID);
• "EID" refers to E. I. du Pont de Nemours and Company and its consolidated subsidiaries or E. I. du Pont de Nemours and Company excluding its consolidated subsidiaries, as the following unaudited interim Consolidated Financial Statements, Footnotescontext may indicate;
• "DowDuPont" refers to DowDuPont Inc., and MD&A presented below is thatits subsidiaries prior to the Separation of Historical DuPont. The financial informationCorteva defined below;
• "Historical Dow" refers to the Dow Chemical Company and results of operations that are discussed relate to Historical DuPont (unless otherwise specifically stated). Consequently, the discussion relates to Historical DuPont as it is currently comprised, without giving effectits consolidated subsidiaries prior to the Internal Reorganization defined below;
• "Historical DuPont" refers to EID prior to the Internal Reorganization, defined below;
• "Internal Reorganizations" refers to the series of internal reorganization and the other transactions that will occur in connection with therealignment steps undertaken by EID and Historical Dow and Corteva Distributions. The discussion in these sections therefore includes Historical DuPont’sto realign its business into three groups: agriculture, materials science and specialty products businesses, and does not reflect Corteva as it will be constituted followingproducts.  These steps include:
1.the April 1, 2019 transfer of the assets and liabilities aligned with EID’s material science businesses including EID’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“EID ECP”) to DowDuPont, which were ultimately conveyed by DowDuPont to Dow;
2.the May 1, 2019 distribution of EID legal entities containing the assets and liabilities of EID’s specialty products business (the “EID Specialty Products Entities”) to DowDuPont;
3.the May 2, 2019 conveyance of Dow Ag Entities to EID; and
4.the May 31, 2019 contribution of EID to Corteva, Inc.  Refer to the company’s Annual Report on Form 10-K for the year ended December 31, 2019 for further information.
• "Dow Distribution" refers to the separation of DowDuPont's materials science business into a separate and independent public company, effective as of 5:00 pm ET on April 1, 2019, by way of a pure-playdistribution of Dow Inc. through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock, par value $0.01 per share, to holders of DowDuPont's common stock, as of the close of business on March 21, 2019;
• "Distributions" refers to the Dow Distribution and the Corteva Distribution;
• "Merger” refers to the all-stock merger of equals strategic combination between Historical Dow and EID;
• "Merger Effectiveness Time” refers to August 31, 2017 at 11:59 pm ET;
• "Dow" refers to Dow Inc. after the Dow Distribution;
• "DuPont" refers to DuPont de Nemours, Inc. after the Separation of Corteva; and
• "DAS" refers to the agriculture company. Asbusiness of Historical Dow, Dow AgroSciences.

On June 1, 2019, DowDuPont Inc. changed its registered name to DuPont de Nemours, Inc. Beginning on June 3, 2019, Corteva's common stock is traded on the New York Stock Exchange under the ticker symbol "CTVA". 

This Quarterly Report on Form 10-Q is a result, the discussion does not necessarily reflect the expectedcombined report being filed separately by Corteva, Inc. and EID.  The information in this Quarterly Report on Form 10-Q is equally applicable to Corteva, Inc. and EID, except where otherwise indicated.

The separate EID financial position, resultsstatements and footnotes for areas that differ from Corteva, are included within this Quarterly Report on Form 10-Q and begin on page 64. Footnotes of operations or cash flowsEID that are identical to that of Corteva following the separation or what Corteva’s financial position, results of operations and cash flows would have been had Corteva been an independent, publicly traded company during the periods presented.are cross-referenced accordingly.



2



PART I.  FINANCIAL INFORMATION


Item 1.CONSOLIDATED FINANCIAL STATEMENTS


E. I. du Pont de Nemours and CompanyCorteva, Inc.
Consolidated Statements of Operations (Unaudited)
(In millions, except per share amounts)Three Months Ended
March 31,
 20202019
Net sales$3,956
$3,396
Cost of goods sold2,269
2,211
Research and development expense280
299
Selling, general and administrative expenses757
735
Amortization of intangibles163
101
Restructuring and asset related charges - net70
61
Integration and separation costs
212
Other income - net1
31
Interest expense10
59
Income (loss) from continuing operations before income taxes408
(251)
Provision for (benefit from) income taxes on continuing operations127
(67)
Income (loss) from continuing operations after income taxes281
(184)
Income from discontinued operations after income taxes1
360
Net income282
176
Net income attributable to noncontrolling interests10
12
Net income attributable to Corteva$272
$164
Basic earnings per share of common stock:  
Basic earnings (loss) per share of common stock from continuing operations$0.36
$(0.26)
Basic earnings per share of common stock from discontinued operations
0.48
Basic earnings per share of common stock$0.36
$0.22
Diluted earnings per share of common stock:  
Diluted earnings (loss) per share of common stock from continuing operations$0.36
$(0.26)
Diluted earnings per share of common stock from discontinued operations
0.48
Diluted earnings per share of common stock$0.36
$0.22

(In millions)Three Months Ended March 31,
 20192018
Net sales$6,288
$6,699
Cost of goods sold4,235
4,847
Research and development expense355
382
Selling, general and administrative expenses970
959
Amortization of intangibles320
315
Restructuring and asset related charges - net55
97
Integration and separation costs405
255
Sundry income - net157
47
Interest expense56
80
Income (loss) from continuing operations before income taxes49
(189)
(Benefit from) provision for income taxes on continuing operations(40)27
Income (loss) from continuing operations after income taxes89
(216)
Loss from discontinued operations after income taxes
(5)
Net income (loss)89
(221)
Net income attributable to noncontrolling interests4
7
Net income (loss) attributable to Historical DuPont$85
$(228)

See Notes to the Consolidated Financial Statements beginning on page 8.

3

Corteva, Inc.


E. I. du Pont de Nemours and Company
Consolidated Statements of ComprehensiveComprehensive (Loss) Income (Unaudited)

(In millions)Three Months Ended March 31,Three Months Ended
March 31,
2019201820202019
Net income (loss)$89
$(221)
Other comprehensive (loss) income - net of tax: 
Net income$282
$176
Other comprehensive loss - net of tax: 
Cumulative translation adjustments(68)957
(672)(72)
Adjustments to pension benefit plans(6)4

(3)
Adjustments to other benefit plans3

Derivative instruments1
11
6
1
Total other comprehensive (loss) income(73)972
Comprehensive income16
751
Total other comprehensive loss(663)(74)
Comprehensive (loss) income(381)102
Comprehensive income attributable to noncontrolling interests - net of tax4
7
10
12
Comprehensive income attributable to Historical DuPont$12
$744
Comprehensive (loss) income attributable to Corteva$(391)$90

See Notes to the Consolidated Financial Statements beginning on page 8.


Corteva, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share amounts)March 31, 2020December 31, 2019March 31, 2019
Assets 
 
 
Current assets 
 
 
Cash and cash equivalents$1,963
$1,764
$1,759
Marketable securities10
5
5
Accounts and notes receivable - net6,775
5,528
6,507
Inventories4,401
5,032
5,019
Other current assets1,530
1,190
1,318
Assets of discontinued operations - current

9,453
Total current assets14,679
13,519
24,061
Investment in nonconsolidated affiliates64
66
77
Property, plant and equipment - net of accumulated depreciation (March 31, 2020 - $3,406; December 31, 2019 - $3,326; March 31, 2019 - $2,970)4,358
4,546
4,521
Goodwill10,027
10,229
10,203
Other intangible assets11,241
11,424
11,961
Deferred income taxes273
287
294
Other assets2,336
2,326
2,368
Assets of discontinued operations - non-current

56,617
Total Assets$42,978
$42,397
$110,102
Liabilities and Equity 
 
 
Current liabilities 
 
 
Short-term borrowings and finance lease obligations$1,996
$7
$3,201
Accounts payable3,021
3,702
3,120
Income taxes payable143
95
195
Accrued and other current liabilities4,039
4,434
4,061
Liabilities of discontinued operations - current

3,501
Total current liabilities9,199
8,238
14,078
Long-Term Debt614
115
6,297
Other Noncurrent Liabilities 



Deferred income tax liabilities911
920
1,523
Pension and other post employment benefits - noncurrent6,186
6,377
5,554
Other noncurrent obligations1,989
2,192
2,064
Liabilities of discontinued operations - non-current

5,512
Total noncurrent liabilities9,700
9,604
20,950
Commitments and contingent liabilities   
Stockholders’ equity 
 
 
Common stock, $0.01 par value; 1,666,667,000 shares authorized;
issued at March 31, 2020 - 748,369,000; and December 31, 2019 - 748,577,000
7
7


Additional paid-in capital27,906
27,997


Divisional equity




78,005
Accumulated deficit(155)(425)


Accumulated other comprehensive loss(3,933)(3,270)(3,434)
Total Corteva stockholders’ equity23,825
24,309
74,571
Noncontrolling interests254
246
503
Total equity24,079
24,555
75,074
Total Liabilities and Equity$42,978
$42,397
$110,102
See Notes to the Consolidated Financial Statements beginning on page 8.

Corteva, Inc.
4

Condensed Consolidated Statements of Cash Flows (Unaudited)
Table
(In millions)Three Months Ended
March 31,
 20202019
Operating activities  
Net income$282
$176
Adjustments to reconcile net income to cash used for operating activities:



Depreciation and amortization283
726
Provision for (benefit from) deferred income tax26
(220)
Net periodic pension benefit(102)(75)
Pension contributions(28)(50)
Net loss (gain) on sales of property, businesses, consolidated companies and investments46
(65)
Restructuring and asset related charges - net70
106
Amortization of inventory step-up
205
Other net loss138
92
Changes in operating assets and liabilities - net(2,645)(2,436)
Cash used for operating activities(1,930)(1,541)
Investing activities 
 
Capital expenditures(128)(663)
Proceeds from sales of property, businesses and consolidated companies - net of cash divested11
125
Proceeds from sales of ownership interests in nonconsolidated affiliates
21
Purchases of investments(67)(16)
Proceeds from sales and maturities of investments58
36
Other investing activities - net(4)(5)
Cash used for investing activities(130)(502)
Financing activities 
 
Net change in borrowings (less than 90 days)1,619
814
Proceeds from debt875
1,000
Payments on debt(1)(284)
Repurchase of common stock(50)
Proceeds from exercise of stock options14
35
Dividends paid to stockholders(97)
Distributions to DowDuPont
(317)
Contributions from Dow
88
Other financing activities(16)(24)
Cash provided by financing activities2,344
1,312
Effect of exchange rate changes on cash, cash equivalents and restricted cash(117)20
Increase (decrease) in cash, cash equivalents and restricted cash167
(711)
Cash, cash equivalents and restricted cash at beginning of period2,173
5,024
Cash, cash equivalents and restricted cash at end of period1
$2,340
$4,313
1. See page 19 for reconciliation of Contents


E. I. du Pont de Nemourscash and Company
cash equivalents and restricted cash presented in interim Condensed Consolidated Balance Sheets (Unaudited)to total cash, cash equivalents and restricted cash presented in the interim Condensed Consolidated Statements of Cash Flows.
(In millions, except share amounts)March 31, 2019December 31, 2018
Assets 
 
Current assets 
 
Cash and cash equivalents$3,796
$4,466
Marketable securities18
34
Accounts and notes receivable - net6,768
5,534
Inventories7,147
7,407
Other current assets1,515
1,165
Total current assets19,244
18,606
Investment in nonconsolidated affiliates1,366
1,381
Property, plant and equipment - net of accumulated depreciation (March 31, 2019 - $2,111; December 31, 2018 - $1,720)12,083
12,186
Goodwill40,638
40,686
Other intangible assets25,724
26,053
Deferred income taxes306
303
Other assets2,476
1,810
Total Assets$101,837
$101,025
Liabilities and Equity 
 
Current liabilities 
 
Short-term borrowings and finance lease obligations$3,205
$2,160
Accounts payable4,200
4,982
Income taxes payable137
66
Accrued and other current liabilities4,400
4,233
Total current liabilities11,942
11,441
Long-Term Debt6,320
5,812
Other Noncurrent Liabilities  
Deferred income tax liabilities5,164
5,381
Pension and other post employment benefits - noncurrent6,524
6,683
Other noncurrent obligations2,052
1,620
Total noncurrent liabilities20,060
19,496
Commitments and contingent liabilities  
Stockholders’ equity 
 
Preferred stock, without par value – cumulative; 23,000,000 shares authorized;
     issued at March 31, 2019 and December 31, 2018:
  
$4.50 Series – 1,673,000 shares (callable at $120)169
169
$3.50 Series – 700,000 shares (callable at $102)70
70
Common stock, $0.30 par value; 1,800,000,000 shares authorized;
issued at March 31, 2019 and December 31, 2018 - 100


Additional paid-in capital79,843
79,790
Accumulated deficit(7,906)(7,669)
Accumulated other comprehensive loss(2,576)(2,503)
Total Historical DuPont stockholders’ equity69,600
69,857
Noncontrolling interests235
231
Total equity69,835
70,088
Total Liabilities and Equity$101,837
$101,025

See Notes to the Consolidated Financial Statements beginning on page 8.

5

Corteva, Inc.
Table of Contents


E. I. du Pont de Nemours and Company
Condensed Consolidated Statements of Cash FlowsEquity (Unaudited)

(In millions)Three Months Ended March 31,
 20192018
Operating activities  
Net income (loss)$89
$(221)
Adjustments to reconcile net income (loss) to cash used for operating activities:



Depreciation and amortization678
647
(Benefit from) provision for deferred income tax(233)35
Net periodic pension benefit(70)(79)
Pension contributions(50)(70)
Net gain on sales of property, businesses, consolidated companies, and investments(55)(2)
Restructuring and asset related charges - net55
97
Amortization of inventory step-up205
703
Other net loss72
258
Changes in operating assets and liabilities - net(2,113)(3,343)
Cash used for operating activities(1,422)(1,975)
Investing activities 
 
Capital expenditures(625)(355)
Proceeds from sales of property, businesses, and consolidated companies - net of cash divested100
18
Purchases of investments(16)(201)
Proceeds from sales and maturities of investments32
922
Other investing activities - net(5)(2)
Cash (used for) provided by investing activities(514)382
Financing activities 
 
Change in short-term (less than 90 days) borrowings815
(97)
Proceeds from issuance of long-term debt1,000
253
Payments on long-term debt(283)(31)
Proceeds from exercise of stock options35
45
Dividends paid to stockholders(2)(2)
Distributions to DowDuPont(317)(830)
Other financing activities(22)(32)
Cash provided by (used for) financing activities1,226
(694)
Effect of exchange rate changes on cash, cash equivalents and restricted cash20
108
Decrease in cash, cash equivalents and restricted cash(690)(2,179)
Cash, cash equivalents and restricted cash at beginning of period4,966
7,808
Cash, cash equivalents and restricted cash at end of period$4,276
$5,629
(In millions)Common StockAdditional Paid-in CapitalDivisional EquityRetained Earnings (Accumulated deficit)Accumulated Other Comp LossTreasury StockNon-controlling InterestsTotal Equity
2019        
Balance at January 1, 2019$
$
$78,020
$
$(3,360)$
$493
$75,153
Net income



164






12
176
Other comprehensive loss







(74)



(74)
Distributions to DowDuPont



(317)







(317)
Issuance of DowDuPont stock



35








35
Share-based compensation



18








18
Contributions from Dow



88








88
Other - net



(3)





(2)(5)
Balance at March 31, 2019$
$
$78,005
$
$(3,434)$
$503
$75,074
(In millions)Common StockAdditional Paid-in CapitalDivisional Equity(Accumulated deficit) Retained EarningsAccumulated Other Comp LossTreasury StockNon-controlling InterestsTotal Equity
2020       

Balance at January 1, 2020$7
$27,997
 $(425)$(3,270)$
$246
$24,555
Net income




272




10
282
Other comprehensive loss






(663)



(663)
Common dividends ($0.13 per share) (97)     (97)
Issuance of Corteva stock 14
     14
Share-based compensation 2
     2
Common Stock Repurchase (50)     (50)
Other - net

40

(2)



(2)36
Balance at March 31, 2020$7
$27,906

$(155)$(3,933)$
$254
$24,079



See Notes to the Consolidated Financial Statements beginning on page 8.




6

Table of Contents


E. I. du Pont de Nemours and Company
Consolidated Statements of Equity (Unaudited)

(In millions)Preferred StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comp Inc (Loss)Non-controlling InterestsTotal Equity
Balance at January 1, 2018$239
$74,727
$175
$(381)$172
$74,932
Net income

(228)
7
(221)
Other comprehensive income


972

972
Preferred dividends ($4.50 Series - $1.125 per share, $3.50 Series - $0.875 per share)

(2)

(2)
Distributions to DowDuPont

(831)

(831)
Issuance of DowDuPont stock
45



45
Stock-based compensation
11



11
Other

5

55
60
Balance at March 31, 2018$239
$74,783
$(881)$591
$234
$74,966


(In millions)Preferred StockAdditional Paid-in CapitalAccumulated DeficitAccumulated Other Comp LossNon-controlling InterestsTotal Equity
Balance at January 1, 2019$239
$79,790
$(7,669)$(2,503)$231
$70,088
Net income

85

4
89
Other comprehensive loss


(73)
(73)
Preferred dividends ($4.50 Series - $1.125 per share, $3.50 Series - $0.875 per share)

(2)

(2)
Distributions to DowDuPont

(317)

(317)
Issuance of DowDuPont stock
35



35
Stock-based compensation
18



18
Other

(3)

(3)
Balance at March 31, 2019$239
$79,843
$(7,906)$(2,576)$235
$69,835
See Notes to the Consolidated Financial Statements beginning on page 8.



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 E.I. du Pont de Nemours and CompanyCorteva, Inc. 
 Notes to the Consolidated Financial Statements (Unaudited) 




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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Interim Financial Statements
The accompanying unaudited interim Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for interim periods have been included.  Results for interim periods should not be considered indicative of results for a full year.  These interim Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto contained in the company’s Annual Report on Form 10-K for the year ended December 31, 2018,2019, collectively referred to as the “2018“2019 Annual Report.”  The interim Consolidated Financial Statements include the accounts of the company and all of its subsidiaries in which a controlling interest is maintained.


Principles of Consolidation and Basis of Presentation
DowDuPont Inc. ("DowDuPont") was formed on December 9, 2015Certain reclassifications of prior year's data have been made to effect an all-stock, merger of equals strategic combination between The Dow Chemical Company ("Historical Dow") and Historical DuPont (the "Merger Transaction").conform to current year's presentation.  On August 31, 2017 at 11:59 pm ET, (the "Merger Effectiveness Time") pursuant toApril 1, 2019, EID completed the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 (the "Merger Agreement"), Historical Dow and Historical DuPont each merged with wholly owned subsidiaries of DowDuPont ("Mergers") and, as a resulttransference of the Mergers, Historical Dowassets and Historical DuPont became subsidiariesliabilities aligned with EID’s materials science business, including EID’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“EID ECP”) to separate legal entities (the “Materials Science Entities”) that were ultimately conveyed by DowDuPont to Dow. On May 1, 2019, EID completed the transfer of DowDuPont (collectively, the "Merger"). Prior to the Merger, DowDuPont did not conduct any business activities other than those required for its formationassets and matters contemplated by the Merger Agreement. DowDuPont intends to pursue, subject to certain customary conditions, including, among others, the effectiveness of registration statements filedliabilities aligned with the U.S. Securities and Exchange Commission ("SEC") and approval by the Board of Directors of DowDuPont, the separation of the combined company's agriculture business,EID’s specialty products business to separate legal entities (“EID Specialty Products Entities”), which were then distributed to DowDuPont.

In accordance with GAAP, the financial position and materials science business through a seriesresults of tax-efficient transactions (collectively, the "Intended Business Separations"operations of EID ECP and the transactions to accomplish the Intended Business Separations, the "separations").

On February 26, 2018, DowDuPont announced the corporate brand names that each company plans to assume once the Intended Business Separations occur. Materials science is called Dow, agriculture will be called CortevaTM Agriscience, and specialty products will be called DuPont.

Effective as of 5:00 pm ET on April 1, 2019, DowDuPont completed the previously announced separation of its materials science business into a separate and independent public company by way of a distribution of Dow Inc. (“Dow”) through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock, par value $0.01 per share (the “Dow Common Stock”), to holders of DowDuPont's common stock, par value $0.01 per share (the “DowDuPont Common Stock”), as of the close of business on March 21, 2019 (the “Dow Distribution”). DowDuPont expects to complete the previously announced intended separation of its agriculture business into a separate and independent public company on June 1, 2019 by way of a distribution of Corteva, Inc., a Delaware corporation and wholly-owned subsidiary of DowDuPont (“Corteva”), through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Corteva’s common stock, par value $0.01 per share, to holders of DowDuPont Common Stock as of a record date to be set by DowDuPont’s Board of Directors (the “Corteva Distribution” and, together with the Dow Distribution, the “Distributions”). Refer to Notes 3 and 18 for additional information.

Transactions between Historical DuPont and DowDuPont, Historical Dow and their affiliates and other associated companies are reflected in the Consolidated Financial Statements and disclosed as related party transactions when material. Related party transactions with Historical Dow and DowDuPont are included in Note 6.

As a condition of the regulatory approval for the Merger Transaction, the company was required to divest certain assets related to its crop protection business and research and development ("R&D") organization, specifically the company’s Cereal Broadleaf Herbicides and Chewing Insecticides portfolios, including Rynaxypyr®, Cyazypyr® and Indoxacarb as well as the crop protection R&D pipeline and organization, excluding seed treatment, nematicides, and late-stage R&D programs. On March 31, 2017, the company entered into a definitive agreement (the "FMC Transaction Agreement") with FMC Corporation ("FMC"). Under the FMC Transaction Agreement, FMC would acquire the crop protection business and R&D assets that Historical DuPont was required to divest in order to obtain European Commission ("EC") approval of the Merger Transaction as described above, (the "Divested Ag Business") and Historical DuPont agreed to acquire certain assets relating to FMC’s Health and Nutrition segment, excluding its Omega-3 products (the "H&N Business") (collectively, the "FMC Transactions").

On November 1, 2017, the company completed the FMC Transactions through the disposition of the Divested Ag Business and the acquisition of the H&N Business. The sale of the Divested Ag Business meets the criteria for discontinued operations and as such, results of operationsEID Specialty Products Entities are presented as discontinued operations and, as such, have been excluded from continuing operations and segment results for all periods presented. The sum of the three months ended March 31, 2018.individual earnings per share amounts from continuing operations and discontinued operations may not equal the total company earnings per share amounts due to rounding. The cash flows, comprehensive (loss) income, and cash flowsequity related to EID ECP and the Divested Ag BusinessEID Specialty Products Entities have not

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been segregated and are included in the interim Consolidated Statements of Comprehensive Income and interim Condensed Consolidated Statements of Cash Flows, Consolidated Statements of Comprehensive Income (Loss), and Consolidated Statements of Equity, respectively, for the three months ended March 31, 2018.all periods presented. Amounts related to EID ECP and the Divested Ag BusinessEID Specialty Products Entities are consistently included or excluded from the Notes to the interim Consolidated Financial Statements based on the respective financial statement line item. See Note 3 - Divestitures and Other Transactions, for additional information.


Significant Accounting PoliciesPrior to the Corteva Distribution, these combined financial statements were derived from the consolidated financial statements and accounting records of EID as well as the carve-out financial statements of DAS. The DAS carve-out financial statements reflect the historical results of operations, financial position, and cash flows of Historical Dow's Agricultural Sciences Business and include allocations of certain expenses for services from Historical Dow, including, but not limited to, general corporate expenses related to finance, legal, information technology, human resources, ethics and compliance, shared services, employee benefits and incentives, insurance, and stock-based compensation. These expenses were allocated on the basis of direct usage when identifiable, with the remainder allocated under the basis of headcount or other measures. Beginning in the second quarter 2019, the financial statements are presented on a consolidated basis.

The company has updatedcompany's Condensed Consolidated Balance Sheets at March 31, 2020 and December 31, 2019 consist of Corteva, Inc. and its leasing policy since the issuance of its 2018 Annual Report as a resultconsolidated subsidiaries. The company's Condensed Consolidated Balance Sheet at March 31, 2019 consists of the adoptioncombined balances of ASU No. 2016-02, Leases (Topic 842) inHistorical EID and DAS. The Balance Sheets will be referred to as the first quarter 2019. See Notes 2 and 11 for additional information. See Note 1, "Summary of Significant Accounting Policies," in the 2018 Annual Report for more information on Historical DuPont's other significant accounting policies."Condensed Consolidated Balance Sheets" throughout this document.

Leases
The company determines whether an arrangement is a lease at the inception of the arrangement based on the terms and conditions in the contract. A contract contains a lease if there is an identified asset and the company has the right to control the asset. Operating lease right-of-use ("ROU") assets are included in other assets on the company’s Consolidated Balance Sheets. Operating lease liabilities are included in accrued and other current liabilities and other noncurrent obligations on the company’s Consolidated Balance Sheets. Finance lease assets are included in property, plant and equipment on the company’s Consolidated Balance Sheets. Finance lease liabilities are included in short-term borrowings and finance lease obligations and long-term debt on the company’s Consolidated Balance Sheets.  

Operating lease ROU assets represent the company’s right to use an underlying asset for the lease term and lease liabilities represent the company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the company’s leases do not provide the lessor's implicit rate, the company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments. Lease terms include options to extend the lease when it is reasonably certain those options will be exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The company recognizes lease expense for these leases on a straight-line basis over the lease term.

The company has lease agreements with lease and non-lease components, which are accounted for as a single lease component for all asset classes. In thecompany's Consolidated Statements of Operations lease expense(the "Consolidated Statements of Operations") for operating lease payments is recognized on a straight-line basis overall periods prior to April 30, 2019 consist of the lease term. For finance leases, interest expense is recognized oncombined results of operations for Historical EID and DAS. The Consolidated Statements of Operations for all periods after May 1, 2019 represent the lease liabilityconsolidated balances of the company. Intercompany balances and transactions with Historical EID and DAS have been eliminated.

During the ROU asset is amortized overfirst quarter 2020, the lease term.company recorded an increase of $40 million to Additional Paid-in Capital relating to net assets recorded as transferred as part of the 2019 Internal Reorganizations that were retained. 



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NOTE 2 - RECENT ACCOUNTING GUIDANCE


Recently Adopted Accounting Guidance
In FebruaryJune 2016, the FASB issued ASU 2016-02, Leases2016-13, Financial Instruments (Topic 842), and associated ASUs related to Topic 842,326): Credit Losses - Measurement of Credit Losses on Financial Statements, which requires organizations that leasefinancial assets measured at amortized cost basis to recognize on their balance sheetbe presented at the net amount expected to be collected. The amortized cost basis of financial assets and liabilities forshould be reduced by expected credit losses to present the rights and obligations created by those leases. The new guidance requires that a lessee recognize assets and liabilities for leases, and recognition, presentation and measurementnet carrying value in the financial statements will depend on its classification as a finance or operating lease. In addition, the new guidance requires disclosures to help investors and other financial statement users better understandat the amount timingexpected to be collected. The measurement of expected credit losses is based on past events, historical experience, current conditions and uncertaintyforecasts that affect the collectability of cash flows arising from leases. Lessor accounting remains largely unchanged from previous U.S. GAAP but does contain some targeted improvementsthe financial assets. Additionally, credit losses relating to align with the new revenue recognition guidance issued in 2014 (Topic 606).available-for-sale debt securities should be recorded through an allowance for credit losses.


The company adopted this standardthe guidance in the first quarter of 2019,2020. The primary impact of adoption related to the credit losses on accounts and notes receivable, which allows foris applied using a modified retrospective transition approach, applying the new standard to all leases existing at the date of initial adoption. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statement as its date of initial application. The company has elected to apply the transition requirements at the January 1, 2019 effective date rather than at the beginning of the earliest comparative period presented. This approach allows for a cumulative effectcumulative-effect adjustment in the period of adoption, and prior periods are not restatedrestated. The adoption of ASU 2016-13 did not have a material impact on the company’s financial position, results of operations or cash flows. See Note 10 - Accounts and continueNotes Receivable - Net, to the Consolidated Financial Statements for additional information.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, which provides guidance on whether certain transactions between collaborative arrangement participants should be reportedaccounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in accordance with historic accounting under ASC 840 (Leases).the context of a unit of account. Accordingly, this amendment added unit of account guidance in Topic 606 when an entity is assessing whether the collaborative arrangement, or a part of the arrangement, is within the scope of Topic 606. In addition, the amendment provides certain guidance on presenting the collaborative arrangement transaction together with Topic 606. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years and early adoption is permitted. This ASU is to be applied retrospectively to the date of initial application of Topic 606. The company has electedadopted this guidance on January 1, 2020 and it did not have a material impact on the packagecompany’s financial position, results of practical expedients permitted underoperations or cash flows.

In March 2020, the transition guidance withinFASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides companies with optional financial reporting alternatives to reduce the cost and complexity associated with the accounting for contracts and hedging relationships affected by reference rate reform. The amendments in this Update are effective for all entities as of March 12, 2020 through December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on the company's financial position, results of operations or cash flows, and will apply to future changes.

Accounting Guidance Issued But Not Adopted as of March 31, 2020
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which was part of the FASB’s Simplification Initiative to identify, evaluate, and improve areas of U.S. GAAP for which cost and complexity can be reduced, while maintaining or improving the usefulness of the information provided to users of financial statements. This ASU amends ASC 740, Income Taxes, by removing certain exceptions to the general principles, and clarifying and amending current guidance. The new standard which among other things, does not require reassessmentis effective for fiscal years, and periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, however all amended guidance must be adopted in the same period and should be reflected as of prior conclusions related to contracts containing a lease, lease classification,the beginning of the annual period if initially adopted and initial direct lease costs. Asapplied during an accounting policy election,interim period. The company is currently evaluating the company chose to not apply the standard to certain existing land easements, excluded short-term leases (termimpact of 12 months or less) from the balance sheet and will account for nonlease and lease components in a contract as a single component for all asset classes.adopting this guidance.



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The following table summarizes the impact of adoption to the company’s interim Condensed Consolidated Balance Sheet:
(In millions)
As Reported
December 31, 2018
Effect of Adoption of ASU 2016-02
Updated
January 1, 2019
Assets   
Property, plant and equipment - net of accumulated depreciation$12,186
$9
$12,195
Other assets$1,810
$758
$2,568
    
Liabilities and Equity   
Current liabilities   
Short-term borrowings and finance lease obligations$2,160
$1
$2,161
Accrued and other current liabilities$4,233
$234
$4,467
    
Long-Term Debt$5,812
$8
$5,820
Other noncurrent obligations$1,620
$524
$2,144
The adoption of the new guidance did not have a material impact on the company's interim Consolidated Statement of Operations and had no impact on the interim Condensed Consolidated Statement of Cash Flows.

NOTE 3 - DIVESTITURES AND OTHER TRANSACTIONS


The Intended Business SeparationsSeparation Agreements
As discussed in the company’s 2018 Annual Report and in Note 1, DowDuPont announced its intent to pursue the separation of the combined company's agriculture business, specialty products business and materials science business through a series of tax-efficient transactions. Refer to Note 18 for additional information on the Intended Business Separations and the separations.

Integration and Separation Costs
Integration and separation costs have been and are expected to be significant. These costs primarily have consisted of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with the preparation and execution of activities related to the Merger and the Intended Business Separations. These costs are recorded within integration and separation costs within the interim Consolidated Statements of Operations.
 Three Months Ended March 31,
(In millions)20192018
Integration and separation costs$405
$255

Merger Remedy - Divested Ag Business
On March 31, 2017, the company and FMC entered into the FMC Transaction Agreement. Under the FMC Transaction Agreement, and effective upon the closing of the transaction on November 1, 2017, FMC acquired the Divested Ag Business that Historical DuPont was required to divest in order to obtain EC approval of the Merger Transaction and Historical DuPont acquired the H&N Business. See further discussion of the FMC Transactions in Note 1. The sale of the Divested Ag Business met the criteria for discontinued operations and as such, earnings were included within loss from discontinued operations after income taxes for all periods presented.

For the three months ended March 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).


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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,Distributions, DuPont, Corteva, and Dow (together, the company“Parties” and The Chemours Company ("Chemours"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 Separation Agreement (as amended,framework for Corteva's relationship with Dow and DuPont following the "Chemours Separation Agreement"separations and Distributions (collectively, the "Separation Agreements"). For further details on the Separation Agreements, refer to the 2019 Annual Report.

DuPont
Pursuant to the Chemours Separation Agreement, as discussed below, ChemoursAgreements, DuPont and Corteva indemnifies Historical DuPontthe other against certain litigation, environmental, tax, workers' compensation and other liabilities that arose prior to the distribution.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 2017, Historical DuPont 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 March 31, 2019,2020, the indemnification assets are $84$25 million within accounts and notes receivable - net and $289$54 million within other assets along within the correspondinginterim Condensed Consolidated Balance Sheet. At March 31, 2020, the indemnification liabilities of $84are $8 million within accrued and other current liabilities and $289$69 million within other noncurrent obligations in the interim Condensed Consolidated Balance Sheet. See

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 March 31, 2020, the indemnification assets are $30 million within accounts and notes receivable - net in the interim Condensed Consolidated Balance Sheet. At March 31, 2020, the indemnification liabilities are $158 million within accrued and other current liabilities and $13 million within other noncurrent obligations in the interim Condensed Consolidated Balance Sheet.

EID ECP Divestiture
As discussed in Note 13 for further discussion1 - Summary of Significant Accounting Policies, on April 1, 2019, EID completed the transfer of the amendmententities 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:
(In millions)Three Months Ended
March 31, 2019
Net sales$362
Cost of goods sold259
Research and development expense4
Selling, general and administrative expenses9
Amortization of intangibles23
Restructuring and asset related charges - net2
Integration and separation costs44
Other income - net2
Income from discontinued operations before income taxes23
Provision for income taxes on discontinued operations4
Income from discontinued operations after income taxes$19



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The following table presents the depreciation, amortization of intangibles, and capital expenditures of the discontinued operations related to EID ECP:
(In millions)Three Months Ended
March 31, 2019
Depreciation$28
Amortization of intangibles$23
Capital expenditures$16


The carrying amount of major classes of assets and liabilities classified as assets and liabilities of discontinued operations at March 31, 2019 related to EID ECP consist of the following:
(In millions)March 31, 2019
Cash and cash equivalents$32
Accounts and notes receivable - net221
Inventories448
Other current assets25
Total current assets of discontinued operations726
Investment in nonconsolidated affiliates109
Property, plant and equipment - net753
Goodwill3,585
Other intangible assets1,118
Deferred income taxes15
Other assets5
Non-current assets of discontinued operations5,585
Total assets of discontinued operations$6,311
Short-term borrowings and finance lease obligations2
Accounts payable187
Income tax payable9
Accrued and other current liabilities26
Total current liabilities of discontinued operations224
Long-term Debt2
Deferred income tax liabilities374
Pension and other post employment benefits - noncurrent5
Other noncurrent obligations4
Non-current liabilities of discontinued operations385
Total liabilities of discontinued operations$609



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EID Specialty Products Divestiture
As discussed in Note 1 - Summary of Significant Accounting Policies, on May 1, 2019, the company completed the transfer of the entities and related assets and liabilities of 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:
(In millions)Three Months Ended
March 31, 2019
Net sales$3,816
Cost of goods sold2,535
Research and development expense153
Selling, general and administrative expenses401
Amortization of intangibles201
Restructuring and asset related charges - net43
Integration and separation costs164
Other income - net120
Income from discontinued operations before income taxes439
Provision for income taxes on discontinued operations98
Income from discontinued operations after income taxes$341


The following table presents the depreciation, amortization of intangibles, and capital expenditures of the discontinued operations related to the Chemours Separation AgreementEID Specialty Products Entities:
(In millions)Three Months Ended
March 31, 2019
Depreciation$216
Amortization of intangibles$201
Capital expenditures$423



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The carrying amount of major classes of assets and certain litigationliabilities classified as assets and environmental matters indemnified by Chemours.liabilities of discontinued operations at March 31, 2019 related to the EID Specialty Products Entities consist of the following:

(In millions)March 31, 2019
Cash and cash equivalents$2,042
Marketable securities13
Accounts and notes receivable - net2,722
Inventories3,640
Other current assets310
Total current assets of discontinued operations8,727
Investment in nonconsolidated affiliates1,192
Property, plant and equipment - net8,061
Goodwill28,194
Other intangible assets12,822
Deferred income taxes106
Other assets657
Non-current assets of discontinued operations51,032
Total assets of discontinued operations$59,759
Short-term borrowings and finance lease obligations16
Accounts payable2,075
Income taxes payable47
Accrued and other current liabilities1,139
Total current liabilities of discontinued operations3,277
Long-term Debt25
Deferred income tax liabilities3,408
Pension and other post employment benefits - noncurrent1,084
Other noncurrent obligations610
Non-current liabilities of discontinued operations5,127
Total liabilities of discontinued operations$8,404


NOTE 4 - REVENUE


Revenue Recognition
Products
Substantially all of Historical DuPont'sCorteva's revenue is derived from product sales. Product sales consist of sales of Historical DuPont'sCorteva's products to supply manufacturers,farmers, distributors, and farmers. Historical DuPontmanufacturers. Corteva 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. However, the company has some long-term contracts which can span multiple years.


Licenses of Intellectual Property
Historical DuPontCorteva enters into licensing arrangements with customers under which it licenses its intellectual property, such as patents and trademarks.property. 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.


Remaining Performance Obligations
Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. At March 31, 2020, the company had remaining performance obligations related to material rights granted to customers for contract renewal options of $106 million ($108 million and $100 million at December 31, 2019 and March 31, 2019, respectively). The company expects revenue to be recognized for the remaining performance obligations over the next 1 year to 6 years.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



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 DuPontCorteva 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.invoiced. Accounts receivable are recorded when the right to consideration becomes unconditional.


Contract BalancesMarch 31, 2019December 31, 2018March 31, 2020December 31, 2019March 31, 2019
(In millions)
Accounts and notes receivable - trade1
$5,619
$4,130
$5,779
$4,396
$5,060
Contract assets - current2
$36
$48
$20
$20
$18
Deferred revenue - current3
$2,033
$1,927
Deferred revenue - noncurrent4
$28
$30
Contract assets - noncurrent3
$49
$49
$46
Deferred revenue - current4
$1,996
$2,584
$2,057
Deferred revenue - noncurrent5
$104
$108
$103
1. 
Included in accounts and notes receivable - net in the interim Condensed Consolidated Balance Sheets.
2. 
Included in other current assets in the interim Condensed Consolidated Balance Sheets.
3. 
Included in other assets in the interim Condensed Consolidated Balance Sheets.
4.
Included in accrued and other current liabilities in the interim Condensed Consolidated Balance Sheets.
4.5. 
Included in other noncurrent obligations in the interim Condensed 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, 20192020 from amounts included in deferred revenue - current at the beginning of the period was approximately $460 million.$822 million ($677 million in the three months ended March 31, 2019).



Disaggregation of Revenue
Corteva's operations are classified into two reportable segments: Seed and Crop Protection. The company disaggregates its revenue by major product line and geographic region, as the company believes it best depicts the nature, amount and timing of its revenue and cash flows. Net sales by major product line are included below:
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Three Months Ended
March 31,
(In millions)20202019
    Corn$1,864
$1,468
    Soybean181
131
    Other oilseeds248
225
    Other162
143
Seed2,455
1,967
    Herbicides823
771
    Insecticides378
377
    Fungicides229
220
    Other71
61
Crop Protection1,501
1,429
Total$3,956
$3,396



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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)20192018
Agriculture$2,108
$2,343
Packaging and Specialty Plastics363
419
Electronics and Imaging455
527
Nutrition and Health1,014
1,024
Industrial Biosciences376
406
Transportation and Advanced Polymers1,071
1,121
Safety and Construction899
855
Other2
4
Total$6,288
$6,699


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

SeedThree Months Ended
March 31,
(In millions)20202019
North America1
$1,290
$913
EMEA2
881
804
Latin America216
178
Asia Pacific68
72
Total$2,455
$1,967


Three Months Ended March 31,
Crop ProtectionThree Months Ended
March 31,
(In millions)2019201820202019
U.S. & Canada$2,250
$2,515
EMEA1
2,110
2,166
North America1
$475
$479
EMEA2
586
560
Latin America218
187
Asia Pacific1,459
1,535
222
203
Latin America469
483
Total$6,288
$6,699
$1,501
$1,429
1.
Represents U.S. & Canada.
2.Europe, Middle East, and Africa ("EMEA").


NOTE 5 - 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 Protection18
Corporate expenses42
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 CostsAsset Related ChargesTotal
Balance at December 31, 2019$
$
$
Charges to income from continuing operations for the three months ended March 31, 202042
21
63
Asset write-offs
(15)(15)
Balance at March 31, 2020$42
$6
$48


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



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 the companyEID 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 iswas designed to integrate and optimize the organization following the Merger and in preparation for the Intended Business Separations. Based on all actions approved to dateDistributions. The company recorded pre-tax restructuring charges of $842 million inception-to-date under the Synergy Program, Historical DuPont expects to record total pre-tax restructuring charges of $695 million to $755 million, comprised of approximately $420 million to $440 millionconsisting of severance and related benefits costs; $125benefit costs of $319 million, to $145contract termination costs of $193 million, and asset write-downs and write-offs of costs$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 contract terminations; and $150 million to $170 million of asset related charges.


the segments, as well as corporate expenses, were as follows:
13

Three Months Ended
March 31,
(In millions)20202019
Seed$(3)$24
Crop Protection
27
Corporate expenses
11
Total$(3)$62

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



The below is a summary of (benefits) charges incurred related to the Synergy Program for the three months ended March 31, 20192020 and 2018:2019:

Three Months Ended
March 31,
(In millions)20202019
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

 Three Months Ended March 31,
(In millions)20192018
Severance and related benefit costs$40
$68
Contract termination charges
29
Asset related charges16

Total restructuring and asset related charges - net1
$56
$97

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) ChargesTotal
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. 
The charge for the three months ended March 31, 2019 includes $55 million which was recognized in restructuring and asset related charges - net and $1 million which was recognized in sundry income - net in the company's Condensed Consolidated Statement of Operations.Relates primarily to contract terminations charges.


Historical DuPont recorded pre-tax restructuring charges of $565 million inception-to-date under the Synergy Program, consisting of severance and related benefit costs of $412 million, contract termination costs of $71 million, and asset write-downs and write-offs of $82 million. Actions associated with the Synergy Program, including employee separations, are expected to be substantially complete by the end of 2019.Other Asset Related Charges

Historical DuPont account balances and activity for the Synergy Program are summarized below:
(In millions)Severance and Related Benefit CostsContract Termination ChargesAsset Related ChargesTotal
Balance at December 31, 2018$229
$18
$
$247
Charges to income from continuing operations for the three months ended March 31, 201940

16
56
Payments(43)(7)
(50)
Asset write-offs

(15)(15)
Balance at March 31, 2019$226
$11
$1
$238

DowDuPont Agriculture Division Restructuring Program
The company expects to record total pre-tax charges of approximately $65 million, comprised of approximately $55 million of severance and related benefits costs; $8 million of asset related charges, and $2 million of costs related to contract terminations, related to the DowDuPont Agriculture Division Restructuring Program.

From inception-to-date, Historical DuPont has recorded total pre-tax restructuring charge of $62 million, comprised of $54 million of severance and related benefit costs and $8 million of asset related charges. ForDuring the three months ended March 31, 2019, Historical DuPont recorded a pre-tax charge of $32020, the company recognized $10 million for asset related charges in restructuring and asset related charges, - net in the company's interim Consolidated Statementconsolidated statement of Operations. The company expects actionsoperations, from non-cash accelerated prepaid royalty amortization expense related to this program to be substantially complete by mid-2019.Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.


Historical DuPont account balances and activity for the DowDuPont Agriculture Division Restructuring Programare summarized below:
(In millions)Severance and Related Benefit CostsAsset Related ChargesTotal
Balance at December 31, 2018$54
$
$54
Charges to income from continuing operations for the three months ended March 31, 2019
3
3
Payments(7)
(7)
Asset write-offs
(3)(3)
Balance at March 31, 2019$47
$
$47


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NOTE 6 - RELATED PARTIES


Services Provided by and to Historical Dow and its affiliates
Following the Merger Historical DuPontand prior to the Dow Distribution, Corteva reports transactions with Historical Dow and its affiliates as related party transactions. Historical DuPont sells to and procures from Historical Dow and its affiliates certain feedstocks and raw materials that are consumed in each company's manufacturing process, as well as finished goods. Historical DuPont also provides to Historical Dow and its affiliates certain seed production and distribution services.  The following table presents amounts due to or due from Historical Dow and its affiliates at March 31, 2019 and December 31, 2018:


(In millions)March 31, 2019December 31, 2018
Accounts and notes receivable - net$112
$201
Accounts payable$201
$288

The table below presents revenue earned and expenses incurred in transactions with Historical Dow and its affiliates for the three months ended March 31, 2019 and 2018:

 Three Months Ended March 31,
(In millions)20192018
Net sales$115
$44
Cost of goods sold 
$109
$24

For the three months ended March 31, 2019 and 2018, respectively, purchasesPurchases from Historical Dow and its affiliates were $106 million and $43 million, respectively. Historical DuPont also received transfers of certain feedstocks and energy from Historical Dow and its affiliates at cost which totaled $82 million and $79$42 million for the three months ended March 31, 2019 and 2018, respectively,2019.


Transactions with DowDuPont
In November 2017, DowDuPont's Board of Directors authorized an initial $4,000 million share repurchase program to buy back shares of DowDuPont common stock. The $4,000 million share repurchase program was completed in the third quarter of 2018. In February 2019, and 2018, the DowDuPont Board declared first quarter dividends per share of DowDuPont common stock payable on March 15, 20192019. EID declared and March 15, 2018, respectively. Forpaid distributions to DowDuPont of $317 million for the three months ended March 31, 2019, and 2018, Historical DuPont declared and paid distributions to DowDuPont of about $317 million and $830 million, respectively, primarily to fund a portion of DowDuPont's dividend payments for these periods, and, specific to 2018, to fund a portion of DowDuPont's share repurchases.payment.


In addition, at March 31, 2019, and December 31, 2018, Historical DuPontEID had a payable to DowDuPont of $103 million included in accounts payable in the interim Condensed Consolidated Balance SheetsSheet related to its estimated tax liability for the period beginning with the Merger through the date of the Dow Distribution, during which time the parties filed a consolidated USUnited States ("U.S.") tax return. See Note 8 - Income Taxes, for additional information.



15

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 7 - SUPPLEMENTARY INFORMATION

Sundry Income - NetThree Months Ended March 31,
(In millions)20192018
Interest income$23
$28
Equity in earnings of affiliates - net13
14
Net gain on sales of businesses and other assets1
55
2
Net exchange losses(32)(132)
Non-operating pension and other post employment benefit credit2
66
92
Miscellaneous income and expenses - net3
32
43
Sundry income - net$157
$47
Other Income - NetThree Months Ended
March 31,
(In millions)20202019
Interest income$18
$16
Equity in losses of affiliates - net(1)
Net loss on sales of businesses and other assets1
(46)(13)
Net exchange losses(61)(27)
Non-operating pension and other post employment benefit credit2
91
51
Miscellaneous income (expenses) - net
4
Other income - net$1
$31
1.TheIncludes a loss of $(53) million relating to the expected sale of the La Porte site, for which the company signed an agreement during the three months ended March 31, 2019 includes2020 and a gain onloss of $(24) million relating to DAS’s sale of assets withina joint venture related to synergy actions for the electronics and imaging product line.three months ended March 31, 2019.
2.Includes non-service related components of net periodic benefit credits (costs) (interest cost, expected return on plan assets, and amortization of unrecognized (gain) loss, and settlement loss).
3.Miscellaneous income and expenses - net, includes gains related to litigation settlements and other items. 




18

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


The following table summarizes the impacts of the company's foreign currency hedging program on the company's results of operations. The company routinely uses foreign currency exchange contracts to offset its net exposures, by currency, related to the foreign currency-denominated monetary assets and liabilities. 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 on net monetary asset positions. The hedging program gains (losses) are largely taxable (tax deductible) in the United States ("U.S."), whereas the offsetting exchange gains (losses) on the remeasurement of the net monetary asset positions are often not taxable (tax deductible) in their local jurisdictions. The net pre-tax exchange gains (losses) are recorded in sundryother income - net and the related tax impact is recorded in (benefit from) provision for income taxes on continuing operations in the interim Consolidated Statements of Operations.
(In millions)Three Months Ended March 31,
 20192018
Subsidiary Monetary Position (Losses) Gains  
Pre-tax exchange (losses) gains$(23)$49
Local tax benefits
32
Net after-tax impact from subsidiary exchange (losses) gains$(23)$81
   
Hedging Program Losses  
Pre-tax exchange losses1
$(9)$(181)
Tax benefits2
42
Net after-tax impact from hedging program exchange losses$(7)$(139)
   
Total Exchange Losses  
Pre-tax exchange losses$(32)$(132)
Tax benefits2
74
Net after-tax exchange losses$(30)$(58)
(In millions)Three Months Ended
March 31,
 20202019
Subsidiary Monetary Position Losses  
Pre-tax exchange losses$(226)$(10)
Local tax benefits (expenses)23
(10)
Net after-tax impact from subsidiary exchange losses$(203)$(20)
   
Hedging Program Gains (Losses)  
Pre-tax exchange gains (losses)$165
$(17)
Tax (expenses) benefits(40)4
Net after-tax impact from hedging program exchange gains (losses)$125
$(13)
   
Total Exchange Losses  
Pre-tax exchange losses$(61)$(27)
Tax expenses(17)(6)
Net after-tax exchange losses$(78)$(33)
1.
Includes a $50 million foreign exchange loss for the three months ended March 31, 2018 related to adjustments to foreign currency exchange contracts as a result of U.S. tax reform.



16

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Cash, cash equivalents and restricted cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash (included in other current assets) presented in the interim Condensed Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash presented in the interim Condensed Consolidated Statements of Cash Flows.
(In millions)March 31, 2020December 31, 2019March 31, 2019
Cash and cash equivalents$1,963
$1,764
$1,759
Restricted cash377
409
438
Total cash, cash equivalents and restricted cash2,340
2,173
2,197
Cash and cash equivalents of discontinued operations1


2,074
Restricted cash of discontinued operations2


42
Total cash, cash equivalents and restricted cash$2,340
$2,173
$4,313

1.Refer to Note 3 - Divestitures and Other Transactions, for additional information.
2.Amount included in other current assets within assets of discontinued operations - current. Refer to Note 3 - Divestitures and Other Transactions, for additional information.

(In millions)March 31, 2019December 31, 2018
Cash and cash equivalents$3,796
$4,466
Restricted cash480
500
Total cash, cash equivalents and restricted cash$4,276
$4,966

Historical DuPontEID entered into a trust agreement in 2013 (as amended and restated in 2017), establishing and requiring Historical DuPontEID to fund a trust (the "Trust") for cash obligations under certain non-qualified benefit and deferred compensation plans upon a change in control event as defined in the Trust agreement. Under the Trust agreement, the consummation of the Merger was a change in control event. Restricted cash at March 31, 2020, December 31, 2019, and DecemberMarch 31, 20182019 is related to the Trust.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 8 - INCOME TAXES


On December 22, 2017,For periods between the Tax CutsMerger Effectiveness Time and Jobs Act (“The Act”) was enacted. The Act reduces the U.S. federal corporate income tax rate from 35 percent to 21 percent, requires companies to pay a one-time transition tax (“transition tax”) on earnings of foreign subsidiaries that were previously tax deferred, creates new provisions related to foreign sourced earnings, eliminates the domestic manufacturing deduction and moves towards a territorial system. At December 31, 2018, the company had completed its accounting for the tax effects of The Act.

As a result of The Act, the company remeasured its U.S. federal deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21 percent. In the first quarter of 2018, the company recorded a $48 million charge to provision for income taxes on continuing operations in the company's interim Consolidated Statements of Operations to adjust the provisional amount related to the remeasurement of the company's deferred tax balance.

In the first quarter of 2018, the company recognized a charge of $16 million to provision for income taxes on continuing operations in the company's interim Consolidated Statements of Operations as a result of an indirect impact of the Act related to certain inventory.

Historical DuPontCorteva Distribution, Corteva and its subsidiaries arewere included in DowDuPont's consolidated federal income tax group and consolidated tax return.  Generally, the consolidated tax liability of the DowDuPont U.S. tax group for each year will bewas apportioned among the members of the consolidated group based on each member’s separate taxable income.  HistoricalCorteva, DuPont and Historical Dow intend that to the extent Federal and/or State corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with a tax sharing agreement and/or tax matters agreement. See Note 3 - Divestitures and Other Transactions, for further information related to indemnifications between Corteva, Dow and DuPont.


Each year the company files hundreds of tax returns in the various national, state and local income taxing jurisdictions in which it operates. These tax returns are subject to examination and possible challenge by the tax authorities. Positions challenged by the tax authorities may be settled or appealed by the company. As a result, there is an uncertainty in income taxes recognized in the company's financial statements in accordance with accounting for income taxes and accounting for uncertainty in income taxes. The ultimate resolution of such uncertainties is not expected to have a material impact on the company's results of operations.

During the first and second quarters of 2019, in connection with the Intended Business Separations, the company has and expects to continue repatriating certain funds from its foreign subsidiaries that are not needed to finance local operations or separation activities. During the three months ended March 31, 2019, the company recorded tax expense of $13 million associated with these repatriation activities. Beyond these expected repatriations, the company is still asserting indefinite reinvestment related to certain investments in foreign subsidiaries.


During the three months ended March 31, 2019, the company recordedrecognized a tax charge of $32 million to provision for (benefit from) income taxes on continuing operations related to U.S. state blended tax rate changes associated with the Internal Reorganizations.

During the three months ended March 31, 2019, the company recognized a tax benefit of $102 million to provision for (benefit from) income taxes on continuing operations, related to an internal legal entity restructuring associated with the Intended Business Separations.Internal Reorganizations.



For further discussion of pre-tax and after-tax impacts of the company's foreign currency hedging program and net monetary asset programs, refer to Note 7 - Supplementary Information.
17

NOTE 9 - EARNINGS PER SHARE OF COMMON STOCK

On June 1, 2019, the date of the Corteva Distribution, 748,815,000 shares of the company’s common stock were distributed to DowDuPont shareholders of record as of May 24, 2019.

The following tables provide earnings per share calculations for the periods indicated below:
Net Income for Earnings Per Share Calculations - Basic and DilutedThree Months Ended
March 31
(In millions)20202019
Income (loss) from continuing operations after income taxes$281
$(184)
Net income attributable to continuing operations noncontrolling interests10
8
Income (loss) from continuing operations available to Corteva common stockholders271
(192)
Income from discontinued operations, net of tax1
360
Net income attributable to discontinued operations noncontrolling interests
4
Income from discontinued operations available to Corteva common stockholders1
356
Net income available to common stockholders$272
$164


Earnings Per Share Calculations - BasicThree Months Ended
March 31
(Dollars per share)20202019
Earnings (loss) per share of common stock from continuing operations
$0.36
$(0.26)
Earnings per share of common stock from discontinued operations
0.48
Earnings per share of common stock$0.36
$0.22



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




Earnings Per Share Calculations - DilutedThree Months Ended
March 31
(Dollars per share)20202019
Earnings (loss) per share of common stock from continuing operations$0.36
$(0.26)
Earnings per share of common stock from discontinued operations
0.48
Earnings per share of common stock$0.36
$0.22


Share Count InformationThree Months Ended
March 31
(Shares in millions)20202019
Weighted-average common shares - basic1
749.9
749.4
Plus dilutive effect of equity compensation plans2
2.6

Weighted-average common shares - diluted752.5
749.4
Potential shares of common stock excluded from EPS calculations3
9.1


1.Share amounts for all periods prior to the Corteva Distribution were based on 748.8 million shares of Corteva, Inc. common stock distributed to holders of DowDuPont's common stock on June 1, 2019, plus 0.6 million of additional shares in which accelerated vesting conditions have been met.
2.Diluted earnings per share considers the impact of potentially dilutive securities except in periods in which there is a loss because the inclusion of the potential common shares would have an anti-dilutive effect.
3.These outstanding potential shares of common stock were excluded from the calculation of diluted earnings per share because the effect of including them would have been anti-dilutive.

NOTE 910 - ACCOUNTS AND NOTES RECEIVABLE - NET

(In millions)March 31, 2020December 31, 2019March 31, 2019
Accounts receivable – trade1
$5,367
$4,225
$4,683
Notes receivable – trade2
412
171
377
Other3
996
1,132
1,447
Total accounts and notes receivable - net$6,775
$5,528
$6,507
1.
Accounts receivable – trade is net of allowances of $203 million at March 31, 2020, $174 million at December 31, 2019, and $148 million at March 31, 2019. Allowances are equal to the estimated expected credit losses. The estimate at March 31, 2020 was developed using a loss-rate method. The estimate at December 31, 2019 and March 31, 2019 is based on historical collection experience, current economic and market conditions, and review of the current status of customers' accounts.
2.
Notes receivable – trade primarily consists of receivables for deferred payment loan programs for the sale of seed products to customers. These loans have terms of one year or less and are primarily concentrated in North America. The company maintains a rigid pre-approval process for extending credit to customers in order to manage overall risk and exposure associated with credit losses. As of March 31, 2020, December 31, 2019, and March 31, 2019 there were no additional exposures requiring a reserve in excess of what is already reserved, nor were there any significant impairments related to current loan agreements.
3.
Other includes receivables in relation to indemnification assets, value added tax, general sales tax and other taxes. No individual group represents more than 10 percent of total receivables. In addition, Other includes amounts due from nonconsolidated affiliates of $140 million, $119 million, and $135 million as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively.

Accounts and notes receivable are carried at the expected amount to be collected, which approximates fair value. The company establishes the allowance for doubtful receivables using a loss-rate method where the loss rate is developed using past events, historical experience, current conditions and forecasts that affect the collectability of the financial assets.

The following table summarizes changes in the allowance for doubtful receivables for the three months ended March 31, 2020:
(In millions)
Balance at December 31, 2019$174
Additions charged to expenses60
Write-offs charged against allowance(1)
Recoveries collected(30)
Balance at March 31, 2020$203


21

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



The company enters into various factoring agreements with third-party financial institutions to sell its trade receivables under both recourse and non-recourse agreements in exchange for cash proceeds. These financing arrangements result in a transfer of the company's receivables and risks to the third-party. As these transfers qualify as true sales under the applicable accounting guidance, the receivables are derecognized from the Consolidated Balance Sheets upon transfer, and the company receives a payment for the receivables from the third-party within a mutually agreed upon time period. For arrangements involving an element of recourse, which is typically provided through a guarantee of accounts in the event of customer default, the guarantee obligation is measured using market data from similar transactions and reported as a current liability in the Consolidated Balance Sheets.

Trade receivables sold under these agreements were $15 million and $3 million for the three months ended March 31, 2020 and 2019. The trade receivables sold that remained outstanding under these agreements which include an element of recourse as of March 31, 2020, December 31, 2019, and March 31, 2019 were $43 million, $171 million, and $25 million, respectively. The net proceeds received are included in cash provided by operating activities in the Consolidated Statements of Cash Flows. The difference between the carrying amount of the trade receivables sold and the sum of the cash received is recorded as a loss on sale of receivables in other income - net in the Consolidated Statements of Operations. The loss on sale of receivables was $2 million and $1 million for the three months ended March 31, 2020 and 2019, respectively. The guarantee obligations recorded as of March 31, 2020, December 31, 2019, and March 31, 2019 in the interim Condensed Consolidated Balance Sheets were not material. See Note 14 - Commitments and Contingent Liabilities for additional information on the company’s guarantees.

NOTE 11 - INVENTORIES


(In millions)March 31, 2020December 31, 2019March 31, 2019
Finished products$2,721
$2,684
$3,266
Semi-finished products1,260
1,850
1,350
Raw materials and supplies420
498
403
Total inventories$4,401
$5,032
$5,019

(In millions)March 31,
2019
December 31,
2018
Finished products$4,390
$4,204
Semi-finished products1,338
1,769
Raw materials523
481
Stores and supplies385
441
Total$6,636
$6,895
Adjustment of inventories to a last-in, first out ("LIFO") basis511
512
Total inventories$7,147
$7,407


As a result of the Merger, a fair value step-up of $3,840$2,297 million was recorded for inventories. Of this amount, $205 million and $641 million was recognized in cost of goods sold within income from continuing operations in the interim Consolidated Statements of Operations forDuring the three months ended March 31, 2019, and 2018, respectively.the company recognized $205 million of these costs in cost of goods sold within loss from continuing operations before income taxes.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1012 - OTHER INTANGIBLE ASSETS

Other Intangible Assets
The gross carrying amounts and accumulated amortization of other intangible assets by major class are as follows: 
(In millions)March 31, 2020December 31, 2019March 31, 2019
 Gross
Accumulated
Amortization
NetGross
Accumulated
Amortization
NetGross
Accumulated
Amortization
Net
Intangible assets subject to amortization (Definite-lived): 
 
 
 
 
 
   
Germplasm1
$6,265
$(126)$6,139
$6,265
$(63)$6,202
   
Customer-related1,956
(293)1,663
1,977
(268)1,709
$1,977
$(182)$1,795
Developed technology1,463
(409)1,054
1,463
(370)1,093
1,411
(202)1,209
Trademarks/trade names166
(88)78
166
(86)80
172
(86)86
Favorable supply contracts475
(231)244
475
(207)268
475
(135)340
Other2
400
(218)182
404
(213)191
530
(289)241
Total other intangible assets with finite lives10,725
(1,365)9,360
10,750
(1,207)9,543
4,565
(894)3,671
          
Intangible assets not subject to amortization (Indefinite-lived): 
 
 
 
 
 
   
IPR&D10

10
10

10
146

146
Germplasm1
      6,265

6,265
Trademarks / trade names1,871

1,871
1,871

1,871
1,871

1,871
Other





8

8
Total other intangible assets1,881

1,881
1,881

1,881
8,290

8,290
Total$12,606
$(1,365)$11,241
$12,631
$(1,207)$11,424
$12,855
$(894)$11,961
(In millions)March 31, 2019December 31, 2018
 Gross
Accumulated
Amortization
NetGross
Accumulated
Amortization
Net
Intangible assets subject to amortization (Definite-lived): 
 
 
 
 
 
Customer-related$9,310
$(884)$8,426
$9,325
$(744)$8,581
Developed technology1
4,926
(735)4,191
4,506
(628)3,878
Trademarks/trade names1,083
(135)948
1,084
(114)970
Favorable supply contracts493
(136)357
475
(111)364
Microbial cell factories384
(26)358
386
(22)364
Other2
376
(37)339
377
(32)345
Total other intangible assets with finite lives16,572
(1,953)14,619
16,153
(1,651)14,502
       
Intangible assets not subject to amortization (Indefinite-lived): 
 
 
 
 
 
IPR&D1
100

100
545

545
Germplasm3
6,265

6,265
6,265

6,265
Trademarks / trade names4,740

4,740
4,741

4,741
Total other intangible assets11,105

11,105
11,551

11,551
Total$27,677
$(1,953)$25,724
$27,704
$(1,651)$26,053

1. 
During the first quarter ofBeginning on October 1, 2019, the company announcedchanged its indefinite life assertion of the germplasm assets to definite lived with a useful life of 25 years.  This change is the result of a more focused development effort of new seed products coupled with an expanded launchintent to out license select germplasm on a non-exclusive basis. Prior to changing the useful life of its Qrome® corn hybrids following the receipt of regulatory approval from China. As a result,germplasm assets, the company reclassifiedtested the amounts from indefinite-lived IPR&D to developed technology.
assets for impairment under ASC 350 - Intangibles, Goodwill and Other, concluding the assets were not impaired.
2. 
Primarily consists of sales and farmer networks, marketing and manufacturing alliances and noncompetition agreements.
3.
Germplasm is the pool of genetic source material and body of knowledge gained from the development and delivery stage of plant breeding. This intangible asset is expected to contribute to cash flows beyond the foreseeable future and there are no legal, regulatory, contractual, or other factors which limit its useful life.


The aggregate pre-tax amortization expense from continuing operations for definite-lived intangible assets was $320$163 million and $315$101 million for the three months ended March 31, 20192020 and 2018,2019, respectively. The estimated aggregate pre-tax amortization expense from continuing operations for the remainder of 20192020 and each of the next five years is approximately $1,029$495 million, $1,270$649 million, $1,257$628 million, $1,235$546 million, $1,120$532 million and $1,044$495 million, respectively.


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NOTE 11 - LEASES

The company has operating and finance leases for real estate, airplanes, railcars, fleet, certain machinery and equipment, and information technology assets. The company’s leases have remaining lease terms of 1 year to 50 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the company will exercise that option. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability.

Certain of the company's leases include residual value guarantees. These residual value guarantees are based on a percentage of the lessor's asset acquisition price and the amount of such guarantee declines over the course of the lease term. The portion of residual value guarantees that are probable of payment are included in the related lease liability on the accompanying Consolidated Balance Sheet other than certain finance leases that include the maximum residual value guarantee amount in the measurement of the related liability given the election to use the package of practical expedients at the date of adoption. At March 31, 2019, the company has future maximum payments for residual value guarantees in operating leases of $46 million with final expirations through 2028. The company's lease agreements do not contain any material restrictive covenants.

The components of lease cost were as follows:
(In millions)Three Months Ended March 31, 2019
Operating lease cost54
Finance lease cost
Amortization of right-of-use assets35
Interest on lease liabilities1
Total finance lease cost36
Short-term lease cost5
Variable lease cost4
Sublease income(8)
Total lease cost91

New leases entered into during the three months ended March 31, 2019 were not considered material. Supplemental cash flow information related to leases was as follows:
(In millions)Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases$56
Operating cash flows from finance leases$1
Financing cash flows from finance leases$20


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Supplemental balance sheet information related to leases was as follows:
(In millions)March 31, 2019
Operating Leases 
Operating lease right-of-use assets1
$703
Current operating lease liabilities2
213
Noncurrent operating lease liabilities3
494
Total operating lease liabilities$707
  
Finance Leases 
Property, plant, and equipment, gross152
Accumulated depreciation(38)
Property, plant, and equipment, net$114
Short-term borrowings and finance lease obligations43
Long-Term Debt83
Total finance lease liabilities$126
1.Included in other assets in the interim Condensed Consolidated Balance Sheet.
2.Included in accrued and other current liabilities in the interim Condensed Consolidated Balance Sheet.
3.Included in other noncurrent obligations in the interim Condensed Consolidated Balance Sheet.

Historical DuPont utilizes the incremental borrowing rate in determining the present value of lease payments unless the implicit rate is readily determinable.
Lease Term and Discount RateMarch 31, 2019
Weighted-average remaining lease term (years)
Operating leases5.31
Finance leases2.58
Weighted average discount rate

Operating leases3.37%
Finance leases3.25%

Maturities of lease liabilities were as follows:
Maturity of Lease Liabilities at March 31, 2019Operating LeasesFinance Leases
(In millions)
2019$184
$36
2020171
30
2021132
27
2022107
27
202355
9
2024 and thereafter129
6
Total lease payments$778
$135
Less: Interest71
9
Present value of lease liabilities$707
$126


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Future minimum lease payments for operating leases accounted for under ASC 840, "Leases," with remaining non-cancelable terms in excess of one year at December 31, 2018 were as follows:
Minimum Lease Commitments at December 31, 2018
(In millions)
2019$242
2020128
202190
202266
202344
2024 and thereafter85
Total$655


NOTE 1213 - SHORT-TERM BORROWINGS, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES


The following tables summarize Corteva's short-term borrowings and finance lease obligations and long-term debt:
Short-term borrowings and finance lease obligations   
(In millions)March 31, 2020December 31, 2019March 31, 2019
Commercial paper$1,918
$
$2,587
Repurchase facility30

19
Other loans - various currencies45
2
80
Long-term debt payable within one year1
1
479
Finance lease obligations payable within one year2
4
36
Total short-term borrowings and finance lease obligations$1,996
$7
$3,201



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The estimated fair value of the company's short-term borrowings, including interest rate financial instruments, was determined using Level 2 inputs within the fair value hierarchy. Based on quoted market prices for the same or similar issues, or on current rates offered to the company for debt of the same remaining maturities, the fair value of the company's short-term borrowings and finance lease obligations was approximately carrying value.

The weighted-average interest rate on short-term borrowings outstanding at March 31, 2020, December 31, 2019, and March 31, 2019 was 2.0%, 6.7% and 2.6%, respectively. The decrease in the weighted-average interest rate was primarily due to lower average commercial paper interest.

Repurchase Facility
In February 2019,2020, the company entered into a new committed receivable repurchase facility of up to $1,300 million$1.3 billion (the "2019"2020 Repurchase Facility") which expires in December 2019. From time to time, the company and the banks modify the monthly commitment amounts to better align with working capital requirements.2020. Under the 20192020 Repurchase Facility, Historical DuPontCorteva may sell a portfolio of available and eligible outstanding agriculture product line customer notes receivables to participating institutions and simultaneously agree to repurchase at a future date. The 20192020 Repurchase Facility is considered a secured borrowing with the customer notes receivable inclusive of those that are sold and repurchased, equal to 105 percent of the outstanding amounts borrowed utilized as collateral. Borrowings under the 20192020 Repurchase Facility have an interest rate of LIBOR + 0.75 percent.


As of March 31, 2019, $202020, $32 million of notes receivable, recorded in accounts and notes receivable - net, were pledged as collateral against outstanding borrowings under the 20192020 Repurchase Facility of $19$30 million, recorded in short-term borrowings and finance lease obligations on the interim Condensed Consolidated Balance Sheet.


Term Loan and Revolving Credit Facilities
In March 2016, the companyNovember 2018, EID entered into a $3.0 billion 5-year revolving credit agreement that provides forfacility and a three-year, senior unsecured term loan$3.0 billion 3-year revolving credit facility in(the “Revolving Credit Facilities”). The Revolving Credit Facilities became effective May 2019. Corteva, Inc. became a party at the aggregate principal amounttime of $4,500 million (the "Term Loan Facility") under which Historical DuPontthe Corteva Distribution. The Revolving Credit Facilities may make upserve as a substitute to seven term loan borrowings and amounts repaid or prepaid are not available for subsequent borrowings. The proceeds from the borrowings under the Term Loan Facility were used for the company's commercial paper program, and can be used, from time to time, for general corporate purposes including, debt repayment,but not limited to, the funding of seasonal working capital needs. The Revolving Credit Facilities contain customary representations and fundingwarranties, affirmative and negative covenants and events of default that are typical for companies with similar credit ratings. Additionally, the Revolving Credit Facilities contain a portionfinancial covenant requiring that the ratio of DowDuPont'stotal indebtedness to total capitalization for Corteva and its consolidated subsidiaries not exceed 0.60.

In March 2020, the Company drew down $500 million under the $3.0 billion 3-year revolving credit facility as a result of the volatility and increased borrowing costs of commercial paper resulting from the unstable market conditions caused by the novel coronavirus ("COVID-19"). Unused commitments under the 3-year revolving credit facility were $2.5 billion as of March 31, 2020. The company elected a 6 month LIBOR interest rate option for the $500 million borrowing.  Borrowings outstanding under the 3-year revolving credit facility as of March 31, 2020 bore interest at an all-in-rate of 1.99% per annum. 

Under the Revolving Credit Facilities, all amounts borrowed, absence any event of default, are not required to be repaid until the commitment termination date which is May 2022 for the 3-year revolving credit facility and expenses. AtMay 2024 for the 5-year revolving credit facility, despite the interest rate option elected.  As a result, borrowings under the Revolving Credit Facilities as of March 31, 2020 are reflected as long-term debt in the interim Condensed Consolidated Balance Sheet.

The fair value of the company’s long-term borrowings, including debt due within one year, was $612 million, $119 million, and $6,830 million as of March 31, 2020, December 31, 2019, and March 31, 2019, respectively, and was determined using quoted market prices for the same or similar issues, or current rates offered to the company had made six term loan borrowings in an aggregate principal amount of $3,000 million and had unused commitments of $1,500 million under the Term Loan Facility. See Note 18 for further discussion on the repaymentdebt of the term loan in May 2019.same remaining maturities (Level 2 inputs).



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NOTE 1314 - COMMITMENTS AND CONTINGENT LIABILITIES


Guarantees
Indemnifications
In connection with acquisitions and divestitures as of March 31, 2019,2020, the company has indemnified respective parties against certain liabilities that may arise in connection with these transactions and business activities prior to the completion of the transactions. The term of these indemnifications, which typically pertain to environmental, tax and product liabilities, is generally indefinite. In addition, the company indemnifies its duly elected or appointed directors and officers to the fullest extent permitted by Delaware law, against liabilities incurred as a result of their activities for the company, such as adverse judgments relating to litigation matters. If the indemnified party were to incur a liability or have a liability increase as a result of a successful claim, pursuant to the terms of the indemnification, the company would be required to reimburse the indemnified party. The maximum amount of potential future payments is generally unlimited. See pages 26 and 11 for additional information relating to the indemnification obligations under the Chemours Separation Agreement and the Corteva Separation Agreement.


Obligations for Equity Affiliates & OthersCustomers and Other Third Parties
The company has directly guaranteed various debt obligations under agreements with third parties related to equity affiliates,customers and customers.other third parties. At March 31, 2020, December 31, 2019 and DecemberMarch 31, 2018,2019, the company had directly guaranteed $239$90 million, $97 million, and $259$294 million, respectively, of such obligations. These amounts represent the maximum potential amount of future (undiscounted) payments that the company could be required to make under the guarantees. The company would be required to perform on these guarantees in the event of default by the guaranteed party. Of the total maximum future payments at March 31, 2020, less than $1 million had terms greater than a year. The maximum future payments also include $17 million, $16 million, and $12 million of guarantees related to the various factoring agreements that the company enters into with its customer to sell its trade receivables at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. See Note 10 - Accounts and Notes Receivable, Net, for additional information.



The maximum future payments include agreements with lenders to establish programs that provide financing for select customers. The terms of the guarantees are equivalent to the terms of the customer loans that are primarily made to finance customer invoices. The total accounts receivable balance outstanding on these agreements was $125 million, $27 million and $63 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively.
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The company assesses the payment/performance risk by assigning default rates based on the duration of the guarantees. These default rates are assigned based on the external credit rating of the counterparty or through internal credit analysis and historical default history for counterparties that do not have published credit ratings. For counterparties without an external rating or available credit history, a cumulative average default rate is used.

In certain cases, the company has recourse to assets held as collateral, as well as personal guarantees from customers. Assuming liquidation, these assets are estimated to cover approximately 7 percent of the $73 million of guaranteed obligations of customers. Set forth below are the company's guaranteed obligations at March 31, 2019.

The following table provides a summary of the final expiration year and maximum future payments for each type of guarantee:
Guarantees at March 31, 2019Final Expiration YearMaximum Future Payments
(In millions)
Obligations for customers1:
  
Bank borrowings2022$73
Obligations for non-consolidated affiliates2:



Bank borrowings2019166
Total guarantees $239
1.Existing guarantees for select customers, as part of contractual agreements. The terms of the guarantees are equivalent to the terms of the customer loans that are primarily made to finance customer invoices.  Of the total maximum future payments, $72 million had terms less than a year.
2.   Existing guarantees for non-consolidated affiliates' liquidity needs in normal operations.


Litigation
The company is subject to various legal proceedings, including, but not limited to, product liability, intellectual property, antitrust, commercial, property damage, personal injury, environmental and regulatory matters arising out of the normal course of its current and former business operations, including product liability, intellectual property, commercial, environmental and antitrust lawsuits.businesses or legacy EID businesses unrelated to Corteva’s current businesses but allocated to Corteva as part of the separation of Corteva from DuPont. It is not possible to predict the outcome of these various proceedings. Although considerable uncertainty exists, management does not anticipate that the ultimate disposition of these matters will have a material adverse effect on the company's results of operations, consolidated financial position or liquidity.  However, the ultimate liabilities could be material to results of operations and the cash flows in the period recognized.


PFOA LiabilitiesIndemnifications under Separation Agreements
Historical DuPontThe company has entered into various agreements where the company is a partyindemnified for certain liabilities. In connection with the recognition of liabilities related to legal proceedings relatingthese matters, the company records an indemnification asset when recovery is deemed probable. See Note 3 - Divestitures and Other Transactions, for additional information related to indemnifications.

Chemours/Performance Chemicals
On July 1, 2015, EID completed the useseparation of PFOA (collectively, perfluorooctanoic acids and its salts, including the ammonium salt) by its former Performance Chemicals segment which separated from Historical DuPont in July 2015 through the spin-off of all of the issued and outstanding stock of Chemours. While it is reasonably possible thatThe Chemours Company (the "Chemours Separation"). In connection with the company could incur liabilities relatedChemours Separation, EID and The Chemours Company ("Chemours") entered into a Separation Agreement (the "Chemours Separation Agreement"). Pursuant to PFOA, any such liabilities are not expected to be material. As discussed in Note 3 and below, the company is indemnified by Chemours under the Chemours Separation Agreement as amended. The company has recorded a liability of $22 million and an indemnification asset of $22 million at March 31, 2019, primarily related to testing drinking water in and around certain historic company sites and offering treatment or an alternative supply of drinking water if tests indicate the presence of PFOA in drinking water at or greater than the national health advisory level established from time to time by the EPA.
Leach Settlement and MDL Settlement
Historical DuPont has residual liabilities under its 2004 settlement of a West Virginia state court class action, Leach v. DuPont, which alleged that PFOA from Historical DuPont’s former Washington Works facility had contaminated area drinking water supplies and affected the health of area residents. The settlement class has about 80,000 members. In addition to relief that was provided to class members years ago, the settlement requires Historical DuPont to continue providing PFOA water treatment to six area water districts and private well users and to fund, through an escrow account, up to $235 million for a medical monitoring program for eligible class members. As of March 31, 2019, approximately $2 million had been disbursed from the account since its establishment in 2012 and the remaining balanceamendment 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 approximately $1 million.generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments.


The Leach settlement permits class members to pursue personal injury claims for six health conditions (and no others) that an expert panel appointed under the settlement reported in 2012 had a “probable link” (as defined in the settlement) with PFOA: pregnancy-induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis; and diagnosed high cholesterol. After the expert panel reported its findings, approximately 3,550 personal injury lawsuits were filed in federal and state courts in Ohio and West Virginia and consolidated in multi-district litigation in the U.S. District Court for the Southern District of Ohio (“MDL”). The MDL was settled in early 2017 for $670.7 million in cash, with Chemours and Historical DuPont (without indemnification from Chemours) each paying half.



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Post-MDL Settlement PFOA Personal Injury Claims
The MDL settlement did not resolve claims of plaintiffs who did not have claims in the MDL or whose claims are based on diseases first diagnosed after February 11, 2017. At March 31, 2019, approximately 57 lawsuits were pending alleging personal injury, including kidney and testicular cancer, thyroid disease and ulcerative colitis, from exposure to PFOA through air or water, only 3 of which are not part of the MDL or were not otherwise filed on behalf of Leach class members.

Other PFOA Actions
Historical DuPont is a party to other PFOA lawsuits that do not involve claims for personal injury. Chemours, pursuant to the Chemours Separation Agreement, is defending and indemnifying, with reservation, the company in these lawsuits.

New York. Historical DuPont is a defendant in about 52 lawsuits, including a putative class action, brought by persons who live in and around Hoosick Falls, New York. These lawsuits assert claims for medical monitoring and property damage based on alleged PFOA releases from manufacturing facilities owned and operated by co-defendants in Hoosick Falls and allege that Historical DuPont and 3M supplied some of the materials used at these facilities. Historical DuPont is also one of more than ten defendants in a lawsuit brought by the Town of East Hampton, New York alleging PFOA and perfluorooctanesulfonic acid ("PFOS") contamination of the town’s well water.

New Jersey. At December 31, 2018, two lawsuits were pending, one brought by a local water utility and the second a putative class action, against Historical DuPont alleging that PFOA from Historical DuPont’s former Chambers Works facility contaminated drinking water sources. The putative class action was dismissed without prejudice by the plaintiffs.

In late March of 2019, the New Jersey State Attorney General (the “NJAG”) filed four lawsuits against the company, Chemours, 3M and others alleging that former Historical DuPont operations at the Chambers Works, Pompton Lakes Works, Parlin and Repauno sites in New Jersey, caused damage to the State’s natural resources.  Two of these lawsuits (those involving the Chambers Works and Parlin sites) allege contamination from per- and polyfluoroalkyl substances (“PFAS”). The lawsuit related to Parlin names an additional DowDuPont subsidiary. The Ridgewood Water District in New Jersey filed suit in the first quarter 2019 against Historical DuPont alleging losses related to the investigation, remediation and monitoring of polyfluorinated surfactants (“PFS”), including PFOA, in water supplies.

Alabama. Historical DuPont is one of more than thirty defendants in one lawsuit by a local water utility alleging contamination from perfluorinated chemicals and compounds (“PFCs”), including PFOA, used by co-defendant carpet manufacturers to make their products more stain and grease resistant.

Ohio. Historical DuPont is a defendant in three lawsuits: an action by the State of Ohio based on alleged damage to natural resources, a putative nationwide class action brought on behalf of anyone who has detectable levels of perfluorinated chemicals, including PFOA, in their blood, and an action by the City of Dayton claiming losses related to the investigation, remediation and monitoring of PFAS, including PFOA, in water supplies.

Other. Dozens of cases have been filed against 3M and other defendants primarily alleging property damage from contamination in connection with the use of firefighting foams that contain PFOS.  At March 31, 2019, Historical DuPont was named in 4 of these cases. Historical DuPont did not make firefighting foam and has never made or supplied PFOS or products that contained PFOS.

Chemours Separation Agreement Amendment
As discussed in Note 3, concurrentConcurrent with the MDL Settlement Historical DuPont(as discussed below), EID and Chemours amended the Chemours Separation Agreement to provide for a limited sharing of potential future PFOA liabilities for a five-year period thatfive years, which began on July 6, 2017. During that five-year period,the five years, Chemours will annually pay the first $25 million of future PFOA liabilities and, if that amount is exceeded, Historical DuPontEID will pay any excess amount up to the next $25 million, with Chemours annually bearing any excess liabilities above that amount. At the end of the five-year period,five years, this limited sharing agreement will expire, and Chemours’ indemnification obligations under the Chemours Separation Agreement will continue unchanged. As part of this amendment, Chemours also agreed that it would not contest its liability for PFOA liabilities on the basis of certain ostensible defenses it had previously raised, including defenses relating to punitive damages, and would waive any such defenses with respect to PFOA liabilities.  Chemours has, however, retained defenses as to whether any particular PFOA claim is within the scope of the indemnification provisions of the Chemours Separation Agreement.

There have been no charges incurred by Historical DuPontthe company under this arrangementamendment through March 31, 2019.2020.



On May 13, 2019, Chemours filed a complaint in the Delaware Court of Chancery ("Chancery Court") against DuPont, Corteva, and EID alleging, among other things, that the litigation and environmental liabilities allocated to Chemours under the Chemours Separation Agreement were underestimated and asking that the Court either limit the amount of Chemours’ indemnification obligations or, alternatively, order the return of the $3.91 billion dividend Chemours paid to EID prior to its separation. On June 3, 2019, the defendants moved to dismiss the complaint on the grounds that the Chemours Separation Agreement requires arbitration of all disputes relating to that agreement. On March 30, 2020, the Chancery Court granted the motion to dismiss made by DuPont, Corteva, and EID. Chemours filed its notice of appeal of the Chancery Court's decision on April 17, 2020. The company believes the probability of liability with respect to Chemours' suit continues to be remote. For additional information regarding environmental indemnification, see discussion on page 29.

At March 31, 2020, the indemnification assets pursuant to the Chemours Separation Agreement are $60 million within accounts and notes receivable - net and $294 million within other assets along with the corresponding liabilities of $60 million within accrued and other current liabilities and $294 million within other noncurrent obligations in the interim Condensed Consolidated Balance Sheet.

Corteva Separation Agreement
On April 1, 2019, in connection with the Dow Distribution, Corteva, DuPont and Dow entered into the Corteva Separation Agreement, the Tax Matters Agreement, the Employee Matters Agreement, and certain other agreements (collectively, the “Corteva Separation Agreements”). The Corteva Separation Agreements allocate among Corteva, DuPont and Dow certain liabilities and obligations among the parties and provides for indemnification obligation among the parties. Under the Corteva Separation Agreements, DuPont will indemnify Corteva against certain litigation, environmental, workers' compensation and other liabilities that arose prior to the Corteva Distribution and (ii) Dow indemnifies Corteva against certain litigation and other liabilities that relate to the Historical Dow business, but were transferred over as part of DAS, and Corteva indemnifies DuPont and Dow for certain liabilities. The term of this indemnification is generally indefinite with exceptions, and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. See Note 3 - Divestitures and Other Transactions, for additional information relating to the Separation

DuPont
Under the Corteva Separation Agreement, certain legacy EID liabilities from discontinued and/or divested operations and businesses of EID (including Performance Chemicals) (a “stray liability”) were allocated to Corteva or DuPont. For those stray liabilities allocated to Corteva (which may include a specified amount of liability associated with that liability), Corteva is responsible for liabilities in an amount up to that specified amount plus an additional $200 million and, for those stray liabilities allocated to DuPont (which may include a specified amount of liability associated with that liability), DuPont is responsible for liabilities up to a specified amount plus an additional $200 million. Once each company has met the $200 million threshold, Corteva and DuPont will share future liabilities proportionally on the basis of 29% and 71%, respectively; provided, however, that for PFAS, DuPont will manage such liabilities with Corteva and DuPont sharing the costs on a 50% - 50% basis starting from $1 and up to $300 million (with such amount, up to $150 million, to be credited to each company’s $200 million threshold) and once the $300 million threshold is met, then the companies will share proportionally on the basis of 29% and 71% respectively, subject to a $1 million de minimis requirement.

Litigation related to legacy EID businesses unrelated to Corteva’s current businesses

While it is reasonably possible that the company could incur liabilities related to the litigation related to legacy EID businesses, unrelated to Corteva's current business, as described below, any such liabilities are not expected to be material.


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PFAS, PFOA, PFOS and Other Related Liabilities
For purposes of this report, the term PFOA means collectively perfluorooctanoic acid and its salts, including the ammonium salt and does not distinguish between the two forms, and PFAS, which means per- and polyfluoroalkyl substances, including PFOA, PFOS (perfluorooctanesulfonic acid), GenX and other perfluorinated chemicals and compounds ("PFCs").

EID is a party to various legal proceedings relating to the use of PFOA by its former Performance Chemicals segment. While it is reasonably possible that EID could incur liabilities related to PFOA in excess of amounts accrued, any such liabilities are not expected to be material. As discussed, EID is indemnified by Chemours under the Chemours Separation Agreement, as amended. The company has recorded a liability of $20 million and an indemnification asset of $20 million at March 31, 2020, related to testing drinking water in and around certain former EID sites and offering treatment or an alternative supply of drinking water if tests indicate the presence of PFOA in drinking water at or greater than the national health advisory level established from time to time by the EPA.

Leach Settlement and MDL Settlement
EID has residual liabilities under its 2004 settlement of a West Virginia state court class action, Leach v. EID, which alleged that PFOA from EID’s former Washington Works facility had contaminated area drinking water supplies and affected the health of area residents. The settlement class has about 80,000 members. In addition to relief that was provided to class members years ago, the settlement requires EID to continue providing PFOA water treatment to 6 area water districts and private well users and to fund, through an escrow account, up to $235 million for a medical monitoring program for eligible class members. As of March 31, 2020, approximately $2 million had been disbursed from the account since its establishment in 2012 and the remaining balance is approximately $1 million.

The Leach settlement permits class members to pursue personal injury claims for 6 health conditions (and no others) that an expert panel appointed under the settlement reported in 2012 had a “probable link” (as defined in the settlement) with PFOA: pregnancy-induced hypertension, including preeclampsia; kidney cancer; testicular cancer; thyroid disease; ulcerative colitis; and diagnosed high cholesterol. After the panel reported its findings, approximately 3,550 personal injury lawsuits were filed in federal and state courts in Ohio and West Virginia and consolidated in multi-district litigation in the U.S. District Court for the Southern District of Ohio (“MDL”). The MDL was settled in early 2017 for $670.7 million in cash, with Chemours and EID (without indemnification from Chemours) each paying half.

Post-MDL Settlement PFOA Personal Injury Claims
The MDL settlement did not resolve claims of plaintiffs who did not have claims in the MDL or whose claims are based on diseases first diagnosed after February 11, 2017. At March 31, 2020, approximately 60 lawsuits were pending alleging personal injury, mostly kidney or testicular cancer, from exposure to PFOA through air or water, with nearly all part of the MDL or were not filed on behalf of Leach class members. The first two trials concluded in February 2020. The first trial, a kidney cancer case, resulted in a hung jury, while the second, a testicular cancer case, resulted in a jury verdict of $40 million in compensatory damages and $10 million for loss of consortium. Following entry of the judgment by the court, EID intends to file post-trial motions to reduce the verdict, and to appeal the verdict on the basis of procedural and substantive legal errors made by the trial court. EID believes the merits of the appeal will be successful in reducing the jury verdict or eliminating its liability, in whole or part. NaN additional cases are scheduled for trial in August 2020.

Other PFOA Matters
EID is a party to other PFOA lawsuits that do not involve claims for personal injury. Chemours, pursuant to the Chemours Separation Agreement, is generally defending and indemnifying, with reservation, EID but Chemours has refused the tender of Corteva, Inc.'s defense in the limited actions in which Corteva, Inc. has been named. Chemours has refused to indemnify Corteva, Inc. and EID against any fraudulent conveyance claims associated with these matters. Corteva believes that Chemours is obligated to indemnify Corteva, Inc. under the Chemours Separation Agreement.

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New York. EID is a defendant in about 60 lawsuits, including a putative class action, brought by persons who live in and around Hoosick Falls, New York. These lawsuits assert claims for medical monitoring and property damage based on alleged PFOA releases from manufacturing facilities owned and operated by co-defendants in Hoosick Falls and allege that EID and 3M supplied some of the materials used at these facilities. EID is also one of more than ten defendants in a lawsuit brought by the Town of East Hampton, New York alleging PFOA and PFOS contamination of the town’s well water. Additionally, EID was served with complaints filed by six water districts in Nassau County, New York alleging that the drinking water they provide to customers is contaminated with PFAS and seeking reimbursement for clean-up costs.

New Jersey. At March 31, 2020, 2 lawsuits were pending, one brought by a local water utility and the second a putative class action, against EID alleging that PFOA from EID’s former Chambers Works facility contaminated drinking water sources. The putative class action was voluntarily dismissed without prejudice by the plaintiff.

In late March of 2019, the New Jersey State Attorney General filed 4 lawsuits against EID, Chemours, 3M and others alleging that operations at and discharges from former EID sites in New Jersey (Chambers Works, Pompton Lakes, Parlin and Repauno) damaged the State’s natural resources. Two of these lawsuits (those involving the Chambers Works and Parlin sites) allege contamination from PFAS. The Ridgewood Water District in New Jersey filed suit in the first quarter 2019 against EID, 3M, Chemours, and Dyneon alleging losses related to the investigation, remediation and monitoring of polyfluorinated surfactants, including PFOA, in water supplies.

Alabama / Others. EID is one of more than thirty defendants in a lawsuit by the Alabama water utility alleging contamination from PFCs, including PFOA, used by co-defendant carpet manufacturers to make their products more stain and grease resistant. In addition, the states of Michigan, New Hampshire, South Dakota, and Vermont recently filed lawsuits against EID, Chemours, 3M and others, claiming, among other things, PFC (including PFOA) contamination of groundwater and drinking water. The complaints seek reimbursement for past and future costs to investigate and remediate the alleged contamination and compensation for the loss of value and use of the state’s natural resources.

Ohio. EID is a defendant in 3 lawsuits: an action by the State of Ohio based on alleged damage to natural resources, a putative nationwide class action brought on behalf of anyone who has detectable levels of PFAS in their blood serum, and an action by the City of Dayton claiming losses related to the investigation, remediation and monitoring of PFAS in water supplies.

Aqueous Firefighting Foams. Approximately 530 cases have been filed against 3M and other defendants, including EID
and Chemours, and more recently also including Corteva and DuPont, alleging PFOS or PFOA contamination of soil and
groundwater from the use of aqueous firefighting foams. Most of those cases claim some form of property damage and
seek to recover the costs of responding to this contamination and damages for the loss of use and enjoyment of property
and diminution in value. Most of these cases have been transferred to a multidistrict litigation proceeding in federal district court in South Carolina. Approximately 180 of these personal injury cases were filed on behalf of firefighters who allege personal injuries (primarily, thyroid disease and kidney, testicular and other cancers) as a result of aqueous firefighting foams. Most of these recent cases assert claims that the EID and Chemours separation constituted a fraudulent conveyance. While Chemours is defending EID for all claims except those for fraudulent conveyance, it has declined defense and indemnity to Corteva on all claims.

EID did not make firefighting foams, PFOS, or PFOS products. While EID made surfactants and intermediaries that some manufacturers used in making foams, which may have contained PFOA as an unintended byproduct or an impurity, EID’s products were not formulated with PFOA, nor was PFOA an ingredient of these products. EID has never made or sold PFOA as a commercial product.

Fayetteville Works Facility, North Carolina
Prior to the separation of Chemours, the companyEID introduced GenX as a polymerization processing aid and a replacement for PFOA at the Fayetteville Works facility in Bladen County, North Carolina. The facility is now owned and operated by Chemours, which continues to manufacture and use GenX. In 2017, the facility became and continues to be the subject of inquiries and government investigations relating to the alleged discharge of GenX and certain similar compounds into the air and Cape Fear River.


In August 2017, the U.S. Attorney’s Office for the Eastern District
28

Table of North Carolina served the company with a grand jury subpoena for testimony and documents related to these discharges. Historical DuPontContents
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


EID was served with additional subpoenas relating to the same issuethese discharges and in the second quarter 2018, received a subpoena expanding the scope to any PFCs discharged from the Fayetteville Works facility into the Cape Fear River. It is possible that these ongoing inquiries and investigations including the grand jury subpoena, could result in penalties or sanctions, or that additional litigation will be instituted against Chemours, the company,EID, or both. EID continues to cooperate with the U.S. Attorney’s Office.


At March 31, 2019,2020, several actions are pending in federal court against Chemours and EID relating to PFC discharges from the company.Fayetteville Works facility. One of these actions is a consolidated putative class action that asserts claims for medical monitoring and property damage on behalf of putative classes of property owners and residents in areas near or who draw drinking water from the Cape Fear River. Another action is a consolidated action brought by various North Carolina water authorities, including the Cape Fear Public Utility Authority and Brunswick County, that seek actual and punitive damages as well as injunctive relief. In addition, anThe other action is pending in North Carolina state court on behalf of about 100 plaintiffs who own wells and property near the Fayetteville Works facility. The plaintiffs seek damages for nuisance allegedly caused by releases of certain PFCs from the site. The plaintiffs’ claims for medical monitoring, punitive damages, public nuisance, trespass, unjust enrichment, failure to warn, and negligent manufacture have all been dismissed.

While it is reasonably possible that the company could incur liabilities related to the actions described above, any such liabilities are not expected to be material.


The company has an indemnification claim against Chemours with respect to current and future inquiries and claims, including lawsuits, related to the foregoing. At March 31, 2019,2020, Chemours, with reservations, is defending and indemnifying the companyEID in the pending civil actions.


Environmental
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated based on current law and existing technologies. At March 31, 2019,2020, the company had accrued obligations of $384$359 million for probable environmental remediation and restoration costs, including $54$51 million for the remediation of Superfund sites. These obligations are included in accrued and other current liabilities and other noncurrent obligations in the interim Condensed Consolidated Balance Sheets.Sheet. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to $790$630 million above the amount accrued at March 31, 2019.2020. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the company’s results of operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration.


Pursuant toFor a discussion of the allocation of environmental liabilities under the Chemours Separation Agreement and the company is indemnified by Chemours for certain environmental matters, included inCorteva Separation Agreement, see the liability of $384previous discussion on page 26.

The above noted $359 million that have an estimated liability of $185 million as of March 31, 2019, and a potential exposure that ranges up to approximately $355 million aboveaccrued obligations includes the amount accrued. As such, the company has recorded an indemnification asset of $185 million corresponding to the company’s accrual balance related to these matters at March 31, 2019, including $35 million related to the Superfund sites.


following:
24
 As of March 31, 2020
(In millions)Indemnification Asset
Accrual balance3
Potential exposure above amount accrued3
Environmental Remediation Stray Liabilities   
Chemours related obligations - subject to indemnity1,2
$164
$164
$289
Other discontinued or divested businesses obligations1

91
223
    
Environmental remediation liabilities primarily related to DuPont - subject to indemnity from DuPont2
34
34
62
    
Environmental remediation liabilities not subject to indemnity
70
56
Total$198
$359
$630
1.
Represents liabilities that are subject the $200 million thresholds and sharing arrangements as discussed on page 26, under Corteva Separation Agreement.
2.
The company has recorded an indemnification asset related to these accruals, including $30 million related to the Superfund sites.
3.
Accrual balance represents management’s best estimate of the costs of remediation and restoration, although it is reasonably possible that the potential exposure, as indicated, could range above the amounts accrued, as there are inherent uncertainties in these estimates.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




NOTE 1415 - STOCKHOLDERS' EQUITY


Common Stock
On June 1, 2019, Corteva, Inc.'s common stock was distributed to DowDuPont stockholders by way of a pro rata distribution. Each DowDuPont stockholder received 1 share of Corteva, Inc. common stock for every 3 shares of DowDuPont common stock held at the close of business on May 24, 2019, the record date of distribution. Corteva, Inc.'s common stock began trading the "regular way" under the ticker symbol "CTVA" on June 3, 2019, the first business day after June 1, 2019. The number of Corteva, Inc. common shares issued on June 1, 2019 was 748,815,000 (par value of $0.01 per share). Information related to the Corteva Distribution and its effect on the company's financial statements are discussed throughout these Notes to the interim Consolidated Financial Statements.

Set forth below is a reconciliation of common stock share activity:
Shares of common stockIssued
Balance January 1, 2020748,577,000
Issued1,657,000
Repurchased and retired(1,865,000)
Balance March 31, 2020748,369,000


Share Buyback Plan
On June 26, 2019, Corteva, Inc. announced that the Board of Directors of Corteva, Inc. authorized a $1 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date. The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other factors.

During the three months ended March 31, 2020, the company purchased and retired 1,865,000 shares in the open market for a total cost of $50 million, with the last purchase completed on March 10, 2020.

Shares repurchased pursuant to Corteva's share buyback plan are immediately retired upon purchase. Repurchased common stock is reflected as a reduction of stockholders' equity. The company's accounting policy related to its share repurchases is to reduce its common stock based on the par value of the shares and to reduce its retained earnings for the excess of the repurchase price over the par value. Corteva currently has an accumulated deficit balance; therefore, the excess over the par value has been applied to additional paid-in capital. Once Corteva has retained earnings, the excess will be charged entirely to retained earnings.

Noncontrolling Interest
Corteva, Inc. owns 100% of the outstanding common shares of EID. However, EID does have preferred stock outstanding to third parties which is accounted for as a non-controlling interest in Corteva's interim Condensed Consolidated Balance Sheets. Each share of EID Preferred Stock - $4.50 Series and EID Preferred Stock - $3.50 Series issued and outstanding at the effective date of the Corteva Distribution remains issued and outstanding as to EID and was unaffected by the Corteva Distribution.

Below is a summary of the EID Preferred Stock at March 31, 2020, December 31, 2019, and March 31, 2019, which is classified as noncontrolling interests in Corteva's interim Condensed Consolidated Balance Sheets.
Shares in thousandsNumber of Shares
Authorized23,000
$4.50 Series, callable at $1201,673
$3.50 Series, callable at $102700



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Other Comprehensive (Loss) IncomeLoss
The changes and after-tax balances of components comprising accumulated other comprehensive (loss) incomeloss are summarized below:
(In millions)
Cumulative Translation Adjustment1
Derivative InstrumentsPension Benefit PlansOther Benefit PlansTotal
2019     
Balance January 1, 2019$(2,793)$(26)$(620)$79
$(3,360)
Other comprehensive loss before reclassifications(72)(4)(4)
(80)
Amounts reclassified from accumulated other comprehensive loss
5
1

6
Net other comprehensive (loss) income(72)1
(3)
(74)
Balance March 31, 2019$(2,865)$(25)$(623)$79
$(3,434)
      
2020 
 
 
 
 
Balance January 1, 2020$(1,944)$2
$(1,247)$(81)$(3,270)
Other comprehensive (loss) income before reclassifications(672)1
(2)3
(670)
Amounts reclassified from accumulated other comprehensive loss
5
2

7
Net other comprehensive (loss) income(672)6

3
(663)
Balance March 31, 2020$(2,616)$8
$(1,247)$(78)$(3,933)
(In millions)
Cumulative Translation Adjustment1
Derivative InstrumentsPension Benefit PlansOther Benefit PlansTotal
2018     
Balance January 1, 2018$(454)$(2)$128
$(53)$(381)
Other comprehensive income before reclassifications957
12
4

973
Amounts reclassified from accumulated other comprehensive loss
(1)

(1)
Net other comprehensive income957
11
4

972
Balance March 31, 2018$503
$9
$132
$(53)$591
      
2019 
 
 
 
 
Balance January 1, 2019$(1,966)$(26)$(590)$79
$(2,503)
Other comprehensive (loss) income before reclassifications(68)4
(7)
(71)
Amounts reclassified from accumulated other comprehensive (loss) income
(3)1

(2)
Net other comprehensive (loss) income(68)1
(6)
(73)
Balance March 31, 2019$(2,034)$(25)$(596)$79
$(2,576)

1. 
The cumulative translation adjustment gain for the three months ended March 31, 2018 was primarily driven by the weakening of the U.S. Dollar ("USD") against the European Euro ("EUR"), as well as the Danish Kroner. The cumulative translation adjustment loss for the three months ended March 31, 2019 was primarily driven by strengthening of the USD against the EUREuropean Euro (“EUR”) and the Brazilian Real.Real (“BRL”). The cumulative translation adjustment loss for the three months ended March 31, 2020 was primarily driven by strengthening of the USD against the BRL and the South African Rand ("ZAR").


The tax expensebenefit (expense) on the net activity related to each component of other comprehensive loss(loss) income was as follows:
(In millions)Three Months Ended
March 31,
 20202019
Derivative instruments$5
$(3)
Pension benefit plans - net(4)(7)
Benefit from (provision for) income taxes related to other comprehensive income (loss) items$1
$(10)




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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(In millions)Three Months Ended March 31,
 20192018
Derivative instruments$(3)$(4)
Pension benefit plans - net(7)(2)
Provision for income taxes related to other comprehensive loss items$(10)$(6)


A summary of the reclassifications out of accumulated other comprehensive loss is provided as follows:
(In millions)Three Months Ended March 31,Income ClassificationThree Months Ended
March 31,
2019201820202019
Derivative Instruments:$(4)$(1)(1)
Tax expense1

(2)
Derivative Instruments1:
$7
$4
Tax (benefit) expense2
(2)1
After-tax$(3)$(1) $5
$5
Amortization of pension benefit plans:     
Actuarial losses1

(3)
Actuarial losses3
$1
1
Settlement loss3
2

Total before tax$1
$
 3
1
Tax benefit

(2)
Tax benefit2
(1)
After-tax$1
$
 $2
$1
Total reclassifications for the period, after-tax$(2)$(1) $7
$6
1. 
CostReflected in cost of goods sold.
2. 
ProvisionReflected in provision for (benefit from) income taxes from continuing operations.
3. 
These accumulated other comprehensive loss(loss) income components are included in the computation of net periodic benefit (credit) cost of the company's pension and other benefit plans. See Note 1516 - Pension Plans and Other Post Employment Benefits, for additional information.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1516 - PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS


The following sets forth the components of the company's net periodic benefit (credit) cost for defined benefit pension plans and other post employment benefits:
 Three Months Ended March 31,
(In millions)20202019
Defined Benefit Pension Plans:  
Service cost$5
$20
Interest cost141
208
Expected return on plan assets(251)(304)
Amortization of unrecognized loss1
1
Settlement loss2

Net periodic benefit credit - Total$(102)$(75)
Less: Discontinued operations1

(8)
Net periodic benefit credit - Continuing operations$(102)$(67)
Other Post Employment Benefits:  
Service cost$1
$2
Interest cost16
23
Net periodic benefit cost - Continuing operations$17
$25

1.
Includes non-service related components of net periodic benefit credit of $(21) million for the three months ended March 31, 2019.


32
 Three Months Ended March 31,
(In millions)20192018
Defined Benefit Pension Plans:  
Service cost$19
$34
Interest cost206
190
Expected return on plan assets(296)(303)
Amortization of unrecognized loss1

Net periodic benefit credit$(70)$(79)
Other Post Employment Benefits:  
Service cost$2
$2
Interest cost23
21
Net periodic benefit cost$25
$23


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1617 - FINANCIAL INSTRUMENTS


At March 31, 2019,2020, the company had $2,750$1,536 million ($3,5511,293 million and $1,055 million at December 31, 2018)2019 and March 31, 2019, respectively) of held-to-maturity securities (primarily time deposits and money market funds) classified as cash equivalents, as these securities had maturities of three months or less at the time of purchase; and $18$10 million ($345 million and $5 million at December 31, 2018)2019 and March 31, 2019, respectively) of held-to-maturity securities (primarily time deposits) classified as marketable securities as these securities had maturities of more than three months to less than one year at the time of purchase. The company’s investments in held-to-maturity securities are held at amortized cost, which approximates fair value. These securities are included in cash and cash equivalents, marketable securities, and other current assets in the Condensed Consolidated Balance Sheets.


Derivative Instruments
Objectives and Strategies for Holding Derivative Instruments
In the ordinary course of business, the company enters into contractual arrangements (derivatives) to reduce its exposure to foreign currency, interest rate and commodity price risks. The company has established a variety of derivative programs to be utilized for financial risk management. These programs reflect varying levels of exposure coverage and time horizons based on an assessment of risk.


Derivative programs have procedures and controls and are approved by the Corporate Financial Risk Management Committee, consistent with the company's financial risk management policies and guidelines. Derivative instruments used are forwards, options, futures and swaps. The company has not designated any non-derivatives as hedging instruments.


The company's financial risk management procedures also address counterparty credit approval, limits and routine exposure monitoring and reporting. The counterparties to these contractual arrangements are major financial institutions and major commodity exchanges. The company is exposed to credit loss in the event of nonperformance by these counterparties. The company utilizes collateral support annex agreements with certain counterparties to limit its exposure to credit losses. The company anticipates performance by counterparties to these contracts and therefore no material loss is expected. Market and counterparty credit risks associated with these instruments are regularly reported to management.


The notional amounts of the company's derivative instruments were as follows:
Notional Amounts
(In millions)
March 31, 2020December 31, 2019March 31, 2019
Derivatives designated as hedging instruments:   
Foreign currency contracts$751
$
$
Commodity contracts$418
$570
$351
Derivatives not designated as hedging instruments:



 
Foreign currency contracts$644
$582
$1,442
Commodity contracts$59
$
$125

Notional Amounts
(In millions)
March 31, 2019December 31, 2018
Derivatives designated as hedging instruments:  
Commodity contracts$351
$525
Derivatives not designated as hedging instruments:



Foreign currency contracts$1,442
$2,057
Commodity contracts$125
$9


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Foreign Currency Risk
The company's objective in managing exposure to foreign currency fluctuations is to reduce earnings and cash flow volatility associated with foreign currency rate changes.changes and to mitigate the exposure of certain investments in foreign subsidiaries against changes in the Euro/USD exchange rate. Accordingly, the company enters into various contracts that change in value as foreign exchange rates change to protect the value of its existing foreign currency-denominated assets, liabilities, commitments, investments and cash flows.


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 primary business objective of this hedging program is to maintain an approximately balanced position in foreign currencies so that exchange gains and losses resulting from exchange rate changes, after related tax effects, are minimized. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on these contracts offset changes in the USD value of the related foreign currency-denominated revenues. The objective of the hedge program is to reduce earnings and cash flow volatility related to changes in foreign currency exchange rates.


Commodity Price Risk
Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn soybeans, soybean oil and soybean meal.soybeans. The company enters into over-the-counter and exchange-traded derivative commodity instruments to hedge the commodity price risk associated with agricultural commodity exposures.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Derivatives Designated as Cash Flow Hedges
Commodity Contracts
The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, futures and swaps, to hedge the commodity price risk associated with agriculture commodity exposures.


While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two-year period.two years. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring.


The following table summarizes the after-tax effect of commodity contract cash flow hedges on accumulated other comprehensive loss:
 Three Months Ended
March 31,
(In millions)20202019
Beginning balance$2
$(26)
Additions and revaluations of derivatives designated as cash flow hedges(22)(4)
Clearance of hedge results to earnings5
5
Ending balance$(15)$(25)

 Three Months Ended March 31,
(In millions)20192018
Beginning balance$(26)$(2)
Additions and revaluations of derivatives designated as cash flow hedges4
12
Clearance of hedge results to earnings(3)(1)
Ending balance$(25)$9


At March 31, 2019,2020, an after-tax net loss of $10$20 million is expected to be reclassified from accumulated other comprehensive loss into earnings over the next twelve months.


Foreign Currency Contracts
The company enters into forward contracts to hedge the foreign currency risk associated with forecasted transactions within certain foreign subsidiaries.

While each risk management program has a different time maturity period, most programs currently do not extend beyond the next two years. Cash flow hedge results are reclassified into earnings during the same period in which the related exposure impacts earnings. Reclassifications are made sooner if it appears that a forecasted transaction is not probable of occurring.

The following table summarizes the after-tax effect of foreign currency cash flow hedges on accumulated other comprehensive loss:
 Three Months Ended
March 31,
(In millions)2020
Beginning balance$
Additions and revaluations of derivatives designated as cash flow hedges16
Ending balance$16


At March 31, 2020, an after-tax net gain of $16 million is expected to be reclassified from accumulated other comprehensive loss into earnings over the next twelve months.

Derivatives Designated as Net Investment Hedges
Foreign Currency Contracts
The company has designated €450 million of forward contracts to exchange EUR as net investment hedges. The purpose of these forward contracts is to mitigate FX exposure related to a portion of the Company’s euro net investments in certain foreign subsidiaries against changes in Euro/USD exchange rates. These hedges will expire and be settled in 2023, unless terminated early at the discretion of the Company.

The company elected to apply the spot method in testing for effectiveness of the hedging relationship.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Derivatives not Designated in Hedging Relationships
Foreign Currency Contracts
The company routinely uses forward exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and liabilities intends to achieve a minimal earnings impact, after taxes. The company also uses foreign currency exchange contracts to offset a portion of the company's exposure to certain foreign currency-denominated revenues so that gains and losses on the contracts offset changes in the USD value of the related foreign currency-denominated revenues.


Commodity Contracts
The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on purchases of inventory such as corn soybeans, soybean oil and soybean meal.soybeans.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Fair Value of Derivative Instruments
Asset and liability derivatives subject to an enforceable master netting arrangement with the same counterparty are presented on a net basis in the interim Condensed Consolidated Balance Sheets. The presentation of the company's derivative assets and liabilities is as follows:
  March 31, 2020
(In millions)Balance Sheet LocationGross
Counterparty and Cash Collateral Netting1
Net Amounts Included in the Condensed Consolidated Balance Sheet
Asset derivatives:    
Derivatives designated as hedging instruments:    
Foreign currency contractsOther current assets$36
$
$36
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsOther current assets230
(110)120
Total asset derivatives $266
$(110)$156
     
Liability derivatives:  
  
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsAccrued and other current liabilities$108
$(103)$5
Total liability derivatives $108
$(103)$5
  March 31, 2019
(In millions)Balance Sheet LocationGross
Counterparty and Cash Collateral Netting1
Net Amounts Included in the Interim Condensed Consolidated Balance Sheet
Asset derivatives:    
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsOther current assets$58
$(16)$42
Total asset derivatives $58
$(16)$42
     
Liability derivatives:  
  
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsAccrued and other current liabilities$17
$(14)$3
Total liability derivatives $17
$(14)$3

  December 31, 2018
(In millions)Balance Sheet LocationGross
Counterparty and Cash Collateral Netting1
Net Amounts Included in the Interim Condensed Consolidated Balance Sheet
Asset derivatives:    
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsOther current assets$72
$(35)$37
Total asset derivatives $72
$(35)$37
     
Liability derivatives:  
  
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsAccrued and other current liabilities$21
$(15)$6
Total liability derivatives $21
$(15)$6

1. 
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

  December 31, 2019
(In millions)Balance Sheet LocationGross
Counterparty and Cash Collateral Netting1
Net Amounts Included in the Condensed Consolidated Balance Sheet
Asset derivatives:    
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsOther current assets$25
$(18)$7
Total asset derivatives $25
$(18)$7
     
Liability derivatives:  
  
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsAccrued and other current liabilities$43
$(16)$27
Total liability derivatives $43
$(16)$27
1.
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)






  March 31, 2019
(In millions)Balance Sheet LocationGross
Counterparty and Cash Collateral Netting1
Net Amounts Included in the Condensed Consolidated Balance Sheet
Asset derivatives:    
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsOther current assets$45
$(11)$34
Total asset derivatives $45
$(11)$34
     
Liability derivatives:  
  
Derivatives not designated as hedging instruments:  
  
Foreign currency contractsAccrued and other current liabilities$10
$(10)$
Total liability derivatives $10
$(10)$
1.
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

Effect of Derivative Instruments
 
Amount of (Loss) Gain Recognized in OCI1 - Pre-Tax
 Three Months Ended
March 31,
(In millions)20202019
Derivatives designated as hedging instruments:  
Net Investment Hedges:  
Foreign currency contracts$9
$
Cash flow hedges:  
Foreign currency contracts19
$
 Commodity contracts(34)$1
Total derivatives designated as hedging instruments(6)1
Total derivatives$(6)$1
 
Amount of Gain Recognized in OCI1 - Pre-Tax
 Three Months Ended March 31,
(In millions)20192018
Derivatives designated as hedging instruments:  
Cash flow hedges:  
Commodity contracts$8
$16
Total derivatives designated as hedging instruments8
16
Total derivatives$8
$16

1. 
OCI is defined as other comprehensive income (loss) income..



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 
Amount of Gain (Loss) Recognized in Income - Pre-Tax1
(In millions)Three Months Ended March 31,
 20192018
Derivatives designated as hedging instruments:  
Cash flow hedges:  
Commodity contracts2
$4
$1
Total derivatives designated as hedging instruments4
1
Derivatives not designated as hedging instruments:  
Foreign currency contracts3
(9)(181)
Commodity contracts2
7
(3)
Total derivatives not designated as hedging instruments(2)(184)
Total derivatives$2
$(183)

 
Amount of Gain (Loss) Recognized in Income - Pre-Tax1
(In millions)Three Months Ended
March 31,
 20202019
Derivatives designated as hedging instruments:  
Cash flow hedges:  
 Commodity contracts2
$(7)$(4)
Total derivatives designated as hedging instruments(7)(4)
Derivatives not designated as hedging instruments:  
Foreign currency contracts3
165
(17)
Commodity contracts2
9
6
Total derivatives not designated as hedging instruments174
(11)
Total derivatives$167
$(15)

1. 
For cash flow hedges, this represents the portion of the gain (loss) reclassified from accumulated OCI into income during the period.
2. 
Recorded in cost of goods sold.
3. 
Gain recognized in sundryother income - net was partially offset by the related gain on the foreign currency-denominated monetary assets and liabilities of the company's operations. See Note 7 - Supplementary Information, for additional information.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1718 - FAIR VALUE MEASUREMENTS


The following tables summarize the basis used to measure certain assets and liabilities at fair value on a recurring basis:
March 31, 2020Significant Other Observable Inputs (Level 2)
(In millions)
Assets at fair value: 
Cash equivalents and restricted cash equivalents1
$1,536
Marketable securities10
Derivatives relating to:2
 
Foreign currency266
Total assets at fair value$1,812
Liabilities at fair value: 
Derivatives relating to:2
 
Foreign currency108
Total liabilities at fair value$108

December 31, 2019Significant Other Observable Inputs (Level 2)
(In millions)
Assets at fair value: 
Cash equivalents and restricted cash equivalents1
$1,293
Marketable securities5
Derivatives relating to:2
 
Foreign currency25
Total assets at fair value$1,323
Liabilities at fair value: 
Derivatives relating to:2


Foreign currency43
Total liabilities at fair value$43


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2019Significant Other Observable Inputs (Level 2)
(In millions)
Assets at fair value: 
Cash equivalents and restricted cash equivalents1
$2,750
Marketable securities18
Derivatives relating to:2
 
Foreign currency58
Total assets at fair value$2,826
Liabilities at fair value: 
Long-term debt$6,865
Derivatives relating to:2
 
Foreign currency17
Total liabilities at fair value$6,882


March 31, 2019Significant Other Observable Inputs (Level 2)
(In millions)
Assets at fair value: 
Cash equivalents and restricted cash equivalents1
$1,055
Marketable securities5
Derivatives relating to:2
 
Foreign currency45
Total assets at fair value$1,105
Liabilities at fair value: 
Derivatives relating to:2
 
Foreign currency10
Total liabilities at fair value$10
December 31, 2018Significant Other Observable Inputs (Level 2)
(In millions)
Assets at fair value: 
Cash equivalents and restricted cash equivalents1
$3,551
Marketable securities34
Derivatives relating to:2
 
Foreign currency72
Total assets at fair value$3,657
Liabilities at fair value: 
Long-term debt$6,100
Derivatives relating to:2


Foreign currency21
Total liabilities at fair value$6,121

1.Time deposits included in cash and cash equivalents and money market funds included in other current assets in the interim Condensed Consolidated Balance Sheets are held at amortized cost, which approximates fair value.
2.
See Note 16 for the classification of derivatives in the interim Condensed Consolidated Balance Sheets.

2. See Note 17 - Financial Instruments for the classification of derivatives in the interim Condensed Consolidated Balance Sheets.



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




NOTE 1819 - SUBSEQUENT EVENTSSEGMENT INFORMATION

Intended Business Separations
Prior toSegment operating EBITDA is the Dow Distribution, Historical Dow conveyed or transferredprimary measure of segment profitability used by Corteva’s chief operating decision maker ("CODM"). The company defines segment operating EBITDA as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating (benefits) costs - net and foreign exchange gains (losses), excluding the assetsimpact of significant items. Non-operating (benefits) costs - net consists of non-operating pension and liabilities aligned with Historical Dow’s agriculture business to separateother post-employment benefit (OPEB) costs, tax indemnification adjustments, environmental remediation and legal entities (“DAS”) and the assets and liabilitiescosts associated with its specialty products businesslegacy EID businesses and sites. Tax indemnification adjustments relate to separate legal entities (the “SP Entities”). On April 1, 2019, DAS and the SP Entities were transferred and conveyed to DowDuPont.

In furtherance of the Intended Business Separations, the company engagedchanges in a series of internal reorganization and realignment steps (the “Internal Reorganization”) to realign its businesses into three subgroups: agriculture, materials science and specialty products. As part of the Internal Reorganization:

the assets and liabilities aligned with the company’s materials science business, including Historical DuPont’s ethylene and ethylene copolymers business, excluding its ethylene acrylic elastomers business, (“ECP”) were transferred or conveyed to separate legal entities (the “Materials Science Entities”) that were ultimately conveyed by DowDuPont to Dow;

the assets and liabilities aligned with the company’s specialty products business were transferred or conveyed to separate legal entities (“Specialty Products Entities”);

on April 1, 2019, Historical DuPont transferred and conveyed its Materials Science Entities to DowDuPont;

on May 1, 2019, Historical DuPont distributed its Special Products Entities to DowDuPont; and

on May 2, 2019, DowDuPont conveyed DAS to the company; in connection with the foregoing, the company issued additional shares of its Common Stock to DowDuPont.

Asindemnification balances, as a result of the foregoing, at May 2, 2019,application of the terms of the Tax Matters Agreement, between Corteva and Dow and/or DuPont that are recorded by the company holds allas pre-tax income or substantially allexpense. For purposes of the assetsthree months ended March 31, 2019, segment operating EBITDA is calculated on a pro forma basis, as this is the manner in which the CODM assesses performance and liabilities associated with DowDuPont’s combined agriculture business.allocates resources.


BeginningPro forma adjustments used in the secondcalculation of pro forma segment operating EBITDA for the first quarter of 2019 ECP’s financial results for periodswere determined in accordance with Article 11 of Regulation S-X. These adjustments give effect to the Merger, the debt retirement transactions related to paying off or retiring portions of EID’s existing debt liabilities (as discussed in Note 13 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva common stock as if they had been consummated on January 1, 2016.

As of and for the Three Months Ended March 31,
(In millions)
SeedCrop ProtectionTotal
2020 
 
 
Net sales$2,455
$1,501
$3,956
Segment operating EBITDA$581
$238
$819
Segment assets1,2
$25,857
$13,251
$39,108
 



 
2019 
 
 
Net sales$1,967
$1,429
$3,396
Pro forma segment operating EBITDA$325
$220
$545
Segment assets1
$30,259
$9,782
$40,041
1.Segment assets at December 31, 2019 were $25,387 million and $13,492 million for Seed and Crop Protection, respectively.
2. On June 1, 2019, as a result of changes in reportable segments, $3,382 million of goodwill was reallocated from the Seed reportable segment to the Crop Protection reportable segment.  This change was not reflected in segment assets prior to AprilJune 1, 2019 will be reflected in Historical DuPont's2019.     

Reconciliation to interim Consolidated Financial Statements as a discontinued operation. Historical DuPont’s specialty products businesses financial results for periods prior to May 1, 2019, will also be reflected in the company’s Consolidated Financial Statements as a discontinued operation beginning in the second quarter of 2019.

The transfer or conveyance of DAS to Historical DuPont will be treated as a transfer of entities under common control. As such, Historical DuPont will record the assets, liabilities, and equity of DAS on its balance sheet at their historical basis. Transfers of businesses between entities under common control requires the financial statements to be presented as if the transaction had occurred at the point at which common control first existed (the "Effective Time of the Merger"). Beginning in the second quarter of 2019, Historical DuPont’s historical financial statements and related notes will be revised to include the historical balances of DAS as of September 1, 2017.

Separation Agreements
In connection with the Dow Distribution and the intended Corteva Distribution, DowDuPont has entered into or will enter into certain agreements that will 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 DowDuPont, Dow, and Corteva (together, the “Parties” and each a “Party”) , and provide a framework for DowDuPont’s relationship with Dow and Corteva following the separations and Distributions. Effective April 1, 2019, the Parties entered into the following agreements:

Separation and Distribution Agreement - 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 "Separation and Distribution Agreement").

Tax Matters Agreement - The Parties entered into an agreement 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.


31
Income (loss) from continuing operations after income taxes to segment operating EBITDA

(In millions)
Three Months Ended
March 31,
2020
2019 1
Income (loss) from continuing operations after income taxes$281
$(184)
Provision for (benefit from) income taxes on continuing operations127
(67)
Income (loss) from continuing operations before income taxes408
(251)
Depreciation and amortization283
258
Interest income(18)(16)
Interest expense10
59
Exchange losses - net 
61
27
Non-operating benefits - net(73)(42)
Significant items123
185
Pro forma adjustments 298
Corporate expenses25
27
Segment operating EBITDA$819
$545
1.Period is presented on a pro forma basis, prepared in accordance with Article 11 of Regulation S-X.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)




Employee Matters Agreement
Segment assets to total assets (in millions)
March 31, 2020December 31, 2019March 31, 2019
Total segment assets$39,108
$38,879
$40,041
Corporate assets3,870
3,518
3,991
Assets related to discontinued operations1


66,070
Total assets$42,978
$42,397
$110,102

1.See Note 3 - Divestitures and Other Transactions for additional information on discontinued operations.

Significant Pre-tax Charges Not Included in Pro Forma Segment Operating EBITDA
The Parties entered into an agreement that identifies employeesthree months ended March 31, 2020 and employee-related liabilities (and attributable assets) to be allocated (either retained, transferred and accepted, or assigned and assumed, as applicable) to2019, respectively, included the Parties as part of the Distributions and describes when and how the relevant transfers and assignments will occur.

Intellectual Property Cross-License Agreements - Dow and Corteva entered into an Intellectual Property Cross-License Agreement (the “Dow-Corteva IP Cross-License Agreement”). The Intellectual Property Cross-License Agreements set forth the terms and conditions underfollowing significant pre-tax charges 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 Separation and Distribution Agreement.

In connection with the intended Corteva Distribution, DowDuPont expects to enter into additional agreements, including an intellectual property cross-license agreement with Corteva. This agreement will set forth the terms and conditions under which DowDuPont and Corteva may use, in their respective businesses following the Corteva Distribution, certain know-how (including trade secrets), copyrights, and software, and certain patents and standards, allocated to another Party pursuant to the Separation and Distribution Agreement.

Debt Redemptions/Repayments
On March 22, 2019, Historical DuPont issued notices of redemption in full of all of its outstanding notes (the “Make Whole Notes”) listed in the table below:are excluded from segment operating EBITDA:
(in millions)Amount
4.625% Notes due 2020$474
3.625% Notes due 2021296
4.250% Notes due 2021163
2.800% Notes due 2023381
6.500% Debentures due 202857
5.600% Senior Notes due 203642
4.900% Notes due 204148
4.150% Notes due 204369
Total$1,530
(In millions)SeedCrop ProtectionCorporateTotal
For the Three Months Ended March 31, 2020    
Restructuring and Asset Related Charges - Net 1
$(10)$(18)$(42)$(70)
Loss on Divestiture2

(53)
(53)
Total$(10)$(71)$(42)$(123)
(In millions)SeedCrop ProtectionCorporateTotal
For the Three Months Ended March 31, 2019    
Restructuring and Asset Related Charges - Net 1
$(27)$(23)$(11)$(61)
Integration Costs 3


(100)(100)
Loss on Divestiture 4
(24)

(24)
Total$(51)$(23)$(111)$(185)
1.Includes Board approved restructuring plans and asset related charges as well as accelerated prepaid amortization expense. See Note 5 - Restructuring and Asset Related Charges - Net, for additional information.
2.Includes a loss recorded in other income - net related to the expected sale of the La Porte site.
3.Integration costs include costs incurred to prepare for and close the Merger as well as post-Merger integration expenses.
4.Includes a loss recorded in other income - net related to DAS’s sale of a joint venture related to synergy actions.


The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forth in the respective Make Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the Make Whole Notes ceased to accrue and all rights of the holders of the Make Whole Notes were terminated.

On May 2, 2019 Historical DuPont terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus accrued and unpaid interest through and including May 1, 2019.

In connection with the foregoing, Historical DuPont paid a total of $4.6 billion, which included breakage fees and accrued and unpaid interest on the Make Whole Notes and Term Loan Facility. The company funded the payments with cash from operations and a related party revolving loan of $4.1 billion from Corteva, Inc. with an interest rate of 4.275%, repayable in 5 years. Corteva, Inc. funded its loan to the company with contributions from DowDuPont.

Historical DuPont anticipates the loss on the early extinguishment of debt to be approximately $18 million 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 Historical DuPont’s debt.


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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


On May 7, 2019, DowDuPont publicly announced the record date in connection with the intended Corteva Distribution. In connection with such announcement, the company will be required to mail a notice of redemption to holders of the $1,250 million aggregate principal amount of 2.200% Notes due 2020 and $750 million aggregate principal amount of Floating Rate Notes due 2020 (collectively, the “SMR Notes”) setting forth the date of redemption of the SMR Notes. The date of redemption will be on or before May 24, 2019. On the date of redemption, the company will be required to redeem all of the SMR Notes at a redemption price equal to 100% of the aggregate principal amount of the SMR Notes plus accrued and unpaid interest, if any, up to but excluding the date of redemption. Following the redemption, the SMR Notes will no longer be outstanding and will cease to bear interest and all rights of the holders of the SMR Notes will terminate. Historical DuPont believes the redemption will be funded with a draw down on the related party revolving loan from Corteva, however, the actual redemption could be funded through a combination of the related party loan and contributions.



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Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Effective as of 5:00 p.m. on April 1, 2019, DowDuPont Inc. (“DowDuPont”) completed the previously announced separation of its materials science business into a separate and independent public company by way of a distribution of Dow Inc. (“Dow”) through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Dow’s common stock, par value $0.01 per share (the “Dow Common Stock”), to holders of the Company’s common stock, par value $0.01 per share (the “DowDuPont Common Stock”), as of the close of business on March 21, 2019 (the “Dow Distribution”). DowDuPont expects to complete the previously announced intended separation of its agriculture business into a separate and independent public company on June 1, 2019 by way of a distribution of Corteva, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Corteva”), through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Corteva’s common stock, par value $0.01 per share, to holders of DowDuPont Common Stock as of a record date to be set by the Company’s Board of Directors (the “Corteva Distribution” and, together with the Dow Distribution, the “Distributions”).

Cautionary Statements About Forward-Looking Statements

This communicationreport contains “forward-looking statements”certain estimates and forward-looking statements within the meaning of Section 21E of the federal securities laws, includingSecurities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and Section 21E ofwhich are intended to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities ExchangeLitigation Reform Act of 1934,1995, and may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about Corteva’s strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as amended. In this context, forward-looking statements often address expected future businesslitigation and environmental matters, expenditures, and financial performance and financial condition, and often contain words suchresults, as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” similar expressions, and variations or negativeswell as expected benefits from, the separation of these words.Corteva from DuPont, are forward-looking statements.


Forward-looking statements by their nature address matters thatand other estimates are to varying degrees, uncertain, including statements about the intended Corteva Distribution.based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements including those related to DowDuPont’s ability to complete, or to make any filing or take anyand other action required to be taken to complete, the Corteva Distribution, are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements. Forward-looking statementsestimates also involve risks and uncertainties, many of which that are beyond DowDuPont’s and Historical DuPont’sCorteva’s control. Some of the important factors that could cause Historical DuPont’s actual results to differ materially from those projected in any such forward-looking statements include, but are not limited to: (i) ability and costs to achieve all the expected benefits from the Distributions; (ii) restrictions under intellectual property cross license agreements entered into or to be entered into in connection with the Corteva Distribution and the Dow Distribution; (iii) ability to receive third-party consents required under the Separation Agreement entered into in connection with the Corteva Distribution and the Dow Distribution; (iv) non-compete restrictions under the Separation Agreement entered into in connection with the Corteva Distribution and the Dow Distribution; (v) the incurrence of significant costs in connection with the separations and Distributions; (vi) risks outside the control of Historical DuPont which could impact the decision of the DowDuPont Board of Directors to proceed with the Corteva Distribution, including, among others, global economic conditions, instability in credit markets, declining consumer and business confidence, fluctuating commodity prices and interest rates, volatile foreign currency exchange rates, tax considerations, other challenges that could affect the global economy, specific market conditions in one or more of the industries of the businesses proposed to be separated, and changes in the regulatory or legal environment and the requirement to redeem $12.7 billion of DowDuPont notes if the Corteva Distribution is abandoned or delayed beyond May 1, 2020; (vii) potential liability arising from fraudulent conveyance and similar laws in connection with the Corteva Distribution and/or the Dow Distribution; (viii) disruptions or business uncertainty, including from the Corteva Distribution, could adversely impact business or financial performance and the ability to retain and hire key personnel; (ix) potential inability to access the capital markets; and (x) risks to business, operations and results of operations from: the availability of and fluctuations in the cost of feedstocks and energy; balance of supply and demand and the impact of balance on prices; failure to develop and market new products and optimally manage product life cycles; ability, cost and impact on business operations, including the supply chain, of responding to changes in market acceptance, rules, regulations and policies and failure to respond to such changes; outcome of significant litigation, environmental matters and other commitments and contingencies; failure to appropriately manage process safety and product stewardship issues; global economic and capital market conditions, including the continued availability of capital and financing, as well as inflation, interest and currency exchange rates; changes in political conditions, including trade disputes and retaliatory actions; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war, natural disasters and weather events and patterns which could result in a significant operational event for DowDuPont, adversely impact demand or production; ability to discover, develop and protect new technologies and to protect and enforce DowDuPont’s intellectual property rights; failure to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio changes; unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. These risks are and will be more fully discussed in Historical DuPont’s current, quarterly and annual reports and other filings made with the U.S. Securities and Exchange Commission, in each case, as may be amended from time to time in future filings with the SEC. While the list of factors presented herebelow is considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those

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anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on the company’s consolidated financial condition,Corteva’s business, results of operations credit rating or liquidity. The company assumes no obligation to publicly provide revisions or updates to any forward-looking statements whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws.
For further discussion of somefinancial condition. Some of the important factors that could cause the company'sCorteva’s actual results to differ materially from those projected in any such forward-looking statements seeinclude: (i) failure to successfully develop and commercialize Corteva’s pipeline; (ii) effect of competition and consolidation in Corteva’s industry; (iii) failure to obtain or maintain the Risk Factorsnecessary regulatory approvals for some Corteva’s products; (iv) failure to enforce Corteva’s intellectual property rights or defend against intellectual property claims asserted by others; (v) effect of competition from manufacturers of generic products; (vi) impact of Corteva’s dependence on third parties with respect to certain of its raw materials or licenses and commercialization; (vii) costs of complying with evolving regulatory requirements and the effect of actual or alleged violations of environmental laws or permit requirements; (viii) effect of the degree of public understanding and acceptance or perceived public acceptance of Corteva’s biotechnology and other agricultural products; (ix) effect of changes in agricultural and related policies of governments and international organizations; (x) effect of industrial espionage and other disruptions to Corteva’s supply chain, information technology or network systems; (xi) competitor’s establishment of an intermediary platform for distribution of Corteva's information statement filed as Exhibit 99.1products; (xii) effect of volatility in Corteva’s input costs; (xiii) failure to Amendment No. 4raise capital through the capital markets or short-term borrowings on terms acceptable to Corteva; (xiv) failure of Corteva’s customers to pay their debts to Corteva, including customer financing programs; (xv) failure to realize the anticipated benefits of the internal reorganizations taken by DowDuPont in connection with the spin-off of Corteva, including failure to benefit from significant cost synergies; (xvi) risks related to the Registration Statementindemnification obligations of legacy EID liabilities in connection with the separation of Corteva; (xvii) increases in pension and other post-employment benefit plan funding obligations; (xviii) effect of compliance with laws and requirements and adverse judgments on litigation; (xix) risks related to Corteva’s global operations; (xx) effect of climate change and unpredictable seasonal and weather factors; (xxi) effect of counterfeit products; (xxii) failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions; (xxiii) risks related to non-cash charges from impairment of goodwill or intangible assets; (xxiv) risks related to COVID-19; (xxv) risks related to oil and commodity markets; and (xxvi) other risks related to the Separation from DowDuPont.

Additionally, there may be other risks and uncertainties that Corteva is unable to currently identify or that Corteva does not currently expect to have a material impact on its business. Where, in any forward-looking statement or other estimate, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of Corteva’s management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Corteva disclaims and does not undertake any obligation to update or revise any forward-looking statement, except as required by applicable law. A detailed discussion of some of the significant risks and uncertainties which may cause results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part II, Item 1A of this quarterly report on Form 10 (File No. 001-38710) filed by Corteva with the Securities and Exchange Commission on May 6, 2019.




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10-Q).

Recent Developments


Chemours ComplaintCOVID-19 Pandemic
On March 11, 2020, the World Health Organization (“WHO”) declared the novel coronavirus disease (“COVID-19”) a pandemic.  Since the early days of the coronavirus outbreak, Corteva has taken steps to help protect the health and safety of its employees, customers, vendors, and stakeholders. Corteva has engaged crisis management teams at the country, regional and global level, and its Integrated Health Services Pandemic & Infectious Disease Planning Team has been monitoring the situation and developing guidelines and protocols that have been communicated to all of its employees globally.

Overwhelmingly, countries and U.S. states have considered agriculture an “essential business”; therefore, Corteva is not subject to many of the restrictions imposed by the government, particularly on non-essential businesses, which, in certain cases, includes ordering businesses to close or limit operations or people to stay at home. While the company's business has experienced some localized operating disruptions, particularly around sourcing and logistics, these disruptions have been temporary and have not materially impacted the company's financial results. Additionally, the company has implemented mitigating strategies to limit the impact of supply chain disruptions, including leveraging the company’s ability to use a multi-sourcing strategy and source key raw materials from multiple suppliers and countries. Furthermore, the company implemented remote work arrangements for non-essential employees and restricted business travel effective mid-March, and to date, these arrangements have not materially affected the company's ability to maintain its business operations, including the operation of financial reporting systems, internal control over financial reporting, and disclosure controls and procedures.

The Chemours Company filedglobal health crisis caused by COVID-19 and the related government actions and stay at home orders have negatively impacted economic activity and increased political instability across the globe. The company has observed declining demand and price reductions in the oil and gas sector as business and consumer activity decelerates across the globe, which has impacted the price of corn. When COVID-19 is demonstrably contained, the company anticipates a lawsuit, under seal, against E. I. du Pont de Nemoursrebound in economic activity, depending on the rate, pace, and Company, Corteva, Inc. and DowDuPont Inc. on May 13, 2019 related to the Separation Agreement (the "Chemours Separation Agreement") by and between E. I. du Pont de Nemours and Company and The Chemours Company, dated June 26, 2015.  The defendants are committed to protecting their rights under the Chemours Separation Agreement.

Debt Redemption
On May 17, 2019, Historical DuPont redeemed $1,250 million 2.200% Notes due 2020 and $750 million Floating Rate Notes due 2020 (collectively, the “SMR Notes). Following the redemption, the SMR Notes were longer outstanding and ceased to bear interest and all rightseffectiveness of the holderscontainment efforts deployed by various national, state, and local governments. Corteva will continue to actively monitor the situation and may take further actions altering its business operations that it determines are in the best interests of its stakeholders, or as required by federal, state, or local authorities. It is not clear what the SMR Notes were terminated.   Historical DuPont paid a total of $2.0 billion, which included accrued and unpaid interestpotential effects any such alterations or modifications may have on the SMR Notes. Historical DuPont funded the payment with a contribution from DowDuPont.

DowDuPont Merger of Equals and the Intended Business Separations
DowDuPont Inc. ("DowDuPont") was formed on December 9, 2015 to effect an all-stock, merger of equals strategic combination between The Dow Chemical Company ("Historical Dow") and Historical DuPont (the "Merger Transaction"). On August 31, 2017 at 11:59 pm ET, (the "Merger Effectiveness Time") pursuant to the Merger Agreement, Historical Dow and Historical DuPont each merged with wholly owned subsidiaries of DowDuPont (the "Mergers") and, as a result of the Mergers, Historical Dow and Historical DuPont became subsidiaries of DowDuPont (collectively, the "Merger"). Prior to the Merger, DowDuPont did not conduct any business activities other than those required for its formation and matters contemplated by the Merger Agreement.

As discussed in the company’s 2018 Annual Report, DowDuPont announced its intent to pursue, subject to the receipt of approval by the Board of Directors of DowDuPont and customary closing conditions, the separation of the combined company's agriculture business, specialty products business and materials science business through a series of tax-efficient transactions (collectively, the "Intended Business Separations" and the transactions to accomplish the Intended Business Separations, the “separations”). In connection with the separations, DowDuPont formed two wholly-owned subsidiaries: Dow Inc., to serve as a holding company for its materials science business, and Corteva, Inc., to serve as a holding company for its agriculture business. On April 1, 2019, DowDuPont completed the separation of its materials science business into a separate and independent public company by way of a pro rata dividend in-kind of Dow Inc’s common stock to holders of record of DowDuPont common stock as of the end of business on March 21, 2019, (the “Dow Distribution”). Prior to the Dow Distribution, Historical Dow conveyed or transferred the assets and liabilities aligned with Historical Dow’s agriculture business to separate legal entities (the “DAS Legal Entities”) and the assets and liabilities associated with its specialty products business to separate legal entities (the “SP Entities”). On April 1, 2019, the DAS Legal Entities and the SP Entities were transferred and conveyed to DowDuPont.

DowDuPont expects to complete the previously announced intended separation of its agriculture business into a separate and independent public company on June 1, 2019 by way of a distribution of Corteva, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Corteva”), through a pro rata dividend in-kind of all of the then-issued and outstanding shares of Corteva’s common stock, par value $0.01 per share, to holders of DowDuPont Common Stock as of a record date to be set by the Company’s Board of Directors, (the “Corteva Distribution” and, together with the Dow Distribution, the “Distributions”).

In furtherance of the Intended Business Separations, the company engaged in a series of internal reorganization and realignment steps (the “Internal Reorganization”) to realign its businesses into three subgroups: agriculture, materials science and specialty products. As part of the Internal Reorganization:

the assets and liabilities aligned with the company’s materials science business, including Historical DuPont’s ethylenethe effects on its customers, employees, and ethylene copolymers business, excludingprospects, or on its ethylene acrylic elastomers business, (“ECP”) were transferred or conveyed to separate legal entities (the “Materials Science Entities”) that were ultimately conveyed by DowDuPont to Dow;
the assets and liabilities aligned with the company’s specialty products business were transferred or conveyed to separate legal entities (“Specialty Products Entities”);
on April 1, 2019, Historical DuPont transferred and conveyed its Materials Science Entities to DowDuPont;
on May 1, 2019, Historical DuPont distributed its Specialty Products Entities to DowDuPont; and
on May 2, 2019, DowDuPont conveyed DAS to the company; in connection with the foregoing, the company issued additional shares of its Common Stock to DowDuPont.

As a result of the foregoing, at May 2, 2019, the company holds all or substantially all the assets and liabilities associated with DowDuPont’s combined agriculture business.

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Beginning in the second quarter of 2019, ECP’s financial results for periods priorthe remainder of fiscal 2020 and beyond. With the increasing uncertainty in global markets, the company will continue to April 1, 2019 will be reflected in Historical DuPont's Consolidated Financial Statements as a discontinued operation. Historical DuPont’s specialty products businesses financial results for periods prior to May 1, 2019, will also be reflected in the company’s Consolidated Financial Statements as a discontinued operation beginning in the second quarter of 2019.

Second Quarter 2019 - Impairment
In connection with the Merger and the related accounting determination, Historical DuPont elected to apply push-down accounting and reflect in its financial statements the fair value of its assets and liabilities. As a resultmonitor various factors that could impact mid-term forecasted cash flows of the related acquisition methodbusiness, including, but not limited to currency fluctuations, expectations of accounting in connection with the Merger, Historical DuPont’s assetsfuture planted area (as influenced by consumer demand and liabilities were measured at fair value resulting in increases to the company’s goodwillethanol markets) and other intangible assets. The fair value valuation increased the risk that any declines in financial projections, including changes to key assumptions,relative commodity prices, which could have a material, negative impact on the fair valuetrigger an assessment of the company’s reporting units, and therefore could result in an impairment.

The distribution of the company’s Specialty Products Entities to DowDuPont (the “SP Distribution”) triggered a re-assessment of the recoverability of goodwill and the overall carrying value of the net assets in the disposal group within the SP Distribution.

The SP Distribution served as a triggering event requiring the company to perform an impairment analysis related to goodwill carried by its electronics and communications, protection solutions, nutrition and health, transportation and advanced polymers, industrial biosciences, and clean technologies reporting units. As a result of this analysis, the company determined that the fair value of its industrial biosciences reporting unit is below its carrying value resulting in an impairment charge. The revised financial projections of the industrial biosciences reporting unit 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 continues to assess recoverability of goodwill and other assets in connection withindefinite and definite-lived intangible assets.

Execute to Win Productivity Program
During the SP Distribution, the results of which are expected to be finalized during the secondfirst quarter of 2019. The company currently expects2020, Corteva approved restructuring actions designed to record aggregate pre-tax, non-cash impairment charges estimated to be in the range of $800 million - $1,300 million primarily related to goodwill in the quarter ended June 30, 2019. The expected non-cash impairment charge will be recorded in income (loss) from discontinued operations after income taxes.

The transfer or conveyance of DAS to Historical DuPont will be treated as a transfer of entities under common control. As such, Historical DuPont will record the assets, liabilities,improve productivity through optimizing certain operational and equity of DAS on its balance sheet at their historical basis. Transfers of businesses between entities under common control requires the financial statements to be presented as if the transaction had occurred at the point at which common control first existed (the "Effective Time of the Merger"). Beginning in the second quarter of 2019, Historical DuPont’s historical financial statements and related notes will be revised to include the historical balances of DAS as of September 1, 2017.

Separation Agreements
In connection with the Dow Distribution and the intended Corteva Distribution, DowDuPont has entered into or will enter into certain agreements that will 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 DowDuPont, Dow, and Corteva (together, the “Parties” and each a “Party”) , and provide a framework for DowDuPont’s relationship with Dow and Corteva following the separations and Distributions. Effective April 1, 2019, the Parties entered into the following agreements:

Separation and Distribution Agreement - 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 "Separation and Distribution Agreement").
Tax Matters Agreement - The Parties entered into an agreement 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 Agreements - Dow and Corteva entered into an Intellectual Property Cross-License Agreement (the “Dow-Corteva IP Cross-License Agreement”). The Intellectual Property Cross-License Agreements set

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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 Separation and Distribution Agreement.

In connection with the intended Corteva Distribution, DowDuPont expects to enter into additional agreements, including an intellectual property cross-license agreement with Corteva. This agreement will set forth the terms and conditions under which DowDuPont and Corteva may use, in their respective businesses following the Corteva Distribution, certain know-how (including trade secrets), copyrights, and software, and certain patents and standards, allocated to another Party pursuant to the Separation and Distribution Agreement.

Debt Redemption and Revolving Credit Facilities
On March 22, 2019, Historical DuPont issued notices of redemption in full of all of its outstanding notes (the “Make Whole Notes”) listed in the table below:
(in millions)Amount
4.625% Notes due 2020$474
3.625% Notes due 2021296
4.250% Notes due 2021163
2.800% Notes due 2023381
6.500% Debentures due 202857
5.600% Senior Notes due 203642
4.900% Notes due 204148
4.150% Notes due 204369
Total$1,530

The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forth in the respective Make Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the Make Whole Notes ceased to accrue and all rights of the holders of the Make Whole Notes were terminated.

On May 2, 2019 Historical DuPont terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus accrued and unpaid interest through and including May 1, 2019.

In connection with the foregoing, Historical DuPont paid a total of $4.6 billion, which included breakage fees and accrued and unpaid interest on the Make Whole Notes and Term Loan Facility. The company funded the payments with cash from operations and a related party revolving loan of $4.1 billion from Corteva, Inc. with an interest rate of 4.275%, repayable in 5 years. Corteva, Inc. funded its loan to the company with contributions from DowDuPont.

Historical DuPont anticipates the loss on the early extinguishment of debt to be approximately $18 million,organizational structures primarily related to the difference betweenExecute to Win Productivity Program. As a result of these actions, 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 Historical DuPont’s debt.

In November 2018, Historical DuPont entered into a $3.0 billion five-year revolving credit facility and a $3.0 billion three-year revolving credit facility (the “2018 Revolving Credit Facilities”). Availability of funds was subject to a number of conditions, including Corteva becoming a party to the 2018 Credit Revolving Facilities and the consummation of the separation and distribution of Corteva. On May 2, 2019, the 2018 Revolving Credit Facilities were amended, making the 2018 Revolving Credit Facilities available for Historical DuPont, effective May 2, 2019.  Corteva, Inc will become a party to the 2018 Revolving Credit Facilities upon the separation and distribution from DowDuPont.

On May 7, 2019, DowDuPont publicly announced the record date in connection with the intended Corteva Distribution. In connection with such announcement, the company will be required to mail a notice of redemption to holders of the $1,250 million aggregate principal amount of 2.200% Notes due 2020 and $750 million aggregate principal amount of Floating Rate Notes due 2020 (collectively, the “SMR Notes”) setting forth the date of redemption of the SMR Notes. On the date of redemption, the company will be required to redeem all of the SMR Notes at a redemption price equal to 100% of the aggregate principal amount of the SMR Notes plus accrued and unpaid interest, if any, up to but excluding the date of redemption. Following the redemption, the SMR Notes will no longer be outstanding and will cease to bear interest and all rights of the holders of the SMR Notes will terminate.

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Capacity Expansions Kapton®
In March 2019, DuPont announced plans to invest more than $200 million in its electronics and imaging product line to increase capacity for the manufacture of Kapton® film at its Circleville, Ohio site due to growing global demand.

DowDuPont Cost Synergy Program
In September and November 2017, DowDuPont and the company approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the “Synergy Program”), adopted by the DowDuPont Board of Directors. The Synergy Program is designed to integrate and optimize the organization following the Merger and in preparation for the Intended Business Separations. Based on all actions approved to date under the Synergy Program, Historical DuPont expects to record total pre-tax restructuring charges of $695 million to $755approximately $185 million, comprised of approximately $420$125 million of asset related charges (of which $30 million relates to $440asset retirement obligations), and $60 million of severance and related benefits costs; $125 million to $145 million of costs related to contract terminations; and $150 million to $170 million of asset related charges. Actionsbenefit costs. The restructuring actions associated with the Synergy Program, including employee separations,this charge are expected to be substantially complete by the end of 2019.in 2020.


ForDuring the three months ended March 31, 2019,2020, the company recorded a pre-tax chargecharges of $56$63 million, of which $55 million was recognized in restructuring and asset related charges - net and $1 million was recognized in sundry income - net in the company's interim Consolidated StatementsStatement of Operations. The charge wasOperations comprised of $21 million of asset related charges and $42 million of severance and related benefit costs of $40 million and asset related charges of $16 million.costs.


Future cash payments related to this programcharge are anticipated to be approximately $300 million to $350$90 million, primarily related to the payment of severance and related benefits lease terminationand asset retirement obligations. The company expects $130 million of savings to be achieved on a run rate basis by 2023.

Share Buyback Plan
On June 26, 2019, Corteva, Inc. announced that its Board of Directors authorized a $1 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date. The program is expected to be completed in three years. The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other factors. During the three months ended March 31, 2020, the company purchased and retired 1,865,000 shares in the open market for a total cost of $50 million, with the last purchase completed on March 10, 2020.


Overview

The following is a summary of results from continuing operations for the three months ended March 31, 2020:

The company reported net sales of $3,956 million, up 16 percent versus the same quarter last year, reflecting a 17 percent increase in volume and a 3 percent increase in local price, partially offset by a 3 percent decline in currency and a 1 percent impact from portfolio.

Cost of goods sold ("COGS") totaled $2,269 million in the first quarter of 2020, up from $2,211 million in the first quarter of 2019, primarily driven by increased volumes. The three months ended March 31, 2019 included $205 million of amortization of inventory step-up.

Restructuring and asset related charges - net were $70 million in the first quarter of 2020, an increase from $61 million in the first quarter 2019.

There were no integration and separation costs and contract termination costs. It is possible that additional charges and future cash payments could occur in relationthe first quarter of 2020, as compared to $212 million in the first quarter of 2019.

Income from continuing operations after income taxes was $281 million, as compared to a loss of $(184) million in the same quarter last year.

Operating EBITDA was $794 million, up from $518 million for the three months ended March 31, 2019, as volume increases from strong early demand in North America and Europe, price increases for new products and ongoing cost-improvement actions more than offset currency headwinds. Refer to page 51 for further discussion of the company's Non-GAAP financial measures.

The company realized cost synergies of approximately $70 million for the three months ended March 31, 2020.

In addition to the restructuring actions. financial highlights above, the following events occurred during or subsequent to the first quarter of 2020:

The company anticipates including savings associated with these actions within DowDuPont's cost synergy commitmentrepurchased $50 million of $3.6shares as part of the $1 billion associated withshare repurchase program announced in the Merger Transaction.second quarter of 2019.



The company announced it is suspending its full year 2020 Corporate Outlook in light of the COVID-19 crisis and volatility it is creating in the global markets. Refer to page 60 for further discussion.

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Selected Financial Data
In millions, except per share amountsThree Months Ended
March 31,
Three Months Ended March 31,20202019
In millions20192018
Net sales$6,288
$6,699
$3,956
$3,396



  
Cost of goods sold$4,235
$4,847
$2,269
$2,211
Percent of net sales67.4 %72.4 %57%65%


  
Research and development expenses$355
$382
Research and development expense$280
$299
Percent of net sales5.6 %5.7 %7%9%


  
Selling, general and administrative expenses$970
$959
$757
$735
Percent of net sales15.4 %14.3 %19%22%


  
Effective tax rate on continuing operations(81.6)%(14.3)%31.1%26.7%


  
Net income (loss)$89
$(221)
Income (loss) from continuing operations after income taxes$281
$(184)
  
Income (loss) from continuing operations available to Corteva common stockholders$271
$(192)
 
Basic earnings (loss) per share of common stock from continuing operations$0.36
$(0.26)
Diluted earnings (loss) per share of common stock from continuing operations$0.36
$(0.26)


Results of Operations


Net Sales
Net sales were $6.3 billion$3,956 million and $6.7 billion for the three months ended March 31, 2019 and 2018, respectively. The decrease was primarily driven by volume declines in North America and Asia Pacific, principally in the agriculture and transportation and advanced polymers product lines, respectively. Sales also decreased in EMEA driven primarily by unfavorable currency impacts from the Euro. These decreases were partially offset by local pricing gains across all regions.

 Three Months Ended March 31,
 20192018
 
Net Sales
($ Billions)
%
Net Sales
($ Billions)
%
Worldwide$6.3
100.0$6.7
100
U.S. & Canada2.2
35.02.5
38
Europe, Middle East & Africa ("EMEA")2.1
33.02.2
32
Asia Pacific1.5
24.01.5
23
Latin America0.5
8.00.5
7

Cost of Goods Sold ("COGS")
COGS was $4.2 billion and $4.8 billion for the three months ended March 31, 2019 and 2018, respectively. The decrease was primarily driven by the amortization of the inventory step-up of $205$3,396 million for the three months ended March 31, 2020 and 2019, compared with $703respectively. The increase was primarily driven by a 17 percent increase in volume and a 3 percent increase in price, partially offset by a 3 percent decrease in currency and a 1 percent impact from portfolio. Volume gains were primarily driven by earlier seed deliveries due to improved weather conditions and the anticipated recovery of planted area in North America, strong early demand in EMEA due to perceived supply concerns from COVID-19, and strong demand for new products in crop protection. Pricing gains were largely driven by increased pricing to offset currency in Latin America and improved mix from new products in both North America and Latin America. Unfavorable currency impacts were primarily driven by the Brazilian Real and the European Euro. The portfolio impact was due to prior year divestitures in North America and Asia Pacific.
 Three Months Ended
March 31,
 20202019
 
Net Sales
($ Millions)
%Net Sales
($ Millions)
%
Worldwide$3,956
100%$3,396
100%
North America1,765
45%1,392
41%
EMEA1,467
37%1,364
40%
Latin America434
11%365
11%
Asia Pacific290
7%275
8%
 Q1 2020 vs. Q1 2019Percent Change Due To:
 Net Sales ChangeLocal Price &  Portfolio /
$ In millions$%Product MixVolumeCurrencyOther
North America$373
27%2%26% %(1)%
EMEA103
8%2%9%(3)% %
Latin America69
19%11%19%(11)% %
Asia Pacific15
5%2%8%(3)%(2)%
Total$560
16%3%17%(3)%(1)%

Cost of Goods Sold
COGS was $2,269 million and $2,211 million for the three months ended March 31, 2018.2020 and 2019, respectively. The increase was primarily driven by higher volumes in both seed and crop protection and higher unit costs for crop protection, partially offset by favorable product mix in seed, ongoing cost synergies and productivity, and the lack of amortization of inventory step-up for the three months ended March 31, 2020, as compared to $205 million recognized for the three months ended March 31, 2019.


COGS as a percentage of net sales was 6757 percent and 7265 percent for the three months ended March 31, 20192020 and 2018,2019, respectively. The amortization of inventory step-up was 3 percent and 106 percent of net sales for the three months ended March 31, 2019 and 2018, respectively. The remaining COGS change as a percentage of net sales for the three months ended March 31, 2019 was primarily related to higher input and raw material costs, primarily in the agriculture, nutrition and health, and safety and construction product lines.2019.


Research and Development Expense
R&D expense was $355$280 million (7 percent of net sales) and $382$299 million (9 percent of net sales) for the three months ended March 31, 20192020 and 2018,2019, respectively. The decrease was driven primarily driven by ongoing cost synergies and a decreaseproductivity efforts and actions taken to assess and reduce spending in R&D expense for the agriculture product line.first quarter of 2020.


R&D as a percentageSelling, General and Administrative Expenses
SG&A expenses were $757 million (19 percent of net sales was 6sales) and $735 million (22 percent of net sales) for the three months ended March 31, 20192020 and 2018.


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Selling, General and Administrative Expenses ("SG&A")
SG&A expenses were $970 million and $959 million for the three months ended March 31, 2019, and 2018, respectively. The increase was primarily driven by higher performance-based compensationcommissions and selling expenses due to higher volumes and increases in bad debt expense, partially offset by the settlement of a legal matter in the agriculture product line. These increases were largely offset byprior year, ongoing cost synergies and favorable currency impacts in the agriculture product line.productivity efforts, and lower promotion and advertising expense.

SG&A as a percentage of net sales was 15 percent and 14 percent for the three months ended March 31, 2019 and 2018, respectively.

Amortization of Intangibles
Intangible asset amortization was $320$163 million and $315$101 million for the three months ended March 31, 2020 and 2019, and 2018, respectively. The increase was primarily driven by amortization of germplasm assets, which changed from an indefinite lived intangible asset to definite lived with a useful life of 25 years in the fourth quarter of 2019. See Note 1012 - Other Intangible Assets, to the interim Consolidated Financial Statements for additional information on intangible assets.information.


Restructuring and Asset Related Charges - Net
Restructuring and asset related charges - net were $55$70 million and $97$61 million for the three months ended March 31, 20192020 and 2018,2019, respectively. The charges in the first quarter of 20192020 primarily related to a $55 million chargeseverance and related benefit costs and asset related charges under the Execute to DowDuPont Cost Synergy Program, a $3 million charge related to the DowDuPont Agriculture Division RestructuringWin Productivity Program, and a ($3) million benefit from reversals of prior programs.there were no cash payments made during the three months ended March 31, 2020. The charges in the first quarter of 20182019 primarily related to asset related charges, contract termination charges, and severance and related benefit costs under the DowDuPont Cost Synergy Program.


In addition, 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.

See Note 5 - Restructuring and Asset Related Charges, Net, to the interim Consolidated Financial Statements for additional information.


Integration and Separation Costs
Integration and separation costs were $405 million and $255$212 million for the three months ended March 31, 2019 and 2018, respectively.2019. These costs primarily have consisted of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with the preparation and execution of activities related to the MergerDistributions and the Intended Business Separations. The company expects Integrationintegration of EID’s Pioneer and separation costs to continue to be significant in 2019.Crop Protection businesses with DAS. 


SundryOther Income - Net
SundryOther income - net was $157$1 million and $47$31 million for the three months ended March 31, 20192020 and 2018,2019, respectively. The decrease was primarily due to higher net exchange losses and higher losses on asset sales, including a $53 million loss related to the expected sale of the La Porte site, for which the company signed an agreement during the three months ended March 31, 2019 included2020, as compared to a gain on$24 million loss related to DAS’s sale of assets withina joint venture related to synergy actions in the electronics and imaging product line,three months ended March 31, 2019. This decrease was partially offset by an increase in non-operating pension and other post employment benefit creditcredits. 

The company routinely uses forward exchange contracts to offset its net exposures, by currency denominated monetary assets and liabilities of $66its 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 interim Consolidated Statement of Operations.

The after-tax net exchange losses were $(78) million and interest income of $23$(33) million offset by exchange losses of $32 million. Thefor the three months ended March 31, 2018 included2020 and March 31, 2019, respectively. The increase in net exchange losses of $132 million, partially offsetloss was primarily driven by a non-operating pensioncurrency devaluations for the Ukrainian Hryvnia, Argentine Peso and other post employment benefit credit of $92 million and interest income of $28 million. The non-operating pension benefit in the first quarter of 2018 was a result of the absence of the amortization of net losses from accumulated other comprehensive loss.Mexican Peso.


See Note 7 - Supplementary Information, to the interim Consolidated Financial Statements for additional information.


Interest Expense
Interest expense was $56$10 million and $80$59 million for the three months ended March 31, 20192020 and 2018,2019, respectively. The change was primarily driven by lower average long-term debt balances duringas a result of the firstredemption/repayment transactions in the second quarter of 2019 compared to the first quarter of 2018.2019.


(Benefit from) Provision for (Benefit from) Income Taxes on Continuing Operations
The company’s provision for income taxes on continuing operations was $127 million for the three months ended March 31, 2020 on pre-tax income from continuing operations of $408 million, resulting in an effective tax rate of 31.1 percent.  The effective tax rate was unfavorably impacted by the tax impact of certain net exchange losses recognized on the re-measurement of the net monetary asset positions which were not tax-deductible in their local jurisdictions, as well as tax charges related to the issuance of stock-based compensation.

The company’s benefit from income taxes on continuing operations was $(40)$(67) million for the first quarter ofthree months ended March 31, 2019 on a pre-tax incomeloss from continuing operations of $49$(251) million, resulting in an effective tax rate of (81.6)26.7 percent. The effective tax rate was favorably impacted by a tax benefit of $102 million related to an internal legal entity restructuring associated with the Intended Business Separations.Internal Reorganizations. The effective tax rate was unfavorably impacted by non-tax-deductible amortization of the fair value step-up in Historical DuPont’s inventories as a result of the Merger, as well as the impact of integration and separation costs.

The company’s provision for income taxes on continuing operations was $27costs, including a $32 million for the first quarter 2018 on a pre-tax loss from continuing operations of $189 million, resulting in antax charge associated with U.S. state blended tax rate changes. Other unfavorable effective tax rate of (14.3) percent. The effective tax rate was favorably impacted byimpacts included the tax impact of certain net exchange gainslosses recognized on the re-measurement of the net monetary asset positions which were not taxabletax-deductible in their local jurisdictions.jurisdictions, as well as geographic mix of earnings.

Income from Discontinued Operations After Tax
Income from discontinued operations after tax was $1 million and $360 million for the three months ended March 31, 2020 and 2019, respectively. The three months ended March 31, 2019 reflects the operations of EID ECP and the EID Specialty Product Entities.  Refer to Note 3 - Divestitures and Other Transactions for further information.

EID Analysis of Operations
As discussed in Note 1 - Basis of Presentation, to the EID Consolidated Financial Statements, EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only and is presented to provide an Analysis of Operations, only for the differences between EID and Corteva, Inc.

Interest Expense
EID’s interest expense was $42 million and $59 million for the three months ended March 31, 2020 and 2019, respectively, and driven by the items noted on page 46, under the header “Interest Expense”, partially offset by interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 2 - Related Party Transactions, to the EID Consolidated Financial Statements for further information.

Provision for (Benefit from) Income Taxes on Continuing Operations
For the three months ended March 31, 2020, EID had an effective tax rate of 31.6 percent on pre-tax income from continuing operations of $376 million, driven by the items noted on page 46, under the header “Provision for (Benefit from) Income Taxes on Continuing Operations” and a tax benefit related to the interest expense incurred on the related party loan between EID and Corteva, Inc. See Note 2 - Related Party Transactions, to the EID Consolidated Financial Statements for further information.

Corporate Outlook
The overall impact of COVID-19 on the company's consolidated results of operations for the three months ended March 31, 2020 was unfavorably impactednot material and was limited to localized operating disruptions (as previously discussed on page 42).  However, given the economic volatility caused by non-tax-deductible amortizationCOVID-19 and related government actions, the company is suspending the previously issued corporate outlook  for the full year 2020, included in the company's 2019 Annual Report.  As noted in the Liquidity and Capital Resources discussion, on pages 54 - 56, and Note 13 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements, the company maintains sufficient access to liquidity via commercial paper markets, $6 billion in revolving credit facilities, and $2 billion in cash and cash equivalents.  With the increasing uncertainty in global markets, the company will continue to monitor near-term operating conditions with a focus on business continuity and any potential adverse effects on the company’s financial results from lower demand for the company's products, such as declines in corn volumes related to lower corn commodity prices stemming from a drop in the use of corn for ethanol production, that could trigger an assessment of the fair valuerecoverability of goodwill and other indefinite and definite-lived intangible assets.


Supplemental Unaudited Pro Forma Financial Information
The following supplemental unaudited pro forma statements of operations (the "unaudited pro forma statements of operations") for Corteva give effect to the Merger, the debt retirement transactions related to paying off or retiring portions of EID’s existing debt liabilities (as discussed in Note 13 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva common stock as if they had been consummated on January 1, 2016. For the periods presented below, Corteva’s results for all periods prior to the Business Realignment and Internal Reorganization consist of the combined results of operations for Historical EID and DAS, and Corteva’s results for all periods after the Business Realignment and Internal Reorganization represent the consolidated balances of the company. The unaudited pro forma statements of operations below were prepared in accordance with Article 11 of Regulation S-X, and events that are not expected to have a continuing impact on the combined results (e.g., inventory step-up in Historical DuPont’s inventories as a resultcosts) are excluded. One-time transaction-related costs incurred prior to, or concurrent with, the closing of the Merger, the debt redemptions/repayments, and the Corteva Distribution are not included in the unaudited pro forma combined statements of operations through March 31, 2019. The unaudited pro forma combined statements of operations do not reflect restructuring or integration activities or other costs following the separation and distribution transactions that may be incurred to achieve cost or growth synergies of Corteva. As no assurance can be made that these costs will be incurred or the growth synergies will be achieved, no adjustment has been made.

The unaudited pro forma statements of operations have been presented for informational purposes only and are not necessarily indicative of what Corteva’s results of operations actually would have been had the above transactions been completed on January 1, 2016. In addition, the unaudited pro forma statements of operations do not purport to an incremental net provisional chargeproject the future operating results of $48 million associatedthe company. The unaudited pro forma statements of operations were based on and should be read in conjunction with the enactment of Tax Cutsaudited Consolidated Financial Statements and Jobs Act (“The Act”).Notes contained within the company's Annual Report on Form 10-K for the year ended December 31, 2019. 

Unaudited Pro Forma Statement of OperationsThree Months Ended March 31, 2019
(In millions, except per share amounts)Corteva
Merger 1
Debt Retirement 2
Separations Related 3
Pro Forma
Net sales$3,396
$
$
$
$3,396
Cost of goods sold2,211
(205)
16
2,022
Research and development expense299



299
Selling, general and administrative expenses735


3
738
Amortization of intangibles101



101
Restructuring and asset related charges - net61



61
Integration and separation costs212


(112)100
Other income - net31



31
Interest expense59

(45)
14
(Loss) income from continuing operations before income taxes(251)205
45
93
92
Benefit from income taxes on continuing operations(67)36
10
1
(20)
(Loss) income from continuing operations after income taxes(184)169
35
92
112
Net income from continuing operations attributable to noncontrolling interests8



8
Net (loss) income from continuing operations attributable to Corteva$(192)$169
$35
$92
$104
 
Per share common data 
Earnings per share of common stock from continuing operations - basic$0.14
Earnings per share of common stock from continuing operations - diluted$0.14
 
Weighted-average common shares outstanding - basic749.4
Weighted-average common shares outstanding - diluted749.4
1.Represents the removal of 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. include the following: removal of Telone® Soil Fumigant business (“Telone®”) results (as Telone® did not transfer to Corteva as part of the common control combination of DAS); impact from the distribution agreement entered into between Corteva and Dow that allows for Corteva to become the exclusive distributor of Telone® products for Dow; elimination of one-time transaction costs directly attributable to the Corteva Distribution; the impact of certain manufacturing, leasing and supply agreements entered into in connection with the Corteva Distribution; and the related tax impacts of these items.

Recent Accounting Pronouncements
See Note 2 - Recent Accounting Guidance, to the interim Consolidated Financial Statements for a description of recent accounting pronouncements.



Segment Reviews
41The company operates in two reportable segments: Seed and Crop Protection. The company’s seed segment is a global leader in developing and supplying advanced germplasm and traits that produce optimum yield for farms around the world. The segment offers trait technologies that improve resistance to weather, disease, insects and weeds, and trait technologies that enhance food and nutritional characteristics, and also provides digital solutions that assist farmer decision-making with a view to optimize product selection and, ultimately, maximize yield and profitability. The segment competes in a wide variety of agricultural markets.
The crop protection segment serves the global agricultural input industry with products that protect against weeds, insects and other pests, and disease, and that improve overall crop health both above and below ground via nitrogen management and seed-applied technologies. The segment is a leader in global herbicides, insecticides, below-ground nitrogen stabilizers and pasture and range management herbicides.

Summarized below are comments on individual segment net sales and segment operating EBITDA for the three months ended March 31, 2020 compared with the same period in 2019. For purposes of the three months ended March 31, 2019, segment operating EBITDA is calculated on a pro forma basis, as this is the manner in which the CODM assesses performance and allocates resources. Pro forma adjustments used in the calculation of pro forma segment operating EBITDA were determined in accordance with Article 11 of Regulation S-X. These adjustments give effect to the Merger, the debt retirement transactions related to paying off or retiring portions of EID’s existing debt liabilities (as discussed in Note 13 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements), and the separation and distribution to DowDuPont stockholders of all the outstanding shares of Corteva common stock as if they had been consummated on January 1, 2016 (refer to supplemental unaudited pro forma financial statements on page 48). The company defines segment operating EBITDA as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating (benefits) costs - net and foreign exchange gains (losses), excluding the impact of significant items. Non-operating (benefits) costs - net consists of non-operating pension and other post-employment benefit (OPEB) credits, 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. See Note 19 to the interim Consolidated Financial Statements for details related to significant pre-tax benefits (charges) excluded from segment operating EBITDA. All references to prices are based on local price unless otherwise specified.

A reconciliation of pro forma segment operating EBITDA to income from continuing operations before income taxes for the three months ended March 31, 2020 and 2019 is included in Note 19 - Segment Information, to the interim Consolidated Financial Statements.

SeedThree Months Ended
March 31,
In millions20202019
Net sales$2,455
$1,967
Segment operating EBITDA 1
$581
$325
1.
The three months ended March 31, 2019 is presented on a Pro Forma Basis, prepared in accordance with Article 11 of Regulation S-X.
SeedQ1 2020 vs. Q1 2019Percent Change Due To:
 Net Sales ChangeLocal Price &  Portfolio /
$ In millions$%Product MixVolumeCurrencyOther
North America$377
41 %4%37 % %%
EMEA77
10 %3%10 %(3)%%
Latin America38
21 %16%14 %(9)%%
Asia Pacific(4)(6)%5%(7)%(4)%%
Total$488
25 %5%22 %(2)%%

Seed
Seed net sales were $2,455 million in the first quarter of 2020, up from $1,967 million in the first quarter of 2019. The increase was due to a 22 percent increase in volume and a 5 percent increase in local price, partially offset by a 2 percent decline in currency.

Volume gains were primarily driven by earlier deliveries in North America due to improved weather conditions and the anticipated recovery of planted area, as well as strong early demand in EMEA due to perceived supply concerns from COVID-19. The increase in local price was driven by favorable mix in both North America and Latin America as well as changes in route to market in EMEA. Unfavorable currency impacts were primarily due to currencies in Brazil and Europe.

Segment operating EBITDA was $581 million in the first quarter of 2020, compared to $325 million in the first quarter of 2019 on a pro forma basis. Volume gains in North America, pricing gains on favorable mix, and ongoing cost synergies and productivity efforts more than offset higher commissions, currency headwinds, and higher unit costs due to unfavorable seed yields.

Crop ProtectionThree Months Ended
March 31,
In millions20202019
Net sales$1,501
$1,429
Segment Operating EBITDA 1
$238
$220
1.
The three months ended March 31, 2019 is presented on a Pro Forma Basis, prepared in accordance with Article 11 of Regulation S-X.
Crop ProtectionQ1 2020 vs. Q1 2019Percent Change Due To:
 Net Sales ChangeLocal Price &  Portfolio /
$ In millions$%Product MixVolumeCurrencyOther
North America$(4)(1)%(4)%5% %(2)%
EMEA26
5 % %9%(4)% %
Latin America31
17 %6 %24%(13)% %
Asia Pacific19
9 %1 %13%(2)%(3)%
Total$72
5 % %10%(4)%(1)%

Crop Protection
Crop protection net sales were $1,501 million in the first quarter of 2020, up from $1,429 million in the first quarter of 2019. The increase was due to a 10 percent increase in volume, partially offset by a 4 percent decline in currency and a 1 percent decline related to portfolio actions. Local price was flat.

Volume gains were primarily driven by new product launches, including ArylexTM and EnlistTM herbicides and IsoclastTM insecticide, as well as strong early demand in Latin America and EMEA. Unfavorable currency impacts were primarily due to currencies in Brazil and Europe. The portfolio impact was driven by prior year divestitures in North America and Asia Pacific. Pricing gains in Latin America were offset by increased grower incentive discounts in North America.

Segment operating EBITDA was $238 million in the first quarter of 2020, compared to $220 million in the first quarter of 2019 on a pro forma basis. Gains from new product sales and ongoing cost synergies and productivity efforts were partially offset by higher input costs, unfavorable currency, and portfolio impacts.

Non-GAAP Financial Measures
TableThe company presents certain financial measures that do not conform to U.S. GAAP and are considered non-GAAP measures. These measures include Operating EBITDA and operating earnings per share. Management believes that these non-GAAP measures best reflect the ongoing performance of Contentsthe company during the periods presented and provide more relevant and meaningful information to investors as they provide insight with respect to ongoing operating results of the company and a more useful comparison of year over year results. These non-GAAP measures supplement the company's U.S. GAAP disclosures and should not be viewed as an alternative to U.S. GAAP measures of performance. Furthermore, such non-GAAP measures may not be consistent with similar measures provided or used by other companies. Reconciliations for these non-GAAP measures to U.S. GAAP are provided below. For the three months ended March 31, 2019 information is on a pro forma basis and these non-GAAP measures are being reconciled to a pro forma GAAP financial measure prepared and presented in accordance with Article 11 of Regulation S-X, which are reconciled to the GAAP reported figures. See Article 11 Pro Forma Combined Statements of Operations on page 48.


Operating EBITDA is defined as earnings (i.e., income from continuing operations before income taxes) before interest, depreciation, amortization, non-operating (benefits) costs - net and foreign exchange gains (losses), excluding the impact of significant items (including goodwill impairment charges). Non-operating (benefits) costs - net consists of non-operating pension and OPEB credits, tax indemnification adjustments, environmental remediation and legal costs associated with legacy businesses and sites of Historical DuPont. 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. Operating earnings per share is defined as "Earnings per common share from continuing operations - diluted" excluding the after-tax impact of significant items (including goodwill impairment charges), the after-tax impact of non-operating (benefits) costs - net, and the after-tax impact of amortization expense associated with intangible assets existing as of the Separation from DowDuPont. Although amortization of the company's intangible assets is excluded from these non-GAAP measures, management believes it is important for investors to understand that such intangible assets contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in amortization of additional intangible assets.

Reconciliation of Income from Continuing Operations after Income Taxes to Operating EBITDA

Three Months Ended
March 31,

20202019
(In millions)As ReportedPro Forma
Income from continuing operations after income taxes$281
$112
Provision for (benefit from) income taxes on continuing operations127
(20)
Income from continuing operations before income taxes408
92
Depreciation and amortization283
258
Interest income(18)(16)
Interest expense10
14
Exchange losses - net61
27
Non-operating benefits - net(73)(42)
Significant items charge123
185
Operating EBITDA (Non-GAAP)$794
$518

Significant Items

Three Months Ended
March 31,

20202019
(In millions)As ReportedPro Forma
Integration costs$
$(100)
Restructuring and asset related charges - net(70)(61)
Loss on divestitures(53)(24)
Total pretax significant items charge(123)(185)
Total tax benefit impact of significant items1
23
92
Tax only significant item charge2
(19)
Total significant items charge, after tax$(119)$(93)
1.
The tax benefit impact of significant items for the three months ended March 31, 2019 includes a net tax charge of $(32) million related to U.S. state blended tax rate changes associated with the Internal Reorganizations and a net tax benefit of $102 million related to an internal legal entity restructuring associated with the Internal Reorganizations. Unless specifically addressed 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.
2.
The three months ended March 31, 2020 includes an after tax charge related to the impact of a state tax valuation allowance in the US based on a change in judgment about the realizability of a deferred tax asset.


Reconciliation of Income from Continuing Operations Attributable to Corteva and Earnings Per Share of Common Stock from Continuing Operations - Diluted to Operating Earnings and Operating Earnings Per Share

Three Months Ended
March 31,

20202019
(In millions)As ReportedPro Forma
Income from continuing operations attributable to Corteva$271
$104
Less: Non-operating benefits - net, after tax57
31
Less: Amortization of intangibles (existing as of Separation), after tax(114)(81)
Less: Significant items charge, after tax(119)(93)
Operating Earnings (Non-GAAP)$447
$247
 Three Months Ended
March 31,
 20202019
 As ReportedPro Forma
Earnings per share of common stock from continuing operations - diluted$0.36
$0.14
Less: Non-operating benefits - net, after tax0.08
0.04
Less: Amortization of intangibles (existing as of Separation), after tax(0.15)(0.11)
Less: Significant items charge, after tax(0.16)(0.12)
Operating Earnings Per Share (Non-GAAP)$0.59
$0.33
Diluted Shares Outstanding (in millions)
752.5
749.4


Liquidity &and Capital Resources
Information related to the company's liquidity and capital resources can be found in the company's 2018company’s 2019 Annual Report, Part II, Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and& Capital Resources. DiscussionThe discussion below provides the updates to this information for the three months ended March 31, 2019.2020.
(Dollars in millions)March 31, 2019December 31, 2018March 31, 2020December 31, 2019March 31, 2019
Cash, cash equivalents and marketable securities$3,814
$4,500
$1,973
$1,769
$1,764
Total debt9,525
7,972
$2,610
$122
$9,498


The company's cash, cash equivalents and marketable securities at March 31, 2020, December 31, 2019, and March 31, 2019 were $1,973 million, $1,769 million and $1,764 million, respectively. Total debt at March 31, 2020, December 31, 2018 were $3.8 billion2019, and $4.5 billion,March 31, 2019 was $2,610 million, $122 million, and $9,498 million, respectively. The decrease of approximately $0.7 billionincrease in debt balances from December 31, 2019 was primarily due to funding the company’s seasonal working capital needs and capital expendituresexpenditures. See further information in Note 13 - Short-Term Borrowings, Long-Term Debt and distributionsAvailable Credit Facilities, to DowDuPont.the interim Consolidated Financial Statements.

Total debt at March 31, 2019 and December 31, 2018 was $9.5 billion and $8.0 billion, respectively. The increase was primarily due to increased borrowings from commercial paper and new borrowings under the Term Loan Facility, described below, partially offset by the maturity of debt. The increase in debt was used primarily to fund seasonal working capital needs, capital expenditures and distributions to DowDuPont.


The company believes its ability to generate cash from operations and access to access capital markets and commercial paper markets will be adequate to meet anticipated cash requirements to fund its operations, including seasonal working capital, capital spending debt maturities in the ordinary course,and pension obligations as well as distributions and other transfers to DowDuPont. Historical DuPont’s currentobligations. Corteva's strong financial position, liquidity and credit ratings continue towill provide access as needed to the capital markets.markets and commercial paper markets to fund seasonal working capital needs. The company's liquidity needs can be met through a variety of sources, including cash provided by operating activities, cash and cash equivalents, marketable securities, commercial paper, syndicated credit lines, bilateral credit lines, long-term debt markets, bank financing and committed receivable repurchase facilitiesfacilities. Corteva considers the borrowing costs and asset sales.lending terms when selecting the source to fund its operations and working capital needs.


The company had access to approximately $6.3$5.8 billion, $6.4 billion, and $6.1$4.8 billion in committed and uncommitted unused credit lines at March 31, 2020, December 31, 2019, and DecemberMarch 31, 2018,2019, respectively. TheseIn addition to the unused credit linesfacilities, the company has a $1.3 billion 2020 Repurchase Facility (as defined below). These facilities provide support to meet the company’s short-term liquidity needs and for general corporate purposes which may include funding of discretionary and non-discretionary contributions to certain benefit plans, severance payments, repayment and refinancing of debt, working capital, capital expenditures, repurchases and redemptions of securities, and funding a portion of DowDuPont'sCorteva's costs and expenses.


Debt Redemptions/Repayments
On March 22,In November 2018, EID entered into a $3.0 billion five-year revolving credit facility and a $3.0 billion three-year revolving credit facility (the “Revolving Credit Facilities”). The Revolving Credit Facilities became effective May 2019 Historical DuPont issued notices of redemption in full of all of its outstanding notes (the “Make Whole Notes”) listed inconnection with the table below:
(in millions)Amount
4.625% Notes due 2020$474
3.625% Notes due 2021296
4.250% Notes due 2021163
2.800% Notes due 2023381
6.500% Debentures due 202857
5.600% Senior Notes due 203642
4.900% Notes due 204148
4.150% Notes due 204369
Total$1,530

The Make Whole Notes were redeemed on April 22, 2019 at the make-whole redemption prices set forth in the respective Make Whole Notes. On and after the date of redemption, the Make Whole Notes were no longer deemed outstanding, interest on the Make Whole Notes ceased to accrue and all rightstermination of the holdersEID $4.5 billion Term Loan Facility and the $3.0 billion Revolving Credit Facility dated May 2014. Corteva, Inc. became a party to the Revolving Credit Facilities upon the Corteva Distribution. In March 2020, EID drew down $500 million under the three-year revolving credit facility to finance its short-term liquidity needs as a result of the Make Whole Notes were terminated. For further information onvolatility and increased borrowing costs of commercial paper resulting from the Make Whole Notes, see Note 18unstable market conditions caused by COVID-19. The Revolving Credit Facilities contain customary representations and warranties, affirmative and negative covenants and events of default that are typical for companies with similar credit ratings. The Revolving Credit Facilities also contain a financial covenant requiring that the ratio of total indebtedness to total capitalization for Corteva and its consolidated subsidiaries not exceed 0.60. At March 31, 2020 the interim Consolidated Financial Statements and Recent Developments.company was in compliance with these covenants.


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The company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations affecting manufacturing plants, mineral producing properties or research facilities located in the U.S. and the consolidated subsidiaries owning such plants, properties and facilities subject to certain limitations. The outstanding long-term debt also contains customary default provisions. In addition, the
The company will be required to redeem all of the Notes associated with $1.25 billion of the company's 2.20 percent Notes due 2020 and $750 million of the company's Floating Rate Notes due 2020, at a redemption price equal to 100 percent of the aggregate principal amount plus any accrued and unpaid interest upon the announcement of the record date for the separation of either the agriculture or specialty products business, or the entry into an agreement to sell all or substantially all of the assets of either business to a third party. On May 7, 2019, DowDuPont publicly announced the record date in connection with the intended Corteva Distribution. For further information on the record date announcement and required notice of redemption, see Note 18 to the interim Consolidated Financial Statements and Recent Developments.

In March 2016, the company entered into a credit agreement that provides for a three-year, senior unsecured term loan facility in the aggregate principal amount of $4.5 billion (as amended, from time to time, the "Term Loan Facility") under which Historical DuPont may make up to seven term loan borrowings and amounts repaid or prepaid are not available for subsequent borrowings. The proceeds from the borrowings under the Term Loan Facility were used for the company's general corporate purposes including debt repayment,has meaningful seasonal working capital and fundingneeds based in part on providing financing to its customers. Working capital is funded through multiple methods including commercial paper, a portion of DowDuPont's costs and expenses. At March 31, 2019,receivable repurchase facility, the company had made six term loan borrowings in an aggregate principal amount of $3 billion and had unused commitments of $1.5 billion under the Term Loan Facility. On May 2, 2019 Historical DuPont terminated its Term Loan Facility and repaid the aggregate outstanding principal amount of $3 billion plus accrued and unpaid interest through and including May 1, 2019. For further information on the termination of the Term Loan Facility, see Note 18 to the interim Consolidated Financial Statements and Recent Developments.

The Term Loan Facility and the revolving credit facility (the "Facilities") contain customary representations and warranties, affirmative and negative covenants, and events of default that are typical for companies with similar credit ratings and generally consistent with those applicable to Historical DuPont’s long-term public debt. The Facilities contain a financial covenant requiring that the ratio of Total Indebtedness to Total Capitalization for Historical DuPont and its consolidated subsidiaries not exceed 0.6667. At March 31, 2019, the company was in compliance with this financial covenant.

In November 2018, Historical DuPont entered into a $3.0 billion five-year revolving credit facility and a $3.0 billion three-year revolving credit facility (the “2018 Revolving Credit Facilities”). Availability of funds was subject to a number of conditions, including Corteva becoming a party to the 2018 Credit Revolving Facilities and the consummation of the separation and distribution of Corteva. On May 2, 2019, the 2018 Revolving Credit Facilities, were amended, making the 2018 Revolving Credit Facilities available for Historical DuPont, effective May 2, 2019.  Corteva, Inc will become a party to the 2018 Revolving Credit Facilities upon the separationfactoring and distributioncash from DowDuPont. The 2018 Revolving Credit Facilities contain customary representations and warranties, affirmative and negative covenants and events of default that are typical for companies with similar credit ratings and generally consistent with those applicable to Historical DuPont’s existing term loan and revolving credit facilities. The 2018 Revolving Credit Facilities also contain a financial covenant requiring that the ratio of total indebtedness to total capitalization for the company and its consolidated subsidiaries not exceed 0.60.operations.


In February 2019,2020, in line with seasonal agricultural working capital requirements, the company entered into a committed receivable repurchase agreement of up to $1.3 billion (the "2019"2020 Repurchase Facility") which expires in December 2019. From time to time, the company and the banks modify the monthly commitment amounts to better align with working capital requirements.2020. Under the 20192020 Repurchase Facility, the companyCorteva may sell a portfolio of available and eligible outstanding customer notes receivables within the agriculture product line to participating institutions and simultaneously agree to repurchase at a future date. See further discussion of this facility in Note 1213 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities, to the interim Consolidated Financial Statements.

The company has factoring agreements with third-party financial institutions to sell its trade receivables under both recourse and non-recourse agreements in exchange for cash proceeds in an effort to reduce its receivables risk. For arrangements that include an element of recourse, the company provides a guarantee of the trade receivables in the event of customer default. Refer to Note 10 - Accounts and Notes Receivable, Net, to the interim Consolidated Financial Statements for more information.
The company also organizes agreements with third-party financial institutions who directly provide financing for select customers of the company's seed and crop protection products in each region. Terms of the third-party loans are less than a year and programs are renewed on an annual basis. In some cases, the company guarantees a portion of the extension of such credit to such customers. Refer to Note 14 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements for more information on the company’s guarantees.

The company's cash, cash equivalents and marketable securities at March 31, 2020, December 31, 2019, and DecemberMarch 31, 2018 were $3.82019 are $2.0 billion, $1.8 billion, and $4.5$1.8 billion respectively, of which $3.3$1.5 billion at March 31, 2019 and $3.92020, $1.5 billion at December 31, 20182019, and $1.3 billion at March 31, 2019 was held by subsidiaries in foreign countries, including United States territories.


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The Tax Cuts and Jobs Act requires("The Act") required companies to pay a one-time transition tax on the untaxed earnings of foreign subsidiaries,subsidiaries. Upon actual repatriation, such earnings could be subject to withholding taxes, foreign and/or U.S. state income taxes, and taxes resulting from the impact of foreign currency movements.  The Act also introduced a majority100 percent dividends received deduction regarding earnings of which were previously considered permanently reinvested by the company (see Note 8 to the interim Consolidated Financial Statements for further details of The Act).foreign subsidiaries.  The cash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments.  The company has the ability to repatriate additional funds to the US, which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes and the impact of foreign currency movements. It is not practicable to calculate the unrecognized deferred tax liability on undistributed foreign earnings due to the complexity of the hypothetical calculation. During the first and second quarters of 2019, in connection with the Intended Business Separations, the company has and expects to continue repatriating certain funds from its foreign subsidiaries that are not needed to finance local operations or separation activities. During the three months endedAt March 31, 2019,2020, management believed that sufficient liquidity is available in the company recorded tax expense of $13 million associated with these repatriation activities.U.S.


Summary of Cash Flows
Cash used for operating activities was $1,422 million$1.9 billion for the three months ended March 31, 20192020 compared to $1,975 million$1.5 billion for the three months ended March 31, 2018.2019. The changeincrease in cash used for operating activities was primarily due todriven by an increase in working capital requirements and the impact of the absence of net income from EID ECP and EID Specialty Products entities, as a result of the Internal Reorganizations and Business Realignments in 2019, partially offset by a decrease in integration and separation costs and lower deferred tax payments and higher prepayments from customer contracts.provisions.


Cash used for investing activities was $514 million$0.1 billion for the three months ended March 31, 20192020 compared to $382 million provided by$0.5 billion used for investing activities for the three months ended March 31, 2018.2019. The change was due primarily due to lower net maturitiescapital expenditures driven by the Internal Reorganizations and Business Realignments in 2019 and proceeds from sales of marketable securities, as well as higher capital expenditures.property, businesses, consolidated companies and ownership interests in non-consolidated affiliates.


Cash provided by financing activities was $1,226 million$2.3 billion for the three months ended March 31, 2020 compared to $1.3 billion for the three months ended March 31, 2019. The change was due primarily to higher short-term borrowings, lower payments on long-term debt, the absence of distributions to DowDuPont which in 2019 were used primarily to fund a portion of DowDuPont’s dividend payments partially offset by dividends to Corteva stockholders and $694 millionrepurchases of Corteva common stock.

In February 2020, the company's Board of Directors authorized a common stock dividend of $0.13 per share, payable on March 13, 2020, to shareholders of record on March 3, 2020. In April 2020, the company's Board of Directors authorized a common stock dividend of $0.13 per share, payable on June 15, 2020, to shareholders of record on May 15, 2020.

On June 26, 2019, the company's Board of Directors authorized a $1 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date. The program is expected to be completed in three years.

During the three months ended March 31, 2020, the company purchased and retired 1,865,000 shares for a total cost of $50 million. See Note 15 - Stockholders' Equity, to the interim Consolidated Financial Statements for additional information related to the share buyback plan.

EID Liquidity Discussion
As discussed in Note 1 - Basis of Presentation, to the EID Consolidated Financial Statements, EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The below relates to EID only and is presented to provide a Liquidity discussion, only for the differences between EID and Corteva, Inc.

Cash provided by operating activities
EID’s cash used for financingoperating activities for the three months ended March 31, 2018. The change2020 was primarily due$1.9 billion compared to a net increase in borrowings, as well as decreased distributions to DowDuPont.

As of the consummation of the Merger, shares of Historical DuPont common stock held publicly were redeemed and Historical DuPont's common stock is owned solely by DowDuPont. Historical DuPont's preferred stock remains issued and outstanding, and Historical DuPont continues to be responsible for dividends on its preferred stock; however, the obligation is not material to the company's liquidity. Dividend payments to shareholders of Historical DuPont preferred stock totaled $2 million$1.5 billion for the three months ended March 31, 20192019. The change was primarily driven by the items noted above under the header, "Summary of Cash Flows," partially offset by interest incurred on the related party loan between EID and 2018, respectively.Corteva, Inc.

ForCash used for financing activities
EID’s cash provided by financing activities was $2.3 billion for the three months ended March 31, 2019, Historical DuPont declared and paid2020 compared to $1.3 billion for the three months ended March 31, 2019. The change was due to higher short-term borrowings, lower payments on long-term debt, absence of distributions to DowDuPont of $317 million, primarilywhich in 2019 which were used to fund a portion of DowDuPont’s first quarter dividend payment.payments partially offset by payments on related party long term debt.


See Note 2 - Related Party Transactions, to the EID Consolidated Financial Statements for further information on the related party loan between EID and Corteva, Inc.

Guarantees and Off-Balance Sheet Arrangements
For detailed information related to Guarantees, Indemnifications, and Obligations for Equity Affiliates and Others, see the company's 2018 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Off- Balance Sheet Arrangements, and Note 13 to the interim Consolidated Financial Statements.


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Critical Accounting Estimates
The company's significant accounting policies are more fully described in Note 1 in the company's 2018 Annual Report. Management believes that the application of these policies on a consistent basis enables the company to provide the users of the financial statements with useful and reliable information about the company's operating results and financial condition.

Valuation of Assets and Impairment Considerations
As a result of the Merger and related acquisition method of accounting, Historical DuPont’s assets and liabilities were measured at fair value, and any declines in the projected cash flows 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 Historical DuPont will assess 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 (the “SP Distribution”). Additionally, in connection with Internal Reorganizations and the Corteva Distribution, in the second quarter of 2019, Historical DuPont will reorganize its reporting structure to align with that of Corteva and will re-allocate goodwill to the new reporting units (the “Corteva Segment Realignment”). Historical DuPont will assess the recoverability of the goodwill in the reporting unit identified both before and after the reorganization of the reporting structure.

Certain of Historical DuPont’s reporting units, industrial biosciences, electronics and imaging, and clean technologies, are at higher risk for impairment given recent unfavorable conditions in certain markets and the small margin of their respective fair values over their respective carrying values as of the date of the company’s last annual impairment test. Recent unfavorable market conditions slowed demand in biomaterials within industrial biosciences and electronics and imaging is being impacted by softness in photovoltaics and advanced materials. These legacy specialty products product lines will be reflected in Historical DuPont’s Consolidated Financial Statements as a discontinued operation beginning in the second quarter 2019.    

The company will assemble and review updated financial projections, including any changes to key assumptions, in connection with the SP Distribution and Corteva Segment Realignment. In connection with this activity, the outcome of which is not currently known, it is possible that non-cash impairment charges could be recorded in second quarter 2019. There can be no assurance that such charges, if any, would not be material to the company.

The company’s goodwill and indefinite-lived intangibles by reporting unit at March 31, 2019 is shown below (in millions):
Reporting UnitGoodwillIndefinite-Lived Intangible Assets
Agriculture$8,859
$8,237
Electronics and Imaging4,058
480
Protection Solutions5,496
260
Nutrition and Health8,726
1,420
Transportation and Advanced Polymers6,354
310
Packaging and Specialty Plastics3,584

Industrial Biosciences3,100
398
Clean Technologies461

Total$40,638
$11,105
For further detailed information related to valuation of assets and impairment considerations, see the company’s 2018 Annual Report, Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, Critical Accounting Estimates.Off-Balance Sheet Arrangements and Note 14 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements.


Contractual Obligations

Information related to the company'scompany’s contractual obligations, commercial commitments and expected cash requirements for interest at December 31, 20182019 can be found in the company's 2018company’s 2019 Annual Report, Part II, Item 7. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements. With the exception of increased borrowings under the Term Loan Facility, in the first quarter of 2019, thereThere have been no material changes in the company's contractual obligations since December 31, 2018. See Note 12 to the interim Consolidated Financial Statements for further discussion of the company's Term Loan Facility.2019.




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Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Registrant meetsSee Note 17 - Financial Instruments, to the conditions set forth in General Instruction H(1)(a)interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and (b)Qualitative Disclosures About Market Risk, of Form 10-Qthe company's 2019 Annual Report, for information on the company's utilization of financial instruments and is therefore filing this form withan analysis of the reduced disclosure format and has omitted the information called for by this Item pursuant to General Instruction H(2)(c)sensitivity of Form 10-Q.these instruments.


Item 4.CONTROLS AND PROCEDURES


Corteva, Inc.

a)        Evaluation of Disclosure Controls and Procedures
 
Corteva, Inc.The company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in Corteva'sthe company's reports filed or submitted under the Securities Exchange Act of 1934 ("Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.


As of March 31, 2019, Corteva's2020, the company's Chief Executive Officer ("CEO")" and Chief Financial Officer ("CFO"), together with management, conducted an evaluation of the effectiveness of Corteva'sthe company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.
 
b)Changes in Internal Control over Financial Reporting
 
There have been no changes in Corteva'sthe company's internal control over financial reporting that occurred during the quarter ended March 31, 20192020 that hashave materially affected, or isare reasonably likely to materially affect, Corteva'sthe company's internal control over financial reporting.

E. I. du Pont de Nemours and Company

a)        Evaluation of Disclosure Controls and Procedures
EID maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in their reports filed or submitted under the Securities Exchange Act of 1934 ("Exchange Act") is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

As of March 31, 2020, EID's CEO and CFO, together with management, conducted an evaluation of the effectiveness of EID's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.
b)Changes in Internal Control over Financial Reporting
There have been no changes in EID's internal control over financial reporting that occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, EID's internal control over financial reporting.

In connection with the separations and intended Corteva Distribution, there are several processes, policies, operations, technologies and information systems that were integrated following the Merger which have been or will be replicated, transferred or separated. Corteva continues to take steps to ensure that adequate controls are designed and maintained throughout this transition period.



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PART II.  OTHER INFORMATION




Item 1.LEGAL PROCEEDINGS
The company is subject to various litigation matters,legal proceedings, including, but not limited to, product liability, patent infringement,intellectual property, antitrust, claims, and claims for third partycommercial, property damage, or personal injury, stemmingenvironmental and regulatory matters arising out of the normal course of its current businesses or legacy EID businesses unrelated to Corteva’s current businesses but allocated to Corteva as part of the Separation of Corteva from alleged environmental torts.DuPont. Information regarding certain of these matters is set forth below and in Note 1314 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements.


Litigation related to Corteva’s current businesses
PFOA: EnvironmentalCanadian Competition Bureau Formal Inquiry
On January 30, 2020, the Canadian Competition Bureau (the “Bureau”) filed a court order for the company to produce records and information as part of a formal inquiry under civil sections of Canada’s competition laws. The inquiry is in response to allegations by the Farmers Business Network ("FBN") that Corteva and other seeds and crop protection manufacturers and wholesalers unilaterally or in coordination refused, restricted and/or impaired supply of products to FBN in western Canada. This inquiry follows an informal request for information from the Bureau pursuant to which the company voluntarily provided documents and engaged in discussions with the Bureau outlining how its conduct was and continues to be compliant with Canadian competition laws. Corteva continues to cooperate with the Bureau’s inquiries, but believes the likelihood of material liability is remote.

Litigation Proceedingsrelated to legacy EID businesses unrelated to Corteva’s current businesses
ForAs discussed below and in Note 14 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements, certain of the environmental proceedings and litigation allocated to Corteva as part of the Separation from DuPont relate to the legacy EID businesses, including their use of PFOA, which, for purposes of this report, the term PFOA means collectively perfluorooctanoic acid and its salts, including the ammonium salt
and does not distinguish between the two forms. Informationforms, and PFAS, which means per- and polyfluoroalkyl substances, including PFOA, PFOS (perfluorooctanesulfonic acid), GenX and other perfluorinated chemicals and compounds ("PFCs"). While it is reasonably possible that the company could incur liabilities related to these actions, any such liabilities are not expected to be material.

Pursuant to the Separation Agreements, the company is entitled to indemnification for certain liabilities related to legacy EID businesses. On May 13, 2019, Chemours filed a complaint in the Delaware Court of Chancery against DuPont, Corteva, and EID alleging, among other things, that the litigation and environmental liabilities allocated to Chemours under the Chemours Separation Agreement were underestimated and asking that the Court either limit the amount of Chemours’ indemnification obligations or, alternatively, order the return of the $3.91 billion dividend Chemours paid to EID prior to its separation. On March 30, 2020, the Court granted the motion to dismiss made by DuPont, Corteva, and EID. Chemours filed its notice of appeal of the Chancery Court's decision on April 17, 2020. The company believes the probability of liability with respect to Chemours' suit continues to be remote. Further information with respect to this matterproceeding is includedset forth in Note 1314 - Commitments and Contingent Liabilities, to the interim Consolidated Financial Statements underStatements. The company believes the heading PFOA.probability of liability with respect to Chemours' suit to be remote.

Fayetteville Works Facility, Fayetteville, North Carolina
In August 2017, the U.S. Attorney’s Office for the Eastern District of North Carolina served the company with a grand jury subpoena for testimony and the production of documents related to alleged discharges of GenX from the Fayetteville Works facility into the Cape Fear River. Historical DuPont has been served with additional subpoenas relating to the same issue and in the second quarter 2018, received a subpoena expanding the scope to any PFCs discharged from the Fayetteville Works facility into the Cape Fear River. Additional information related to this matter is included in Note 13 to the interim Consolidated Financial Statements under the heading Fayetteville Works Facility, North Carolina.

La Porte Plant, La Porte, Texas - Crop Protection - Release Incident Investigations
On November 15, 2014, there was a release of methyl mercaptan at Historical DuPont's La Porte, Texas, facility. The release occurred at the site’s Crop Protection unit resulting in four employee fatalities inside the unit. Historical DuPont continues to cooperate with governmental agencies, including the U.S. Environmental Protection Agency ("EPA"), the Chemical Safety Board and the Department of Justice ("DOJ"), which are still conducting investigations. These investigations could result in sanctions and criminal penalties against Historical DuPont.


Environmental Proceedings
The company believes it is remote that the following matters will have a material impact on its financial position, liquidity or results of operations. The descriptions below are included per Regulation S-K, Item 103(5)(c) of Regulation S-K of the Securities Exchange Act of 1934.1934, as amended.

Related to Corteva's current businesses

La Porte Plant, La Porte, Texas - Crop Protection - Release Incident Investigations
On November 15, 2014, there was a release of methyl mercaptan at EID's La Porte, Texas, facility. The release occurred at the site’s crop protection unit resulting in four employee fatalities inside the unit. The Chemical Safety Board (“CSB”) issued its final report on June 18, 2019, which included recommendations related to the emergency response program at La Porte. Corteva responded to the CSB on September 30, 2019 outlining the actions it has taken to date to address the recommendations for the site and providing its plan to address the CSB’s remaining recommendations. Corteva continues to cooperate with the ongoing criminal U.S. Environmental Protection Agency ("EPA") and the Department of Justice ("DOJ") investigations and is having discussions with the DOJ regarding potential criminal charges and EID's defenses under the U.S. Clean Air Act. These investigations could result in sanctions and criminal penalties against Corteva.


La Porte Plant, La Porte, Texas - EPA Multimedia Inspection
The EPA conducted a multimedia inspection at the La Porte facility in January 2008. Historical DuPont,EID, the EPA and the DOJ began discussions in the Fall 2011 relating to the management of certain materials in the facility's waste water treatment system, hazardous waste management, flare and air emissions. These discussions continue.In March 2020, EID agreed to settle with the EPA and DOJ and pay a $3.4 million civil penalty. The final consent decree is expected to be filed with the federal court in the second quarter of 2020.


Related to legacy EID businesses unrelated to Corteva’s current businesses

Sabine Plant, Orange, Texas - EPA Multimedia Inspection
In June 2012, Historical DuPontEID began discussions with the EPA and the DOJ related to a multimedia inspection that the EPA conducted at the Sabine facility in March 2009 and December 2015. The discussions involve the management of materials in the facility's waste water treatment system, hazardous waste management, flare and air emissions, including leak detection and repair. These discussions continue. Under the Separation Agreement, Corteva and DuPont will share any future liabilities proportionally on the basis of 29% and 71%, respectively.


Divested Neoprene Facility, La Place, Louisiana - EPA Compliance Inspection
In 2016, the EPA conducted a focused compliance investigation at the Denka Performance Elastomer LLC (“Denka”) neoprene manufacturing facility in La Place, Louisiana. Historical DuPontEID sold the neoprene business, including this manufacturing facility, to Denka in the fourth quarter of 2015. Subsequent to this inspection,In the spring of 2017, the EPA, the DOJ, the Louisiana Department of Environmental Quality, ("LDEQ"), Historical DuPontEID and Denka began discussions in the spring of 2017 relating to the inspection conclusions and allegations of noncompliance arising under the Clean Air Act, including leak detection and repair. These discussions, which include potential settlement options, continue. Under the Separation Agreement, DuPont is defending and indemnifying the company in this matter.


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New Jersey Directive PFAS
On March 25, 2019, the New Jersey Department of Environmental Protection (“NJDEP”) issued a Statewide PFAS Directive and Notice to Insurers to a number ofseveral companies, including Chemours, DowDuPontDuPont, and certain DowDuPont subsidiaries including the company. Allegations against the company relate to former operations of Historical DuPont involving poly- and perfluoroalkyl substances, (“PFAS”), including PFOA and PFOA- replacement products. The NJDEP seeks past and future costs of investigating, monitoring, testing, treating, and remediating New Jersey’s drinking water and waste systems, private drinking water wells and natural resources including groundwater, surface water, soil, sediments and biota.EID. The Directive seeks certain information asrelating to futurethe use and environmental release of PFAS and PFAS-replacement chemicals at and from two former EID sites in New Jersey, Chambers Works and Parlin, and a funding source for costs and information related to the historic usesNJDEP’s investigation of PFAS issues and replacement chemicals including “information ranging from usePFAS testing and discharge of the chemicals through wastewater treatment plants, air emissions, and sales of products containing the chemicals to current development, manufacture, use and release of newer chemicals in the state.”remediation.


Chemours has agreed, with reservations, to defend and indemnify the companyEID in this matter.


New Jersey Directive Pompton Lakes
On March 27, 2019, the NJDEP issued a Directiveto Chemours and Notice to Insurers forEID a Natural Resource Damages Directive relating to chemical contamination (non-PFAS) at and around EID’s former Pompton Lakes facility in New Jersey. The directive was issued to the company and Chemours and itDirective alleges that former operations atthis contamination has harmed the facility by Historical DuPont have caused contamination and damage to surface and ground water, soils and sediments on and off the facility. The NJDEP is seekingnatural resources of New Jersey. It seeks $125,000 as reimbursement for the preparationcost of preparing a natural resource damage assessment.  Depending ondamages assessment, which the resultsState will use to determine the extent of such assessment,damage and the parties are notified that they may be requiredamount it expects to pay forseek to restore the restoration and replacement of any damageaffected natural resources to such natural resources. their pre-damage state.


Chemours has agreed, with reservations, to defend and indemnify the companyEID in this matter.

Natural Resource Damage Cases
Since May 2017, several municipal water districts and state attorneys general have filed lawsuits against EID, Corteva, Chemours, 3M, and others, claiming contamination of public water systems by PFCs, including but not limited to PFOA. These actions are currently pending in Alabama, New Hampshire, South Dakota, Vermont, New York, Ohio, Michigan and New Jersey with the municipalities and states seeking economic impact damages for alleged harm to natural resources, punitive damages, present and future costs to cleanup PFOA contamination and the abatement of alleged nuisance with filtration systems. Chemours has accepted the defense and indemnification of EID in these cases subject to a reservation of rights as to product scope and has declined defense and indemnity to Corteva. Furthermore, Chemours declined to defend certain state law and fraudulent conveyance claims.


Item 1A. RISK FACTORS


Corteva participatesThe significant factors known to us that could materially adversely affect our business, financial condition, or operating results are described in an industry thatour most recently filed annual report on Form 10-K under Item 1A - Risk Factors, and are supplemented by the following risk factors below.

Global or regional health pandemics or epidemics, including COVID-19, could negatively impact the company's business, financial condition and results of operations.
Corteva's business, financial condition, and results of operations could be negatively impacted by COVID-19 or other pandemics or epidemics. The severity, magnitude and duration of the current COVID-19 pandemic and future outbreaks is highly competitiveuncertain, rapidly changing and difficult to predict. In 2020, COVID-19 and the related government-imposed restrictions, including stay at home orders, has undergone consolidation,significantly impacted economic activity and markets around the world, which could negatively impact the company's business, financial condition, and results of operations in numerous ways, including but not limited to those outlined below:
Current and future COVID-19 outbreaks and resulting illness, travel restrictions and workforce disruptions could impact Corteva's global supply chain, its operations and its routes to market or those of its suppliers, co-manufacturers, or customers/distributors. These disruptions or the company's failure to effectively respond to them could increase competitive pressures.product or distribution costs, alter the timing of recognizing manufacturing costs, or impact the delivery of products to customers.
Corteva currently faces significant competitionGovernment or regulatory responses to pandemics could negatively impact the company's business. Mandatory lockdowns or other restrictions on operations in certain countries have temporarily disrupted the company's ability to operate or distribute its products in these markets. Continuation or expansion of these disruptions could materially adversely impact the company's operations and results.
Reductions to the company’s forecasted profitability and continued global economic decline could trigger potential impairment of the carrying value of goodwill or other indefinite and definite-lived intangible assets.
The instability or unavailability of a farm workforce to harvest agricultural products could impact the company's customers’ ability to monetize their crop and potentially impact the collection of the company's customer receivables.
Continued commodity cost volatility is expected and the company's commodity hedging activities may not sufficiently offset this volatility. Depressed commodity prices may increase the insolvency risk of Corteva's customers in the marketslonger-term, along with reducing the demand for Corteva's products.
The company expects to be negatively impacted by foreign currency exchange rates, as a result of a generally stronger U.S. dollar relative to other currencies in the countries in which it operates. In most segments of the market, the number of products available to the grower is steadily increasing as new products are introduced. At the same time, certain products are coming off patent and are thus available to generic manufacturers for production and commercialization. Additionally, data analytic tools and web-based new direct purchase models offer increased transparency and comparability,company operates, which creates price pressures. Corteva cannot predict the pricing or promotional actions of its competitors. Aggressive marketing or pricing by Corteva’s competitors could adversely affect Corteva’s business, results of operations and financial conditions. As a result, Corteva anticipates that it will continue to face significant competitive challenges.

The successful development and commercialization of Corteva’s pipeline products will be necessary for Corteva’s growth.
Corteva uses advanced breeding technologies to produce hybrids and varieties with superior performance in farmers’ fields, and uses biotechnology to introduce traits that enhance specific characteristics of its crops. Corteva also uses advanced analytics, software tools, mobile communications and new planting and monitoring equipment to provide agronomic recommendations to growers. Additionally, Corteva conducts research into biological and chemical products to protect farmers’ crops from pests and diseases and enhance plant productivity.

New product concepts may be abandoned for many reasons, including greater anticipated development costs, technical difficulties, lack of efficacy, regulatory obstacles or inability to market under regulatory frameworks, competition, inability to prove the original concept, lack of demand and the need to divert focus, from time to time, to other initiatives with perceived opportunities for better returns. The processes of active ingredient development or discovery, breeding, biotechnology trait discovery and development and trait integration are lengthy, and a very small percentage of the chemicals, genes and germplasm Corteva tests is selected for commercialization. Furthermore, the length of time and the risk associated with the breeding and biotech pipelines are interlinked because both are required as a package for commercial success in markets where biotech traits are approved for growers. In countries where biotech traits are not approved for widespread use, Corteva’s seed sales depend on the quality of its germplasm.

Speed in discovering, developing, protecting and responding to new technologies, including new technology-based distribution channels that could facilitate Corteva’s ability to engage with customers and end users, and bringing related products to market is a significant competitive advantage. Commercial success frequently depends on being the first company to the market, and many of Corteva’s competitors are also making considerable investments in similar new biotechnology products, improved germplasm products, biological and chemical products and agronomic recommendation products.


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Corteva may not be able to obtain or maintain the necessary regulatory approvals for some of its products, including its seed and crop protection products, which could restrict its ability to sell those products in some markets.
Regulatory and legislative requirements affect the development, manufacture and distribution of Corteva’s products, including the testing and planting of seeds containing Corteva’s biotechnology traits and the import of crops grown from those seeds, and non-compliance can harm Corteva’s sales and profitability.

Seed products incorporating biotechnology derived traits and crop protection products must be extensively tested for safety, efficacy and environmental impact before they can be registered for production, use, sale or commercialization in a given market. In certain jurisdictions, Corteva must periodically renew its approvals for both biotechnology and crop protection products, which typically require Corteva to demonstrate compliance with then-current standards which generally are more stringent since the prior registration. The regulatory approvals process is lengthy, costly, complex and in some markets unpredictable, with requirements that can vary by product, technology, industry and country. The regulatory approvals process for products that incorporate novel modes of action or new technologies can be particularly unpredictable and uncertain due to the then-current state of regulatory guidelines and objectives, as well as governmental policy considerations and non-governmental organization and other stakeholder considerations.

Furthermore, the detection of biotechnology traits or chemical residues from a crop protection product not approved in the country in which Corteva sells or cultivates its product, or in a country to which Corteva imports its product, may affect Corteva’s ability to supply its products or export its products, or even result in crop destruction, product recalls or trade disruption, which could result in lawsuits and termination of licenses related to biotechnology traits and raw material supply agreements. Delays in obtaining regulatory approvals to import, including those related to the importation of crops grown from seeds containing certain traits or treated with specific chemicals, may influence the rate of adoption of new products in globally traded crops.

Additionally, the regulatory environment may be impacted by the activities of non-governmental organizations and special interest groups and stakeholder reaction to actual or perceived impacts of new and existing technology, products or processes on safety, health and the environment. Obtaining and maintaining regulatory approvals requires submitting a significant amount of information and data, which may require participation from technology providers. Regulatory standards and trial procedures are continuously changing. In addition, Corteva has seen an increase in recent years in the number of lawsuits filed by those who identify themselves as public or environmental interest groups seeking to invalidate pesticide product registrations and/or challenge the way federal or state governmental entities apply the rules and regulations governing pesticide produce use. The pace of change together with the lack of regulatory harmony could result in unintended noncompliance. Responding to these changes and meeting existing and new requirements may involve significant costs or capital expenditures or require changes in business practice that could result in reduced profitability. The failure to receive necessary permits or approvals could have near- and long-term effects on Corteva’s ability to produce and sell some current and future products.

Enforcing Corteva’s intellectual property rights, or defending against intellectual property claims asserted by others, could adversely affect Corteva’s business,company's reported results of operations and financial condition.
Intellectual property rights, including patents, plant variety protection, trade secrets, confidential information, trademarks, tradenames and other forms of trade dress, are important to Corteva’s business. Corteva endeavors to protect its intellectual property rights in jurisdictions in which its products are producedDisruptions or used and in jurisdictions into which its products are imported. However, Corteva may be unable to obtain protection for its intellectual property in key jurisdictions. Further, changes in government policies and regulations, including changes made in reaction to pressure from non-governmental organizations, or the public generally, could impact the extent of intellectual property protection afforded by such jurisdictions.

Corteva has designed and implemented internal controls to restrict use of, access to and distribution of its intellectual property. Despite these precautions, Corteva’s intellectual property is vulnerable to infringement, misappropriation and other unauthorized access, including through employee or licensee error or actions, theft and cybersecurity incidents, and other security breaches. When unauthorized access and use or counterfeit products are discovered, Corteva reports such situations to governmental authorities for investigation, as appropriate, and takes measures to mitigate any potential impact. Protecting intellectual propertyuncertainties related to biotechnology is particularly challenging because theft is difficult to detect and biotechnology can be self-replicating.

Competitors are increasingly challenging intellectual property positions and the outcomes can be highly uncertain. Third parties may claim Corteva’s products violate their intellectual property rights. Defending such claims, even those without merit, could be time-consuming and expensive. In addition, any such claimCOVID-19 outbreak for a sustained period of time could result in Corteva’s havingdelays or modifications to enter into license agreements, develop non-infringing productsthe company's strategic plans and productivity initiatives.
Increased volatility and pricing in the capital and commercial paper markets may continue to impact, the company's access to preferred sources of liquidity resulting in higher borrowing costs. The company cannot assure investors that additional liquidity will be readily available or engage in litigation that could be costly. If challenges are resolved adversely,available on favorable terms.
Increased market volatility may bring unprecedented market conditions making it could negatively impact Corteva’s abilitydifficult for the company to obtain licenses on competitive terms, develop and commercialize new products and generate sales from existing products.adequately forecast customer demand.


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In addition, becausewhile Corteva experienced early demand for its products in the first quarter of 2020, the company is unable to predict how long this sustained demand will last or how significant it will be. Therefore, the impact of the rapid pace of technological change, the confidentiality of patent applications in some jurisdictions and/or the uncertainty in predicting the outcome of complex proceedings relating to ownershiprecent COVID-19 outbreak and the scope of patents relating to certain emerging technologies, competitors may be issued patents related to Corteva’s business unexpectedly. These patents could reduceunprecedented economic conditions resulting from it will have on the value of Corteva’s commercial or pipeline products or, to the extent they cover key technologies on which Corteva has relied, require Corteva to seek to obtain licenses (and Corteva cannot ensure it would be able to obtain such a license on acceptable terms) or cease using the technology, no matter how valuable to Corteva’s business.

Legislation and jurisprudence on patent protection is evolving and changes in laws could affect Corteva’s ability to obtain or maintain patent protection for, and otherwise enforce Corteva’s patents related to, its products.

Corteva’s business may be adversely affected by competition from manufacturers of generic products.
Competition from manufacturers of generic products is a challenge for Corteva’s branded products around the world, and the loss or expiration of intellectual property rights can have a significant adverse effect on Corteva’s revenues. The date at which generic competition commences may be different from the date that the patent or regulatory exclusivity expires. However, upon the loss or expiration of patent protection for one of Corteva’s products or of a product that Corteva licenses, or upon the “at-risk” launch (despite pending patent infringement litigation against the generic product) by a generic manufacturer of a generic version of one of Corteva’s patented products or of a product that Corteva licenses, Corteva can lose a major portion of revenues for that product, which can adversely affect Corteva’s business.

Corteva is dependent on its relationships or contracts with third parties with respect to certain of its raw materials or licenses and commercialization.
Corteva is dependent on third parties in the research, development and commercialization of its products and enters into transactions including, but not limited to, supply agreements and licensing agreements in connection with Corteva’s business. The majority of Corteva’s corn hybrids and soybean varieties sold to customers contain biotechnology traits that Corteva licenses from third parties under long-term licenses. If Corteva loses its rights under such licenses, it could negatively impact Corteva’s ability to obtain future licenses on competitive terms, commercialize new products and generate sales from existing products. To maintain such licenses, Corteva may elect to out-license its technology, including germplasm. There can be no guarantee that such out-licensing will not ultimately strengthen Corteva’s competition thereby adversely impacting Corteva’s results of operations.

While Corteva relies heavily on third parties for multiple aspects of its business and commercialization activities, Corteva does not control many aspects of such third parties’ activities. Third parties may not complete activities on schedule or in accordance with Corteva’s expectations. Failure by one or more of these third parties to meet their contractual or other obligations to Corteva or to comply with applicable laws or regulations, or any disruption in the relationship between Corteva and one or more of these third parties could delay or prevent the development, approval or commercialization of Corteva’s products and could also result in non-compliance or reputational harm, all with potential negative implications for Corteva’s business.

In addition, Corteva’s agreements with third parties may obligate it to meet certain contractual or other obligations to third parties. For example, Corteva may be obligated to meet certain thresholds or abide by certain boundary conditions. If Corteva were to fail to meet such obligations to the third parties, its relationship with such third parties may be disrupted. Such a disruption could negatively impact certain of Corteva’s licenses on which it depends, could cause reputational harm, and could negatively affect Corteva’s business,company's consolidated results of operations and financial condition.

The costs of complying with evolving regulatory requirementsis uncertain, but could still negatively impact Corteva’sthe company's business results of operations, and financial condition. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.
Corteva is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, waste water discharges, the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials and the use of genetically modified seeds and crop protection active ingredients by growers.

Environmental and health and safety laws, regulations and standards expose Corteva to the risk of substantial costs and liabilities, including liabilities associated with Corteva’s business and the discontinued and divested businesses and operations of Historical DuPont. As is typical for businesses like Corteva’s, soil and groundwater contamination has occurred in the past at certain sites and may be identified at other sites in the future. Disposal of waste from Corteva’s business at off-site locations also exposes it to potential remediation costs. Consistent with past practice, Corteva is continuing to monitor, investigate and remediate soil and groundwater contamination at several of these sites.


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Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt Corteva’s operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities, which may be materially higher than Corteva’s accruals.

The degree of public understanding and acceptance or perceived public acceptance of Corteva’s biotechnology and other agricultural products and technologies can affect Corteva’s salesperformance and results of operations in the future.
Reduction in ethanol demand driven by affecting planting approvals, regulatory requirementsdeclines in crude oil and customer purchase decisions.
Concerns and claims regarding the safe use of seeds with biotechnology traits and crop protection products in general, their potential impact on health and the environment, and the perceived impacts of biotechnology on health and the environment, reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These include concerns and claims that increased use of crop protection products, drift, inversion, volatilization and the use of biotechnology traits meant to reduce the resistance of weeds or pests to control by crop protection products, could increase or accelerate such resistance and otherwisegasoline consumption may negatively impact health anddemand for corn, which would negatively impact the environment. These and other concerns could manifest themselves in stockholder proposals, preferred purchasing, delays or failures in obtaining or retaining regulatory approvals, delayed product launches, lack of market acceptance, product discontinuation, continued pressure for and adoption of more stringent regulatory intervention and litigation, termination of raw material supply agreements and legal claims. These and other concerns could also influence public perceptions, the viability or continued sales of certain of Corteva’s products, Corteva’s reputation and the cost to comply with regulations. As a result, such concerns could adversely affect Corteva’scompany's business, results of operations, financial condition and cash flows.

Changes in agricultural and related policies of governments and international organizations may prove unfavorable.
In many markets there are various pressures to reduce government subsidies to farmers, which may inhibit the growth in these markets of products used in agriculture. In addition, government programs that create incentives for farmers (for example, the U.S. Renewable Fuel Standard) may be modified or discontinued. However, it is difficult to predict accurately whether, and if so when, such changes will occur. Corteva expects that the policies of governments and international organizations will continue to affect the planting choices made by growers as well as the income available to growers to purchase products used in agriculture and, accordingly, the operating results of the agriculture industry.

Corteva’s business, results of operations and financial condition could be adversely affected by disruptions to its supply chain, information technology or network systems.
Business and/or supply chain disruptions, plant and/or power outages and information technology system and/or network disruptions, regardless of cause including acts of sabotage, employee error or other actions, geo-political activity, weather events and natural disasters could seriously harm Corteva’s operations as well as the operations of its customers and suppliers. For example, a pandemic in locations where Corteva has significant operations or sales could have a material adverse effect on Corteva’s results of operations. In addition, terrorist attacks and natural disasters have increased stakeholder concerns about the security and safety of chemical production and distribution.

Business and/or supply chain disruptions may also be caused by security breaches, which could include, for example, attacks on information technology and infrastructure by hackers, viruses, breaches due to employee error or actions or other disruptions. Corteva and/or its suppliers may fail to effectively prevent, detect and recover from these or other security breaches and, as a consequence, such breaches could result in misuse of Corteva’s assets, business disruptions, loss of property including trade secrets and confidential business information, legal claims or proceedings, reporting errors, processing inefficiencies, negative media attention, loss of sales and interference with regulatory compliance.

Like most major corporations, Corteva is the target of industrial espionage, including cyber-attacks, from time to time. Corteva has determined that these attacks have resulted, and could result in the future, in unauthorized parties gaining access to at least certain confidential business information. However, to date, Corteva has not experienced any material financial impact, changes in the competitive environment or impact on business operations that Corteva attributes to these attacks. Although management does not believe that Corteva has experienced any material losses to date related to security breaches, including cybersecurity incidents, there can be no assurance that Corteva will not suffer such losses in the future.

Corteva actively manages the risks within its control that could lead to business disruptions and security breaches. As these threats continue to evolve, particularly around cybersecurity, Corteva may be required to expend significant resources to enhance its control environment, processes, practices and other protective measures. Despite these efforts, such events could have a material adverse effect on Corteva’s business, financial condition or results of operations.


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TableDuring 2020 global and U.S. crude oil price benchmarks suffered record declines in demand resulting from the COVID-19 pandemic stay-at-home orders and over-supply due to price disputes between Russia and Saudi Arabia. Approximately one-third of Contents


Corteva’s salesU.S. corn is used in the production of ethanol for gasoline and U.S. ethanol producers have shut down their facilities and declared “force majeure” on shipments for corn purchases due to its customers may be adversely affected should a company successfully establish an intermediary platform fordepressed demand, and the sale of Corteva’s products or otherwise position itself between Corteva and its customers.
Corteva expects its distribution model will service customers primarily through the DuPont Pioneer direct sales channel in key agricultural geographies, including the United States. In addition, Corteva expectsability to supplement this approachsubstitute with strong retail channels, including distributors, agricultural cooperatives and dealers, and with digital solutions that assist farmer decision-making with a view to optimize their product selection and maximize their yield and profitability. While Corteva expects the indirect channels and its digital platform will extend its reach and increase exposure of its products to other potential customers, including smaller farmers or farmers in less concentrated areas, there can be no assurance that Corteva will be successful in this regard. If a competitor were to successfully establish an intermediary platform for distribution of Corteva’s products, especiallyexpensive crude oil. Similar trends with respect to Corteva’s digital platform, it may disrupt Corteva’s distribution model and inhibit Corteva’s ability to provide a complete go-to-market strategy covering the direct, dealer and retail channels. In such a circumstance, Corteva’s sales may be adversely affected.

Volatility in Corteva’s input costs, which include raw materials and production costs, could have a significant impact on Corteva’s business, results of operations and financial condition.
Corteva’s input costsbio-fuels, like ethanol, are variable based on the costs associated with production or with raw materials Corteva uses. For example, Corteva’s production costs vary, especially on a seasonal basis where changes in weather influence supply and demand. In addition, Corteva’s manufacturing processes consume significant amounts of raw materials, the costs of which are subject to worldwide supply and demand as well as other factors beyond Corteva’s control. Corteva refers to these costs collectively as input costs. Significant variations in input costs affect Corteva’s operating results from period to period.

When possible, Corteva purchases raw materials through negotiated long-term contracts to minimize the impact of price fluctuations. Corteva also enters into over-the-counter and exchange traded derivative commodity instruments to hedge its exposure to price fluctuations on certain raw material purchases. In addition, Corteva takes actions to offset the effects of higher input costs through selling price increases, productivity improvements and cost reduction programs. Success in offsetting higher raw material costs with price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the market served. If Corteva is not able to fully offset the effects of higher input costs, it could have a significant impact on its financial results.

Corteva may be unable to achieve all the benefits that it expects to achieve from the Internal Reorganization. Combining the agriculture businesses of Historical DuPont and Historical Dow may be more difficult, costly or time-consuming than expected, which may adversely affect Corteva’s results and negatively affect the value of Corteva common stock.
Since the Merger, Corteva has benefitted from and expects to continue to benefit from significant cost synergies through the DowDuPont Cost Synergy Program (the “Synergy Program”) which is designed to integrate and optimize the organization in preparation for the separation of DowDuPont’s materials science business through the separation and distribution of Dow (which occurred on April 1, 2019) and the intended separation of DowDuPont’s agriculture business through Corteva’s separation and distribution. This integration and optimization is designed to be achieved through production cost efficiencies, enhancement of the agricultural supply chain, elimination of duplicative agricultural research and development programs, optimization of Corteva’s global footprint across manufacturing, sales and research and development, the reduction of corporate and leveraged services costs, and the realization of significant procurement synergies. In addition, Corteva’s management also expects Corteva will achieve growth synergies and other meaningful savings and benefits as a result of Corteva’s separation and distribution.

Combining Historical DuPont and Historical Dow’s independent agriculture businesses and preparing for Corteva’s separation and distribution are complex, costly and time-consuming processes and management may face significant challenges in implementing or realizing the currently expected synergies from Corteva’s separation and distribution, many of which may be beyond the control of management, including, without limitation:

difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects;
the possibility of faulty assumptions underlying expectations regarding the integration or separation process, including with respect to the intended tax efficient transactions;
unanticipated issues in integrating, replicating or separating information technology, communications programs, financial procedures and operations, and other systems, procedures and policies;
addressing differences in business culture and retaining key personnel;
unanticipated changes in applicable laws and regulations;
managing tax costs or inefficiencies associated with integrating the operations of the combined agriculture company and the intended tax efficient separation transactions;
coordinating geographically separate organizations;
failing to successfully optimize Corteva’s facilities footprint;
failing to take advantage of Corteva’s global supply chain;
failing to identify and eliminate duplicative programs; and

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failing to otherwise integrate Historical DuPont’s or Historical Dow’s respective agriculture businesses, including their technology platforms.

Some of these factors will be outside of Corteva’s control and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreasesoccurring globally. A decline in the amount of expected revenue which could materiallydemand for corn would negatively impact Corteva’sour business, financial condition, and results of operations.

If the anticipated benefits and cost savings from the Synergy Program are not realized fully or take longer to realize than expected, the valueItem 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Corteva’s common stock, revenues, levels of expenses and results of operations may be affected adversely. There can be no assurance that Corteva, as an independent, separate public company, will be able to sustain any or all the cost savings generated from actions under the Synergy Program.Equity Securities

Corteva’s liquidity, business, results of operations and financial condition could be impaired if it is unable to raise capital through the capital markets or short-term debt borrowings.
Any limitation on Corteva’s ability to raise money in the capital markets or through short-term debt borrowings could have a substantial negative effect on Corteva’s liquidity. Corteva’s ability to affordably access the capital markets and/or borrow short-term debt in amounts adequate to finance its activities could be impaired as a result of a variety of factors, including factors that are not specific to Corteva, such as a severe disruption of the financial markets and, in the case of debt securities or borrowings, interest rate fluctuations. Due to the seasonality of Corteva’s business and the credit programs Corteva may offer its customers, net working capital investment and corresponding debt levels will fluctuate over the course of the year.

Corteva regularly extends credit to its customers to enable them to purchase seeds or crop protection products at the beginning of the growing season. The customer receivables may be used as collateral for short-term financing programs. Any material adverse effect upon Corteva’s ability to own or sell such customer receivables, including seasonal factors that may impact the amount of customer receivables Corteva owns, may materially impact Corteva’s access to capital.

Corteva has additional agreements with financial institutions to establish programs that provide financing for select customers of Corteva’s seed and crop protection products in the United States, Latin America, Europe and Asia. The programs are renewed on an annual basis. In most cases, Historical DuPont or the agriculture business of Historical Dow guarantees the extension of such credit to such customers. If Corteva is unable to renew these agreements or access the debt markets to support customer financing Corteva’s sales may be negatively impacted, which could result in increased borrowing needs to fund working capital.

Corteva’s earnings, operations and business, among other things, will impact its credit ratings, costs and availability of financing. A decrease in the ratings assigned to Corteva by the ratings agencies may negatively impact Corteva’s access to the debt capital markets and increase Corteva’s cost of borrowing and the financing of its seasonal working capital.

There can be no assurance that Corteva will maintain its current or prospective credit ratings. Any actual or anticipated changes or downgrades in such credit ratings may have a negative impact on Corteva’s liquidity, capital position or access to capital markets.

Corteva’s customers may be unable to pay their debts to Corteva.
Corteva offers its customers financing programs with credit terms generally less than one year from invoicing in alignment with the growing season. Due to these credit practices as well as the seasonality of Corteva’s operations, Corteva may need to issue short-term debt at certain times of the year to fund its cash flow requirements. Corteva’s customers may be exposed to a variety of conditions that could adversely affect their ability to pay their debts. For example, customers in economies experiencing an economic downturn or in a region experiencing adverse growing conditions may be unable to repay their obligations to Corteva, which could adversely affect Corteva’s results.

Increases in pension and other post-employment benefit plan funding obligations may impair Corteva’s liquidity or financial condition.
Through Corteva’s ownership of EID and other members of Historical DuPont, Corteva maintains certain Historical DuPont defined benefit pension and other post-employment benefit plans. For some of these plans, including Historical DuPont’s principal U.S. pension plan, Corteva will continue as sponsor for the entire plan regardless of whether participants, including retirees, are or were associated with Historical DuPont’s agriculture business. Corteva uses many assumptions in calculating its expected future payment obligations under these plans. Significant adverse changes in credit or market conditions could result in actual rates of returns on pension investments being lower than assumed. In addition, expected future payment obligations may be adversely impacted by changes in assumptions regarding participants, including retirees. Corteva may be required to make significant contributions to its pension plans in the future, which could adversely affect Corteva’s results of operations, liquidity and financial condition.


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Corteva’s business, results of operations and financial condition could be adversely affected by environmental, litigation and other commitments and contingencies.
As a result of Corteva’s operations, including past operations and those related to divested businesses and discontinued operations of Historical DuPont, Corteva incurs environmental operating costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring and obtaining permits. Corteva also incurs environmental operating costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials. In addition, Corteva maintains and periodically reviews and adjusts its accruals for probable environmental remediation and restoration costs.

Corteva expects to continue to incur environmental operating costs since it will operate global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations. These rules are subject to change by the implementing governmental agency, which Corteva monitors closely. Corteva’s policy will require that its operations fully meet or exceed legal and regulatory requirements. In addition, Corteva expects to continue certain voluntary programs, and could consider additional voluntary actions, to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy use and reduce the generation of persistent, bioaccumulative and toxic materials. Costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, are significant and Corteva expects these costs will continue to be significant for the foreseeable future. Over the long term, such expenditures are subject to considerable uncertainty and could fluctuate significantly.

Corteva accrues for environmental matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. As remediation activities vary substantially in duration and cost from site to site, it is difficult to develop precise estimates of future site remediation costs. Corteva expects to base such estimates on several factors, including the complexity of the geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (“PRPs”) at multi-party sites and the number of, and financial viability of, other PRPs. Considerable uncertainty existsfollowing table summarizes information with respect to environmental remediation costs and, under adverse changes in circumstances, the potential liability may be materially higher than Corteva’s accruals.

Corteva faces risks arising from various unasserted and asserted litigation matters arising out of the normal coursecompany's purchase of its current and former business operations, including intellectual property, commercial, product liability, environmental and antitrust lawsuits. Corteva has noted a trend in public and private suits being filed on behalf of states, counties, cities and utilities alleging harm tocommon stock during the general public and the environment, including waterways and watersheds. Claims alleging harm to the public and the environment may be brought against us, notwithstanding years of scientific evidence and regulatory determinations supporting the safety of crop protection products. The litigation involving Monsanto’s Roundup® non-selective glyphosate containing weedkiller products has resulted in negative publicity and sentiment and may lead to similar suits with respect to glyphosate-containing products and/or other established crop protection products. Claims and allegations that Corteva’s products or products that Corteva manufactures or markets on behalf of third parties are not safe could result in litigation, damage to Corteva’s reputation and have a material adverse effect on Corteva’s business. It is not possible to predict the outcome of these various proceedings. An adverse outcome in any one or more of these matters could be material to Corteva’s financial results. Various factors or developments can lead to changes in current estimates of liabilities. Such factors and developments may include, but are not limited to, additional data, safety or risk assessments, as well as a final adverse judgment, significant settlement or changes in applicable law. A future adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on Corteva.

In the ordinary course of business, Corteva may make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third party obligations. If Corteva were required to make payments as a result, they could exceed the amounts accrued, thereby adversely affecting Corteva’s results of operations.




three months ended March 31, 2020:
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MonthTotal Number of Shares Purchased
Average Price
Paid per Share
Total Number of
Shares Purchased as Part of the Company's Publicly Announced Share Buyback Program1
Approximate Value
of Shares that May
Yet Be Purchased
Under the Programs(1) (Dollars in millions)
February 2020320,477
$31.22
320,477
 
March 20202
1,544,335
$25.90
1,544,335
 
Total1,864,812
 1,864,812
$925
1.
On June 26, 2019, Corteva, Inc. announced that its Board of Directors authorized a $1 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date. The timing, price and volume of purchases will be based on market conditions, relevant securities laws and other factors.
2.
The last purchase was completed on March 10, 2020.
Corteva’s operations outside the United States are subject to risks and restrictions, which could negatively affect Corteva’s business, results of operations and financial condition.
Corteva’s operations outside the United States are subject to risks and restrictions, including fluctuations in foreign-currency exchange rates; exchange control regulations; changes in local political or economic conditions; import and trade restrictions; import or export licensing requirements and trade policy; and other potentially detrimental domestic and foreign governmental practices or policies affecting U.S. companies doing business abroad. Although Corteva has operations throughout the world, Corteva pro forma sales outside the United States in 2018 were principally to customers in Eurozone countries, Brazil and Canada. Further, Corteva’s largest currency exposures are the European euro and the Brazilian real. Market uncertainty or an economic downturn in these geographic areas could reduce demand for Corteva’s products and result in decreased sales volume, which could have a negative impact on Corteva’s results of operations. In addition, changes in exchange rates may affect Corteva’s results of operations, financial condition and cash flows in future periods. Corteva actively manages currency exposures that are associated with net monetary asset positions, committed currency purchases and sales, foreign currency-denominated revenues and other assets and liabilities created in the normal course of business.

Additionally, Corteva’s ability to export its products and its sales outside the United States may be adversely affected by significant changes in trade, tax or other policies, including the risk that other countries may retaliate through the imposition of their own trade restrictions and/or increased tariffs in response to substantial changes to U.S. trade and tax policies.

Climate change and unpredictable seasonal and weather factors could impact Corteva’s sales and earnings.
The agriculture industry is subject to seasonal and weather factors, which can vary unpredictably from period to period. Weather factors can affect the presence of disease and pests on a regional basis and, accordingly, can positively or adversely affect the demand for crop protection products, including the mix of products used. The weather also can affect the quality, volume and cost of seed produced for sale as well as demand and product mix. Seed yields can be higher or lower than planned, which could lead to higher inventory and related write-offs. Climate change may increase the frequency or intensity of extreme weather such as storms, floods, heat waves, droughts and other events that could affect the quality, volume and cost of seed produced for sale as well as demand and product mix. Climate change may also affect the availability and suitability of arable land and contribute to unpredictable shifts in the average growing season and types of crops produced.

Corteva’s business may be adversely affected by the availability of counterfeit products.
A counterfeit product is one that has been deliberately and fraudulently mislabeled as to its identity and source. A counterfeit Corteva product, therefore, is one manufactured by someone other than Corteva, but which appears to be the same as an authentic Corteva product. The prevalence of counterfeit products is a significant and growing industry-wide issue due to a variety of factors, including, but not limited to, the following: the widespread use of the Internet, which has greatly facilitated the ease by which counterfeit products can be advertised, purchased and delivered to individual consumers; the availability of sophisticated technology that makes it easier for counterfeiters to make counterfeit products; and the relatively modest risk of penalties faced by counterfeiters compared to the large profits that can be earned by them from the sale of counterfeit products. Further, laws against counterfeiting vary greatly from country to country, and the enforcement of existing laws varies greatly from jurisdiction to jurisdiction. For example, in some countries, counterfeiting is not a crime; in others, it may result in only minimal sanctions. In addition, those involved in the distribution of counterfeit products use complex transport routes to evade customs controls by disguising the true source of their products.

Corteva’s global reputation makes its products prime targets for counterfeiting organizations. Counterfeit products pose a risk to consumer health and safety because of the conditions under which they are manufactured (often in unregulated, unlicensed, uninspected and unsanitary sites) as well as the lack of regulation of their contents. Failure to mitigate the threat of counterfeit products, which is exacerbated by the complexity of the supply chain, could adversely impact Corteva’s business by, among other things, causing the loss of consumer confidence in Corteva’s name and in the integrity of its products, potentially resulting in lost sales and an increased threat of litigation.

Corteva undertakes significant efforts to counteract the threats associated with counterfeit products, including, among other things, working with regulatory authorities and multinational coalitions to combat the counterfeiting of products and supporting efforts by law enforcement authorities to prosecute counterfeiters; assessing new and existing technologies to seek to make it more difficult for counterfeiters to copy Corteva’s products and easier for consumers to distinguish authentic from counterfeit products; working diligently to raise public awareness about the dangers of counterfeit products; working collaboratively with wholesalers, customs offices and law enforcement agencies to increase inspection coverage, monitor distribution channels and improve surveillance of distributors; and working with other members of an international trade association of agrochemical companies to promote initiatives to combat counterfeiting activity. No assurance can be given, however, that Corteva’s efforts and the efforts of others will be entirely successful, and the presence of counterfeit products may continue to increase.


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Failure to effectively manage acquisitions, divestitures, alliances and other portfolio actions could adversely impact Corteva’s future results.
From time to time Corteva evaluates acquisition candidates that may strategically fit Corteva’s business and/or growth objectives. If Corteva is unable to successfully integrate and develop acquired businesses, Corteva could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on Corteva’s financial results. Corteva continually reviews its portfolio of assets for contributions to its objectives and alignment with its growth strategy. However, Corteva may not be successful in separating underperforming or non-strategic assets and gains or losses on the divestiture of, or lost operating income from, such assets may affect Corteva’s earnings. Moreover, Corteva might incur asset impairment charges related to acquisitions or divestitures that reduce its earnings. In addition, if the execution or implementation of acquisitions, divestitures, alliances, joint ventures and other portfolio actions is not successful, it could adversely impact Corteva’s financial condition, cash flows and results of operations.

An impairment of goodwill or intangible assets could require Corteva to record a significant non-cash charge and negatively impact Corteva’s financial results.
Corteva assesses both goodwill and indefinite-lived intangible assets for impairment on an annual basis, or more frequently if conditions indicate that an impairment may have occurred. An impairment is recorded when the carrying value of a reporting unit exceeds its fair value. As a result of the Merger, the carrying value of Historical DuPont net assets was adjusted from historical cost to fair value, therefore increasing the risk of impairments. Future impairments of goodwill or intangible assets could be recorded as a non-cash charge in results of operations due to changes in assumption, estimates or circumstances and there can be no assurance that such impairments would be immaterial to Corteva.


For Corteva's Risks Related to the Separation and Corteva's Common Stock, refer to Corteva's information statement filed as Exhibit 99.1 to Amendment No. 4 to the Registration Statement on Form 10 (File No. 001-38710) filed by Corteva with the Securities and Exchange Commission on May 6, 2019.






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Item 5.OTHER INFORMATION


In anticipation of and to facilitateOn June 1, 2019, Corteva, Inc. became an independent, publicly traded company through the Intended Business Separations post the merger with Historical Dow, Historical DuPont is planning for the internalpreviously announced separation (the “Separation”) of the three businesses, both domestically and internationally,agriculture business of DowDuPont Inc. (“DowDuPont”).  The separation was effectuated through a seriespro rata distribution of transactions that are intendedall of the then-issued and outstanding shares of common stock, par value $0.01 per share, of Corteva, Inc., which was then a wholly-owned subsidiary of DowDuPont, to be tax-efficient from both a United States and foreign perspective (collectively,holders of record of DowDuPont common stock as of the "DuPont Internal Separations"). See Note 1 to the interim Consolidated Financial Statements for more information regarding the Merger and the Intended Business Separations.close of business on May 24, 2019.  The DuPont Internal Separations are currently expected to consist of two phases: (i) a series of internal transactions undertaken by Historical DuPont to separate the businesses underneath Historical DuPont including multiple distributionsSeparation is intended to qualify as a tax-free spinoffs for United States tax purposes under Section 355 of the Internal Revenue Code, followed by (ii) internal distributions by Historical DuPont, as a subsidiary of DowDuPont, to DowDuPont of entities owning collectively the businesses to be owned by the two intended independent companies as opposed to Historical DuPont, which distributions are intended to qualify as tax-free spinoffs for United States tax purposes under Section 355 of the Internal Revenue Code. As part of the DuPont Internal Separations, through transactions that include distributions intended to qualify as tax-free spinoffs for United States tax purposes under Section 355 of the Internal Revenue Code, Historical DuPont also currently expects to separate more fully the internal legal structure of specialty products into electronics and imaging, industrial biosciences, nutrition and health, safety and construction, and transportation and advanced polymers so that each is owned by a separate intermediate corporation owned, in turn, by DowDuPont.

The DuPont Internal Separations are expected to occur in the United States and in (or involving entities domiciled in) various jurisdictions, including (but not limited to) Australia, Brazil, Canada, China, Colombia, France, Hong Kong, India, Japan, Korea, Luxembourg, Mexico, Netherlands, Russia, Singapore, Spain, Switzerland, Taiwan, Thailand, and Turkey. Following the completion of the DuPont Internal Separations, Historical DuPont expects that DowDuPont will effectuate the Intended Business Separations, pending DowDuPont Board approval, by means of distributions to its public shareholders of the capital stock of two entities each owning businesses currently owned by Historical DuPont, in distributions intended to qualify as tax-free spinoffsspinoff for United States tax purposes under Section 355 of the Internal Revenue Code.


Previously, DowDuPont was formed on December 9, 2015, to effect an all-stock merger of equals strategic combination between The Dow Chemical Company ("Historical DuPontDow") and EID. On August 31, 2017 at 11:59 pm ET, Historical Dow and Historical EID each merged with wholly-owned subsidiaries or their successors, that are anticipated to be distributing corporations in the DuPont Internal Separations (each in one or more tax-free spinoffs for United States tax purposes under Section 355 of the Internal Revenue Code) include the following: New Asia Holdco B.V.; DuPont China Holding Company Limited; DuPont China, Ltd.; SP International Holding 4 BV; DuPont de Nemours (France) S.A.S.; E.I. DuPont India Private Limited; DuPont Kabushiki Kaisha; DuPont Specialty Products KK; DuPont - Toray Company, Ltd; Du Pont Company (Singapore) Pte Ltd; DuPont Taiwan Ltd; DuPont International BV; DuPont Textiles & Interiors Delaware, Ltd; DuPont (Thailand) Co, Ltd; DuPont do Brasil S.A.; DuPont Holdco Spain III SL; DuPont de Colombia, S.A ; DuPont Mexicana, S de RL de CV; DuPont Corporaciones S de RL de CV; DuPont Latin America, Inc; DuPont ScienceDowDuPont and Technologies LLC; DuPont Asturias, S.L.; DuPont de Nemours International S.a.r.l; DuPont Technology (Luxembourg) S.a.r.l; DPC (Luxembourg) S.a.r.l; DuPont Contern (Luxembourg) S.a.r.l; DuPont Acquisition (Luxembourg) S.a.r.l; DuPont Holding Netherlands BV; DuPont C.H. (f/k/a DuPont Korea Y.H)became subsidiaries of DowDuPont (the “Merger”).; SP Korea, LLC; DuPont Operations Inc; E&C EMEA Holding 2 BV; E&C International Holding; E&C EMEA Holding BV; SP EMEA Holding 8 BV;DuPont Chemical and Energy Operations, Inc; Danisco Holding USA Inc; E. I. du Pont de Nemours and Company; PM Diamond, Inc; 1811324 Ontario Limited, Hickory Holdings, Inc.; DuPont Asia Pacific, Inc., and Pioneer Hi-Bred International, Inc.


Item 6.EXHIBITS


Exhibits: The list of exhibits in the Exhibit Index to this report is incorporated herein by reference.


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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Corteva, Inc.
(Registrant)
Date:May 31, 2019
By:/s/ Gregory R. Friedman
Gregory R. Friedman
Executive Vice President and
Chief Financial Officer
(As Duly Authorized Officer and
Principal Financial Officer)


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EXHIBIT INDEX
Exhibit
Number
 Description
   
 Separation and Distribution Agreement by and among DowDuPontDuPont Inc., Dow Inc. and Corteva, Inc. (incorporated by reference to Exhibit No. 2.1 to Amendment 3 to Corteva’s Registration Statement on Form 10, filed on April 16, 2019).
   
 Form of Amended and Restated Certificate of Incorporation of Corteva, Inc. (incorporated by reference to Exhibit No. 3.1 to Corteva’s Registration StatementCurrent Report on Form 10,8-K (Commission file number 001-38710), filed on May 6, 2019).June 3, 2019.
   
 Form of Amended and Restated Bylaws of Corteva, Inc. (incorporated by reference to Exhibit No. 3.1 to Corteva’s Current Report on Form 8-K (Commission file number 001-38710), filed on October 10, 2019.
Amended and Restated Certificate of Incorporation of E.I. du Pont de Nemours and Company (incorporated by reference to Exhibit 3.1 to E.I. du Pont de Nemours and Company’s Current Report on Form 8-K (Commission file number 1-815) dated September 1, 2017).
Amended and Restated Bylaws of E.I. du Pont de Nemours and Company (incorporated by reference to Exhibit 3.2 to Corteva’s Registration StatementE.I. du Pont de Nemours and Company's Current Report on Form 10, filed on May 6, 2019)8-K (Commission file number 1-815) dated September 1, 2017).
   
4 Corteva agrees to provide the Commission, on request, copies of instruments defining the rights of holders of long-term debt of Corteva and its subsidiaries.
   
 Tax MattersMaster Repurchase Agreement by and among DowDuPontCooperatieve Rabobank, U.A. (New York Branch), MUFG Bank, Ltd. (New York Branch), Standard Chartered Bank (New York Branch), and PHI Financial Services, Inc., Corteva, Inc. and Dow Inc. (incorporated by reference to Exhibit No. 10.1to Amendment 3 to Corteva’s Registration Statement on Form 10, filed on April 16, 2019). dated as of February 11, 2020.
   
 Employee MattersMaster Framework Agreement by and among DowDuPontCooperatieve Rabobank, U.A. (New York Branch), MUFG Bank, Ltd. (New York Branch), Standard Chartered Bank (New York Branch), and PHI Financial Services, Inc., Corteva, Inc. and Dow Inc. (incorporated by reference to Exhibit No. 10.2 to Amendment 3 to Corteva’s Registration Statement on Form 10, filed on April 16, 2019). dated as of February 11, 2020.
   
 Form of Intellectual Property Cross-License Agreement by and betweenAward Terms for Options granted under the Corteva, Inc. and DowDuPont Inc. (incorporated by reference to Exhibit No. 10.3 to Corteva’s Registration Statement on Form 10, filed on May 6, 2019).2019 Omnibus Incentive Plan for U.S. grantees.
   
 Intellectual Property Cross-License Agreement by and betweenForm of Award Terms for Performance Stock Units granted under the Corteva, Inc. and Dow Inc. (incorporated by reference to Exhibit No. 10.4 to Amendment 3 to Corteva’s Registration Statement on Form 10, filed on April 16, 2019).2019 Omnibus Incentive Plan for U.S. grantees.
   
 Form of Award Terms for Restricted Stock Units granted under the Corteva, Inc. 2019 Omnibus Incentive Plan. (incorporated by reference to Exhibit No. 10.5 to Corteva’s Registration Statement on Form 10, filed on May 6, 2019).Plan for U.S. grantees.
   
Fondation de Prevoyance en Faveur du Personnel de DuPont de Nemours International SÁRL. (incorporated by reference to Exhibit No. 10.6 to Corteva’s Registration Statement on Form 10, filed on May 6, 2019).
Separation Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by reference to Exhibit 2.1 to E. I. du Pont de Nemours and Company's Current Report on Form 8-K (Commission file number 1-815) dated July 8, 2015).
Amendment No. 1 to Separation Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company, dated August 24, 2017 (incorporated by reference to Exhibit 2.1 to E. I. du Pont de Nemours and Company's Current Report on Form 8-K (Commission file number 1-815) dated August 25, 2017).
Tax Matters Agreement by and between E. I. du Pont de Nemours and Company and The Chemours Company (incorporated by reference to Exhibit 2.2 to E. I. du Pont de Nemours and Company's Current Report on Form 8-K (Commission file number 1-815) dated July 8, 2015).
Transaction Agreement, dated as of March 31, 2017, by and between E. I. du Pont de Nemours and Company and FMC Corporation (incorporated by reference to Exhibit 10.25 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2017).
The E. I. du Pont de Nemours and Company Management Deferred Compensation Plan, incorporated by reference to Exhibit 4.3 to DowDuPont Inc. Registration Statement on Form S-8 filed September 1, 2017.
The E. I. du Pont de Nemours and Company Stock Accumulation and Deferred Compensation Plan for Directors, incorporated by reference to Exhibit 4.4 to DowDuPont Inc. Registration Statement on Form S-8 filed September 1, 2017.
DuPont’s Pension Restoration Plan, as last amended effective June 29, 2015 (incorporated by reference to Exhibit 10.3 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2015).
DuPont’s Rules for Lump Sum Payments, as last amended effective May 15, 2014 (incorporated by reference to Exhibit 10.4 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2015).
DuPont’s Retirement Savings Restoration Plan, as last amended effective May 15, 2014. (incorporated by reference to Exhibit 10.08 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended June 30, 2014).
DuPont’s Retirement Income Plan for Directors, as last amended January 2011 (incorporated by reference to Exhibit 10.9 to E. I. du Pont de Nemours and Company’s Quarterly Report on Form 10-Q (Commission file number 1-815) for the period ended March 31, 2012).

59

Table of Contents


DuPont's Senior Executive Severance Plan, as amended and restated effective December 10, 2015 (incorporated by reference to Exhibit 10.10 to E. I. du Pont de Nemours and Company’s Annual Report on Form 10-K (Commission file number 1-815) for the year ended December 31, 2015).
 Rule 13a-14(a)/15d-14(a) Certification of Corteva’sthe company’s and EID’s Principal Executive Officer.
   
 Rule 13a-14(a)/15d-14(a) Certification of Corteva’sthe company’s and EID’s Principal Financial Officer.
   
 Section 1350 Certification of Corteva’sthe company’s and EID’s Principal Executive Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
   
 Section 1350 Certification of Corteva’sthe company’s and EID’s Principal Financial Officer. The information contained in this Exhibit shall not be deemed filed with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by the registrant under the Securities Act of 1933, as amended.
   
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
   
101.SCH Inline XBRL Taxonomy Extension Schema Document
   
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
   
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
   
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
   
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File – The Cover Page XBRL tags are embedded within the Inline XBRL document (included in Exhibit 101.INS)

SIGNATURE

Corteva, Inc.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
*Management contract or compensatory plan or arrangement.
**Upon request of the U.S. Securities and Exchange Commission, (the “SEC”), Corteva hereby undertakes to furnish supplementally a copy of any omitted schedule or exhibit to such agreement; provided, however, that Corteva may omit confidential information pursuant to Item 601(b)(10) or request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any schedule or exhibit so furnished.CORTEVA, INC.
(Registrant)
Date:May 7, 2020
By:/s/ Brian Titus
Brian Titus
Vice President, Controller
(Principal Accounting Officer)

E. I. du Pont de Nemours and Company

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
E. I. du Pont de Nemours and Company
(Registrant)
Date:May 7, 2020
By:/s/ Brian Titus
Brian Titus
Vice President, Controller
(Principal Accounting Officer)




CONSOLIDATED FINANCIAL STATEMENTS OF E. I. DU PONT DE NEMOURS AND COMPANY

E. I. du Pont de Nemours and Company
Consolidated Statements of Operations (Unaudited)
 Three Months Ended
March 31,
(In millions, except per share amounts)20202019
Net sales$3,956
$3,396
Cost of goods sold2,269
2,211
Research and development expense280
299
Selling, general and administrative expenses757
735
Amortization of intangibles163
101
Restructuring and asset related charges - net70
61
Integration and separation costs
212
Other income - net1
31
Interest expense42
59
Income (loss) from continuing operations before income taxes376
(251)
Provision for (benefit from) income taxes on continuing operations119
(67)
Income (loss) from continuing operations after income taxes257
(184)
Income from discontinued operations after income taxes1
360
Net income258
176
Net income attributable to noncontrolling interests8
10
Net income attributable to E. I. du Pont de Nemours and Company$250
$166

See Notes to the Consolidated Financial Statements beginning on page 69.



E. I. du Pont de Nemours and Company
60Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
 Three Months Ended
March 31,
(In millions)20202019
Net income$258
$176
Other comprehensive loss - net of tax:



Cumulative translation adjustments(672)(72)
Adjustments to pension benefit plans
(3)
Adjustments to other benefit plans3

Derivative instruments6
1
Total other comprehensive loss(663)(74)
Comprehensive (loss) income(405)102
Comprehensive income attributable to noncontrolling interests - net of tax8
10
Comprehensive (loss) income attributable to E. I. du Pont de Nemours and Company$(413)$92

See Notes to the Consolidated Financial Statements beginning on page 69.


E. I. du Pont de Nemours and Company
Condensed Consolidated Balance Sheets (Unaudited)
(In millions, except share amounts)March 31, 2020December 31, 2019March 31, 2019
Assets 
 
 
Current assets 
 
 
Cash and cash equivalents$1,963
$1,764
$1,759
Marketable securities10
5
5
Accounts and notes receivable - net6,775
5,528
6,507
Inventories4,401
5,032
5,019
Other current assets1,530
1,190
1,318
Assets of discontinued operations - current

9,453
Total current assets14,679
13,519
24,061
Investment in nonconsolidated affiliates64
66
77
Property, plant and equipment - net of accumulated depreciation (March 31, 2020 - $3,406; December 31, 2019 - $3,326; March 31, 2019 - $2,970)4,358
4,546
4,521
Goodwill10,027
10,229
10,203
Other intangible assets11,241
11,424
11,961
Deferred income taxes273
287
294
Other assets2,336
2,326
2,368
Assets of discontinued operations - non-current

56,617
Total Assets$42,978
$42,397
$110,102
Liabilities and Equity 
 
 
Current liabilities 
 
 
Short-term borrowings and finance lease obligations$1,996
$7
$3,201
Accounts payable3,021
3,702
3,120
Income taxes payable143
95
195
Accrued and other current liabilities4,079
4,440
4,061
Liabilities of discontinued operations - current

3,501
Total current liabilities9,239
8,244
14,078
Long-Term Debt614
115
6,297
Long-Term Debt - Related Party3,872
4,021

Other Noncurrent Liabilities



 
Deferred income tax liabilities911
920
1,523
Pension and other post employment benefits - noncurrent6,186
6,377
5,554
Other noncurrent obligations1,989
2,192
2,064
Liabilities of discontinued operations - non-current

5,512
Total noncurrent liabilities13,572
13,625
20,950
Commitments and contingent liabilities   
Stockholders’ equity 
 
 
Preferred stock, without par value – cumulative; 23,000,000 shares authorized;
     issued at March 31, 2020, December 31, 2019, and March 31, 2019:
   
$4.50 Series – 1,673,000 shares (callable at $120)169
169

$3.50 Series – 700,000 shares (callable at $102)70
70

Common stock, $0.30 par value; 1,800,000,000 shares authorized; issued at March 31, 2020 - 200, December 31, 2019 - 200, and March 31, 2019 - 100


Additional paid-in capital24,004
23,958

Divisional equity

78,244
Accumulated deficit(158)(406)
Accumulated other comprehensive loss(3,933)(3,270)(3,434)
Total E. I. du Pont de Nemours and Company stockholders’ equity20,152
20,521
74,810
Noncontrolling interests15
7
264
Total equity20,167
20,528
75,074
Total Liabilities and Equity$42,978
$42,397
$110,102

See Notes to the Consolidated Financial Statements beginning on page 69.


E. I. du Pont de Nemours and Company
Condensed Consolidated Statements of Cash Flows (Unaudited)
 Three Months Ended
March 31,
(In millions)20202019
Operating activities  
Net income$258
$176
Adjustments to reconcile net income to cash used for operating activities:



Depreciation and amortization283
726
Provision for (benefit from) deferred income tax26
(220)
Net periodic pension benefit(102)(75)
Pension contributions(28)(50)
Net loss (gain) on sales of property, businesses, consolidated companies, and investments46
(65)
Restructuring and asset related charges - net70
106
Amortization of inventory step-up
205
Other net loss138
92
Changes in operating assets and liabilities - net(2,613)(2,436)
Cash used for operating activities(1,922)(1,541)
Investing activities 
 
Capital expenditures(128)(663)
Proceeds from sales of property, businesses, and consolidated companies - net of cash divested11
125
Proceeds from sales of ownership interests in nonconsolidated affiliates
21
Purchases of investments(67)(16)
Proceeds from sales and maturities of investments58
36
Other investing activities - net(4)(5)
Cash used for investing activities(130)(502)
Financing activities 
 
Net change in borrowings (less than 90 days)1,619
814
Payments on related party debt(148)
Proceeds from debt875
1,000
Payments on debt(1)(284)
Proceeds from exercise of stock options14
35
Distributions to DowDuPont
(317)
Contributions from Dow
88
Other financing activities(23)(24)
Cash provided by financing activities2,336
1,312
Effect of exchange rate changes on cash, cash equivalents and restricted cash(117)20
Increase (decrease) in cash, cash equivalents and restricted cash167
(711)
Cash, cash equivalents and restricted cash at beginning of period2,173
5,024
Cash, cash equivalents and restricted cash at end of period$2,340
$4,313

See Notes to the Consolidated Financial Statements beginning on page 69.


E. I. du Pont de Nemours and Company
Consolidated Statements of Equity (Unaudited)
(In millions)Preferred StockCommon StockAdd. Paid-in CapitalDivisional EquityRetained Earnings (Accumulated deficit)Accum. Other Comp LossTreasury StockNon-controlling InterestsTotal Equity
2019         
Balance at January 1, 2019$
$
$
$78,259
$
$(3,360)$
$254
$75,153
Net income





166






10
176
Other comprehensive loss









(74)



(74)
Preferred dividends ($4.50 Series - $1.125 per share, $3.50 Series - $0.875 per share)





(2)







(2)
Distributions to DowDuPont





(317)







(317)
Share-based compensation





18








18
Issuance of DowDuPont stock





35








35
Contributions from Dow





88








88
Other - net





(3)







(3)
Balance at March 31, 2019$
$
$
$78,244
$
$(3,434)$
$264
$75,074
(In millions)Preferred StockCommon StockAdd. Paid-in CapitalDivisional Equity(Accumulated deficit) Retained EarningsAccum. Other Comp LossTreasury StockNon-controlling InterestsTotal Equity
2020         
Balance at January 1, 2020$239
$
$23,958

$(406)$(3,270)$
$7
$20,528
Net income






250




8
258
Other comprehensive loss








(663)



(663)
Preferred dividends ($4.50 Series - $1.125 per share, $3.50 Series - $0.875 per share)



(2)








(2)
Issuance of Corteva stock



14









14
Share-based compensation



2









2
Other - net



32

(2)





30
Balance at March 31, 2020$239
$
$24,004

$(158)$(3,933)$
$15
$20,167


See Notes to the Consolidated Financial Statements beginning on page 69.

68

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


E. I. du Pont de Nemours and Company
Notes to the Consolidated Financial Statements (Unaudited)


Table of Contents

Note Page
1
2
3


69

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE1- BASIS OF PRESENTATION

As a result of the Business Realignment and the Internal Reorganization, Corteva, Inc. owns 100% of the outstanding common stock of EID. EID is a subsidiary of Corteva, Inc. and continues to be a reporting company, subject to the requirements of the Exchange Act. The primary differences between Corteva, Inc. and EID are outlined below:

Preferred Stock - EID has preferred stock outstanding to third parties which is accounted for as a non-controlling interest at the Corteva, Inc. level. Each share of EID Preferred Stock - $4.50 Series and EID Preferred Stock - $3.50 Series issued and outstanding at the effective date of the Corteva Distribution remains issued and outstanding as to EID and was unaffected by the Corteva Distribution.
Related Party Loan - EID engaged in a series of debt redemptions during the second quarter of 2019 that were partially funded through an intercompany loan from Corteva, Inc. This was eliminated in consolidation at the Corteva, Inc. level but remains on EID's financial statements at the standalone level (including the associated interest).
Capital Structure - At March 31, 2020, Corteva, Inc.'s capital structure consists of 748,369,000 issued shares of common stock, par value $0.01 per share.

The accompanying footnotes relate to EID only, and not to Corteva, Inc., and are presented to show differences between EID and Corteva, Inc.

For the footnotes listed below, refer to the following Corteva, Inc. footnotes:
Note 1 - Summary of Significant Accounting Policies - refer to page 9 of the Corteva, Inc. interim Consolidated Financial Statements
Note 2 - Recent Accounting Guidance - refer to page 10 of the Corteva, Inc. interim Consolidated Financial Statements
Note 3 - Divestitures and Other Transactions - refer to page 11 of the Corteva, Inc. interim Consolidated Financial Statements
Note 4 - Revenue - refer to page 14 of the Corteva, Inc. interim Consolidated Financial Statements
Note 5 - Restructuring and Asset Related Charges - Net - refer to page 16 of the Corteva, Inc. interim Consolidated Financial Statements
Note 6 - Related Parties - Differences exist between Corteva, Inc. and EID; refer to EID Note 2 - Related Party Transactions, below
Note 7 - Supplementary Information - refer to page 18 of the Corteva, Inc. interim Consolidated Financial Statements
Note 8 - Income Taxes - refer to page 20 of the Corteva, Inc. interim Consolidated Financial Statements
Note 9 - Earnings Per Share of Common Stock - N/A for EID
Note 10 - Accounts and Notes Receivable - Net - refer to page 21 of the Corteva, Inc. interim Consolidated Financial Statements
Note 11 - Inventories - refer to page 22 of the Corteva, Inc. interim Consolidated Financial Statements
Note 12 - Other Intangible Assets - refer to page 23 of the Corteva, Inc. interim Consolidated Financial Statements
Note 13 - Short-Term Borrowings, Long-Term Debt and Available Credit Facilities - refer to page 23 of the Corteva, Inc. interim Consolidated Financial Statements. In addition, EID has a related party loan payable to Corteva, Inc.; refer to EID Note 2 - Related Party Transactions, below
Note 14 - Commitments and Contingent Liabilities - refer to page 25 of the Corteva, Inc. interim Consolidated Financial Statements
Note 15 - Stockholders' Equity - refer to page 30 of the Corteva, Inc. interim Consolidated Financial Statements
Note 16 - Pension Plans and Other Post Employment Benefits - refer to page 32 of the Corteva, Inc. interim Consolidated Financial Statements
Note 17 - Financial Instruments - refer to page 33 of the Corteva, Inc. interim Consolidated Financial Statements
Note 18 - Fair Value Measurements - refer to page 37 of the Corteva, Inc. interim Consolidated Financial Statements
Note 19 - Segment Information - Differences exist between Corteva, Inc. and EID; refer to EID Note 3 - Segment Information, below



70

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 2 - RELATED PARTY TRANSACTIONS

Refer to page 18 of the Corteva, Inc. interim Consolidated Financial Statements for discussion of related party transactions with Historical Dow, DowDuPont, and DuPont.

Transactions with Corteva
In the second quarter of 2019, EID entered into a related party revolving loan from Corteva, Inc., with a maturity date in 2024. As of March 31, 2020 and December 31, 2019, the outstanding related party loan balance was $3,872 million and $4,021 million, respectively (which approximates fair value), with an interest rate of 3.27%, and is reflected as long-term debt - related party in EID's interim Condensed Consolidated Balance Sheets. Additionally, EID has incurred tax deductible interest expense of $32 million for the three months ended March 31, 2020 associated with the related party loan from Corteva, Inc.

As of March 31, 2020, EID had payables to Corteva, Inc., the parent company, of $166 million and $82 million ($119 million and $154 million at December 31, 2019) included in accrued and other current liabilities and other noncurrent obligations, respectively, in the interim Condensed Consolidated Balance Sheets related to Corteva's indemnification liabilities to Dow and DuPont per the Separation Agreements (refer to page 11 of the Corteva, Inc. interim Consolidated Financial Statements for further details of the Separation Agreements).

NOTE 3 - SEGMENT INFORMATION

There are no differences in reporting structure or segments between Corteva, Inc. and EID. In addition, there are no differences between Corteva, Inc. and EID segment net sales, segment operating EBITDA or pro forma segment operating EBITDA, segment assets, or significant items by segment; refer to page 39 of the Corteva, Inc. interim Consolidated Financial Statements for background information on the segments as well as further details regarding segment metrics. The tables below reconcile segment pro forma operating EBITDA to loss from continuing operations after income taxes, as differences exist between Corteva, Inc. and EID.

Reconciliation to interim Consolidated Financial Statements
Income (loss) from continuing operations after income taxes to segment operating EBITDA

(In millions)
Three Months Ended
March 31,
2020
2019 1
Income (loss) from continuing operations after income taxes$257
$(184)
Provision for (benefit from) income taxes on continuing operations119
(67)
Income (loss) from continuing operations before income taxes376
(251)
Depreciation and amortization283
258
Interest income(18)(16)
Interest expense42
59
Exchange losses - net61
27
Non-operating benefits - net(73)(42)
Significant items123
185
Pro forma adjustments 298
Corporate expenses25
27
Segment operating EBITDA$819
$545

1.Period is presented on a pro forma basis, prepared in accordance with Article 11 of Regulation S-X.

71