| DIVESTITURES | DIVESTITURES Mobility & Materials Segment Intended Divestiture On November 2, 2021 the Company announced that it has initiated a divestiture process related to a substantial portion of the Mobility & Materials segment, which predominantly includes the Engineering Polymers and Performance Resins lines of business (the “In-Scope M&M Businesses”). The outcome of which, including the entry into a definitive agreement, is subject to the approval of the DuPont Board of Directors. The scope of the intended divestiture excludes certain product lines including Auto Adhesives and Multibase TM . The divestiture of the In-Scope M&M Businesses may include a full or partial separation of the businesses from the Company. The Mobility & Materials segment will remain in its current management and reporting structure while these strategic alternatives are considered. N&B Transaction On February 1, 2021, DuPont completed the separation and distribution of the N&B Business, and merger of N&B, a DuPont subsidiary formed to hold the N&B Business, with a subsidiary of IFF. The distribution was effected through an exchange offer (the "Exchange Offer") where, on the terms and subject to the conditions of the Exchange Offer, eligible participating DuPont stockholders had the option to tender all, some or none of their shares of common stock, par value $0.01 per share, of DuPont (the “DuPont Common Stock”) for a number of shares of common stock, par value $0.01 per share, of N&B (the “N&B Common Stock”) and which resulted in all shares of N&B Common Stock being distributed to DuPont stockholders that participated in the Exchange Offer. The consummation of the Exchange Offer was followed by the merger of N&B with a wholly owned subsidiary of IFF, with N&B surviving the merger as a wholly owned subsidiary of IFF (the “N&B Merger” and, together with the Exchange Offer, the “N&B Transaction”). The N&B Transaction was subject to IFF shareholder approval, customary regulatory approvals, tax authority rulings including a favorable private letter ruling from the U.S. Internal Revenue Service which confirms the N&B Transaction to be free of U.S. federal income tax, and expiration of the public exchange offer. DuPont does not have an ownership interest in IFF as a result of the N&B Transaction. In the Exchange Offer, DuPont accepted approximately 197.4 million shares of its common stock in exchange for about 141.7 million shares of N&B Common Stock. As a result, DuPont reduced its common stock outstanding by 197.4 million shares of DuPont Common Stock. In the N&B Merger, each share of N&B Common Stock was automatically converted into the right to receive one share of IFF common stock, par value $0.125 per share, based on the terms of the N&B Merger Agreement. The results of operations of N&B are presented as discontinued operations as summarized below: In millions 2021 2020 2019 Net sales $ 507 $ 6,059 $ 6,076 Cost of sales 354 4,014 4,030 Research and development expenses 21 235 266 Selling, general and administrative expenses 47 534 606 Amortization of intangibles 38 1,423 349 Restructuring and asset related charges - net 1 4 162 Goodwill impairment charges — — 933 Integration and separation costs 172 417 85 Equity in earnings of nonconsolidated affiliates — 4 (1) Sundry income (expense) - net 8 8 9 Interest expense 13 95 1 Loss from discontinued operations before income taxes (131) (651) (348) (Benefit from) provision for income taxes on discontinued operations (21) (183) 142 Loss from discontinued operations, net of tax (110) (468) (490) Income from discontinued operations attributable to noncontrolling interests, net of tax — — 1 Non-taxable gain on split-off 4,920 — — Income (loss) from discontinued operations attributable to DuPont stockholders, net of tax $ 4,810 $ (468) $ (491) The following table presents depreciation, amortization, and capital expenditures of the discontinued operations related to N&B: In millions 2021 2020 2019 Depreciation and amortization $ 63 $ 1,721 $ 664 Capital expenditures $ 27 $ 234 $ 359 The carrying amount of major classes of assets and liabilities that were included in discontinued operations at December 31, 2020 related to N&B consist of the following: In millions 2020 Assets Accounts and notes receivable - net $ 1,130 Inventories 1,333 Other current assets 65 Investments and noncurrent receivables 36 Property, plant and equipment - net 3,118 Goodwill 11,542 Other intangible assets - net 3,072 Deferred income tax assets 44 Deferred charges and other assets 319 Total assets of discontinued operations $ 20,659 Liabilities Short-term borrowings and finance lease obligations $ 4 Accounts payable 742 Income taxes payable 36 Accrued and other current liabilities 301 Long-term debt 6,195 Deferred income tax liabilities 852 Pension and other post employment benefits - noncurrent 238 Other noncurrent liabilities 242 Total liabilities of discontinued operations $ 8,610 In connection with and in accordance with the terms of the N&B Transaction, prior to consummation of the Exchange Offer and the N&B Merger, DuPont received a one-time cash payment of approximately $7.3 billion, (the "Special Cash Payment"). The special cash payment was partially funded by an offering of $6.25 billion of senior unsecured notes (the “N&B Notes Offering”). The net proceeds of approximately $6.2 billion from the N&B Notes Offering were deposited into an escrow account and at December 31, 2020 are reflected as restricted cash in the Company’s Consolidated Balance Sheets. In order to fund the remainder of the Special Cash Payment, on February 1, 2021, N&B borrowed $1.25 billion under a senior unsecured term loan agreement (the "N&B Term Loan"). The obligations and liabilities associated with the N&B Notes Offering and N&B Term Loan were separated from the Company on February 1, 2021 upon consummation of the N&B Transaction. The obligations and liabilities of $6.2 billion associated with the N&B Notes Offering are classified as "Liabilities of discontinued operations" at December 31, 2020 in the Company's Consolidated Balance Sheets. N&B Transaction Agreements In connection with the N&B Transaction, effective December 15, 2019, the Company, as previously discussed, entered into the following agreements: • A Separation and Distribution Agreement, subsequently amended and joined by Neptune Merger Sub II LLC, a subsidiary of IFF on January 22, 2021, and as amended further on February 1, 2021 (as amended, the “N&B Separation and Distribution Agreement”) with N&B and IFF, which, among other things, governs the separation of the N&B Business from DuPont and certain other post-closing obligations between DuPont and N&B related thereto; • An Agreement and Plan of Merger, (the “N&B Merger Agreement”) with N&B, IFF and Neptune Merger Sub I Inc., governing the N&B Merger and related matters; and • An Employee Matters Agreement, subsequently amended on January 22, 2021, (as amended, the “N&B Employee Matters Agreement Agreement”), with N&B and IFF, which, among other things, allocates among the parties the pre- and post-closing liabilities in respect of the current and former employees of the N&B Business (including liabilities in respect of employee compensation and benefit plans). In connection with the closing of the N&B Transaction, and effective February 1, 2021, the Company entered into the following agreements: • DuPont, N&B and IFF entered into a Tax Matters Agreement (the “N&B Tax Matters Agreement”), which governs the parties’ 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, the preservation of the expected tax-free status of the transactions contemplated by the N&B Separation and Distribution Agreement, and other matters regarding taxes; and • DuPont, N&B and certain of their subsidiaries entered into an Intellectual Property Cross-License Agreement (the “N&B IP Cross-License Agreement”). The IP Cross-License Agreement sets forth the terms and conditions under which the applicable parties may use in their respective businesses certain know-how (including trade secrets), copyrights, design rights, software, and patents, allocated to another party pursuant to the N&B Separation and Distribution Agreement, and pursuant to which N&B may use certain standards retained by DuPont. All licenses under the IP Cross-License Agreement are non-exclusive, worldwide, and royalty-free. Other Discontinued Operations Activity The Company recorded a loss from discontinued operations, net of tax of $76 million for the year ended December 31, 2021 related to the binding Memorandum of Understanding (“MOU”) between Chemours, Corteva, EID and a settlement agreement between Chemours, Corteva and DuPont and Delaware's Attorney General. For additional information on these matters, refer to Note 16. The Company also recorded a loss from discontinued operations, net of tax of $23 million for the year ended December 31, 2021, a portion of which is related to certain charges associated with the amended and restated Tax Matters Agreement under the DWDP Distributions. For the year ended December 31, 2020, the Company recorded a "Loss from discontinued operations, net of tax" in the Company's Consolidated Statements of Operations of $49 million. The loss primarily relates to litigation matters (refer to Note 16) partially offset by a gain related to the DWDP Tax Matters Agreement. For the year ended December 31, 2019, the Company recorded "Income from discontinued operations, net of tax" in the Company's Consolidated Statements of Operations of $86 million related to the adjustment of certain unrecognized tax benefits for positions taken on items from prior years from previously divested businesses and $80 million related to changes in accruals for certain prior year tax positions related to the divested crop protection business and research and development assets of EID. Assets Held for Sale In October 2020, the Company entered into a definitive agreement to sell its Biomaterials business unit, which includes the Company's equity method investment in DuPont Tate & Lyle Bio Products, for $240 million. The sale of the Biomaterials business unit is subject to customary closing conditions and is expected to close mid-year 2022. In January 2021, the Company entered into a definitive agreement to sell its Clean Technologies business, which closed on December 31, 2021. The results of operations of the Biomaterials and Clean Technologies businesses are reported in Corporate. The assets and liabilities associated with the Biomaterials business remain classified as held for sale at December 31, 2021. The following table summarizes the carrying value of the major assets and liabilities of the Biomaterials business unit as of December 31, 2021 and the Biomaterials and Clean Technologies business units as of December 31, 2020 (collectively, the “Corporate Held for Sale Disposal Group”): In millions December 31, 2021 December 31, 2020 Assets Accounts and notes receivable - net $ 27 $ 63 Inventories 48 75 Other current assets — 35 Investments and noncurrent receivables 158 164 Property, plant and equipment - net 12 34 Goodwill — 267 Other intangible assets — 168 Deferred charges and other assets — 4 Assets held for sale $ 245 $ 810 Liabilities Accounts payable $ 21 $ 40 Income taxes payable — 1 Accrued and other current liabilities 3 50 Deferred income tax liabilities — 30 Pension and other post-employment benefits - noncurrent — 1 Other noncurrent obligations 1 18 Liabilities related to assets held for sale $ 25 $ 140 In connection with the held for sale classification, the Corporate Held for Sale Disposal Groups were measured at fair value less estimated cost to sell. As a result, the Company recorded a $25 million pre-tax goodwill impairment charge during the third quarter of 2020 which is reflected in “Goodwill impairment charges” in the Company’s Consolidated Statements of Operations for the year ended December 31, 2020. See Note 6 for further information on the asset impairments recorded related to the Corporate Held for Sale Disposal Groups. Sale of Clean Technologies On December 31, 2021, the Company completed the sale of its Clean Technologies business unit, which is part of Corporate. Total consideration related to the sale of the business is approximately $510 million, with cash proceeds of about $500 million reflecting adjustments for customary closing costs as defined within the purchase agreement. For the year ended December 31, 2021, a pre-tax loss of $3 million ($39 million loss net of tax, primarily driven by nondeductible goodwill) on the disposition was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations. Sale of Solamet® On June 30, 2021, the Company completed the sale of its Solamet® business unit, which is part of Corporate. Total consideration received related to the sale of the business is approximately $190 million. For the year ended December 31, 2021, a pre-tax gain of $140 million ($105 million net of tax) was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations. Sale of TCS/HSC Disposal Group In the third quarter of 2020, the Company completed the sale of its trichlorosilane business (“TCS Business”) along with its equity ownership interest in DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group,” and together with the TCS Business, the “TCS/HSC Disposal Group” and the sale of the TCS/HSC Disposal Group, the “TCS/HSC Disposal”) to the HSC Group, both of which were part of the businesses reflected in Corporate. In connection with the TCS/HSC Disposal, the Company received $550 million in cash at closing, subject to certain claw-back provisions. The Company also received approximately $58 million in the third quarter of 2021, which was recorded in "Cash and cash equivalents" in the Company's Consolidated Balance Sheets, and will receive an additional $117 million in equal installments over the course of the next two years associated with the settlement of an existing supply agreement dispute with the HSC Group. The TCS/HSC Disposal resulted in a net pre-tax benefit of $396 million ($236 million net of tax), including the settlement of the supply agreement dispute and after allocation of goodwill to the TCS Business. The net pre-tax benefit is recorded in “Sundry income (expense) – net” in the Company’s Consolidated Statements of Operations for the year ended December 31, 2020. Sale of Compound Semiconductor Solutions In the first quarter of 2020, the Company completed the sale of its Compound Semiconductor Solutions business unit, a part of the Electronics & Industrial segment, to SK Siltron. The proceeds received in the first quarter of 2020 related to the sale of the business were approximately $420 million. The sale resulted in a pre-tax gain of $197 million ($102 million net of tax) recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations for the year ended December 31, 2020. Sale of DuPont Sustainable Solutions In the third quarter of 2019, the Company completed the sale of its Sustainable Solutions business unit, a part of the businesses reflected in Corporate, to Gyrus Capital. The sale resulted in a pre-tax gain of $28 million ($22 million net of tax). The gain was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations for the year ended December 31, 2019. DWDP Distributions Separation Agreements In connection with the Dow Distribution and the Corteva Distribution, the Company entered into certain agreements that, among other things, effected the separations, provides for the allocation of assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) among DuPont, Dow, and Corteva (together, the “Parties” and each a “Party”), and provides a framework for DuPont’s relationship with Dow and Corteva following the DWDP Distributions. Effective April 1, 2019, the Parties entered into the following agreements referred to herein as: the DWDP Separation and Distribution Agreement; the DWDP Tax Matters Agreement; the DWDP Employee Matters Agreement; and the Intellectual Property Cross-License Agreement (the “DuPont-Dow IP Cross-License Agreement”). In addition to the agreements above, DuPont has entered into certain various supply agreements with Dow. These agreements provide for different pricing than the historical intercompany and intracompany practices prior to the DWDP Distributions. Effective June 1, 2019, in connection with the Corteva Distribution, DuPont and Corteva entered into the following agreements: the Intellectual Property Cross-License Agreement (the “DuPont-Corteva IP Cross-License Agreement”); the Letter Agreement; and the Amended and Restated DWDP Tax Matters Agreement. Certain internal distributions and reorganizations, and the distributions of Dow on April 1, 2019, and of Corteva on June 1, 2019, qualified as tax-free transactions under the applicable sections of the Internal Revenue Code. If the completed distribution of Corteva or Dow, in each case, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then the Company could be subject, under the DWDP Tax Matters Agreement, to significant tax and indemnification liability. To the extent that the Company is responsible for any liability under the Amended and Restated DWDP Tax Matters Agreement there could be a material adverse impact on the Company's business, financial condition, results of operations and cash flows in future reporting periods. In connection with the DWDP Distributions, Dow and Corteva indemnify the Company against, and DuPont indemnifies Dow and Corteva against certain litigation, environmental, income taxes, and other liabilities that arose prior to the DWDP Distributions, as applicable. The term of this indemnification is generally indefinite and includes defense costs and expenses, as well as monetary and non-monetary settlements and judgments. Refer to Note 16 for additional information regarding treatment of litigation and environmental related matters under the DWDP Separation and Distribution Agreement and the Letter Agreement. Materials Science Division On April 1, 2019, DowDuPont completed the separation of its Materials Science businesses, including the businesses and operations that comprised the Company's former Performance Materials & Coating, Industrial Intermediates & Infrastructure and the Packaging & Specialty Plastics segments, (the "Materials Science Division") through the consummation of the Dow Distribution. On April 1, 2019, prior to the Dow Distribution, the Company contributed $2,024 million in cash to Dow. The results of operations of the Materials Science Division are presented as discontinued operations as summarized below: In millions 2019 Net sales $ 10,867 Cost of sales 8,917 Research and development expenses 163 Selling, general and administrative expenses 329 Amortization of intangibles 116 Restructuring and asset related charges - net 157 Integration and separation costs 44 Equity in earnings of nonconsolidated affiliates (13) Sundry income (expense) - net 48 Interest expense 240 Income from discontinued operations before income taxes 936 Provision for income taxes on discontinued operations 207 Income from discontinued operations, net of tax 729 Income from discontinued operations attributable to noncontrolling interests, net of tax 37 Income from discontinued operations attributable to DuPont stockholders, net of tax $ 692 The following table presents depreciation, amortization, and capital expenditures of the discontinued operations related to the Materials Science Division: In millions 2019 Depreciation and amortization $ 744 Capital expenditures $ 597 Agriculture Division On June 1, 2019, the Company completed the separation of its Agriculture business, including the businesses and operations that comprised the Company's former Agriculture segment (the "Agriculture Division"), through the consummation of the Corteva Distribution. In 2019, prior to the distribution of Corteva, the Company contributed $7,139 million in cash to Corteva, a portion of which was used to retire indebtedness of EID. The results of operations of the Agriculture Division are presented as discontinued operations as summarized below: In millions 2019 Net sales $ 7,144 Cost of sales 4,218 Research and development expenses 470 Selling, general and administrative expenses 1,294 Amortization of intangibles 176 Restructuring and asset related charges - net 117 Integration and separation costs 430 Equity in earnings of nonconsolidated affiliates (4) Sundry income (expense) - net 40 Interest expense 91 Income from discontinued operations before income taxes 384 Provision for income taxes on discontinued operations 62 Income from discontinued operations, net of tax 322 Income from discontinued operations attributable to noncontrolling interests, net of tax 35 Income from discontinued operations attributable to DuPont stockholders, net of tax $ 287 The following table presents depreciation, amortization, and capital expenditures of the discontinued operations related to the Agriculture Division: In millions 2019 Depreciation and amortization $ 385 Capital expenditures $ 383 Acquisition, Integration and Separation Costs Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the year ended December 31, 2021, these costs were primarily associated with the execution of activities related to strategic initiatives, including the acquisition of Laird PM, the planned divestiture of the In-Scope M&M Businesses, the Intended Rogers Acquisition, and the completed and planned divestitures of the held for sale businesses included within Corporate. For the years ended December 31, 2020 and December 31, 2019 these costs were primarily associated with the preparation and execution of activities related to the DWDP Merger, post-DWDP Merger integration, and the DWDP Distributions. These costs are recorded within "Acquisition, integration and separation costs" within the Consolidated Statements of Operations. In millions 2021 2020 2019 Acquisition, integration and separation costs $ 133 $ 177 $ 1,257 |
