A-1
Corteva, Inc.
Consolidated Statements of Operations
(Dollars in millions, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 5,627 | $ | 5,191 | $ | 9,805 | $ | 9,147 | |||||||||||||||
| Cost of goods sold | 3,010 | 2,829 | 5,430 | 5,098 | |||||||||||||||||||
| Research and development expense | 293 | 273 | 574 | 553 | |||||||||||||||||||
| Selling, general and administrative expenses | 998 | 965 | 1,731 | 1,722 | |||||||||||||||||||
| Amortization of intangibles | 180 | 176 | 363 | 339 | |||||||||||||||||||
| Restructuring and asset related charges - net | 135 | 179 | 235 | 249 | |||||||||||||||||||
| Other income — net | 298 | 89 | 635 | 90 | |||||||||||||||||||
| Interest expense | 7 | 14 | 14 | 24 | |||||||||||||||||||
| Income from continuing operations before income taxes | 1,302 | 844 | 2,093 | 1,252 | |||||||||||||||||||
| Provision for income taxes on continuing operations | 284 | 78 | 462 | 205 | |||||||||||||||||||
| Income from continuing operations after income taxes | 1,018 | 766 | 1,631 | 1,047 | |||||||||||||||||||
| (Loss) income from discontinued operations after income taxes | (45) | — | (55) | 1 | |||||||||||||||||||
| Net income | 973 | 766 | 1,576 | 1,048 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | 3 | 6 | 6 | 16 | |||||||||||||||||||
| Net income attributable to Corteva | $ | 970 | $ | 760 | $ | 1,570 | $ | 1,032 | |||||||||||||||
| Basic earnings per share of common stock: | |||||||||||||||||||||||
| Basic earnings per share of common stock from continuing operations | $ | 1.37 | $ | 1.01 | $ | 2.19 | $ | 1.37 | |||||||||||||||
| Basic loss per share of common stock from discontinued operations | (0.06) | — | (0.07) | — | |||||||||||||||||||
| Basic earnings per share of common stock | $ | 1.31 | $ | 1.01 | $ | 2.12 | $ | 1.37 | |||||||||||||||
| Diluted earnings per share of common stock: | |||||||||||||||||||||||
| Diluted earnings per share of common stock from continuing operations | $ | 1.37 | $ | 1.01 | $ | 2.18 | $ | 1.37 | |||||||||||||||
| Diluted loss per share of common stock from discontinued operations | (0.06) | — | (0.07) | — | |||||||||||||||||||
| Diluted earnings per share of common stock | $ | 1.31 | $ | 1.01 | $ | 2.11 | $ | 1.37 | |||||||||||||||
| Average number of shares outstanding used in earnings per share (EPS) calculation (in millions) | |||||||||||||||||||||||
| Basic | 737.3 | 749.2 | 740.3 | 749.6 | |||||||||||||||||||
| Diluted | 743.3 | 751.6 | 746.4 | 752.0 | |||||||||||||||||||
A-2
Corteva, Inc.
Consolidated Balance Sheets
(Dollars in millions, except share amounts)
| June 30, 2021 | December 31, 2020 | June 30, 2020 | ||||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 2,861 | $ | 3,526 | $ | 2,809 | ||||||||||||||
| Marketable securities | 39 | 269 | 60 | |||||||||||||||||
| Accounts and notes receivable, net | 6,792 | 4,926 | 6,772 | |||||||||||||||||
| Inventories | 3,541 | 4,882 | 3,589 | |||||||||||||||||
| Other current assets | 1,052 | 1,165 | 1,192 | |||||||||||||||||
| Total current assets | 14,285 | 14,768 | 14,422 | |||||||||||||||||
| Investment in nonconsolidated affiliates | 68 | 66 | 62 | |||||||||||||||||
| Property, plant and equipment | 8,343 | 8,253 | 7,858 | |||||||||||||||||
| Less: Accumulated depreciation | 4,002 | 3,857 | 3,565 | |||||||||||||||||
| Net property, plant and equipment | 4,341 | 4,396 | 4,293 | |||||||||||||||||
| Goodwill | 10,207 | 10,269 | 10,069 | |||||||||||||||||
| Other intangible assets | 10,413 | 10,747 | 11,070 | |||||||||||||||||
| Deferred income taxes | 442 | 464 | 290 | |||||||||||||||||
| Other assets | 1,740 | 1,939 | 1,974 | |||||||||||||||||
| Total Assets | $ | 41,496 | $ | 42,649 | $ | 42,180 | ||||||||||||||
| Liabilities and Equity | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Short-term borrowings and finance lease obligations | $ | 677 | $ | 3 | $ | 1,529 | ||||||||||||||
| Accounts payable | 3,070 | 3,615 | 2,891 | |||||||||||||||||
| Income taxes payable | 234 | 123 | 369 | |||||||||||||||||
| Deferred revenue | 748 | 2,662 | 431 | |||||||||||||||||
| Accrued and other current liabilities | 2,523 | 2,145 | 2,309 | |||||||||||||||||
| Total current liabilities | 7,252 | 8,548 | 7,529 | |||||||||||||||||
| Long-Term Debt | 1,101 | 1,102 | 1,102 | |||||||||||||||||
| Other Noncurrent Liabilities | ||||||||||||||||||||
| Deferred income tax liabilities | 935 | 893 | 752 | |||||||||||||||||
| Pension and other post employment benefits - noncurrent | 4,767 | 5,176 | 6,039 | |||||||||||||||||
| Other noncurrent obligations | 1,816 | 1,867 | 1,957 | |||||||||||||||||
| Total noncurrent liabilities | 8,619 | 9,038 | 9,850 | |||||||||||||||||
| Commitments and contingent liabilities | ||||||||||||||||||||
| Stockholders' equity | ||||||||||||||||||||
| Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at June 30, 2021 - 734,421,000; December 31, 2020 - 743,458,000; and June 30, 2020 - 748,485,000 | 7 | 7 | 7 | |||||||||||||||||
| Additional paid-in capital | 27,682 | 27,707 | 27,891 | |||||||||||||||||
| Retained earnings | 941 | — | 508 | |||||||||||||||||
| Accumulated other comprehensive loss | (3,245) | (2,890) | (3,845) | |||||||||||||||||
| Total Corteva stockholders' equity | 25,385 | 24,824 | 24,561 | |||||||||||||||||
| Noncontrolling interests | 240 | 239 | 240 | |||||||||||||||||
| Total equity | 25,625 | 25,063 | 24,801 | |||||||||||||||||
| Total Liabilities and Equity | $ | 41,496 | $ | 42,649 | $ | 42,180 | ||||||||||||||
A-3
Corteva, Inc.
Consolidated Statement of Cash Flows
(Dollars in millions, except per share amounts)
| Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | ||||||||||
| Operating activities | |||||||||||
| Net income | $ | 1,576 | $ | 1,048 | |||||||
| Adjustments to reconcile net income to cash used for operating activities: | |||||||||||
| Depreciation and amortization | 617 | 583 | |||||||||
| Provision for (benefit from) deferred income tax | 124 | (136) | |||||||||
| Net periodic pension and OPEB benefit, net | (641) | (168) | |||||||||
| Pension and OPEB contributions | (149) | (167) | |||||||||
| Net (gain) loss on sales of property, businesses, consolidated companies, and investments | (1) | 30 | |||||||||
| Restructuring and asset related charges - net | 235 | 249 | |||||||||
| Other net loss | 143 | 185 | |||||||||
| Changes in assets and liabilities - net | |||||||||||
| Accounts and notes receivable | (1,957) | (1,712) | |||||||||
| Inventories | 1,334 | 1,271 | |||||||||
| Accounts Payable | (525) | (717) | |||||||||
| Deferred revenue | (1,931) | (2,147) | |||||||||
| Other assets and liabilities | 532 | 812 | |||||||||
| Cash used for operating activities | (643) | (869) | |||||||||
| Investing activities | |||||||||||
| Capital expenditures | (269) | (202) | |||||||||
| Proceeds from sales of property, businesses, and consolidated companies - net of cash divested | 26 | 18 | |||||||||
| Investments in and loans to nonconsolidated affiliates | (1) | — | |||||||||
| Purchases of investments | (56) | (361) | |||||||||
| Proceeds from sales and maturities of investments | 285 | 298 | |||||||||
| Other investing activities - net | (2) | (5) | |||||||||
| Cash used for investing activities | (17) | (252) | |||||||||
| Financing activities | |||||||||||
| Net change in borrowings (less than 90 days) | 254 | 966 | |||||||||
| Proceeds from debt | 419 | 2,434 | |||||||||
| Payments on debt | — | (879) | |||||||||
| Repurchase of common stock | (550) | (50) | |||||||||
| Proceeds from exercise of stock options | 66 | 17 | |||||||||
| Dividends paid to stockholders | (192) | (194) | |||||||||
| Payments for acquisition of subsidiary's interest from the non-controlling interest | — | (60) | |||||||||
| Other financing activities | (24) | (20) | |||||||||
| Cash (used for) provided by financing activities | (27) | 2,214 | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (14) | (95) | |||||||||
| (Decrease)/increase in cash, cash equivalents and restricted cash | (701) | 998 | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 3,873 | 2,173 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 3,172 | $ | 3,171 | |||||||
A-4
Corteva, Inc.
Consolidated Segment Information
(Dollars in millions, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| SEGMENT NET SALES - SEED | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Corn | $ | 2,180 | $ | 2,057 | $ | 4,068 | $ | 3,921 | ||||||||||||||||||
| Soybean | 1,160 | 1,085 | 1,337 | 1,266 | ||||||||||||||||||||||
| Other oilseeds | 271 | 219 | 567 | 467 | ||||||||||||||||||||||
| Other | 169 | 177 | 300 | 339 | ||||||||||||||||||||||
| Seed | $ | 3,780 | $ | 3,538 | $ | 6,272 | $ | 5,993 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| SEGMENT NET SALES - CROP PROTECTION | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Herbicides | $ | 969 | $ | 909 | $ | 1,955 | $ | 1,732 | ||||||||||||||||||
| Insecticides | 460 | 445 | 845 | 823 | ||||||||||||||||||||||
| Fungicides | 311 | 224 | 572 | 453 | ||||||||||||||||||||||
| Other | 107 | 75 | 161 | 146 | ||||||||||||||||||||||
| Crop Protection | $ | 1,847 | $ | 1,653 | $ | 3,533 | $ | 3,154 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| GEOGRAPHIC NET SALES - SEED | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
North America 1 | $ | 3,104 | $ | 2,903 | $ | 4,314 | $ | 4,193 | ||||||||||||||||||
EMEA 2 | 298 | 264 | 1,245 | 1,145 | ||||||||||||||||||||||
| Latin America | 234 | 206 | 508 | 422 | ||||||||||||||||||||||
| Asia Pacific | 144 | 165 | 205 | 233 | ||||||||||||||||||||||
Rest of World 3 | 676 | 635 | 1,958 | 1,800 | ||||||||||||||||||||||
| Net Sales | $ | 3,780 | $ | 3,538 | $ | 6,272 | $ | 5,993 | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| GEOGRAPHIC NET SALES - CROP PROTECTION | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
North America 1 | $ | 738 | $ | 663 | $ | 1,271 | $ | 1,138 | ||||||||||||||||||
EMEA 2 | 412 | 379 | 1,067 | 965 | ||||||||||||||||||||||
| Latin America | 354 | 309 | 598 | 527 | ||||||||||||||||||||||
| Asia Pacific | 343 | 302 | 597 | 524 | ||||||||||||||||||||||
Rest of World 3 | 1,109 | 990 | 2,262 | 2,016 | ||||||||||||||||||||||
| Net Sales | $ | 1,847 | $ | 1,653 | $ | 3,533 | $ | 3,154 | ||||||||||||||||||
| 1. Reflects U.S. & Canada | ||||||||||||||||||||||||||
| 2. Reflects Europe, Middle East, and Africa | ||||||||||||||||||||||||||
| 3. Reflects EMEA, Latin America, and Asia Pacific | ||||||||||||||||||||||||||
A-5
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2021 | |||||||||||||||||||||||||
| Net Sales (GAAP) | $ | 5,627 | $ | 9,805 | ||||||||||||||||||||||
| Less: Impacts from Currency and Portfolio | 130 | 105 | ||||||||||||||||||||||||
| Organic Sales (Non-GAAP) | $ | 5,497 | $ | 9,700 | ||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| OPERATING EBITDA | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||
| Seed | $ | 1,123 | $ | 956 | $ | 1,740 | $ | 1,537 | ||||||||||||||||||
| Crop Protection | 370 | 309 | 691 | 547 | ||||||||||||||||||||||
| Corporate Expenses | (32) | (29) | (66) | (54) | ||||||||||||||||||||||
| Operating EBITDA (Non-GAAP) | $ | 1,461 | $ | 1,236 | $ | 2,365 | $ | 2,030 | ||||||||||||||||||
| RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS AFTER INCOME TAXES TO OPERATING EBITDA | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Income from continuing operations after income taxes (GAAP) | $ | 1,018 | $ | 766 | $ | 1,631 | $ | 1,047 | ||||||||||||||||||
| Provision for income taxes on continuing operations | 284 | 78 | 462 | 205 | ||||||||||||||||||||||
| Income from continuing operations before income taxes (GAAP) | 1,302 | 844 | 2,093 | 1,252 | ||||||||||||||||||||||
| Depreciation and amortization | 313 | 300 | 617 | 583 | ||||||||||||||||||||||
| Interest income | (18) | (9) | (39) | (27) | ||||||||||||||||||||||
| Interest expense | 7 | 14 | 14 | 24 | ||||||||||||||||||||||
Exchange losses (gains) - net1 | 14 | (1) | 49 | 60 | ||||||||||||||||||||||
Non-operating benefits - net2 | (315) | (91) | (626) | (164) | ||||||||||||||||||||||
Mark-to-market losses on certain foreign currency contracts not designated as hedges3 | 23 | 22 | ||||||||||||||||||||||||
Significant items charge4 | 135 | 179 | 235 | 302 | ||||||||||||||||||||||
| Operating EBITDA (Non-GAAP) | $ | 1,461 | $ | 1,236 | $ | 2,365 | $ | 2,030 | ||||||||||||||||||
1.Refer to page A-14 for pre-tax and after tax impacts of exchange losses - net.
2.Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) (benefits) costs, 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.
3.Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and six months ended June 30, 2020, the unrealized mark-to-market gain was $27 million.
4.Refer to page A-10 for pre-tax and after tax impacts of significant items.
A-6
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| PRICE - VOLUME - CURRENCY ANALYSIS | ||||||||||||||||||||||||||
| REGION | ||||||||||||||||||||||||||
| Q2 2021 vs. Q2 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 276 | 8 | % | $ | 227 | 6 | % | — | % | 6 | % | 2 | % | — | % | ||||||||||
| EMEA | 67 | 10 | % | 23 | 4 | % | 5 | % | (1) | % | 6 | % | — | % | ||||||||||||
| Latin America | 73 | 14 | % | 55 | 11 | % | 6 | % | 5 | % | 3 | % | — | % | ||||||||||||
| Asia Pacific | 20 | 4 | % | — | — | % | 2 | % | (2) | % | 5 | % | (1) | % | ||||||||||||
| Rest of World | 160 | 10 | % | 78 | 5 | % | 4 | % | 1 | % | 5 | % | — | % | ||||||||||||
| Total | $ | 436 | 8 | % | $ | 305 | 6 | % | 1 | % | 5 | % | 2 | % | — | % | ||||||||||
| SEED | ||||||||||||||||||||||||||
| Q2 2021 vs. Q2 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 201 | 7 | % | $ | 163 | 6 | % | — | % | 6 | % | 1 | % | — | % | ||||||||||
| EMEA | 34 | 13 | % | 24 | 9 | % | 10 | % | (1) | % | 4 | % | — | % | ||||||||||||
| Latin America | 28 | 14 | % | 20 | 10 | % | 10 | % | — | % | 4 | % | — | % | ||||||||||||
| Asia Pacific | (21) | (13) | % | (26) | (16) | % | — | % | (16) | % | 3 | % | — | % | ||||||||||||
| Rest of World | 41 | 6 | % | 18 | 3 | % | 7 | % | (4) | % | 3 | % | — | % | ||||||||||||
| Total | $ | 242 | 7 | % | $ | 181 | 5 | % | 1 | % | 4 | % | 2 | % | — | % | ||||||||||
| CROP PROTECTION | ||||||||||||||||||||||||||
| Q2 2021 vs. Q2 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 75 | 11 | % | $ | 64 | 10 | % | 2 | % | 8 | % | 1 | % | — | % | ||||||||||
| EMEA | 33 | 9 | % | (1) | — | % | 2 | % | (2) | % | 9 | % | — | % | ||||||||||||
| Latin America | 45 | 15 | % | 35 | 11 | % | 3 | % | 8 | % | 4 | % | — | % | ||||||||||||
| Asia Pacific | 41 | 14 | % | 26 | 9 | % | 3 | % | 6 | % | 7 | % | (2) | % | ||||||||||||
| Rest of World | 119 | 12 | % | 60 | 6 | % | 2 | % | 4 | % | 7 | % | (1) | % | ||||||||||||
| Total | $ | 194 | 12 | % | $ | 124 | 8 | % | 3 | % | 5 | % | 4 | % | — | % | ||||||||||
A-7
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| SEED PRODUCT LINE | ||||||||||||||||||||||||||
| Q2 2021 vs. Q2 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Corn | $ | 123 | 6 | % | $ | 96 | 5 | % | 3 | % | 2 | % | 1 | % | — | % | ||||||||||
| Soybeans | 75 | 7 | % | 66 | 6 | % | (2) | % | 8 | % | 1 | % | — | % | ||||||||||||
| Other oilseeds | 52 | 24 | % | 32 | 15 | % | 4 | % | 11 | % | 9 | % | — | % | ||||||||||||
| Other | (8) | (5) | % | (13) | (7) | % | (5) | % | (2) | % | 2 | % | — | % | ||||||||||||
| Total | $ | 242 | 7 | % | $ | 181 | 5 | % | 1 | % | 4 | % | 2 | % | — | % | ||||||||||
| CROP PROTECTION PRODUCT LINE | ||||||||||||||||||||||||||
| Q2 2021 vs. Q2 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Herbicides | $ | 60 | 7 | % | $ | 24 | 3 | % | 2 | % | 1 | % | 4 | % | — | % | ||||||||||
| Insecticides | 15 | 3 | % | (2) | (1) | % | 2 | % | (3) | % | 4 | % | — | % | ||||||||||||
| Fungicides | 87 | 39 | % | 72 | 32 | % | 4 | % | 28 | % | 9 | % | (2) | % | ||||||||||||
| Other | 32 | 43 | % | 30 | 40 | % | 6 | % | 34 | % | 3 | % | — | % | ||||||||||||
| Total | $ | 194 | 12 | % | $ | 124 | 8 | % | 3 | % | 5 | % | 4 | % | — | % | ||||||||||
A-8
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| PRICE - VOLUME - CURRENCY ANALYSIS | ||||||||||||||||||||||||||
| REGION | ||||||||||||||||||||||||||
| First Half 2021 vs. First Half 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 254 | 5 | % | $ | 197 | 4 | % | — | % | 4 | % | 1 | % | — | % | ||||||||||
| EMEA | 202 | 10 | % | 109 | 5 | % | 4 | % | 1 | % | 5 | % | — | % | ||||||||||||
| Latin America | 157 | 17 | % | 221 | 23 | % | 9 | % | 14 | % | (6) | % | — | % | ||||||||||||
| Asia Pacific | 45 | 6 | % | 26 | 3 | % | 2 | % | 1 | % | 5 | % | (2) | % | ||||||||||||
| Rest of World | 404 | 11 | % | 356 | 9 | % | 5 | % | 4 | % | 2 | % | — | % | ||||||||||||
| Total | $ | 658 | 7 | % | $ | 553 | 6 | % | 2 | % | 4 | % | 1 | % | — | % | ||||||||||
| SEED | ||||||||||||||||||||||||||
| First Half 2021 vs. First Half 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 121 | 3 | % | $ | 79 | 2 | % | (1) | % | 3 | % | 1 | % | — | % | ||||||||||
| EMEA | 100 | 9 | % | 71 | 6 | % | 5 | % | 1 | % | 3 | % | — | % | ||||||||||||
| Latin America | 86 | 20 | % | 124 | 29 | % | 9 | % | 20 | % | (9) | % | — | % | ||||||||||||
| Asia Pacific | (28) | (12) | % | (31) | (13) | % | 2 | % | (15) | % | 1 | % | — | % | ||||||||||||
| Rest of World | 158 | 9 | % | 164 | 9 | % | 5 | % | 4 | % | — | % | — | % | ||||||||||||
| Total | $ | 279 | 5 | % | $ | 243 | 4 | % | 1 | % | 3 | % | 1 | % | — | % | ||||||||||
| CROP PROTECTION | ||||||||||||||||||||||||||
| First Half 2021 vs. First Half 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| North America | $ | 133 | 12 | % | $ | 118 | 10 | % | 3 | % | 7 | % | 2 | % | — | % | ||||||||||
| EMEA | 102 | 11 | % | 38 | 4 | % | 2 | % | 2 | % | 7 | % | — | % | ||||||||||||
| Latin America | 71 | 13 | % | 97 | 18 | % | 9 | % | 9 | % | (5) | % | — | % | ||||||||||||
| Asia Pacific | 73 | 14 | % | 57 | 11 | % | 3 | % | 8 | % | 6 | % | (3) | % | ||||||||||||
| Rest of World | 246 | 12 | % | 192 | 10 | % | 4 | % | 6 | % | 3 | % | (1) | % | ||||||||||||
| Total | $ | 379 | 12 | % | $ | 310 | 10 | % | 4 | % | 6 | % | 3 | % | (1) | % | ||||||||||
A-9
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| SEED PRODUCT LINE | ||||||||||||||||||||||||||
| First Half 2021 vs. First Half 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Corn | $ | 147 | 4 | % | $ | 139 | 4 | % | 3 | % | 1 | % | — | % | — | % | ||||||||||
| Soybeans | 71 | 6 | % | 59 | 5 | % | (2) | % | 7 | % | 1 | % | — | % | ||||||||||||
| Other oilseeds | 100 | 21 | % | 86 | 18 | % | 4 | % | 14 | % | 3 | % | — | % | ||||||||||||
| Other | (39) | (12) | % | (41) | (12) | % | (5) | % | (7) | % | — | % | — | % | ||||||||||||
| Total | $ | 279 | 5 | % | $ | 243 | 4 | % | 1 | % | 3 | % | 1 | % | — | % | ||||||||||
| CROP PROTECTION PRODUCT LINE | ||||||||||||||||||||||||||
| First Half 2021 vs. First Half 2020 | Percent Change Due To: | |||||||||||||||||||||||||
| Net Sales Change (GAAP) | Organic Change 1 (Non-GAAP) | Local Price & | Portfolio / | |||||||||||||||||||||||
| $ | % | $ | % | Product Mix | Volume | Currency | Other | |||||||||||||||||||
| Herbicides | $ | 223 | 13 | % | $ | 166 | 10 | % | 4 | % | 6 | % | 3 | % | — | % | ||||||||||
| Insecticides | 22 | 3 | % | 13 | 2 | % | 5 | % | (3) | % | 1 | % | — | % | ||||||||||||
| Fungicides | 119 | 26 | % | 115 | 25 | % | 4 | % | 21 | % | 4 | % | (3) | % | ||||||||||||
| Other | 15 | 10 | % | 16 | 11 | % | 3 | % | 8 | % | (1) | % | — | % | ||||||||||||
| Total | $ | 379 | 12 | % | $ | 310 | 10 | % | 4 | % | 6 | % | 3 | % | (1) | % | ||||||||||
1.Organic sales is defined as price and volume and excludes currency and portfolio impacts.
A-10
Corteva, Inc.
Significant Items
(Dollars in millions, except per share amounts)
| SIGNIFICANT ITEMS BY SEGMENT (PRE-TAX) | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Seed | $ | (115) | $ | (135) | $ | (136) | $ | (145) | |||||||||||||||
| Crop Protection | (11) | (40) | (43) | (111) | |||||||||||||||||||
| Corporate | (9) | (4) | (56) | (46) | |||||||||||||||||||
| Total significant items before income taxes | $ | (135) | $ | (179) | $ | (235) | $ | (302) | |||||||||||||||
| SIGNIFICANT ITEMS - PRE-TAX, AFTER TAX, AND EPS IMPACTS | ||||||||||||||||||||||||||||||||||||||
| Pre-tax | After tax5 | ($ Per Share) | ||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||||||||||
| 1st Quarter | ||||||||||||||||||||||||||||||||||||||
Restructuring and asset related charges, net 1 | $ | (100) | $ | (70) | $ | (77) | $ | (57) | $ | (0.10) | $ | (0.08) | ||||||||||||||||||||||||||
Loss on divestiture 2 | — | (53) | — | (43) | — | (0.06) | ||||||||||||||||||||||||||||||||
Income tax items 3 | — | — | — | (19) | — | (0.02) | ||||||||||||||||||||||||||||||||
1st Quarter — Total | $ | (100) | $ | (123) | $ | (77) | $ | (119) | $ | (0.10) | $ | (0.16) | ||||||||||||||||||||||||||
| 2nd Quarter | ||||||||||||||||||||||||||||||||||||||
Restructuring and asset related charges, net 1 | (135) | (179) | (107) | (143) | (0.14) | (0.19) | ||||||||||||||||||||||||||||||||
Income tax items 3 | — | — | — | 29 | — | 0.04 | ||||||||||||||||||||||||||||||||
2nd Quarter — Total | $ | (135) | $ | (179) | $ | (107) | $ | (114) | $ | (0.14) | $ | (0.15) | ||||||||||||||||||||||||||
Year-to-date Total 4 | $ | (235) | $ | (302) | $ | (184) | $ | (233) | $ | (0.25) | $ | (0.31) | ||||||||||||||||||||||||||
1.First and second quarter 2021 included restructuring and asset related charges of $(100) and $(135), respectively. The charges for the second quarter primarily relate to a $(21) charge associated with the 2021 Restructuring Actions and a $(112) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. The charges for the first quarter primarily relate to a $(89) charge associated with the 2021 Restructuring Actions and a $(7) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.
First quarter and second quarter 2020 included restructuring and asset related charges of $(70) and $(179), respectively. The charge for the second quarter included a $(41) charge related to the Execute to Win Productivity Program and a $(138) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits. The charge for the first quarter included a $(63) charge related to the Execute to Win Productivity Program, a $(10) charge related to non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits, and a $3 asset related benefit associated with the DowDuPont Synergy Program.
2.First quarter 2020 included a loss of $(53) included in other income - net related to the sale of the La Porte site, for which the company signed an agreement during the first quarter 2020, and closed during the first quarter of 2021.
3.Second quarter 2020 reflected a benefit of $29 due to an elective change in accounting method that altered the 2019 impact of the business separation on the 2017 Tax Cuts and Jobs Act's foreign tax provisions. First quarter 2020 included an after tax charge related to the impact of a state tax valuation allowance in the U.S. based on a change in judgment about the realizability of a deferred tax asset.
4.Earnings per share for the year may not equal the sum of quarterly earnings per share due to the changes in average share calculations.
5.Unless specifically addressed in notes 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.
A-11
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| Operating Earnings Per Share (Non-GAAP) | ||||||||||||||||||||||||||
| Operating earnings per share is defined as earnings per share from continuing operations – diluted, excluding non-operating benefits - net, amortization of intangibles (existing as of Separation), net unrealized gain or loss from mark-to-market activity on certain foreign currency derivative instruments that do not qualify for hedge accounting, and significant items. | ||||||||||||||||||||||||||
| Three Months Ended June 30, | ||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| $ | $ | EPS (diluted) | EPS (diluted) | |||||||||||||||||||||||
| Net income from continuing operations attributable to Corteva (GAAP) | $ | 1,015 | $ | 760 | $ | 1.37 | $ | 1.01 | ||||||||||||||||||
Less: Non-operating benefits - net, after tax 1 | 237 | 67 | 0.32 | 0.09 | ||||||||||||||||||||||
| Less: Amortization of intangibles (existing as of Separation), after tax | (140) | (137) | (0.19) | (0.19) | ||||||||||||||||||||||
Less: Mark-to-market losses on certain foreign currency contracts not designated as hedges, after tax2 | (18) | (0.02) | ||||||||||||||||||||||||
| Less: Significant items charge, after tax | (107) | (114) | (0.14) | (0.15) | ||||||||||||||||||||||
| Operating Earnings (Non-GAAP) | $ | 1,043 | $ | 944 | $ | 1.40 | $ | 1.26 | ||||||||||||||||||
| Six Months Ended June 30, | ||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| $ | $ | EPS (diluted) | EPS (diluted) | |||||||||||||||||||||||
| Net income from continuing operations attributable to Corteva (GAAP) | $ | 1,625 | $ | 1,031 | $ | 2.18 | $ | 1.37 | ||||||||||||||||||
Less: Non-operating benefits - net, after tax 1 | 474 | 124 | 0.64 | 0.16 | ||||||||||||||||||||||
| Less: Amortization of intangibles (existing as of Separation), after tax | (283) | (251) | (0.38) | (0.33) | ||||||||||||||||||||||
Less: Mark-to-market losses on certain foreign currency contracts not designated as hedges, after tax2 | (17) | (0.02) | ||||||||||||||||||||||||
| Less: Significant items charge, after tax | (184) | (233) | (0.25) | (0.31) | ||||||||||||||||||||||
| Operating Earnings (Non-GAAP) | $ | 1,635 | $ | 1,391 | $ | 2.19 | $ | 1.85 | ||||||||||||||||||
1.Non-operating benefits—net consists of non-operating pension and other post-employment benefit (OPEB) benefits (costs), tax indemnification adjustments, and 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.
2.Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and six months ended June 30, 2020, the unrealized mark-to-market gain was $27 million.
A-12
Corteva, Inc.
Operating EBITDA to Operating Earnings Per Share
(Dollars in millions, except per share amounts)
| Operating EBITDA to Operating Earnings Per Share | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Operating EBITDA (Non-GAAP)1 | $ | 1,461 | $ | 1,236 | $ | 2,365 | $ | 2,030 | ||||||||||||||||||
| Depreciation | (133) | (124) | (254) | (244) | ||||||||||||||||||||||
| Interest Income | 18 | 9 | 39 | 27 | ||||||||||||||||||||||
| Interest Expense | (7) | (14) | (14) | (24) | ||||||||||||||||||||||
Provision for income taxes on continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market losses on certain foreign currency contracts not designated as hedges, and exchange gains/(losses), net (Non-GAAP)1 | (278) | (160) | (440) | (307) | ||||||||||||||||||||||
Base income tax rate from continuing operations (Non-GAAP)1 | 20.8 | % | 14.5 | % | 20.6 | % | 17.2 | % | ||||||||||||||||||
Exchange (losses) gains - net, after tax2 | (15) | 3 | (55) | (75) | ||||||||||||||||||||||
| Net income attributable to non-controlling interests | (3) | (6) | (6) | (16) | ||||||||||||||||||||||
Operating Earnings (Non-GAAP)1 | $ | 1,043 | $ | 944 | $ | 1,635 | $ | 1,391 | ||||||||||||||||||
| Diluted Shares (in millions) | 743.3 | 751.6 | 746.4 | 752.0 | ||||||||||||||||||||||
Operating Earnings Per Share (Non-GAAP)1 | $ | 1.40 | $ | 1.26 | $ | 2.19 | $ | 1.85 | ||||||||||||||||||
1. Refer to pages A-5 through A-9 and A-11 through A-13 for Non-GAAP reconciliations.
2. Refer to page A-14 for pre-tax and after tax impacts of exchange (losses) gains - net.
A-13
Corteva, Inc.
Reconciliation of Non-GAAP Measures
(Dollars in millions, except per share amounts)
| Reconciliation of Base Income Tax Rate to Effective Income Tax Rate | |||||||||||||||||||||||
| Base income tax rate is defined as the effective income tax rate less the effect of exchange (losses) gains, significant items, amortization of intangibles (existing as of Separation), mark-to-market gains on certain foreign currency contracts not designated as hedges, and non-operating benefits - net. | |||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Income from continuing operations before income taxes (GAAP) | $ | 1,302 | $ | 844 | $ | 2,093 | $ | 1,252 | |||||||||||||||
Add: Significant items - charge 1 | 135 | 179 | 235 | 302 | |||||||||||||||||||
| Non-operating benefits - net | (315) | (91) | (626) | (164) | |||||||||||||||||||
| Amortization of intangibles (existing as of Separation) | 180 | 176 | 363 | 339 | |||||||||||||||||||
Mark-to-market losses on certain foreign currency contracts not designated as hedges2 | 23 | 22 | |||||||||||||||||||||
Less: Exchange (losses) gains, net3 | (14) | 1 | (49) | (60) | |||||||||||||||||||
Income from continuing operations before income taxes, significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market losses on certain foreign currency contracts not designated as hedges, and exchange (losses) gains, net (Non-GAAP) | $ | 1,339 | $ | 1,107 | $ | 2,136 | $ | 1,789 | |||||||||||||||
Provision for income taxes on continuing operations (GAAP) | $ | 284 | $ | 78 | $ | 462 | $ | 205 | |||||||||||||||
Add: Tax benefits on significant items charge1 | 28 | 65 | 51 | 69 | |||||||||||||||||||
| Tax expenses on non-operating benefits - net | (78) | (24) | (152) | (40) | |||||||||||||||||||
| Tax benefits on amortization of intangibles (existing as of Separation) | 40 | 39 | 80 | 88 | |||||||||||||||||||
Tax benefits on mark-to-market losses on certain foreign currency contracts not designated as hedges2 | 5 | 5 | |||||||||||||||||||||
Tax expenses on exchange (losses) gains, net3 | (1) | 2 | (6) | (15) | |||||||||||||||||||
Provision for income taxes on continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), mark-to-market losses on certain foreign currency contracts not designated as hedges, and exchange (losses) gains, net (Non-GAAP) | $ | 278 | $ | 160 | $ | 440 | $ | 307 | |||||||||||||||
Effective income tax rate (GAAP) | 21.8 | % | 9.2 | % | 22.1 | % | 16.4 | % | |||||||||||||||
| Significant items, non-operating benefits, amortization of intangibles (existing as of Separation), and mark-to-market losses on certain foreign currency contracts not designated as hedges effect | (0.8) | % | 5.1 | % | (0.7) | % | 2.2 | % | |||||||||||||||
| Tax rate from continuing operations before significant items, non-operating benefits - net, amortization of intangibles (existing as of Separation), and mark-to-market losses on certain foreign currency contracts not designated as hedges | 21.0 | % | 14.3 | % | 21.4 | % | 18.6 | % | |||||||||||||||
Exchange (losses) gains, net effect3 | (0.2) | % | 0.2 | % | (0.8) | % | (1.4) | % | |||||||||||||||
Base income tax rate from continuing operations (Non-GAAP) | 20.8 | % | 14.5 | % | 20.6 | % | 17.2 | % | |||||||||||||||
| 1. See Significant Items table for further detail. | |||||||||||||||||||||||
| 2. Effective January 1, 2021, on a prospective basis, the company excludes net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting. For the three and six months ended June 30, 2020, the unrealized mark-to-market gain was $27 million. | |||||||||||||||||||||||
| 3. See page A-14 for further details of exchange (losses) gains. | |||||||||||||||||||||||
A-14
Corteva, Inc.
(Dollars in millions, except per share amounts)
| Exchange Gains/Losses | ||||||||||||||||||||||||||
| 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 other income (expense) - net and the related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the Consolidated Statements of Operations. | ||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Subsidiary Monetary Position Gain (Loss) | ||||||||||||||||||||||||||
| Pre-tax exchange gains (losses) | $ | 36 | $ | (13) | $ | (15) | $ | (239) | ||||||||||||||||||
| Local tax (expenses) benefits | (13) | 5 | (14) | 28 | ||||||||||||||||||||||
| Net after tax impact from subsidiary exchange gains (losses) | $ | 23 | $ | (8) | $ | (29) | $ | (211) | ||||||||||||||||||
| Hedging Program (Loss) Gain | ||||||||||||||||||||||||||
| Pre-tax exchange (losses) gains | $ | (50) | $ | 14 | $ | (34) | $ | 179 | ||||||||||||||||||
| Tax benefits (expenses) | 12 | (3) | 8 | (43) | ||||||||||||||||||||||
| Net after tax impact from hedging program exchange (losses) gains | $ | (38) | $ | 11 | $ | (26) | $ | 136 | ||||||||||||||||||
| Total Exchange (Loss) Gain | ||||||||||||||||||||||||||
| Pre-tax exchange (losses) gains | $ | (14) | $ | 1 | $ | (49) | $ | (60) | ||||||||||||||||||
| Tax (expenses) benefits | (1) | 2 | (6) | (15) | ||||||||||||||||||||||
| Net after tax exchange (losses) gains | $ | (15) | $ | 3 | $ | (55) | $ | (75) | ||||||||||||||||||
| As shown above, the "Total Exchange (Loss) Gain" is the sum of the "Subsidiary Monetary Position Gain (Loss)" and the "Hedging Program (Loss) Gain." | ||||||||||||||||||||||||||