Item 1. CONSOLIDATED FINANCIAL STATEMENTS

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Item 1. CONSOLIDATED FINANCIAL STATEMENTS

Corteva, Inc.

Consolidated Statements of Operations (Unaudited)

(In millions, except per share amounts)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net sales$2,777$2,371$13,630$12,176
Cost of goods sold1,8791,5587,9266,988
Research and development expense312297876871
Selling, general and administrative expenses6576722,4092,403
Amortization of intangibles178180536543
Restructuring and asset related charges - net15226300261
Other income - net23378891,013
Interest expense1884322
Income (loss) from continuing operations before income taxes(396)81,6292,101
Provision for (benefit from) income taxes on continuing operations(74)(28)372434
Income (loss) from continuing operations after income taxes(322)361,2571,667
(Loss) income from discontinued operations after income taxes(6)(4)(46)(59)
Net income (loss)(328)321,2111,608
Net income (loss) attributable to noncontrolling interests3298
Net income (loss) attributable to Corteva$(331)$30$1,202$1,600
Basic earnings (loss) per share of common stock:
Basic earnings (loss) per share of common stock from continuing operations$(0.45)$0.05$1.73$2.25
Basic earnings (loss) per share of common stock from discontinued operations(0.01)(0.01)(0.06)(0.08)
Basic earnings (loss) per share of common stock$(0.46)$0.04$1.67$2.17
Diluted earnings (loss) per share of common stock:
Diluted earnings (loss) per share of common stock from continuing operations$(0.45)$0.05$1.72$2.23
Diluted earnings (loss) per share of common stock from discontinued operations(0.01)(0.01)(0.06)(0.08)
Diluted earnings (loss) per share of common stock$(0.46)$0.04$1.66$2.15

See Notes to the Interim Consolidated Financial Statements beginning on page 9.

Corteva, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$(328)$32$1,211$1,608
Other comprehensive income (loss) - net of tax:
Cumulative translation adjustments(533)(264)(868)(424)
Adjustments to pension benefit plans1131012826
Adjustments to other benefit plans1(157)4(474)
Unrealized gain (loss) on investments———10
Derivative instruments501142107
Total other comprehensive income (loss)(369)(400)(694)(755)
Comprehensive income (loss)(697)(368)517853
Comprehensive income (loss) attributable to noncontrolling interests - net of tax3298
Comprehensive income (loss) attributable to Corteva$(700)$(370)$508$845

See Notes to the Interim Consolidated Financial Statements beginning on page 9.

Corteva, Inc.

Consolidated Balance Sheets (Unaudited)

(In millions, except share amounts)September 30, 2022December 31, 2021September 30, 2021
Assets
Current assets
Cash and cash equivalents$2,199$4,459$2,779
Marketable securities11986103
Accounts and notes receivable - net6,2734,8115,818
Inventories5,4155,1804,417
Other current assets1,0391,0101,029
Total current assets15,04515,54614,146
Investment in nonconsolidated affiliates917667
Property, plant and equipment8,4448,3648,270
Less: Accumulated depreciation4,2594,0353,960
Net property, plant and equipment4,1854,3294,310
Goodwill9,79110,10710,130
Other intangible assets9,46110,04410,225
Deferred income taxes407438448
Other assets1,6711,8041,796
Total Assets$40,651$42,344$41,122
Liabilities and Equity
Current liabilities
Short-term borrowings and finance lease obligations$1,576$17$1,372
Accounts payable4,1404,1263,512
Income taxes payable22714695
Deferred revenue8603,201692
Accrued and other current liabilities2,1152,0682,134
Total current liabilities8,9189,5587,805
Long-term debt1,2771,1001,101
Other noncurrent liabilities
Deferred income tax liabilities1,1231,220930
Pension and other post employment benefits - noncurrent2,6283,1244,583
Other noncurrent obligations1,6211,7191,724
Total noncurrent liabilities6,6497,1638,338
Commitments and contingent liabilities
Stockholders’ equity
Common stock, $0.01 par value; 1,666,667,000 shares authorized; issued at September 30, 2022 - 716,225,000; December 31, 2021 - 726,527,000; and September 30, 2021 - 730,267,000777
Additional paid-in capital27,81527,75127,712
Retained earnings614524666
Accumulated other comprehensive income (loss)(3,592)(2,898)(3,645)
Total Corteva stockholders’ equity24,84425,38424,740
Noncontrolling interests240239239
Total equity25,08425,62324,979
Total Liabilities and Equity$40,651$42,344$41,122

See Notes to the Interim Consolidated Financial Statements beginning on page 9.

Corteva, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In millions)Nine Months Ended September 30,
20222021
Operating activities
Net income (loss)$1,211$1,608
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities:
Depreciation and amortization919926
Provision for (benefit from) deferred income tax(149)151
Net periodic pension and OPEB benefit, net(155)(959)
Pension and OPEB contributions(147)(202)
Net (gain) loss on sales of property, businesses, consolidated companies and investments(17)(1)
Restructuring and asset related charges - net300261
Other net loss181117
Changes in assets and liabilities, net
Accounts and notes receivable(1,814)(1,116)
Inventories(466)375
Accounts payable202(41)
Deferred revenue(2,311)(1,945)
Other assets and liabilities1007
Cash provided by (used for) operating activities(2,146)(819)
Investing activities
Capital expenditures(460)(413)
Proceeds from sales of property, businesses and consolidated companies - net of cash divested4653
Investments in and loans to nonconsolidated affiliates(9)(3)
Purchases of investments(314)(147)
Proceeds from sales and maturities of investments274310
Other investing activities, net24(1)
Cash provided by (used for) investing activities(439)(201)
Financing activities
Net change in borrowings (less than 90 days)777949
Proceeds from debt1,335419
Payments on debt(355)(1)
Repurchase of common stock(800)(750)
Proceeds from exercise of stock options6671
Dividends paid to stockholders(311)(295)
Other financing activities, net(49)(28)
Cash provided by (used for) financing activities663365
Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalents(295)(78)
Increase (decrease) in cash, cash equivalents and restricted cash equivalents(2,217)(733)
Cash, cash equivalents and restricted cash equivalents at beginning of period4,8363,873
Cash, cash equivalents and restricted cash equivalents at end of period****1$2,619$3,140
  1. See page 16 for reconciliation of cash and cash equivalents and restricted cash equivalents presented in interim Consolidated Balance Sheets to total cash, cash equivalents and restricted cash equivalents presented in the interim Consolidated Statements of Cash Flows.

See Notes to the Interim Consolidated Financial Statements beginning on page 9.

Corteva, Inc.

Consolidated Statements of Equity (Unaudited)

(In millions, except per share amounts)Common StockAdditional Paid-in Capital "APIC"Retained EarningsAccumulated Other Comp Income (Loss)Non-controlling InterestsTotal Equity
2021
Balance at January 1, 2021$7$27,707$—$(2,890)$239$25,063
Net income (loss)6003603
Other comprehensive income (loss)(477)(477)
Common dividends ($0.13 per share)(97)(97)
Issuance of Corteva stock3838
Repurchase of common stock(18)(332)(350)
Other - net(2)(2)
Balance at March 31, 2021$7$27,630$268$(3,367)$240$24,778
Net income (loss)9703973
Other comprehensive income (loss)122122
Common dividends ($0.13 per share)(95)(95)
Issuance of Corteva stock2828
Share-based compensation23(1)22
Repurchase of common stock(200)(200)
Other - net1(1)(3)(3)
Balance at June 30, 2021$7$27,682$941$(3,245)$240$25,625
Net income (loss)30232
Other comprehensive income (loss)(400)(400)
Common dividends ($0.14 per share)(103)(103)
Issuance of Corteva stock55
Share-based compensation26(1)25
Repurchase of common stock(200)(200)
Other - net(1)(1)(3)(5)
Balance at September 30, 2021$7$27,712$666$(3,645)$239$24,979
(In millions, except per share amounts)Common StockAdditional Paid-in Capital "APIC"Retained EarningsAccumulated Other Comp Income (Loss)Non-controlling InterestsTotal Equity
2022
Balance at January 1, 2022$7$27,751$524$(2,898)$239$25,623
Net income (loss)5643567
Other comprehensive income (loss)7777
Common dividends ($0.14 per share)(102)(102)
Issuance of Corteva stock4040
Share-based compensation(31)(31)
Repurchase of common stock(235)(235)
Other - net(1)(2)(3)
Balance at March 31, 2022$7$27,760$750$(2,821)$240$25,936
Net income (loss)9693972
Other comprehensive income (loss)(402)(402)
Common dividends ($0.14 per share)(101)(101)
Issuance of Corteva stock2222
Share-based compensation13(1)12
Repurchase of common stock(365)(365)
Other - net(3)(3)
Balance at June 30, 2022$7$27,795$1,252$(3,223)$240$26,071
Net income (loss)(331)3(328)
Other comprehensive income (loss)(369)(369)
Common dividends ($0.15 per share)(108)(108)
Issuance of Corteva stock44
Share-based compensation16(1)15
Repurchase of common stock(200)(200)
Other - net2(3)(1)
Balance at September 30, 2022$7$27,815$614$(3,592)$240$25,084

See Notes to the Interim Consolidated Financial Statements beginning on page 9.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Corteva, Inc.
Notes to the Interim Consolidated Financial Statements (Unaudited)

Table of Contents

NotePage
1Summary of Significant Accounting Policies10
2Recent Accounting Guidance10
3Revenue11
4Restructuring and Asset Related Charges - Net13
5Supplementary Information15
6Income Taxes17
7Earnings Per Share of Common Stock18
8Accounts and Notes Receivable - Net19
9Inventories20
10Other Intangible Assets20
11Short-Term Borrowings, Long-Term Debt and Available Credit Facilities21
12Commitments and Contingent Liabilities23
13Stockholders' Equity30
14Pension Plans and Other Post Employment Benefits33
15Financial Instruments33
16Fair Value Measurements39
17Segment Information40
18Subsequent Events43

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

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, 2021, collectively referred to as the “2021 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.

Since 2018, Argentina has been considered a hyper-inflationary economy under U.S. GAAP and therefore the U.S. Dollar (“USD”) is the functional currency for our related subsidiaries. Argentina contributes approximately 5 percent to both the company's annual Sales and EBITDA. We remeasure net monetary assets and translate our financial statements utilizing the official Argentine Peso (“Peso”) to USD exchange rate. The ability to draw down Peso cash balances is limited at this time due to government restrictions and market availability of U.S. Dollars. The devaluation of the Peso relative to the USD over the last several years has resulted in the recognition of exchange losses (refer to Note 5 – Supplementary Information, to the interim Consolidated Financial Statements, and Note 9 – Supplemental Information, to the company's 2021 Annual Report). As of September 30, 2022, a further 10 percent deterioration in the official Peso to USD exchange rate would reduce the USD value of our net monetary assets and negatively impact pre-tax earnings by approximately $20 million. We will continue to assess the implications to our operations and financial reporting.

In April 2022, the company implemented a global business unit organization model (“BU Reorganization”). While the new organization model had no impact on our determination of operating segments, it did result in the company’s digital reporting unit being merged into the seed and crop protection reporting units with the goodwill relating to the former digital reporting unit being reassigned to the seed and crop protection reporting units using a relative fair value allocation approach. The impact of the BU Reorganization did not have a material impact to the company’s historical reportable segments’ financial measures. An interim goodwill impairment assessment immediately prior to the BU Reorganization and for the seed and crop protection reporting units immediately after the BU Reorganization resulted in no goodwill impairment charges.

Qualitative impairment assessments were performed for the seed and crop protection reporting units. The qualitative assessments included an evaluation of relevant factors including GDP growth rates, long-term commodity prices, equity and credit market activity, discount rates, changes in the industry and market structure, competitive environments, cost factors such as raw material prices, and overall financial performance. Based on the qualitative assessments performed, it was more likely than not that the fair value of each reporting unit exceeded the carrying value and therefore a quantitative test was not performed. A quantitative impairment assessment was performed for the former digital reporting unit using a combination of the discounted cash flow model (a form of the income approach) and the market approach. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The company's significant assumptions in this analysis included future cash flow projections, weighted average cost of capital, the terminal growth rate and the tax rate. The company’s estimate of future cash flows is based on current regulatory and economic climates, recent operating results, and assumed business strategy from a market participant perspective and includes an estimate of a long-term future growth rate based on such strategy. Actual results may differ from those assumed in the company’s forecast. The company derives its discount rate using a capital asset pricing model and analyzes published rates for industries relevant to its reporting unit to estimate the cost of equity financing. The company uses a discount rate that is commensurate with the risks and uncertainty inherent in the reporting unit and in its internally developed forecast. Under the market approach, the company uses historically completed transactions for comparable companies.

NOTE 2 - RECENT ACCOUNTING GUIDANCE

Recently Adopted Accounting Guidance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, which requires business entities to disclose transactions with a governmental entity for which a grant or contribution accounting model is used in recognizing and measuring such transactions. This standard is effective for fiscal years beginning after December 15, 2021, and early adoption is permitted. The company adopted this guidance on January 1, 2022 and it did not have a material impact on the company’s disclosures.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Accounting Guidance Issued But Not Adopted as of September 30, 2022

In September 2022, the FASB issued ASU 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU includes amendments that require a buyer in supplier finance programs to disclose key terms of the programs and related obligations, including a rollforward of such obligations. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the rollforward requirements, which is effective for fiscal years beginning after December 15, 2023, and early adoption is permitted. Retrospective application to all periods in which a balance sheet is presented is required, except for the rollforward requirement, which will be applied prospectively. The adoption of this guidance will result in the company being required to include certain disclosures relating to supplier financing programs and related obligations.

NOTE 3 - REVENUE

Revenue Recognition

Products

Substantially all of Corteva's revenue is derived from product sales. Product sales consist of sales of Corteva's products to farmers, distributors, and manufacturers. 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.

Revenue from product sales is recognized when the customer obtains control of the company's product, which occurs at a point in time according to shipping terms. Payment terms are generally less than one year from invoicing. The company elected the practical expedient and does not adjust the promised amount of consideration for the effects of a significant financing component when the company expects it will be one year or less between when a customer obtains control of the company's product and when payment is due. When the company performs shipping and handling activities after the transfer of control to the customer (e.g., when control transfers prior to or at shipment), these are considered fulfillment activities, and accordingly, the costs are accrued when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues. In addition, the company elected the practical expedient to expense any costs to obtain contracts as incurred, as the amortization period for these costs would have been one year or less.

The transaction price includes estimates of variable consideration, such as rights of return, rebates, and discounts, that are reductions in revenue. All estimates are based on the company's historical experience, anticipated performance, and the company's best judgment at the time the estimate is made. Estimates of variable consideration included in the transaction price primarily utilize the expected value method based on historical experience. These estimates are reassessed each reporting period and are included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur upon resolution of uncertainty associated with the variable consideration. The majority of contracts have a single performance obligation satisfied at a point in time and the transaction price is stated in the contract, usually as quantity times price per unit. For contracts with multiple performance obligations, the company allocates the transaction price to each performance obligation based on the relative standalone selling price. The standalone selling price is the observable price which depicts the price as if sold to a similar customer in similar circumstances.

Licenses of Intellectual Property

Corteva enters into licensing arrangements with customers under which it licenses its intellectual property. Revenue from the majority of intellectual property licenses is derived from sales-based royalties. 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. The company applies the practical expedient to disclose the transaction price allocated to the remaining performance obligations for only those contracts with an original duration of more than one year. The transaction price allocated to remaining performance obligations with an original duration of more than one year related to material rights granted to customers for contract renewal options were $129 million, $123 million and $122 million at September 30, 2022, December 31, 2021 and September 30, 2021, respectively. The company expects revenue to be recognized for the remaining performance obligations evenly over the period of one year to six years.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Contract Balances

Contract liabilities primarily reflect deferred revenue from prepayments under contracts with customers where the company receives advance payments for products to be delivered in future periods. Corteva 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 conditional rights to consideration for completed performance not yet invoiced. Accounts receivable are recorded when the right to consideration becomes unconditional.

Contract BalancesSeptember 30, 2022December 31, 2021September 30, 2021
(In millions)
Accounts and notes receivable - trade1$4,875$3,561$4,744
Contract assets - current2$25$24$24
Contract assets - noncurrent3$62$58$60
Deferred revenue - current$860$3,201$692
Deferred revenue - noncurrent4$108$120$111

1.Included in accounts and notes receivable - net in the interim Consolidated Balance Sheets.

2.Included in other current assets in the interim Consolidated Balance Sheets.

3.Included in other assets in the interim Consolidated Balance Sheets.

4.Included in other noncurrent obligations in the interim Consolidated Balance Sheets.

Revenue recognized during the nine months ended September 30, 2022 and 2021 from amounts included in deferred revenue at the beginning of the period was $3,049 million and $2,454 million, respectively.

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:

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Corn$469$437$4,621$4,505
Soybean2051571,6851,494
Other oilseeds12494647661
Other6450380350
Seed8627387,3337,010
Herbicides1,0437823,4722,737
Insecticides3634161,2751,261
Fungicides4213391,173911
Other8896377257
Crop Protection1,9151,6336,2975,166
Total$2,777$2,371$13,630$12,176

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

SeedThree Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
North America1$218$168$4,637$4,482
EMEA21571531,4421,398
Latin America383334912842
Asia Pacific10483342288
Total$862$738$7,333$7,010

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Crop ProtectionThree Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
North America1$521$422$2,185$1,693
EMEA22972371,4521,304
Latin America8987631,8521,361
Asia Pacific199211808808
Total$1,915$1,633$6,297$5,166

1.Represents U.S. & Canada.

2.Europe, Middle East, and Africa ("EMEA").

NOTE 4 - RESTRUCTURING AND ASSET RELATED CHARGES - NET

2022 Restructuring Actions

In connection with the company’s shift to a global business unit model, the company has assessed its business priorities and operational structure to maximize the customer experience and deliver on growth and earnings potential. As a result of this assessment, the company has committed to restructuring actions that, combined with the impact of the company’s separate announcement to withdraw from Russia (“Russia Exit”) (collectively the “2022 Restructuring Actions”), is expected to result in total net pre-tax restructuring and other charges of $350 million to $420 million comprised of $105 million to $120 million of severance and related benefit costs, $155 million to $180 million of asset related charges, $65 million to $80 million of costs related to contract terminations (contract terminations includes early lease terminations) and $25 million to $40 million of other charges. Future cash payments related to these charges are anticipated to be $150 million to $175 million, primarily related to the payment of severance and related benefits, contract terminations and other charges. The restructuring actions associated with these charges are expected to be substantially complete in 2023.

The total net pre-tax restructuring and other charges included $47 million associated with the Russia Exit for the nine months ended September 30, 2022. The Russia Exit net pre-tax restructuring charges consisted of $6 million of severance and related benefit costs, $3 million of asset related charges, and $28 million of costs related to contract terminations (contract terminations includes early lease terminations). The company also recorded other pre-tax charges associated with the Russia Exit to cost of goods sold and other income – net in the interim Consolidated Statement of Operations, relating to inventory write-offs of $2 million and settlement costs of $8 million, respectively. Additional pre-tax charges up to $20 million associated with the Russia Exit are possible, primarily associated with government receivables.

The charges related to the 2022 Restructuring Actions related to the segments, as well as corporate expenses, for the three and nine months ended September 30, 2022 were as follows:

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)20222022
Seed$61$94
Crop Protection1920
Corporate expenses6688
Total1$146$202

1.This amount excludes the pre-tax charges impacting Seed recorded to cost of goods sold and other income - net in the company's interim Consolidated Statement of Operations, relating to inventory write-offs of $33 million, and a gain on sale of a business of $15 million, settlement costs associated with the Russia Exit, and charges associated with the exit of a non-strategic asset of $5 million, respectively.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table is a summary of charges incurred related to 2022 Restructuring Actions for the three and nine months ended September 30, 2022:

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)20222022
Severance and related benefit costs$66$88
Asset related charges6670
Contract termination charges11444
Total restructuring and asset related charges - net2$146$202

1.Contract terminations includes early lease terminations.

2.This amount excludes the pre-tax charges recorded to the cost of goods sold and other income - net in the interim Consolidated Statement of Operations, relating to inventory write-offs of $33 million, and a gain on sale of a business of $15 million, settlement costs associated with the Russia Exit and charges associated with the exit of a non-strategic asset of $5 million, respectively.

A reconciliation of the December 31, 2021 to the September 30, 2022 liability balances related to the 2022 Restructuring Actions is summarized below:

(in millions)Severance and Related Benefit CostsAsset RelatedContract Termination**1Total
Balance at December 31, 2021$—$—$—$—
Charges to income (loss) from continuing operations887044202
Payments(19)—(5)(24)
Asset write-offs—(70)—(70)
Balance at September 30, 2022$69$—$39$108

1.The liability for contract terminations includes lease obligations. The cash impact of these obligations will be substantially complete by the end of 2022.

2021 Restructuring Actions

During the first quarter of 2021, Corteva approved restructuring actions designed to right-size and optimize its footprint and organizational structure according to the business needs in each region with the focus on driving continued cost improvement and productivity. Through the third quarter of 2022, the company recorded net pre-tax restructuring charges of $166 million inception-to-date under the 2021 Restructuring Actions, consisting of $77 million of severance and related benefit costs, $44 million of asset related charges, $6 million of asset retirement obligations and $39 million of costs related to contract terminations (contract terminations includes early lease terminations). The company does not anticipate any additional material charges from the 2021 Restructuring Actions as actions associated with this charge were substantially complete by the end of 2021.

The charges related to the 2021 Restructuring Actions related to the segments, as well as corporate expenses, for the three and nine months ended September 30, 2022 and 2021 were as follows:

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Seed$1$4$(1)$21
Crop Protection(1)4(3)41
Corporate expenses—9365
Total$—$17$(1)$127

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table is a summary of charges incurred related to 2021 Restructuring Actions for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Severance and related benefit costs$—$9$3$58
Asset related charges—7(1)29
Contract termination charges—1(3)40
Total restructuring and asset related charges - net$—$17$(1)$127

A reconciliation of the December 31, 2021 to the September 30, 2022 liability balances related to the 2021 Restructuring Actions is summarized below:

(In millions)Severance and Related Benefit CostsAsset Related**1Contract TerminationTotal
Balance at December 31, 2021$52$—$12$64
Charges to income (loss) from continuing operations3(1)(3)(1)
Payments(35)—(8)(43)
Asset write-offs—1—1
Balance at September 30, 2022$20$—$1$21

1.In addition, the company has a liability recorded for asset retirement obligations of $3 million as of September 30, 2022.

Other Asset Related Charges

The company recognized $5 million and $104 million for the three and nine months ended September 30, 2022, respectively, and $5 million and $124 million for the three and nine months ended September 30, 2021, respectively, in restructuring and asset related charges - net in the interim Consolidated Statement of Operations, from non-cash accelerated prepaid royalty amortization expense related to Roundup Ready 2 Yield® and Roundup Ready 2 Xtend® herbicide tolerance traits.

NOTE 5 - SUPPLEMENTARY INFORMATION

Other Income - NetThree Months Ended SeptemberNine Months Ended September 30,
(In millions)2022202120222021
Interest income$36$19$75$58
Equity in earnings (losses) of affiliates - net(1)(1)134
Net gain (loss) on sales of businesses and other assets161172
Net exchange gains (losses)1(13)2(96)(47)
Non-operating pension and other post employment benefit credit (costs)222326170979
Miscellaneous income (expenses) - net3(37)31(90)17
Other income - net$23$378$89$1,013

1.Includes net pre-tax exchange gains (losses) of $(32) million and $(65) million associated with the devaluation of the Argentine peso for the three and nine months ended September 30, 2022, respectively, and $(16) million and $(53) million for the three and nine months ended September 30, 2021, respectively.

2.Includes non-service related components of net periodic benefit credits (costs) (interest cost, expected return on plan assets, amortization of unrecognized gain (loss), amortization of prior service benefit and settlement gain (loss)).

3.Miscellaneous income (expenses) - net for the three and nine months ended September 30, 2022 and 2021 includes losses on sale of receivables, tax indemnification adjustments related 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, and other items. Miscellaneous income (expenses) - net for the three and nine months ended September 30, 2022 also includes estimated settlement reserves, settlement cost associated with the Russia Exit and an Employee Retention Credit, and the nine months ended September 30, 2022 also includes charges associated with the exit of a non-strategic asset. Additionally, the three and nine months ended September 30, 2021 includes a gain from remeasurement of an equity investment and the nine months ended September 30, 2021 includes realized losses on sale of available-for-sale securities.

NOTES TO THE INTERIM 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 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 - net and the related tax impact is recorded in provision for (benefit from) income taxes on continuing operations in the interim Consolidated Statements of Operations.

(In millions)Three Months Ended SeptemberNine Months Ended September 30,
2022202120222021
Subsidiary Monetary Position Gain (Loss)
Pre-tax exchange gain (loss)$(80)$(32)$(120)$(47)
Local tax (expenses) benefits(40)3(61)(11)
Net after-tax impact from subsidiary exchange gain (loss)$(120)$(29)$(181)$(58)
Hedging Program Gain (Loss)
Pre-tax exchange gain (loss)$67$34$24$—
Tax (expenses) benefits(15)(8)(5)—
Net after-tax impact from hedging program exchange gain (loss)$52$26$19$—
Total Exchange Gain (Loss)
Pre-tax exchange gain (loss)$(13)$2$(96)$(47)
Tax (expenses) benefits(55)(5)(66)(11)
Net after-tax exchange gain (loss)$(68)$(3)$(162)$(58)

Cash, cash equivalents and restricted cash equivalents

The following table provides a reconciliation of cash and cash equivalents and restricted cash equivalents presented in the interim Consolidated Balance Sheets to the total cash, cash equivalents and restricted cash equivalents presented in the interim Consolidated Statements of Cash Flows. Corteva classifies restricted cash equivalents as current or noncurrent based on the nature of the restrictions, which are included in other current assets and other assets, respectively, in the interim Consolidated Balance Sheets.

(In millions)September 30, 2022December 31, 2021September 30, 2021
Cash and cash equivalents$2,199$4,459$2,779
Restricted cash equivalents420377361
Total cash, cash equivalents and restricted cash equivalents$2,619$4,836$3,140

Restricted cash equivalents primarily relates to a trust funded by EID for cash obligations under certain non-qualified benefit and deferred compensation plans due to the Merger, which was a change in control event, and is classified as current. Restricted cash equivalents for September 30, 2022 and December 31, 2021 also includes contributions to escrow accounts established for the settlement of certain legal matters, which is classified as current, and the settlement of legacy PFAS matters and the associated qualified spend, which is classified as noncurrent.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 - INCOME TAXES

For periods between the Merger and the Corteva Distribution, Corteva and its subsidiaries were 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 was apportioned among the members of the consolidated group based on each member’s separate taxable income. Corteva, DuPont and 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 matters agreement. See Note 12 - Commitments and Contingent Liabilities, for further information related to indemnifications between Corteva, DuPont and Dow.

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 three and nine months ended September 30, 2022, the company recognized a tax benefit of $55 million to provision for income taxes on continuing operations related to the impact of a change in a U.S. legal entity's tax characterization, resulting in the establishment of deferred taxes.

During the three months ended September 30, 2022, the company recognized $9 million of net tax charges to provision for income taxes on continuing operations associated with changes in accruals and deferred taxes for certain prior year tax positions and valuation allowances, partially offset by tax benefits associated with U.S. state tax rate changes.

During the nine months ended September 30, 2022, the company recognized $39 million of net tax benefits to provision for income taxes on continuing operations associated with changes in accruals and deferred taxes for certain prior year tax positions in various jurisdictions, U.S state tax rate changes, and stock-based compensation, partially offset by changes in valuation allowances.

During the three and nine months ended September 30, 2021, the company recognized $32 million and $58 million, respectively, of net tax benefits to provision for income taxes on continuing operations associated with changes in accruals for certain prior year tax positions in various jurisdictions, including a $22 million tax benefit associated with U.S. research and development credits.

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 the program, which resides in the U.S., 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, which can drive material impacts on the company's effective tax rate. 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 5 - Supplementary Information.

On August 16, 2022, the U.S. federal government enacted the Inflation Reduction Act of 2022 (“the Act”). The Act includes tax provisions, among other things, which implements (i) a 15 percent minimum tax on book income of certain large corporations; (ii) a one percent excise tax on net stock repurchases; and (iii) several tax incentives to promote clean energy. The company does not expect the Act to have a material impact on the company’s financial position, results of operations or cash flows.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 7 - EARNINGS PER SHARE OF COMMON STOCK

The following tables provide earnings per share calculations for the periods indicated below:

Net Income (Loss) for Earnings (Loss) Per Share Calculations - Basic and DilutedThree Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Income (loss) from continuing operations after income taxes$(322)$36$1,257$1,667
Net income (loss) attributable to continuing operations noncontrolling interests3298
Income (loss) from continuing operations available to Corteva common stockholders(325)341,2481,659
(Loss) income from discontinued operations available to Corteva common stockholders(6)(4)(46)(59)
Net income (loss) available to common stockholders$(331)$30$1,202$1,600
Earnings (Loss) Per Share Calculations - BasicThree Months Ended September 30,Nine Months Ended September 30,
(Dollars per share)2022202120222021
Earnings (loss) per share of common stock from continuing operations$(0.45)$0.05$1.73$2.25
(Loss) earnings per share of common stock from discontinued operations(0.01)(0.01)(0.06)(0.08)
Earnings (loss) per share of common stock$(0.46)$0.04$1.67$2.17
Earnings (Loss) Per Share Calculations - DilutedThree Months Ended September 30,Nine Months Ended September 30,
(Dollars per share)2022202120222021
Earnings (loss) per share of common stock from continuing operations$(0.45)$0.05$1.72$2.23
(Loss) earnings per share of common stock from discontinued operations(0.01)(0.01)(0.06)(0.08)
Earnings (loss) per share of common stock$(0.46)$0.04$1.66$2.15
Share Count InformationThree Months Ended September 30,Nine Months Ended September 30,
(Shares in millions)2022202120222021
Weighted-average common shares - basic718.7733.8722.8738.1
Plus dilutive effect of equity compensation plans1—5.73.65.9
Weighted-average common shares - diluted718.7739.5726.4744.0
Potential shares of common stock excluded from EPS calculations26.13.02.23.1

1.Diluted earnings (loss) 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.

2.These outstanding potential shares of common stock relating to stock options, restricted stock units and performance-based restricted stock units were excluded from the calculation of diluted earnings (loss) per share because (i) the effect of including them would have been anti-dilutive; and (ii) the performance metrics have not yet been achieved for the outstanding potential shares relating to performance-based restricted stock units, which are deemed to be contingently issuable.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 - ACCOUNTS AND NOTES RECEIVABLE - NET

(In millions)September 30, 2022December 31, 2021September 30, 2021
Accounts receivable – trade1$3,642$3,441$3,336
Notes receivable – trade1,21,2331201,408
Other31,3981,2501,074
Total accounts and notes receivable - net$6,273$4,811$5,818

1.Accounts receivable – trade and notes receivable - trade are net of allowances of $213 million at September 30, 2022, and $210 million at December 31, 2021, and September 30, 2021. Allowances are equal to the estimated uncollectible amounts and are based on the expected credit losses and were developed using a loss-rate method.

2.Notes receivable – trade primarily consists of receivables for deferred payment loan programs for the sale of seed and chemical products to customers. These loans have terms of one year or less and are primarily concentrated in North America. The company maintains a rigid approval process for extending credit to customers in order to manage overall risk and exposure associated with credit losses. As of September 30, 2022, December 31, 2021, and September 30, 2021 there were no 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 $132 million, $104 million, and $84 million as of September 30, 2022, December 31, 2021, and September 30, 2021, 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 September 30, 2022 and 2021:

(In millions)
2021
Balance at December 31, 2020$208
Net benefit for credit losses(7)
Write-offs charged against allowance / other9
Balance at September 30, 2021$210
2022
Balance at December 31, 2021$210
Net provision for credit losses4
Write-offs charged against allowance / other(1)
Balance at September 30, 2022$213

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 interim 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 interim Consolidated Balance Sheets.

Trade receivables sold under these agreements were $35 million and $130 million for the three and nine months ended September 30, 2022 and $70 million and $257 million for the three and nine months ended September 30, 2021, respectively. The trade receivables sold that remained outstanding under these agreements which include an element of recourse as of September 30, 2022, December 31, 2021, and September 30, 2021 were $47 million, $166 million, and $173 million, respectively. The net proceeds received are included in cash provided by (used for) operating activities in the interim 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 interim Consolidated Statements of Operations. The loss on sale of receivables for the three and nine months ended September 30, 2022 was $6 million and $19 million, and $11 million and $54 million for the three and nine months ended September 30, 2021, respectively. See Note 12 - Commitments and Contingent Liabilities for additional information on the company’s guarantees.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 9 - INVENTORIES

(In millions)September 30, 2022December 31, 2021September 30, 2021
Finished products$2,082$2,497$1,871
Semi-finished products2,5572,0762,028
Raw materials and supplies776607518
Total inventories$5,415$5,180$4,417

NOTE 10 - OTHER INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization of other intangible assets by major class are as follows:

(In millions)September 30, 2022December 31, 2021September 30, 2021
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Intangible assets subject to amortization (Definite-lived):
Germplasm$6,265$(762)$5,503$6,265$(571)$5,694$6,265$(507)$5,758
Customer-related1,890(550)1,3401,953(487)1,4661,956(460)1,496
Developed technology1,485(790)6951,485(679)8061,485(641)844
Trademarks/trade names2,006(231)1,7752,012(172)1,8402,012(152)1,860
Favorable supply contracts475(467)8475(396)79475(373)102
Other1395(265)130405(256)149407(252)155
Total other intangible assets with finite lives12,516(3,065)9,45112,595(2,561)10,03412,600(2,385)10,215
Intangible assets not subject to amortization (Indefinite-lived):
IPR&D10—1010—1010—10
Total other intangible assets10—1010—1010—10
Total$12,526$(3,065)$9,461$12,605$(2,561)$10,044$12,610$(2,385)$10,225

1.Primarily consists of sales and farmer networks, marketing and manufacturing alliances and noncompetition agreements.

The aggregate pre-tax amortization expense from continuing operations for definite-lived intangible assets was $178 million and $536 million for the three and nine months ended September 30, 2022, respectively and $180 million and $543 million for the three and nine months ended September 30, 2021, respectively. The current estimated aggregate pre-tax amortization expense from continuing operations for the remainder of 2022 and each year of the next five years is approximately $164 million, $616 million, $602 million, $565 million, $554 million and $494 million, respectively.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 - 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)September 30, 2022December 31, 2021September 30, 2021
Commercial paper$1,369$—$802
Repurchase facility200—550
Other loans - various currencies61518
Long-term debt payable within one year—11
Finance lease obligations payable within one year111
Total short-term borrowings and finance lease obligations$1,576$17$1,372
Long-term debt
(in millions)September 30, 2022December 31, 2021September 30, 2021
AmountWeighted Average RateAmountWeighted Average RateAmountWeighted Average Rate
Promissory notes and debentures:
Maturing in 2025$5001.70%$5001.70%$5001.70%
Maturing in 20305002.30%5002.30%5002.30%
Other loans:
Foreign currency loans, various rates and maturities17614.80%16.82%16.38%
Medium-term notes, varying maturities through 20411072.87%107—%108—%
Finance lease obligations233
Less: Unamortized debt discount and issuance costs81010
Less: Long-term debt due within one year—11
Total long-term debt$1,277$1,100$1,101

The estimated fair value of the company's short-term and long-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 fair value of the company’s long-term borrowings, including debt due within one year, was $1,154 million, $1,121 million, and $1,134 million as of September 30, 2022, December 31, 2021, and September 30, 2021, respectively.

Repurchase Facility

In February 2022, the company entered into a new committed receivable repurchase facility of up to $500 million (the "2022 Repurchase Facility") which expires in December 2022. Under the 2022 Repurchase Facility, Corteva may sell a portfolio of available and eligible outstanding customer notes receivables to participating institutions and simultaneously agree to repurchase at a future date. The 2022 Repurchase Facility is considered a secured borrowing with the customer notes receivables inclusive of those that are sold and repurchased, equal to 105 percent of the outstanding amounts borrowed utilized as collateral. Borrowings under the 2022 Repurchase Facility have an interest rate equal to the Adjusted Term Secured Overnight Financing Rate ("SOFR"), which is Term SOFR plus 0.10 percent, plus the margin.

As of September 30, 2022, $210 million of notes receivable, recorded in accounts and notes receivable - net in the interim Consolidated Balance Sheets, were pledged as collateral against outstanding borrowings under the 2022 Repurchase Facility of $200 million, recorded in short-term borrowings and finance lease obligations in the interim Consolidated Balance Sheets.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Foreign Currency Loans

The company enters into short-term and long-term foreign currency loans from time-to-time by accessing uncommitted revolving credit lines to fund working capital needs of foreign subsidiaries in the normal course of business (“Foreign Currency Loans”). Interest rates are variable and determined at the time of borrowing. Total unused bank credit lines on the Foreign Currency Loans at September 30, 2022 was approximately $85 million. The company’s long-term Foreign Currency Loans have varying maturities through 2024.

Available Committed Credit Facilities

The following table summarizes the company's credit facilities:

Committed and Available Credit Facilities at September 30, 2022
(in millions)Effective DateCommitted CreditCredit AvailableMaturity DateInterest
Revolving Credit FacilityMay 2022$3,000$3,000May 2027Floating Rate
Revolving Credit FacilityMay 20222,0002,000May 2025Floating Rate
364-day Revolving Credit FacilityMay 2022500500May 2023Floating Rate
Total Committed and Available Credit Facilities$5,500$5,500

Revolving Credit Facilities

In November 2018, EID entered into a $3 billion, 5-year revolving credit facility and a $3 billion, 3-year revolving credit facility (the “Revolving Credit Facilities”). The Revolving Credit Facilities became effective in May 2019. Corteva, Inc. became a party at the time of the Corteva Distribution. In May 2021, the company entered into an amendment that extended the maturity date of the 3-year revolving credit facility from May 2022 to May 2023. Other than the change in maturity date, there were no material modifications to the terms of the credit facility. During May 2022, the Credit Facilities were refinanced for purposes of extending the maturity dates to 2027 and 2025 for the 5-year and 3-year revolving credit facilities, respectively, lowering the facility amount of the 3-year revolving credit facility to $2 billion and transitioning the interest rate to Adjusted Term SOFR, which is Term SOFR plus 0.10 percent, plus the applicable margin. The Revolving Credit Facilities may serve as a substitute to the company's commercial paper program, and can be used, from time to time, for general corporate purposes including, but not limited to, the funding of seasonal working capital needs. 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. Additionally, the Revolving Credit Facilities 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 September 30, 2022, the company was in compliance with these covenants.

364-day Revolving Credit Facilities

In May 2022, the company entered into a $500 million, 364-day revolving credit agreement (the “364-day Revolving Credit Facility”) expiring in May 2023. Borrowings under the 364-day Revolving Credit Facility will have an interest rate equal to Adjusted Term SOFR, which is Term SOFR plus 0.10 percent, plus the applicable margin. The 364-day Revolving Credit Facility includes a provision under which the company may convert any advances outstanding prior to the maturity date into term loans having a maturity date up to one year later. The 364-day Revolving Credit Facility will be used for general corporate purposes including, but not limited to, the funding of seasonal working capital needs. The 364-day Revolving Credit Facility contains customary representations and warranties, affirmative and negative covenants and events of default that are typical for companies with similar credit ratings. Additionally, the 364-day Revolving Credit Facility contains a financial covenant requiring that the ratio of total indebtedness to total capitalization for Corteva and its consolidated subsidiaries not exceed 0.60. At September 30, 2022, the company was in compliance with these covenants.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 - COMMITMENTS AND CONTINGENT LIABILITIES

Guarantees

Indemnifications

In connection with acquisitions and divestitures, 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 below for additional information relating to the indemnification obligations under the Chemours Separation Agreement and the Corteva Separation Agreement.

Obligations for Customers and Other Third Parties

The company has directly guaranteed various debt obligations under agreements with third parties related to customers and other third parties. At September 30, 2022, December 31, 2021 and September 30, 2021, the company had directly guaranteed $79 million, $105 million, and $107 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 in the event of default by the guaranteed party. All of the maximum future payments at September 30, 2022 had terms less than one year. The maximum future payments include $19 million, $21 million and $22 million at September 30, 2022, December 31, 2021 and September 30, 2021, respectively, of guarantees related to the various factoring agreements that the company enters into with third-party financial institutions to sell its trade receivables. See Note 8 - Accounts and Notes Receivable - Net, to the interim Consolidated Financial Statements, for additional information.

The maximum future payments also 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 amounts owed from customers to the lenders relating to these agreements was $560 million, $15 million and $615 million at September 30, 2022, December 31, 2021 and September 30, 2021, respectively.

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.

Indemnifications under Separation Agreements

The company has entered into various agreements where the company is indemnified 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. In connection with the recognition of liabilities related to these matters, the company records an indemnification asset when recovery is deemed probable.

Chemours/Performance Chemicals

Pursuant to the Chemours Separation Agreement resulting from the 2015 spin-off of the Performance Chemicals segment from Historical DuPont, Chemours indemnifies the company against certain litigation, environmental, workers' compensation and other liabilities that arose prior to the distribution.

In 2017, the Chemours Separation Agreement was amended to provide for a limited sharing of potential future liabilities related to alleged historical releases of perfluorooctanoic acids and its ammonium salts (“PFOA”) for a five-year period that began on July 6, 2017. In addition, in 2017, Chemours and EID settled multi-district litigation in the U.S. District Court for the Southern District of Ohio (“Ohio MDL”), resolving claims of about 3,550 plaintiffs alleging injury from exposure to PFOA in drinking water as a result of the historical manufacture or use of PFOA at the Washington Works plant outside Parkersburg, West Virginia. This plant was previously owned and/or operated by the performance chemicals segment of EID and is now owned and/or operated by Chemours.

On May 13, 2019, Chemours filed suit in the Delaware Court of Chancery against DuPont, EID, and Corteva, seeking, among other things, to limit its responsibility for the litigation and environmental liabilities allocated to and assumed by Chemours under the Chemours Separation Agreement (the “Delaware Litigation”). On March 30, 2020, the Court of Chancery granted a

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

motion to dismiss. On December 15, 2020, the Delaware Supreme Court affirmed the judgment of the Court of Chancery. Meanwhile, a confidential arbitration process regarding the same and other claims proceeded (the “Arbitration”).

On January 22, 2021, Chemours, DuPont, Corteva and EID entered into a binding memorandum of understanding containing a settlement to resolve legal disputes originating from the Delaware Litigation and Arbitration, and to establish a cost sharing arrangement and escrow account to be used to support and manage potential future legacy per- and polyfluoroalkyl substances ("PFAS") liabilities arising out of pre-July 1, 2015 conduct (the “MOU”). The MOU replaces the 2017 amendment to the Chemours Separation Agreement. According to the terms of the cost sharing arrangement within the MOU, Corteva and DuPont together, on one hand, and Chemours, on the other hand, agreed to a 50-50 split of certain qualified expenses related to PFAS liabilities incurred over a term not to exceed twenty years or $4 billion of qualified spend and escrow account contributions (see below for discussion of the escrow account) in the aggregate. DuPont’s and Corteva’s 50% share under the MOU will be limited to $2 billion, including qualified expenses and escrow contributions. These expenses and escrow account contributions will be subject to the existing Letter Agreement, under which DuPont and Corteva will each bear 50% of the first $300 million (up to $150 million each), and thereafter DuPont bears 71% and Corteva bears the remaining 29%.

In order to support and manage any potential future PFAS liabilities, the parties have also agreed to establish an escrow account ("MOU Escrow Account"). The MOU provides that (1) no later than each of September 30, 2021 and September 30, 2022, Chemours shall deposit $100 million into an escrow account and DuPont and Corteva shall together deposit $100 million in the aggregate into an escrow account and (2) no later than September 30 of each subsequent year through and including 2028, Chemours shall deposit $50 million into an escrow account and DuPont and Corteva shall together deposit $50 million in the aggregate into an escrow account. Subject to the terms and conditions set forth in the MOU, each party may be permitted to defer funding in any year (excluding 2021). Over this period, Chemours will deposit a total of $500 million in the account and DuPont and Corteva will deposit an additional $500 million pursuant to the terms of the Letter Agreement. Additionally, if on December 31, 2028, the balance of the escrow account (including interest) is less than $700 million, Chemours will make 50% of the deposits and DuPont and Corteva together will make 50% of the deposits necessary to restore the balance of the escrow account to $700 million. Such payments will be made in a series of consecutive annual equal installments commencing on September 30, 2029 pursuant to the escrow account replenishment terms as set forth in the MOU. The MOU provides that no withdrawals from the MOU Escrow Account can be made before year six, except to fund mutually agreed upon third-party settlements in excess of $125 million. Starting with year six, withdrawals can only be made to fund qualified spend if the parties’ aggregate qualified spend in that particular year is greater than $200 million. Beginning with year 11, the amounts in the MOU Escrow Account can be used to fund any qualified spend.

The company made its annual installment deposits due to the MOU Escrow Account through September 30, 2022. These payments are classified as noncurrent restricted cash equivalents and included in other assets in the interim Consolidated Balance Sheets.

After the term of this arrangement, Chemours’ indemnification obligations under the original 2015 Chemours Separation Agreement, would continue unchanged, subject in each case to certain exceptions set out in the MOU. Under the MOU, Chemours waived specified claims regarding the construct of its 2015 spin-off transaction, and the parties will dismiss the Pending Arbitration regarding those claims. Additionally, the parties have agreed to resolve the Ohio MDL PFOA personal injury litigation (as discussed below). The parties are expected to cooperate in good faith to enter into additional agreements reflecting the terms set forth in the MOU.

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 assets, employees, certain liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) among the parties and provides for indemnification obligation among the parties. Under the Corteva Separation Agreements, DuPont will indemnify Corteva against certain litigation, environmental, tax, workers' compensation and other liabilities that arose prior to the Corteva Distribution and Dow indemnifies Corteva against certain litigation, environmental, tax, workers' compensation and other liabilities that relate to the Historical Dow business, and Corteva indemnifies DuPont and Dow for certain liabilities.

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,

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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. During the second quarter of 2021, the aggregate amount of the company’s cash spent and liabilities accrued exceeded the stray liability thresholds, including PFAS, noted above. Therefore, liabilities recognized subsequent to the second quarter of 2021 are shared at the reduced rates noted above.

At September 30, 2022, December 31, 2021, and September 30, 2021, the indemnification assets were $33 million, $25 million, and $25 million, respectively, within accounts and notes receivable - net and $91 million, $75 million, and $70 million, respectively, within other assets in the interim Consolidated Balance Sheets. At September 30, 2022, December 31, 2021, and September 30, 2021, the indemnification liabilities were $24 million, $20 million, and $54 million, respectively, within accrued and other current liabilities and $122 million, $117 million, and $90 million, respectively, within other noncurrent obligations in the interim Consolidated Balance Sheets.

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 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, as considerable uncertainty exists. The company records accruals for legal matters when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Accruals may reflect the impact and status of negotiations, settlements, rulings, advice from counsel and other information and events that may pertain to a particular matter. For the litigation matters discussed below, management believes that it is reasonably possible that the company could incur liabilities in excess of amounts accrued, the ultimate liability for which could be material to the results of operations and the cash flows in the period recognized. However, the company is unable to estimate the possible loss beyond amounts accrued due to various reasons, including, among others, that the underlying matters are either in early stages and/or have significant factual issues to be resolved. In addition, even when the company believes it has substantial defenses, the company may consider settlement of matters if it believes it is in the best interest of the company.

Lorsban® Lawsuits

As of September 30, 2022, there were pending personal injury lawsuits filed and additional asserted claims against the former Dow Agrosciences LLC, alleging injuries related to chlorpyrifos exposure, the active ingredient in Lorsban®, an insecticide used by commercial farms for field fruit, nut and vegetable crops. Corteva ended its production of Lorsban® in 2020. Chlorpyrifos products are restricted-use pesticides, which are not available for purchase or use by the general public, and may only be sold to, and used by, certified applicators or someone under the certified applicator's direct supervision. These lawsuits do not relate to Dursban®, a residential type chlorpyrifos product that was authorized for indoor purposes, which was discontinued over two decades ago prior to the Merger and Corteva’s formation and Separation. Claimants allege personal injury, including autism, developmental delays and/or decreased neurologic function, resulting from farm worker exposure and bystander drift and in utero exposure to chlorpyrifos. Certain claimants have also put forth remediation claims due to alleged property contamination from chlorpyrifos. As of September 30, 2022, an accrual has been established for the estimated resolution of certain claims.

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

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, 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 for which potential liabilities would be subject to the cost sharing arrangement under the MOU as long as it remains effective.

Leach Settlement and Ohio 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 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

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

class members. As of September 30, 2022, 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 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 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 (“Ohio MDL”). The Ohio 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 2017 Ohio MDL settlement did not resolve claims of plaintiffs who did not have claims in the Ohio MDL or whose claims are based on diseases first diagnosed after February 11, 2017. The first was a consolidated trial of two cases; the first, a kidney cancer case, which resulted in a hung jury, while the second, Travis and Julie Abbot v. E.I du Pont de Nemours and Company (the “Abbot Case”), a testicular cancer case, resulted in a jury verdict of $40 million in compensatory damages and $10 million for loss of consortium. The loss of consortium award was subsequently reduced to $250,000 in accordance with state law limitations. Following entry of the judgment by the court, EID filed 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. The company believes the merits of the appeal will be successful in reducing the jury verdict or eliminating its liability, in whole or part.

In January 2021, Chemours, DuPont and Corteva agreed to settle the remaining approximately 95 matters, as well as unfiled matters, remaining in the Ohio MDL, with the exception of the Abbot case, for $83 million, with Chemours contributing $29 million to the settlement, and DuPont and Corteva contributing $27 million each. The company paid $27 million during the year ended December 31, 2021. As agreed to in the settlement, the plaintiffs' counsel filed a motion to dissolve the MDL. EID has sought dissolution of the MDL from the judicial oversight panel responsible for the MDL.

Other PFOA Matters

EID is a party to other PFOA lawsuits involving claims for property damage, medical monitoring and personal injury. Defense costs and any future liabilities that may arise out of these lawsuits are subject to the MOU and the cost sharing arrangement disclosed above. Under the MOU, fraudulent conveyance claims associated with these matters are not qualified expenses, unless Corteva, Inc. and EID would prevail on the merits of these claims.

New York. EID is a defendant in about 45 lawsuits, including a putative class action (the "Baker Class Action"), brought by persons who live in and around Hoosick Falls, New York. These lawsuits assert claims for medical monitoring, property damage and personal injury based on alleged PFOA releases from manufacturing facilities owned and operated by co-defendants in Hoosick Falls. The lawsuits allege that EID and others supplied materials used at these facilities resulting in PFOA air and water contamination. A court approved settlement was reached between the plaintiffs and the other co-defendants regarding the Baker Class Action case. In September 2022, the class certification of the Baker Class Action was granted, with the court certifying three separate classes consisting of a private well property damage class, a medical monitoring class and a nuisance class. EID will challenge the certification, and continue to defend itself on the merits of the case, while seeking an out of court resolution.

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 along with Chemours and others, have been named defendants in complaints filed by 11 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. The water district complaints also include allegations of fraudulent transfer.

New Jersey. As of September 30, 2022, two 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 four lawsuits against EID, Chemours, 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, Chemours, and others alleging losses related to the investigation, remediation and monitoring of polyfluorinated surfactants, including PFOA, in water supplies. DuPont and Corteva were subsequently

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

added as defendants to these lawsuits. These lawsuits include claims under the New Jersey Industrial Site Recovery Act ("ISRA") and for fraudulent conveyance.

Alabama / Georgia / Others. EID is one of more than 30 defendants in lawsuits by Alabama and Georgia water utilities 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 Alaska, Florida, Michigan, Mississippi, New Hampshire, North Carolina, South Dakota, Vermont and Wisconsin filed lawsuits against EID, Chemours, 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. Motions to dismiss the Michigan, Vermont and New Hampshire cases have been denied.

Ohio. EID is a defendant in three lawsuits, including an action by the State of Ohio based on alleged damage to natural resources, and an action by the City of Dayton claiming losses related to the investigation, remediation and monitoring of PFAS in water supplies. The trial with respect to the natural resources lawsuit is scheduled for February 2024. The third lawsuit, a putative nationwide class action brought on behalf of anyone who has detectable levels of PFAS in their blood serum seeks declaratory and injunctive relief, including the establishment of a “PFAS Science Panel.” In March 2022, the trial court certified a class covering anyone subject to Ohio laws having minimal levels of PFOA plus at least one other PFAS in their blood. The trial court requested further briefing on whether the class should be extended to include other states that recognize analogous claims for relief. Because EID and the other defendants were granted permission by the court to appeal the class certification decision, further briefing on the extension of the class for the trial court has been paused subject to the outcome of the appeal.

Netherlands. In April 2021, four municipalities in the Netherlands filed complaints alleging contamination of land and groundwater resulting from the emission of PFOA and GenX by Corteva, DuPont and Chemours. The municipalities seek to recover costs incurred due to the alleged emissions, including damages for investigation costs, construction project delays, depreciation of land, soil remediation, liabilities to contractors, and attorneys’ fees. In September 2022, the court ordered a hearing on the merits to occur by May 2023.

Delaware. On July 13, 2021, Chemours, DuPont, EID and Corteva entered into a settlement agreement with the State of Delaware reflecting the companies’ and the State’s agreement to settle and fully resolve claims alleged against the companies regarding their historical Delaware operations, manufacturing, use and disposal of all chemical compounds, including PFAS. Under the settlement, the companies will collectively pay $50 million to fund environmental projects, including sampling and community environmental justice and equity grants, which shall be utilized to fund the Natural Resources and Sustainability Trust (the “NRS Trust”). If the companies, individually or jointly, within 8 years of the settlement, enter into a proportionally similar agreement to settle or resolve claims of another state for PFAS-related natural resource damages, for an amount greater than $50 million, the companies shall make a supplemental payment directly to the NRS Trust (“Supplemental Payment”) in an amount equal to such other states’ recovery in excess of $50 million. Supplemental Payment(s), if any, will not exceed $25 million in the aggregate. All amounts paid by the companies under the settlement are subject to the MOU and the Corteva Separation Agreement with Chemours bearing responsibility for 50%, or $25 million, of the $50 million payment due to the NRS Trust and DuPont and Corteva each bearing $12.5 million of the remaining amount, which Corteva paid in January 2022. During the three months ended September 30, 2021, the company recorded a charge of $11 million to (loss) income from discontinued operations after income taxes in the interim Consolidated Statement of Operations, related to the settlement. Under the settlement, if the state sues other parties and those parties seek contribution from the companies, the companies will have protection from contribution up to the amounts previously paid under the settlement agreement. The companies will also receive a credit up to the amount of the payment if the state seeks natural resource damage claims against the companies outside the scope of the settlement’s release of claims.

Aqueous Firefighting Foams. Approximately 3,100 cases have been filed against 3M and other defendants, including EID and Chemours, and some 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 multi-district litigation proceeding in federal district court in South Carolina. Approximately 2,800 of these cases were filed on behalf of firefighters who allege personal injuries (primarily kidney and testicular cancer) as a result of aqueous firefighting foams. Approximately 230 of these cases were filed by water utility or municipal water districts. Most of these recent cases assert claims that the EID and Chemours separation constituted a fraudulent conveyance. The Stuart, Florida water district "bellwether" trial is scheduled for June 2023. The court has encouraged all parties to discuss resolution of the

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

water utility and water district category of cases. Consistent with the Court's instruction and under the mutual obligations of the MOU, Corteva, EID, DuPont and Chemours have engaged with the plaintiff's counsel on these cases.

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.

In June 2022, the U.S. Environmental Protection Agency ("EPA") published interim health advisories for PFOA and PFOS lowering previous health advisory guidance for drinking water. Health advisories provide drinking water system operators, and state, tribal, and local officials who have the primary responsibility for overseeing these systems, with information on the health risks related to chemicals, so appropriate actions may be taken to protect their constituents. The advisories are not regulations or legally enforceable Federal standards, except as it relates to the Consent Order between Chemours and the North Carolina Department of Environmental Quality (“NC DEQ”), and were published without engagement in the public comment process required for developing regulations. Health advisories are subject to revision as additional information becomes available and the company continues to monitor these developments. The American Chemistry Council (“ACC”) filed a challenge to the health advisories asserting that EPA failed to follow its own rules in issuing the health advisory guidance, did so against the objections of its own PFAS advisory panel, and bypassed the Congress. The EPA moved to dismiss this challenge arguing that the challenge is premature due to the lack of standing (no showing of actual harm) by ACC members and because of the interim nature of the advisories.

Fayetteville Works Facility, North Carolina

Prior to the separation of Chemours, EID 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 June 2022, the EPA issued a final health advisory for drinking water related to GenX. In July 2022, Chemours filed a petition in federal court for review of the EPA's GenX compounds health advisory.

At September 30, 2022, several actions are pending in federal court against Chemours and EID relating to PFC discharges from the Fayetteville Works facility. One of these 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 another action over approximately 100 property owners near the Fayetteville Works facility filed a complaint against Chemours and EID in May 2020. The plaintiffs seek compensatory and punitive damages for their claims of private nuisance, trespass, and negligence allegedly caused by release of PFAS.

In addition to the federal court actions, there is an action 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.

Generally, site-related expenses related to GenX claims are subject to the cost sharing arrangements as defined in the MOU.

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. These obligations are included in accrued and other current liabilities and other noncurrent obligations in the interim Consolidated Balance Sheets. 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.

For a discussion of the allocation of environmental liabilities under the Chemours Separation Agreement and the Corteva Separation Agreement, see page 23.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three and nine months ended September 30, 2022, the company recorded charges of $5 million and $32 million, respectively, and during the three and nine months ended September 30, 2021, the company recorded charges of $8 million and $45 million, respectively, to (loss) income from discontinued operations after income taxes in the interim Consolidated Statement of Operations, related to the MOU. The charges during the three and nine months ended September 30, 2022 and 2021, primarily related to an increase in the environmental remediation accrual for Chemours’ Fayetteville Works facility for estimated costs for off-site water systems and on-site surface water and groundwater remediation to address and abate PFAS discharges arising out of pre-July 1, 2015 conduct. The increase is the result of changes in Chemours’ environmental remediation activities at the site under the Consent Order between Chemours and the NC DEQ.

The accrued environmental obligations and indemnification assets include the following:

As of September 30, 2022
(In millions)Indemnification AssetAccrual balance****3Potential exposure above amount accrued****3
Environmental Remediation Stray Liabilities
Chemours related obligations - subject to indemnity1,2$155$155$266
Other discontinued or divested businesses obligations12477185
Environmental remediation liabilities primarily related to DuPont - subject to indemnity from DuPont2454662
Environmental remediation liabilities not subject to indemnity—8054
Indemnification liabilities related to the MOU42112529
Total$245$483$596

1.Represents liabilities that are subject to the $200 million threshold and sharing arrangements as discussed on page 24, under the header "Corteva Separation Agreement."

2.The company has recorded an indemnification asset related to these accruals, including $36 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. Accrual balances includes $67 million for remediation of Superfund sites. Amounts do not include possible impacts from the remediation elements of the EPA's October 2021 PFAS Strategic Roadmap (as applicable), except as disclosed on page 28 relating to Chemours' remediation activities at the Fayetteville Works Facility pursuant to the Consent Order with the NC DEQ.

4.Represents liabilities that are subject to the $150 million threshold and sharing agreements as discussed on page 23, under the header "Chemours / Performance Chemicals."

Chambers Works, New Jersey

On January 28, 2022, the State of New Jersey filed a request for a preliminary injunction against EID and Chemours seeking the establishment of a Remediation Funding Source ("RFS") in an amount exceeding $900 million for environmental remediation at EID's former Chambers Works facility in New Jersey. The RFS primarily relates to non-PFAS remediation, which is not subject to the MOU. Chemours has accepted indemnity and defense for these matters, while reserving rights and declining demand relating to the ISRA and fraudulent transfer matters as alleged under the existing New Jersey natural resource lawsuits discussed on page 26.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 - STOCKHOLDERS' EQUITY

Share Buyback Plan

On September 13, 2022, Corteva, Inc. announced that its Board of Directors authorized a $2 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2022 Share Buyback Plan").

On August 5, 2021, Corteva, Inc. announced that its Board of Directors authorized a $1.5 billion share repurchase program to purchase Corteva, Inc.'s common stock, par value $0.01 per share, without an expiration date ("2021 Share Buyback Plan"). In connection with the 2021 Share Buyback Plan, the company repurchased and retired 3,414,000 shares and 14,284,000 shares in the open market for a total cost of $200 million and $800 million during the three and nine months ended September 30, 2022, respectively.

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 ("2019 Share Buyback Plan"). In connection with the 2019 Share Buyback Plan, the company repurchased and retired 3,408,000 shares and 15,378,000 shares in the open market for a total cost of $150 million and $700 million during the three and nine months ended September 30, 2021, respectively. Repurchases under the 2019 Share Buyback Plan were completed during the third quarter of 2021.

The timing, price and volume of purchases in connection with the 2022 and 2021 Share Buyback Plans will be based on market conditions, relevant securities laws and other factors.

Shares repurchased pursuant to Corteva's share buyback plans are immediately retired upon repurchase. 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. When Corteva has an accumulated deficit balance, the excess over the par value is applied to APIC. When Corteva has retained earnings, the excess is charged entirely to retained earnings.

Noncontrolling Interest

Corteva, Inc. owns 100 percent of the outstanding common shares of EID. However, EID has preferred stock outstanding to third parties which is accounted for as a non-controlling interest in Corteva's interim 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 September 30, 2022, December 31, 2021, and September 30, 2021, which is classified as noncontrolling interests in Corteva's interim Consolidated Balance Sheets.

Shares in thousandsNumber of Shares
Authorized23,000
$4.50 Series, callable at $1201,673
$3.50 Series, callable at $102700

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other Comprehensive Income (Loss)

The changes and after-tax balances of components comprising accumulated other comprehensive income (loss) are summarized below:

(In millions)Cumulative Translation Adjustment****1Derivative InstrumentsPension Benefit PlansOther Benefit PlansUnrealized Gain (Loss) on InvestmentsTotal
2021
Balance January 1, 2021$(1,970)$(67)$(1,433)$590$(10)$(2,890)
Other comprehensive income (loss) before reclassifications(424)115(6)13(311)
Amounts reclassified from accumulated other comprehensive income (loss)—(8)32(475)7(444)
Net other comprehensive income (loss)(424)10726(474)10(755)
Balance September 30, 2021$(2,394)$40$(1,407)$116$—$(3,645)
2022
Balance January 1, 2022$(2,543)$72$(396)$(31)$—$(2,898)
Other comprehensive income (loss) before reclassifications(868)921073—(666)
Amounts reclassified from accumulated other comprehensive income (loss)—(50)211—(28)
Net other comprehensive income (loss)(868)421284—(694)
Balance September 30, 2022$(3,411)$114$(268)$(27)$—$(3,592)

1.The cumulative translation adjustment gain for the nine months ended September 30, 2022 was primarily driven by strengthening of the USD against the European Euro ("EUR"), Swiss Franc ("CHF"), Indian Rupee ("INR") and South African Rand ("ZAR"). The cumulative translation adjustment loss for the nine months ended September 30, 2021 was primarily driven by strengthening of the USD against the European Euro ("EUR"), Swiss Franc ("CHF") and Brazilian Real ("BRL").

The tax (expense) benefit on the net activity related to each component of other comprehensive income (loss) was as follows:

(In millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Derivative instruments$(13)$(12)$(13)$(37)
Pension benefit plans - net(30)(3)(35)(8)
Other benefit plans - net—513148
(Provision for) benefit from income taxes related to other comprehensive income (loss) items$(43)$36$(45)$103

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of the reclassifications out of accumulated other comprehensive income (loss) is provided as follows:

(In millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Derivative Instruments1:$33$6$(68)$(9)
Tax (benefit) expense2(5)(1)181
After-tax$28$5$(50)$(8)
Amortization of pension benefit plans:
Prior service (benefit) cost3,4$—$—$(2)$(1)
Actuarial (gains) losses3,4—14241
Settlement (gain) loss3,425—271
Total before tax$25$14$27$41
Tax (benefit) expense2(6)(3)(6)(9)
After-tax$19$11$21$32
Amortization of other benefit plans:
Prior service (benefit) cost3,4$—$(231)$(1)$(692)
Actuarial (gains) loss3,4123270
Curtailment (gain) loss———(1)
Total before tax$1$(208)$1$(623)
Tax (benefit) expense2—51—148
After-tax$1$(157)$1$(475)
Unrealized Loss on Investments****4$—$—$—$7
Tax (benefit) expense2————
After-tax$—$—$—$7
Total reclassifications for the period, after-tax$48$(141)$(28)$(444)

1.Reflected in cost of goods sold in the interim Consolidated Statements of Operations.

2.Reflected in provision for (benefit from) income taxes from continuing operations in the interim Consolidated Statements of Operations.

3.These accumulated other comprehensive income (loss) components are included in the computation of net periodic benefit credit of the company's pension and other benefit plans. See Note 14 - Pension Plans and Other Post Employment Benefits, for additional information.

4.Reflected in other income - net in the interim Consolidated Statements of Operations.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 14 - 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 September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Defined Benefit Pension Plans:
Service cost$5$7$14$19
Interest cost12691343273
Expected return on plan assets(180)(228)(560)(686)
Amortization of unrecognized (gain) loss—14241
Amortization of prior service (benefit) cost——(2)(1)
Settlement loss25—271
Net periodic benefit (credit) cost$(24)$(116)$(176)$(353)
Other Post Employment Benefits:
Service cost$—$1$1$1
Interest cost651916
Amortization of unrecognized (gain) loss123270
Amortization of prior service (benefit) cost—(231)(1)(692)
Curtailment (gain) loss———(1)
Net periodic benefit (credit) cost$7$(202)$21$(606)

In August 2022, the company transferred approximately $1.1 billion of certain benefit obligations and associated plan assets in the principal U.S. pension plan (the “Plan”) to an insurance company through the purchase of a nonparticipating group annuity contract (“Annuity Purchase”). The company recorded a non-cash, pre-tax settlement charge of approximately $25 million in other income – net in the interim Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and corresponding adjustment to accumulated other comprehensive income (loss) in the interim Consolidated Balance Sheets at September 30, 2022 due to the Annuity Purchase. The Annuity Purchase resulted in a remeasurement of the Plan as of August 31, 2022 and the company updated the weighted average discount rate used in developing the 2022 net periodic pension (credit) costs at December 31, 2021 from 2.82 percent to 4.60 percent. Due to the remeasurement, the company recorded a pre-tax actuarial gain of approximately $110 million to accumulated other comprehensive income (loss) in the interim Consolidated Balance Sheets at September 30, 2022.

NOTE 15 - FINANCIAL INSTRUMENTS

At September 30, 2022, December 31, 2021 and September 30, 2021, the company had $921 million, $3,400 million and $2,108 million, respectively, of held-to-maturity securities (primarily time deposits and money market funds) classified as cash equivalents in the interim Consolidated Balance Sheets, as these securities had maturities of three months or less at the time of purchase; $119 million, $86 million and $103 million at September 30, 2022, December 31, 2021 and September 30, 2021, respectively, of held-to-maturity securities (primarily time deposits and foreign government bonds) classified as marketable securities in the interim Consolidated Balance Sheets, as these securities had maturities of more than three months to less than one year at the time of purchase; and $24 million at September 30, 2022 of held-to-maturity securities (primarily foreign government bonds) classified as marketable securities and included in other assets in the interim Consolidated Balance Sheets, as these securities had maturities more 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. The company’s held-to-maturity securities relating to investments in foreign government bonds at September 30, 2022 and available-for-sale securities sold during the nine months ended September 30, 2021 are discussed further in the “Debt Securities” section.

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 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.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, and multinational grain exporters. 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)September 30, 2022December 31, 2021September 30, 2021
Derivatives designated as hedging instruments:
Foreign currency contracts$948$1,252$1,227
Commodity contracts$1,424$845$262
Derivatives not designated as hedging instruments:
Foreign currency contracts$1,371$103$1,164
Commodity contracts$3$4$7

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 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 uses foreign currency 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 forecasted transactions as well as the translation of foreign currency-denominated earnings. The company also uses commodity contracts to offset risks associated with foreign currency devaluation in certain countries.

Commodity Price Risk

Commodity price risk management programs serve to reduce exposure to price fluctuations on purchases of inventory such as corn and 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.

Derivatives Designated as Cash Flow Hedges

Commodity Contracts

The company enters into over-the-counter and exchange-traded derivative commodity instruments, including options, forwards, 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 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 probable of not occurring.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the after-tax effect of commodity contract cash flow hedges on accumulated other comprehensive income (loss):

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Beginning balance$81$73$47$(16)
Additions and revaluations of derivatives designated as cash flow hedges(25)(10)9193
Clearance of hedge results to earnings(4)(4)(86)(18)
Ending balance$52$59$52$59

At September 30, 2022, an after-tax net gain of $50 million is expected to be reclassified from accumulated other comprehensive income (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 probable of not occurring.

The following table summarizes the after-tax effect of foreign currency cash flow hedges on accumulated other comprehensive income (loss):

Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Beginning balance$(31)$(21)$32$(17)
Additions and revaluations of derivatives designated as cash flow hedges118(56)3
Clearance of hedge results to earnings3293610
Ending balance$12$(4)$12$(4)

At September 30, 2022, an after-tax net gain of $8 million is expected to be reclassified from accumulated other comprehensive income (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.

Derivatives not Designated in Hedging Relationships

Foreign Currency Contracts

The company uses foreign 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 the translation of certain foreign currency-denominated earnings so that gains and losses on the contracts offset changes in the USD value of the related foreign currency-denominated earnings over the relevant aggregate period.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 and soybeans. The company uses forward agreements, with durations less than one year, to buy and sell USD priced commodities in order to reduce its exposure to currency devaluation for a portion of its local currency cash balances. Counterparties to the forward sales agreements are multinational grain exporters and subject to the company’s financial risk management procedures.

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 Consolidated Balance Sheets. The presentation of the company's derivative assets and liabilities is as follows:

September 30, 2022
(In millions)Balance Sheet LocationGrossCounterparty and Cash Collateral Netting****1Net Amounts Included in the interim Consolidated Balance Sheet
Asset derivatives:
Derivatives designated as hedging instruments:
Foreign currency contractsOther current assets$101$—$101
Commodity contractsOther current assets3—3
Derivatives not designated as hedging instruments:
Foreign currency contractsOther current assets112(58)54
Total asset derivatives$216$(58)$158
Liability derivatives:
Derivatives designated as hedging instruments:
Commodity contractsAccrued and other current liabilities2—2
Derivatives not designated as hedging instruments:
Foreign currency contractsAccrued and other current liabilities63(58)5
Total liability derivatives$65$(58)$7

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

December 31, 2021
(In millions)Balance Sheet LocationGrossCounterparty and Cash Collateral Netting****1Net Amounts Included in the Consolidated Balance Sheet
Asset derivatives:
Derivatives designated as hedging instruments:
Foreign currency contractsOther current assets$37$—$37
Derivatives not designated as hedging instruments:
Foreign currency contractsOther current assets31(20)11
Commodity contractsOther current assets3—3
Total asset derivatives$71$(20)$51
Liability derivatives:
Derivatives designated as hedging instruments:
Foreign currency contractsAccrued and other current liabilities$1$—$1
Derivatives not designated as hedging instruments:
Foreign currency contractsAccrued and other current liabilities23(20)3
Commodity contractsAccrued and other current liabilities2—2
Total liability derivatives$26$(20)$6
September 30, 2021
(In millions)Balance Sheet LocationGrossCounterparty and Cash Collateral Netting****1Net Amounts Included in the interim Consolidated Balance Sheet
Asset derivatives:
Derivatives designated as hedging instruments:
Foreign currency contractsOther current assets$20$—$20
Derivatives not designated as hedging instruments:
Foreign currency contractsOther current assets37(23)14
Total asset derivatives$57$(23)$34
Liability derivatives:
Derivatives designated as hedging instruments:
Foreign currency contractsAccrued and other current liabilities$9$—$9
Derivatives not designated as hedging instruments:
Foreign currency contractsAccrued and other current liabilities31(23)8
Total liability derivatives$40$(23)$17
  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.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Effect of Derivative Instruments

Amount of Gain (Loss) Recognized in OCI - Pre-Tax****1
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Derivatives designated as hedging instruments:
Net investment hedges:
Foreign currency contracts$47$10$74$24
Cash flow hedges:
Foreign currency contracts1318(68)12
Commodity contracts(30)(11)117117
Total derivatives designated as hedging instruments$30$17$123$153

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

Amount of Gain (Loss) Recognized in Income - Pre-Tax****1
Three Months Ended September 30,Nine Months Ended September 30,
(In millions)2022202120222021
Derivatives designated as hedging instruments:
Cash flow hedges:
Foreign currency contracts2$(39)$(10)$(44)$(11)
Commodity contracts26411220
Total derivatives designated as hedging instruments$(33)$(6)$68$9
Derivatives not designated as hedging instruments:
Foreign currency contracts3$67$34$24$—
Foreign currency contracts2412(1)(16)
Commodity contracts25(1)(21)(18)
Total derivatives not designated as hedging instruments76452(34)
Total derivatives$43$39$70$(25)

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 in the interim Consolidated Statements of Operations.

3.Gain recognized in other 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 5 - Supplementary Information, to the interim Consolidated Financial Statements, for additional information.

Debt Securities

The company’s debt securities at September 30, 2022 include foreign government bonds classified as held-to-maturity securities. The company’s investments in held-to-maturity securities are held at amortized cost, which approximates fair value, and are held by certain foreign subsidiaries in which the USD is the functional currency.

During the three and nine months ended September 30, 2021, the company sold its U.S. treasuries classified as available-for-sale securities.The estimated fair value of the available-for-sale securities that were sold during the nine months ended September 30, 2021 was determined using Level 1 inputs within the fair value hierarchy. Level 1 measurements were based on quoted market prices in active markets for identical assets and liabilities. The available-for-sale securities that were sold during the three and nine months ended September 30, 2021 were held by certain foreign subsidiaries in which the USD is not the functional currency. The fluctuations in foreign exchange were initially recorded in accumulated other comprehensive income (loss) within the interim Consolidated Statements of Equity and subsequently reclassified to earnings when sold. The gains and losses on these securities offset a portion of the foreign exchange fluctuations in earnings for the company.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table provides the investing results from available-for-sale securities for the nine months ended September 30, 2021:

Investing ResultsNine months Ended September 30,
(In millions)2021
Proceeds from sales of available-for-sale securities$226
Gross realized losses$(7)

The following table summarizes the contractual maturities of the company's investments in debt securities at September 30, 2022:

Contractual Maturities of Debt Securities****1 (In millions)Amortization CostFair Value
Within one year$86$86
One to Five years$24$24

1.The company's debt securities at September 30, 2022 consists of foreign government bonds, which are classified as held-to-maturity.

NOTE 16 - FAIR VALUE MEASUREMENTS

The following tables summarize the basis used to measure certain assets and liabilities at fair value on a recurring basis:

September 30, 2022Significant Other Observable Inputs
(In millions)Level 1Level 2
Assets at fair value:
Marketable securities$—$119
Derivatives relating to:1
Foreign currency—213
Commodity contracts—3
Total assets at fair value$—$335
Liabilities at fair value:
Derivatives relating to:1
Foreign currency—63
Commodity contracts—2
Total liabilities at fair value$—$65
December 31, 2021Significant Other Observable Inputs
(In millions)Level 1Level 2
Assets at fair value:
Marketable securities$—$86
Derivatives relating to:1
Foreign currency—68
Equity securities248—
Total assets at fair value$48$154
Liabilities at fair value:
Derivatives relating to:1
Foreign currency—24
Total liabilities at fair value$—$24

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2021Significant Other Observable Inputs
(In millions)Level 1Level 2
Assets at fair value:
Marketable securities$—$103
Derivatives relating to:1
Foreign currency—57
Equity Securities275—
Total assets at fair value$75$160
Liabilities at fair value:
Derivatives relating to:1
Foreign currency—40
Total liabilities at fair value$—$40

1.See Note 15 - Financial Instruments for the classification of derivatives in the interim Consolidated Balance Sheets.

2.The company's equity securities are included in other assets in the interim Consolidated Balance Sheets.

NOTE 17 - SEGMENT INFORMATION

Corteva’s reportable segments reflects the manner in which its chief operating decision maker ("CODM") allocates resources and assesses performance, which is at the operating segment level (seed and crop protection). For purposes of allocating resources to the segments and assessing segment performance, segment operating EBITDA is the primary measure used by Corteva’s CODM. The company defines segment operating EBITDA as earnings (loss) (i.e., income (loss) from continuing operations before income taxes) before interest, depreciation, amortization, corporate expenses, non-operating benefits (costs), foreign exchange gains (losses), and net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting, excluding the impact of significant items. Non-operating benefits (costs) 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. Net unrealized gain or loss from mark-to-market activity for certain foreign currency derivative instruments that do not qualify for hedge accounting represents the non-cash net gain (loss) from changes in fair value of certain undesignated foreign currency derivative contracts. Upon settlement, which is within the same calendar year of execution of the contract, the realized gain (loss) from the changes in fair value of the non-qualified foreign currency derivative contracts will be reported in the respective segment results to reflect the economic effects of the foreign currency derivative contracts without the resulting unrealized mark to fair value volatility.

As of and for the Three Months Ended September 30, (In millions)SeedCrop ProtectionTotal
2022
Net sales$862$1,915$2,777
Segment operating EBITDA$(224)$352$128
Segment assets1$22,665$13,474$36,139
2021
Net sales$738$1,633$2,371
Segment operating EBITDA$(217)$206$(11)
Segment assets1$23,701$12,539$36,240
  1. Segment assets at December 31, 2021 were $23,270 million and $12,428 million for Seed and Crop Protection, respectively.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

For the Nine Months Ended September 30, (In millions)SeedCrop ProtectionTotal
2022
Net Sales$7,333$6,297$13,630
Segment operating EBITDA$1,585$1,352$2,937
2021
Net sales$7,010$5,166$12,176
Segment operating EBITDA$1,523$897$2,420

Reconciliation to interim Consolidated Financial Statements

Income (loss) from continuing operations after income taxes to segment operating EBITDA (In millions)Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Income (loss) from continuing operations after income taxes$(322)$36$1,257$1,667
Provision for (benefit from) income taxes on continuing operations(74)(28)372434
Income (loss) from continuing operations before income taxes(396)81,6292,101
Depreciation and amortization310309919926
Interest income(36)(19)(75)(58)
Interest expense1884322
Exchange (gains) losses13(2)9647
Non-operating (benefits) costs(9)(315)(134)(941)
Mark-to-market (gains) losses on certain foreign currency contracts not designated as hedges(6)(19)(3)3
Significant items (benefit) charge202(21)379214
Corporate expenses324083106
Segment operating EBITDA$128$(11)$2,937$2,420
Segment assets to total assets (in millions)September 30, 2022December 31, 2021September 30, 2021
Total segment assets$36,139$35,698$36,240
Corporate assets4,5126,6464,882
Total assets$40,651$42,344$41,122

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Significant Pre-tax (Charges) Benefits Not Included in Segment Operating EBITDA

The three and nine months ended September 30, 2022, respectively, included the following significant pre-tax (charges) benefits which are excluded from segment operating EBITDA:

(In millions)SeedCrop ProtectionCorporateTotal
For the Three Months Ended September 30, 2022
Restructuring and asset related charges - net 1$(66)$(20)$(66)$(152)
Estimated settlement expense2—(40)—(40)
Inventory write-offs3(32)——(32)
Gain on sale of business3—15—15
Settlement cost associated with Russia Exit3(2)——(2)
Employee Retention Credit63—9
Total$(94)$(42)$(66)$(202)
(In millions)SeedCrop ProtectionCorporateTotal
For the Three Months Ended September 30, 2021
Restructuring and asset related charges - net 1$(9)$(8)$(9)$(26)
Equity securities mark-to-market gain47——47
Total$38$(8)$(9)$21
(In millions)SeedCrop ProtectionCorporateTotal
For the Nine Months Ended September 30, 2022
Restructuring and asset related charges - net 1$(197)$(20)$(83)$(300)
Estimated settlement expense2—(57)—(57)
Inventory write-offs3(33)——(33)
Gain on sale of business3—15—15
Loss on exit of non-strategic asset3(5)——(5)
Settlement costs associated with Russia Exit3(8)——(8)
Employee Retention Credit63—9
Total$(237)$(59)$(83)$(379)
(In millions)SeedCrop ProtectionCorporateTotal
For the Nine Months Ended September 30, 2021
Restructuring and asset related charges - net 1$(145)$(51)$(65)$(261)
Equity securities mark-to-market gain47——47
Total$(98)$(51)$(65)$(214)

1.Includes Board approved restructuring plans and asset related charges as well as accelerated prepaid amortization expense. See Note 4 - Restructuring and Asset Related Charges - Net, to the interim Consolidated Financial Statements, for additional information.

2.Consists of estimated Lorsban® related reserves

3.Incremental gains (losses) associated with activities related to the 2022 Restructuring Actions.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 18 - SUBSEQUENT EVENTS

In September 2022, Corteva announced that it has signed a definitive agreement to acquire Quorum Vital Investment, S.L. and its affiliates (“Symborg”), a leader in microbiological technologies. The transaction is subject to customary closing conditions and is expected to be completed in 2022. The company will apply the acquisition method of accounting and expects to complete the preliminary purchase price allocation for the business combination during the fourth quarter of 2022.

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