EIDP Inc

NOTE 5 -RESTRUCTURING AND ASSET RELATED CHARGES - NET

Crop Protection Operations Strategy Restructuring Program

On November 5, 2023, management of the company approved a plan to further optimize its Crop Protection network of manufacturing and external partners (the "Crop Protection Operations Strategy Restructuring Program"). In October 2024, management of the company amended the Crop Protection Operations Strategy Restructuring Program to include revisions to its previous estimates and decommissioning and demolition costs associated with the ceasing of operations, primarily at the Pittsburg, California site.

The company expects to record aggregate pre-tax restructuring and asset related charges of $650 million to $700 million, comprised of $85 million to $105 million of severance and related benefit costs, $320 million to $340 million of asset-related and impairment charges and $245 million to $255 million of costs related to exiting the company’s production activities and ceasing operations (inclusive of contract terminations and decommissioning and demolition costs). Decommissioning and demolition costs will be expensed on an as-incurred basis. Reductions in workforce are subject to local regulatory requirements. Through the third quarter of 2024, the company recorded net pre-tax restructuring and asset related charges of $372 million, comprised of $60 million of severance and related benefit costs, $309 million of asset-related and impairment charges and $3 million of costs related to contract terminations. The pre-tax restructuring and asset related charges noted above includes charges relating to spare parts write-offs recognized during the fourth quarter of 2023, which impacted the Crop Protection segment, and were included in cost of goods sold, in the company’s Consolidated Statement of Operations for the year ended December 31, 2023. See Note 23 – Segment Information, to the Consolidated Financial Statements, in the company’s 2023 Annual Report for additional information.

Cash payments related to these charges are anticipated to be $330 million to $360 million, which primarily relate to the payment of severance and related benefits, contract terminations and decommissioning and demolition. Through the third quarter of 2024, the company paid $10 million associated with these charges. The restructuring actions associated with these charges are expected to be substantially complete by the end of 2026.

The following table is a summary of charges incurred related to the Crop Protection Operations Strategy Restructuring Program for the three and nine months ended September 30, 2024.

1. Reflects corporate-related charges.

2. Reflects charges associated with the Crop Protection segment.

3. The three and nine months ended September 30, 2024 include charges of $4 million for decommissioning costs associated with the exit of the company’s production activities at its site in Pittsburg, California.

A reconciliation of the December 31, 2023 to the September 30, 2024 liability balances related to the Crop Protection Operations Strategy Restructuring Program is summarized below:

1. Includes charges of $4 million for decommissioning costs associated with the exit of the company’s production activities at its site in Pittsburg, California.

2022 Restructuring Actions

In connection with the company’s shift to a global business unit model during 2022, the company 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 committed to restructuring actions during the second quarter of 2022, which included the company’s separate announcement to withdraw from Russia (“Russia Exit”) (collectively the “2022 Restructuring Actions”). The company does not anticipate any additional material charges from the 2022 Restructuring Actions as actions associated with this charge are substantially complete.

The remaining cash payments related to these charges is $36 million, and primarily relate to the payment of severance and related benefits and contract terminations.

The following table is a summary of charges incurred related to the 2022 Restructuring Actions for the three and nine months ended September 30, 2024 and 2023.

1. Reflects corporate-related charges.

2. The nine months ended September 30, 2024, reflects a benefit of $(2) million, associated with sales of inventory previously reserved for impacting the Seed segment. The three and nine months ended September 30, 2023 reflects charges of $1 million and $10 million, respectively, impacting the Seed segment, and $— and $5 million, respectively, impacting the Crop Protection segment.

3. This amount excludes other pre-tax charges recorded during the nine months ended September 30, 2024 and the three and nine months ended September 30, 2023 impacting the Seed segment included in cost of goods sold and other income (expense) – net, in the company’s interim Consolidated Statement of Operations, relating to inventory write-offs and a loss on the sale of the company's interest in an equity investment. See Note 18 - Segment Information, to the interim Consolidated Financial Statements, for additional information.

Other Asset Related Charges

The company recognized charges (benefits) of $55 million for the nine months ended September 30, 2024, and $(2) million and $66 million for the three and nine months ended September 30, 2023 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, which as of the end of the second quarter of 2024 is now complete.