Restructuring and Asset Related Charges

3 Months Ended

Mar. 31, 2024

Restructuring and Related Activities [Abstract]

Restructuring and Related Activities Disclosure [Text Block]

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"). The plan includes the exit of the company’s production activities at its site in Pittsburg, California, as well as ceasing operations in select manufacturing lines at other locations.

The company expects to record aggregate pre-tax restructuring and asset related charges of $410 million to $460 million, comprised of $70 million to $90 million of severance and related benefit costs, $320 million to $340 million of asset-related and impairment charges and $20 million to $30 million of costs related to contract terminations. Reductions in workforce are

subject to local regulatory requirements. Through the first quarter of 2024, the company recorded net pre-tax restructuring and asset related charges of $284 million, comprised of $14 million of severance and related benefit costs, $267 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.

Future cash payments related to these charges are anticipated to be $90 million to $120 million, which primarily relate to the payment of severance and related benefits and contract terminations. Through the first quarter of 2024, the company paid $3 million associated with these charges. The restructuring actions associated with these charges are expected to be substantially complete in 2024.

The following table is a summary of charges incurred related to the Crop Protection Operations Strategy Restructuring Program for the three months ended March 31, 2024.

(In millions)	Three Months Ended March 31, 2024
Severance and related benefit costs1	$	14
Asset related charges2	41
Total restructuring and asset related charges - net	$	55

1.Reflects corporate-related charges.

2.Reflects charges associated with the crop protection segment.

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

(In millions)	Severance and Related Benefit Costs		Asset Related		Total
Balance at December 31, 2023	$	—	$	—	$	—
Charges to income from continuing operations	14		41		55
Asset write-offs	—		(41)		(41)
Balance at March 31, 2024	$	14	$	—	$	14

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”). Through the first quarter of 2024, the company recorded net pre-tax restructuring and other charges of $373 million inception-to-date under the 2022 Restructuring Actions, consisting of $131 million of severance and related benefit costs, $116 million of asset related charges, $67 million of costs related to contract terminations (including early lease terminations) and $59 million of other charges. The company does not anticipate any additional material charges from the 2022 Restructuring Actions as actions associated with this charge are substantially complete.

Cash payments related to these charges are anticipated to be up to $210 million, of which approximately $160 million has been paid through March 31, 2024, and primarily relate to the payment of severance and related benefits, contract terminations and other charges.

The total net pre-tax restructuring and other charges recognized through the three months ended March 31, 2024 included $53 million associated with the Russia Exit. The Russia Exit net pre-tax restructuring charges consisted of $6 million of severance and related benefit costs, $6 million of asset related charges, and $30 million of costs related to contract terminations (including early lease terminations). Other pre-tax charges associated with the Russia Exit were recorded to cost of goods sold and other income (expense) – net in the Consolidated Statement of Operations, relating to inventory write-offs of $3 million and settlement costs of $8 million, respectively.

The following table is a summary of charges incurred related to the 2022 Restructuring Actions for the three months ended March 31, 2023.

(In millions)	Three Months Ended March 31, 2023
Severance and related benefit costs1	$	4
Asset related charges2	7
Total restructuring and asset related charges - net3	$	11

1.Reflects corporate-related charges.

2.Reflects charges of $6 million and $1 million associated with the seed and crop protection segment, respectively.

3.This amount excludes other pre-tax charges recorded during the three months ended March 31, 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.

A reconciliation of the December 31, 2023 to the March 31, 2024 liability balances related to the 2022 Restructuring Actions is summarized below:

(In millions)	Severance and Related Benefit Costs		Asset Related		Contract Termination1		Total
Balance at December 31, 2023	$	48	$	1	$	9	$	58
Payments	(8)		—		—		(8)
Balance at March 31, 2024	$	40	$	1	$	9	$	50

1.The liability for contract terminations includes lease obligations.

Other Asset Related Charges

The company recognized charges of $20 million and $16 million for the three months ended March 31, 2024 and 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.