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Item 7. Management’s Discussion and Analysis

2024-02-15 compared with 2023-02-15 · 297 added, 225 removed, 481 unchanged (52% of the section changed)

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Mobility & Materials Divestitures

On November 1, 2022, DuPont completed the previously announced divestiture (the "Transaction Date") of the majority of the historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Divestiture”).

On November 1, 2022, (the "Transaction Date") DuPont completed the previously announced divestiture of the majority of the historic Mobility & Materials segment, including the Engineering Polymers business line and select product lines within the Advanced Solutions and Performance Resins business lines (the “M&M Divestiture”).

The Company had previously entered into a Transaction Agreement (the "Transaction Agreement") with Celanese Corporation ("Celanese") on February 17, 2022 for a purchase price of $11.0 billion in cash.

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These adjustments include approximately $0.5 billion of cash transferred with the M&M Divestiture for which DuPont was reimbursed at closing resulting in net proceeds of $10.5 billion.

On February 18, 2022, the Company announced that its Board of Directors approved of the divestiture of the Delrin® acetal homopolymer (H-POM) business (the "Delrin® Divestiture"), subject to entry into a definitive agreement and satisfaction of closing conditions.

On February 18, 2022, the Company announced that its Board of Directors approved of the divestiture of the Delrin® acetal homopolymer (H-POM) business (the "Delrin® Divestiture").

On November 1, 2023, the Company closed the sale of the Delrin® business to TJC LP ("TJC"), (the “Delrin® Divestiture”).

DuPont received cash proceeds of approximately $1.28 billion, which includes certain customary transaction adjustments, a note receivable of $350 million and acquired a 19.9 percent non-controlling equity interest in Derby Group Holdings LLC, (“Derby”).

The customary transaction adjustments related to $27 million of cash transferred with the Delrin® Divestiture for which DuPont was reimbursed at closing resulting in net cash proceeds of $1.25 billion.

TJC, through its subsidiaries, holds the 80.1 percent controlling interest in Derby.

The Delrin® Divestiture together with the M&M Divestiture (collectively the "M&M Divestitures" and the businesses in scope for the M&M Divestitures collectively the "M&M Businesses") represent a strategic shift that has a major impact on DuPont's operations and results.

The financial position of DuPont as of December 31, 2022 presents the assets and liabilities of the Delrin® Divestiture as held for sale, presented as discontinued operations.

In the comparative period, the assets and liabilities of both the M&M Divestiture and the Delrin® Divestiture are presented as held for sale, presented as discontinued operations.

The results of operations for the years ended December 31, 2022, 2021 and 2020 present the financial results of the M&M Businesses, including the M&M Divestiture through the Transaction Date, as discontinued operations.

The cash flows and comprehensive income of the M&M Businesses have not been segregated and are included in the Consolidated Statements of Cash Flows and Consolidated Statements of Comprehensive Income, respectively, for all periods presented.

The results of operations for the year ended December 31, 2023 present the financial results of the Delrin® Divestiture through the November 1, 2023 transaction date, as discontinued operations.

In the comparative period, the results of operations for the years ended December 31, 2022 and 2021 present the financial results of the M&M Businesses as discontinued operations.

For the year ended December 31, 2023, the Consolidated Statements of Cash Flows present the cash flows of the Delrin® Divestiture as discontinued operations.

In the comparative period, the cash flows for the years ended December 31, 2022 and 2021 present the financial results of the M&M Businesses as discontinued operations.

The comprehensive income of the M&M Businesses have not been segregated and are included in the Consolidated Statements of Comprehensive Income, respectively, for all periods presented.

Unless otherwise indicated, the information in the notes to the Consolidated Financial Statements refer only to DuPont's continuing operations and do not include discussion of balances or activity of the M&M Businesses.

See Note 4 to the Consolidated Financial Statements for additional information.

The Auto Adhesives & Fluids, Multibase TM and Tedlar® product lines, previously reported within the historic Mobility & Materials segment, (the "Retained Businesses") are not included in the scope of the M&M Divestitures.

Effective with the signing of the Transaction Agreement, the Retained Businesses were realigned to Corporate & Other.

The reporting changes have been retrospectively applied for all periods presented.

The Auto Adhesives & Fluids, Multibase TM and Tedlar® product lines, previously reported within the historic Mobility & Materials segment, (the "Retained Businesses") were not included in the scope of the M&M Divestitures.

The Retained Businesses are included in Corporate & Other.

Spectrum Acquisition

On August 1, 2023, the Company completed the previously announced acquisition of Spectrum Plastics Group (“Spectrum”) from AEA Investors (the “Spectrum Acquisition”).

Spectrum manufactures flexible packaging products, plastic and silicone extrusions, and components for the industrial, food and medical business sectors throughout the United States and international markets.

Spectrum is being integrated into the Electronics & Industrial segment.

The net purchase price was approximately $1,792 million, including a net upward adjustment of approximately $43.1 million for acquired cash and net working capital, among other items.

See Note 3 to the Consolidated Financial Statements for additional information.

Terminated Intended Rogers Acquisition

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The results of operations of DuPont for all periods presented reflect the historical financial results of N&B as discontinued operations.

The cash flows and comprehensive income related to N&B have not been segregated and are included in the Consolidated Statements of Cash Flows and Consolidated Statements of Comprehensive Income, respectively, for the applicable period.

The comprehensive income related to N&B has not been segregated and are included in the Consolidated Statements of Comprehensive Income for the applicable period.

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On July 1, 2021, DuPont completed the acquisition of Laird Performance Materials ("Laird PM") from Advent International (“Laird PM Acquisition”) for cash consideration of $2.4 billion, which reflects adjustments, primarily for acquired cash and net working capital.

Laird PM has been integrated into the Electronic & Industrials segment.

See Note 3 to the Consolidated Financial Statements for additional information.

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In May 2022, a pre-tax gain of $26 million ($21 million net of tax) was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations.

The results of operations of the Biomaterials business unit are reported in Corporate & Other for all periods presented.

The results of operations of the Biomaterials business unit are reported in Corporate & Other for 2021 and 2022.

On December 31, 2021, the Company completed the sale of its Clean Technologies business unit, which is part of Corporate & Other.

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The sale resulted in a pre-tax gain of $140 million ($105 million net of tax) which was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations.

Other Discontinued Operations Tax Matter

Subsequent to the Company’s earnings announcement on February 7, 2023, the Company recorded an adjustment to the provision for income taxes related to Discontinued Operations and deferred income tax liabilities of Discontinued Operations (the “Tax Adjustment”).

The Tax Adjustment resulted in an increase of $70 million in “Income (loss) from discontinued operations, net of tax” and a decrease of $70 million in “Liabilities of discontinued operations” as of and for the year ended December 31, 2022, and a corresponding impact on net income.

The Tax Adjustment did not impact the results of Continuing Operations.

The Consolidated Financial Statements and other financial information included in this annual report on Form 10-K reflect the Tax Adjustment.

ANALYSIS OF OPERATIONS

Macroeconomic Conditions

Certain macroeconomic factors, including the inflationary cost environment and supply chain disruptions, along with the novel coronavirus (“COVID-19”) and its variants, continue to adversely impact the global economy, including certain suppliers of the Company’s key raw materials.

As a result of COVID-19, the Company qualified for a tax credit of payroll taxes under the Employee Retention Credit (“ERC”) pursuant to the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act as enhanced by the Consolidated Appropriations Act and American Rescue Plan Act.

In the third quarter of 2022, the Company recorded approximately $59 million of benefit to the ERC for full year 2020 and Q1 2021 payroll taxes previously paid.

The benefit was recorded as an offset to the Cost of Sales, Research and Development Expenses ("R&D") and Selling, General and Administrative Expenses ("SG&A"), with a portion, approximately $7 million, of the benefit relating to discontinued operations.

The Company anticipates receiving a refund of the credit in 2023.

With respect to the war in the Ukraine, the Company’s business and operational environment is impacted by, among other things, responsive governmental actions including sanctions imposed by the U.S.

and other governments.

In the second quarter of 2022, the Company exited substantially all business operations in Russia, the net sales from which were less than one percent of DuPont’s consolidated net sales in 2021.

The Company does not have operations in the Ukraine.

In 2022, DuPont experienced supply chain challenges and increased logistics, raw material and energy costs due in part to the negative impact on the global economy from the ongoing war in Ukraine.

The extent to which the conflict may continue to impact DuPont in future periods will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions, and the extent of supply chain disruptions.

DuPont will continue to monitor the conflict and assess the related sanctions and other effects and may take further actions if necessary.

In 2023, DuPont continued to experience the impact of macroeconomic factors primarily involving channel inventory destocking and slower industrial demand in China.

The ultimate extent to which these macroeconomic factors will continue to impact DuPont's results is not known.

The global economy has been impacted in recent years by supply chain disruptions and inflationary cost pressures as well as the military conflict between Russia and Ukraine and the COVID-19 pandemic.

In 2022, the Company exited substantially all business operations in Russia and the Company does not have operations in the Ukraine.

The military conflict in the Ukraine did not have a significant impact on results in 2023.

The COVID-19 pandemic is not expected to have a significant impact on the Company's businesses globally in the foreseeable future.

Joint Settlement Agreement

On January 22, 2021, the Company, Corteva, EIDP and Chemours entered into a binding Memorandum of Understanding (the “MOU”), pursuant to which the parties have agreed to share certain costs associated with potential future liabilities related to alleged historical releases of certain PFAS arising out of pre-July 1, 2015 conduct (“eligible PFAS costs”) until the earlier to occur of (i) December 31, 2040, (ii) the day on which the aggregate amount of qualified spend (as defined in the MOU) is equal to $4 billion or (iii) a termination in accordance with the terms of the MOU.

The parties have agreed that, during the term of this sharing arrangement, Chemours will bear 50% of any qualified spend and the Company and Corteva shall together bear 50% of any qualified spend.

The parties have agreed that, during the term of this sharing arrangement, Chemours will bear 50 percent of any qualified spend and the Company and Corteva shall together bear 50 percent of any qualified spend.

As of December 31, 2023, the Company has recorded an indemnification liability of $206 million in connection with the cost sharing arrangement related to future eligible PFAS costs.

Total pre-tax charges of $96 million ($74 million after-tax) and $98 million ($76 million after-tax) related to the MOU are reflected as a loss from discontinued operations for the year ended December 31, 2022 and 2021, respectively, in the Company's Consolidated Statements of Operations.

Total pre-tax charges of $487 million and $96 million related to the MOU are reflected as a loss from discontinued operations for the year ended December 31, 2023 and 2022, respectively, in the Company's Consolidated Statements of Operations.

The pre-tax charges for the year ended December 31, 2023, are primarily driven by the definitive agreement reached in June 2023 by Chemours, Corteva, EIDP and DuPont to comprehensively resolve all PFAS-related claims of a defined class of U.S.

public water systems, (the “Water District Settlement Agreement”) for $1.185 billion in cash to be paid to a Qualified Settlement Fund, (the “Water District Settlement Fund”) of which DuPont is responsible for $400 million.

DuPont’s $400 million contribution was made in the third quarter 2023 and is reflected in “Restricted cash and cash equivalents “on the Consolidated Balance Sheets as of December 31, 2023.

The increase in pre-tax charges also reflects the agreement by Chemours, Corteva and DuPont with the State of Ohio in which the three companies agreed to pay $110 million of which DuPont’s portion is $39 million.

The Ohio agreement triggers a supplemental payment of $25 million to the State of Delaware related to an agreement reached in 2021 of which the Company’s portion is $9 million.

See Note 16 of the Consolidated Financial Statements for additional information.

Long-Lived Asset and Indefinite-Lived Asset Impairments

In connection with the M&M Divestitures, in the first quarter of 2022 a portion of an equity method investment was reclassified to “Assets of discontinued operations” within the Consolidated Balance Sheet.

The reclassification served as a triggering event requiring the Company to perform an impairment analysis on the retained portion of the equity method investment held within “Investments and noncurrent receivables” on the Consolidated Balance Sheet.

As a result of the analysis the Company recorded an impairment charge of $94 million ($65 million net of tax) in “Restructuring and asset related charges - net” in the Consolidated Statements of Operations for the year ended December 31, 2023 related to the Electronics & Industrial segment.

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Share Buyback Program

In February 2022, the Company's Board of Directors authorized a $1.0 billion share buyback program which expires on March 31, 2023.

In February 2022, the Company's Board of Directors authorized a $1.0 billion share buyback program, with an expiration date in March 2023.

At the end of the third quarter 2022, the Company had repurchased and retired a total of 11.9 million shares for $750 million under the 2022 Share Buyback Program, with $250 million remaining on the authorization.

On November 7, 2022, DuPont’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock in addition to the $250 million remaining under the Company’s 2022 Share Buyback Program.

The remaining $250 million was completed in 2022 as part of the Company's $3.25B ASR Transaction discussed below.

On November 7, 2022, DuPont’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock (the "$5B Share Buyback Program") in addition to the $250 million remaining under the Company’s 2022 Share Buyback Program.

The new repurchase program expires on June 30, 2024, unless extended or shortened by the Board of Directors.

On November 10, 2022, DuPont entered into an accelerated share repurchase ("ASR") agreement (the “2022 ASR Agreement”) for the repurchase of an aggregate of approximately $3.25 billion.

In accordance with the terms of the agreement, DuPont received initial deliveries of 38.8 million shares in the aggregate.

The final number of shares to be repurchased will be based on the volume-weighted average stock price for DuPont common stock during the term of the ASR, less an agreed upon discount.

The ASR transaction is being funded with cash on hand, from the M&M Divestiture, and is expected to be completed by the third quarter of 2023.

On November 10, 2022, DuPont entered into an accelerated share repurchase ("ASR") transaction with three financial counterparties for the repurchase of an aggregate of approximately $3.25 billion (the "$3.25B ASR Transaction").

In accordance with the terms of the agreements with the counterparties, DuPont received initial deliveries of 38.8 million shares in the aggregate, which were retired immediately and were recorded as a reduction to retained earnings.

The $3.25B ASR transaction was funded with cash on hand from the M&M Divestiture.

In connection with the completion of the transaction, the remaining $613 million was settled as a forward contract indexed to DuPont common stock at the time of settlement, classified within stockholders’ equity.

At the completion of the $3.25B ASR Transaction, the Company had repurchased and retired a total of 46.8 million shares at an average price of $69.44 per share.

In the third quarter 2023, DuPont entered into an ASR agreement with three financial counterparties to repurchase an aggregate of $2.0 billion of common stock (the "$2B ASR Transaction").

DuPont paid an aggregate of $2.0 billion to the counterparties and received initial deliveries of 21.2 million shares in aggregate of DuPont common stock, which were retired immediately and recorded as a reduction to retained earnings of $1.6 billion.

The remaining $400 million was evaluated as an unsettled forward contract indexed to DuPont common stock, classified within stockholders’ equity as of December 31, 2023.

Subsequent to year end, in the first quarter of 2024, the accelerated share repurchase agreements under the $2B ASR Transaction were settled.

The settlement resulted in the delivery of 6.7 million additional shares of DuPont common stock, which were retired immediately and will be recorded as a reduction to retained earnings in the first quarter of 2024.

In total, the Company repurchased 27.9 million shares at an average price of $71.67 per share under the $2B ASR Transaction.

The completion of the $2B ASR Transaction completes the $5B Share Buyback Program and the Company's stock repurchase authorization.

Subsequent to year end, in the first quarter 2024, the Company’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $1 billion of common stock (“the $1B Program”).

Under the $1B Program, repurchases may be made from time to time on the open market at prevailing market prices or in privately negotiated transactions off market, including additional ASR agreements in accordance with applicable federal securities laws.

The $1B Program terminates on June 30, 2025, unless extended or shortened by the Board of Directors.

The timing and number of shares to be repurchased will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements.

In the first quarter 2024, DuPont entered an ASR agreement with one counterparty for the repurchase of about $500 million of common stock;

DuPont received initial deliveries in February 2024, of 6 million shares of common stock.

The final number of shares to be repurchased will be based on the volume-weighted average stock price for DuPont common stock during the term of the ASR agreement, less an agreed upon discount.

Final settlement is expected in the second quarter of 2024.

The Inflation Reduction Act of 2022 introduced a 1 percent nondeductible excise tax imposed on the net value of certain stock repurchases made after December 31, 2022.

The net value is determined by the fair market value of the stock repurchased during the tax year, reduced by the fair market value of stock issued during the tax year.

The Company recorded total excise tax of $21.2 million as a reduction to retained earnings for the year ended December 31, 2023.

In the first quarter of 2021, the Company's Board of Directors authorized a $1.5 billion share buyback program, which expired on June 30, 2022 (the "2021 Share Buyback Program").

In the first quarter of 2022, the Company purchased 5.1 million shares for approximately $375 million, effectively completing the program.

In the first quarter of 2022, the Company purchased 5.1 million shares for approximately $375 million, thereby completing the program.

At the expiry of the 2021 Share Buyback Program, the Company had repurchased and retired a total of 19.6 million shares for $1.5 billion under the 2021 Share Buyback Program.

In the second quarter of 2019, the Company's Board of Directors approved a $2 billion share buyback program, which expired on June 1, 2021.

At the expiry of the 2019 Share Buyback Program, the Company had repurchased and retired a total of 29.9 million shares at a cost of $2 billion.

Interest Rate Swap Agreements

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2023-2024 Restructuring Program

In December 2023, the Company approved targeted restructuring actions to capture near-term cost reductions due to macroeconomic factors as well as to further simplify certain organizational structures following the Spectrum acquisition and Delrin® Divestiture (the "2023-2024 Restructuring Program").

For the year ended December 31, 2023, DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $110 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $80 million of severance and related benefit costs and asset related charges of $30 million.

At December 31, 2023, total liabilities related to the 2023-2024 Restructuring Program were $79 million for severance and related benefit costs, recognized in "Accrued and other current liabilities" in the Consolidated Balance Sheets.

2022 Restructuring Program

In October 2022, the Company approved targeted restructuring actions to capture near-term cost reductions and to further simplify certain organizational structures following the M&M Divestitures (the "2022 Restructuring Program").

For the year ended December 31, 2022, DuPont recorded a pre-tax charge related to the 2022 Restructuring Program in the amount of $61 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $61 million of severance and related benefit costs.

At December 31, 2022, total liabilities related to the 2022 Restructuring Program were $57 million for severance and related benefit costs, recognized in "Accrued and other current liabilities" in the Consolidated Balance Sheet.

DuPont recorded pre-tax charges related to the 2022 Restructuring Program in the amount of $96 million inception-to-date, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $82 million of severance and related benefit costs and asset related charges of $14 million.

At December 31, 2023, total liabilities related to the 2022 Restructuring Program were $27 million for severance and related benefit costs, recognized in "Accrued and other current liabilities" in the Consolidated Balance Sheets.

The 2022 Restructuring Program is considered substantially complete.

2021 Restructuring Actions

In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions").

For the years ended December 31, 2021 and December 31, 2022, DuPont recorded pre-tax charges related to the 2021 Restructuring Actions in the amount of $46 million inception-to-date, consisting of severance and related benefit costs of $26 million and asset related charges of $20 million.

DuPont recorded pre-tax charges related to the 2021 Restructuring Actions in the amount of $47 million inception-to-date, consisting of severance and related benefit costs of $27 million and asset related charges of $20 million.

At December 31, 2023, total liabilities related to the 2021 Restructuring Actions were $1 million for severance and related benefits.

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2023 versus 2022

The Company reported net sales for the year ended December 31, 2023 of $12.1 billion, down 7 percent from $13.0 billion for the year ended December 31, 2022, due to an 8 percent decrease in volume and a 1 percent unfavorable currency impact partially offset by a 2 percent increase due to local price and product mix.

Volume decrease was driven by Electronics & Industrial (down 11 percent) and Water and Protection (down 7 percent) partially offset by Corporate & Other (up 2 percent).

Local price and product mix increased within Water & Protection (up 3 percent) and Corporate & Other (up 1 percent) and reminded flat in Electronics & Industrial.

Currency was down 1 percent compared with the same period last year, primarily driven by Asia Pacific (down 2 percent) partially offset by EMEA (up 1 percent).

2022 versus 2021

The Company reported net sales for the year ended December 31, 2022 of $13.0 billion, up 4 percent from $12.6 billion for the year ended December 31, 2021, due to a 7 percent increase due to local price and product mix, a 1 percent increase in volume, partially offset by a 3 percent unfavorable currency impact and a 1 percent decrease in portfolio and other.

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Currency was down 3 percent compared with the same period last year, primarily driven by EMEA (down 8 percent) and Asia Pacific (down 4 percent).

2021 versus 2020

The Company reported net sales for the year ended December 31, 2021 of $12.6 billion, up 13 percent from $11.1 billion for the year ended December 31, 2020, due to a 10 percent increase in volume and a 1 percent increase due to local price and product mix, and a 2 percent favorable currency impact.

Portfolio and other changes and currency were flat.

Volume grew across all geographic regions and across all segments, most notably Electronics & Industrial (up 12 percent).

Local price and product mix increased across all regions and all segments with the exception of Electronics & Industrial and EMEA where it was flat.

Currency was up 2 percent compared with the same period last year, driven primarily by EMEA (up 4 percent) and Asia Pacific (up 2 percent).

Portfolio and other changes were flat overall as the July 1, 2021 acquisition of Laird PM in Electronics & Industrial (up 6 percent) was offset by the decline within Corporate & Other (down 15 percent) due to the sale of the Clean Technologies and Solamet® businesses.

Cost of Sales

Cost of sales was $8.4 billion for the year ended December 31, 2022, up from $8.0 billion for the year ended December 31, 2021.

Cost of sales increased for the year ended December 31, 2022 primarily due to higher raw materials and higher logistics and energy costs, increased sales volume and partially offset by currency impacts and a payroll tax credit recognized under the ERC of the CARES Act.

Cost of sales as a percentage of net sales for the year ended December 31, 2022 was 65 percent compared with 63 percent for the year ended December 31, 2021.

Cost of sales was $7.8 billion for the year ended December 31, 2023, down from $8.4 billion for the year ended December 31, 2022.

Cost of sales decreased for the year ended December 31, 2023 primarily due to decreased sales volume and lower raw material, logistics and energy costs.

Cost of sales as a percentage of net sales for the years ended December 31, 2023 and 2022 was 65 percent.

For the year ended December 31, 2022, cost of sales was $8.4 billion, up from $8.0 billion for the year ended December 31, 2021.

Cost of sales increased for the year ended December 31, 2021 primarily due to increased sales volume, currency impacts, and higher raw materials and logistics costs.

The increase was partially offset by the absence of charges in the prior year associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19.

Cost of sales as a percentage of net sales for the year ended December 31, 2022 was 65 percent compared with 63 percent for the year ended December 31, 2021.

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R&D expense was $508 million for the year ended December 31, 2023, down from $536 million for the year ended December 31, 2022 and $557 million for the year ended December 31, 2021.

R&D as a percentage of net sales was 4 percent for the years ended December 31, 2022 and 2021 and 5 percent for the year ended December 31, 2020.

R&D expense in 2022, 2021 and 2020 was relatively consistent.

R&D as a percentage of net sales was 4 percent for the years ended December 31, 2023, 2022 and 2021.

The decrease in R&D expense in 2023 compared to 2022 was primarily due to lower personnel related expenses partially offset by the Spectrum Acquisition.

The slight decline in 2022 compared to 2021 was primarily due to a payroll tax credit recognized under the ERC of the CARES Act as well as currency fluctuations.

The slight decline in R&D expense in 2021 compared to 2020 was primarily due to productivity actions.

Selling, General and Administrative Expenses ("SG&A")

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SG&A as a percentage of net sales was 12 percent, 11 percent, and 13 percent for the years ended December 31, 2023, 2022 and 2021, respectively.

The decrease in SG&A costs in 2023 compared with 2022 was primarily due to lower Stranded Costs related to the M&M Divestiture, lower personnel related expenses and lower bad debt expense partially offset by the Spectrum Acquisition.

The decrease in SG&A cost in 2022 compared to 2021 was primarily due to currency fluctuations, lower personnel related expenses and a payroll tax credit recognized under the ERC of the CARES Act.

The increase in SG&A costs in 2021 compared with 2020 was primarily due to incremental costs from higher personnel related expenses, currency fluctuations, and SG&A costs for six months of the Laird PM acquisition.

Amortization of Intangibles

Amortization of intangibles was $600 million, $590 million and $566 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The increase in amortization of intangibles in 2023 compared to 2022 was primarily due to the amortization of the intangible assets acquired in the Spectrum Acquisition in the third quarter of 2023 partially offset by the absence of amortization in 2023 from fully amortized assets.

The increase in amortization of intangibles in 2022 compared to 2021 was primarily due to the amortization of the intangible assets acquired in the Laird PM Acquisition in the third quarter of 2021.

The increase in amortization expense in 2021 compared to 2020 was primarily due to the amortization of the intangible assets acquired in the Laird PM Acquisition, partially offset by lower amortization due to the sale of the trichlorosilane business ("TCS Business") in the third quarter of 2020, as well as the classification of the Biomaterials and Clean Technologies business units as held for sale in the third quarter of 2020.

See Note 14 to the Consolidated Financial Statements for additional information on intangible assets.

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Restructuring and asset related charges - net were $146 million, $155 million and $50 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The activity for the year ended December 31, 2022 included a pre-tax charge related to the 2022 Restructuring Program in the amount of $61 million of severance and related benefit costs and a $94 million ($65 million net of tax) impairment related to an equity method investment within the Electronics & Industrial segments.

The activity for the year ended December 31, 2021 included a $46 million charge related to the 2021 Restructuring Actions and a $8 million charge related to the 2020 Restructuring Program.

The charges for the year ended December 31, 2020 included a $270 million impairment charge related to long-lived assets and a $52 million impairment charge related to indefinite-lived intangible assets in Corporate & Other, a $318 million impairment charge related to long-lived assets and a $150 million charge related to the 2020 Restructuring Program.

The activity for the year ended December 31, 2023 DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $110 million .

The charges for the year ended December 31, 2021 included a $46 million charge related to the 2021 Restructuring Actions.

See Note 6 to the Consolidated Financial Statements for additional information.

Goodwill Impairment Charges

For the year ended December 31, 2023, goodwill impairment charges of $804 million related to the Water & Protection segment.

For the years ended December 31, 2022 and 2021 there were no goodwill impairment charges.

For the year ended December 31, 2020, goodwill impairment charges of $1,862 million related to a business reported in Corporate & Other and the Industrial Solutions reporting unit.

Acquisition, Integration and Separation Costs

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Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, other professional advisory fees and other contractual transaction payments.

For the year ended December 31, 2023 these costs were primarily related to Spectrum Acquisition.

For the year ended December 31, 2022 these costs were primarily related to the Terminated Intended Rogers Acquisition, specifically the $162.5 million termination fee paid, the Biomaterials business unit divestiture and the prior year acquisition of Laird PM.

For the year ended December 31, 2021 these costs were primarily related to the acquisition of Laird PM and the divestitures of the Biomaterials, Clean Technologies and Solamet® business units.

Comparatively, for the year ended December 31, 2020 these costs were primarily associated with the post-DWDP Merger integration.

Comparatively, for the year ended December 31, 2021 these costs were primarily associated with the acquisition of Laird PM and the divestitures of the Biomaterials, Clean Technologies and Solamet® business units.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $51 million, $75 million and $85 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Earnings of nonconsolidated affiliates for the year ended December 31, 2022 declined slightly compared to the prior year due to lower equity earnings.

The decrease in earnings of nonconsolidated affiliates for the year ended December 31, 2021 compared to the prior year is primarily due to the sale of DC HSC Holdings LLC and Hemlock Semiconductor L.L.C.

(the "HSC Group") in the third quarter of 2020.

The decrease in earnings of nonconsolidated affiliates for the year ended December 31, 2023 and 2022 compared to the prior years is primarily due to lower equity earnings.

Sundry Income (Expense) - Net

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Sundry income (expense) - net for the year ended December 31, 2023 was $102 million compared with $191 million and $145 million in the years ended December 31, 2022 and 2021, respectively.

The year ended December 31, 2023 included interest income of $155 million and a $19 million net gain on divestiture and sales of other assets, primarily related to a land sale within the Water & Protection segment, partially offset by foreign currency exchange losses of $73 million.

The year ended December 31, 2022 included interest income of $50 million primarily due to higher cash on hand and marketable securities in the fourth quarter, income of $37 million related to the second quarter sale of a land use right within the Water & Protection segment, a $26 million gain on sale of the Biomaterials business unit recorded in the second quarter, income related to non-operating pension and other post-employment benefit plans of $28 million and foreign currency exchange gains of $15 million.

The year ended December 31, 2021 included a net pre-tax benefit of $140 million associated with the sale of the Solamet® business unit within Corporate & Other, a pre-tax gain of $28 million related to the sale of assets within the Electronics & Industrial segment, income related to non-operating pension and other post-employment benefit plans of $30 million, partially offset by foreign currency exchange losses of $53 million, and miscellaneous expenses of $15 million.

The year ended December 31, 2020 included a net pre-tax benefit of $396 million associated with the TCS/HSC Disposal, a pre-tax gain of $197 million related to the sale of the Compound Semiconductor Solutions business unit in the Electronics & Industrial segment, miscellaneous income of $24 million, and income related to non-operating pension and other post-employment benefit plans of $12 million, partially offset by foreign currency exchange losses of $54 million.

See Note 7 to the Consolidated Financial Statements for additional information.

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Interest expense was $396 million, $492 million, and $525 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The decrease in interest expense from the 2023 compared to 2022, is primarily due to the redemption of $2.5 billion fixed-rate long-term senior unsecured notes due in November 2023, the decrease in commercial paper borrowing and the absence of the structuring and the commitment fees on term loans related to the Terminated Intended Rogers Acquisition, partially offset by the increase in interest expense from the interest rate swap.

The decrease in interest expense in 2022 compared to 2021 is primarily due to the redemption in the fourth quarter of 2022 of $2.5 billion of 2018 Senior Notes due in November 2023, the absence of interest in 2022 on the May 2022 Notes and the absence of the structuring fee on the term loan related to the Terminated Intended Rogers Acquisition, partially offset by increase in interest expense from commercial paper borrowings.

The decrease in interest expense in 2021 compared to 2020 primarily relates to the maturity of the November 2020 Notes, the termination and repayment of the fully-drawn $3.0 billion term loan facilities in February 2021, and significant reduction in commercial paper borrowings, partially offset by structuring fees and the amortization of commitment fees related to the Terminated Intended Rogers Acquisition financing agreements.

Refer to Note 15 to the Consolidated Financial Statements for additional information.

Provision for (Benefit from) Income Taxes on Continuing Operations

(Benefit from) Provision for Income Taxes on Continuing Operations

The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to tax attributes.

For the year ended December 31, 2023, the Company's effective tax rate was (5.8) percent on pre-tax income from continuing operations of $504 million.

The effective tax rate differential for the year ended December 31, 2022, was driven by the U.S tax effect of foreign earnings and dividends, geographic mix of earnings and the tax impacts of acquisition, integration, and separation costs.

For the year ended December 31, 2021, the Company's effective tax rate was 16.4 percent on a pre-tax income from continuing operations of $1,444 million.

The effective tax rate differential for the year ended December 31, 2023, was principally the result the result of the non-tax-deductible goodwill impairment charge of $804 million in the fourth quarter partially offset by a $324 million tax benefit recorded in connection with an internal restructuring.

For the year ended December 31, 2022, the Company's effective tax rate was 26.7 percent on pre-tax income from continuing operations of $1,448 million.

The effective tax rate differential was driven by the U.S tax effect of foreign earnings and dividends, geographic mix of earnings and the tax impacts of acquisition, integration, and separation costs.

For the year ended December 31, 2021, the Company's effective tax rate was 16.4 percent on pre-tax loss from continuing operations of $1,444 million.

The effective tax rate differential was principally the result of a $59 million tax benefit related to the step-up in tax basis in the goodwill of the Company’s European regional headquarters legal entity.

For the year ended December 31, 2020, the Company's effective tax rate was (7.1) percent on a pre-tax loss from continuing operations of $1,259 million.

The effective tax rate differential was principally the result of the non-tax-deductible goodwill impairment charges impacting Corporate & Other.

The underlying factors affecting the Company’s overall tax rate are summarized in Note 8 to the Consolidated Financial Statements.

SEGMENT RESULTS

Effective February 2022, the revenues and certain expenses of the M&M Businesses were classified as discontinued operations

in the current and historical periods.

The Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines within the historic

Mobility & Materials segment (the "Retained Businesses") are not in the scope of the M&M Divestitures.

Effective with the signing of the Transaction Agreement, the Retained Businesses were realigned to Corporate & Other.

The reporting changes have been retrospectively reflected for all periods presented.

The costs of the M&M Businesses that are classified as discontinued operations include only direct operating expenses incurred prior to the November 1, 2022 M&M Divestiture and costs which the Company will no longer incur upon the close of the Delrin® Divestiture.

The revenues and certain expenses of the M&M Businesses are classified as discontinued operations in the current and historical periods.

In addition, the Auto Adhesives & Fluids, MultibaseTM and Tedlar® product lines within the historical Mobility & Materials segment (the "Retained Businesses") are not included in the scope of the M&M Divestitures and are included in Corporate & Other.

The costs of the M&M Businesses that are classified as discontinued operations include only direct operating expenses incurred prior to the November 1, 2022 M&M Divestiture and prior to the November 1, 2023 Delrin® Divestiture.

Indirect costs, such as those related to corporate and shared service functions previously allocated to the M&M Businesses, do not meet the criteria for discontinued operations and remain reported within continuing operations.

A portion of these indirect costs related to activities the Company continues to undertake post-closing of the M&M Divestiture, and for which it is and will be reimbursed (“Future Reimbursable Indirect Costs”).

In addition, a portion of these indirect costs relate to activities the Company intends to perform post the close of the Delrin® Divestiture and for which it will be reimbursed.

A portion of these indirect costs related to activities the Company continues to undertake post-closing of the M&M Divestitures, and for which it is reimbursed (“Future Reimbursable Indirect Costs”).

In addition, a portion of these indirect costs relate to activities the Company performs post the close of the Delrin® Divestiture and for which it is reimbursed.

Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below.

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Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.

On August 1, 2023, the Company completed the previously announced acquisition of Spectrum Plastics Group (“Spectrum”) from AEA Investors (the “Spectrum Acquisition”).

Spectrum is part of the Electronics & Industrial segment.

The Company's measure of profit/loss for segment reporting purposes is Operating EBITDA as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources.

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Electronics & Industrial is a leading provider of platemaking systems and photopolymer plates for the packaging graphics industry, digital printing inks and cutting-edge materials for the manufacturing of displays for organic light emitting diode ("OLED").

In addition, the segment produces innovative engineering polymer solutions, high performance parts, medical silicones and specialty lubricants.

In addition, the segment produces innovative engineering polymer solutions, high performance parts, flexible packaging products, plastic and silicone extrusions, medical silicones, specialty lubricants and critical polymer-based components and devices for medical and other industrial markets.

Electronics & Industrial For the Years Ended December 31,

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2023 Versus 2022

Electronics & Industrial net sales were $5,337 million for the year ended December 31, 2023, down 10 percent from $5,917 million for the year ended December 31, 2022.

Net sales decreased due to an 11 percent volume decline and a 1 percent currency headwind offset by a 2 percent increase in portfolio.

Volume declines in Semiconductor Technologies were driven by inventory destocking and reduced semiconductor fabrication utilization rates due to ongoing consumer electronics demand weakness, led by China.

Volume declines in Interconnect Solutions related to decreased spending on consumer and industrial electronics and related channel inventory destocking, both led by China.

Within Industrial Solutions, volume declines were driven by channel inventory destocking within biopharma markets and continued lower demand in consumer electronics markets slightly offset by increased demand for OLED materials.

The local price and product mix gains in Semiconductor Technologies and Industrial Solutions are a result of actions taken to offset cost inflation.

These gains were offset by local price and product mix declines in Interconnect Solutions, including the impact of lower pass-through metals, as well as declines in OLED materials.

The unfavorable currency impact is primarily driven by the Japanese yen and Chinese yuan.

The portfolio impact primarily reflects the August 1, 2023 acquisition of Spectrum.

Operating EBITDA was $1,472 million for the year ended December 31, 2023, down 20 percent compared with $1,836 million for the year ended December 31, 2022 primarily due to decreased sales volumes, the impact of reduced production rates to better align inventory with demand, slightly offset by the earnings associated with Spectrum.

2022 Versus 2021

Electronics & Industrial net sales were $5,917 million for the year ended December 31, 2022, up 7 percent from $5,554 million for the year ended December, 31 2021.

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Volumes within Interconnect Solutions were down due to weakness in consumer electronics and smartphones.

Operating EBITDA was $1,836 million for the year ended December 31, 2022, up 4 percent compared with $1,758 million for the year ended December 31, 2021 driven by strong volume growth, pricing gains, and the acquisition of Laird PM, partially offset by higher raw material, logistics and energy costs, as well as weaker product mix in Interconnect Solutions.

2021 Versus 2020

Electronics & Industrial net sales were $5,554 million for the year ended December 31, 2021, up 19 percent from $4,674 million for the year ended December, 31 2020.

Net sales increased due to a 12 percent increase in volume, a 6 percent portfolio and other increase impact and a 1 percent favorable currency impact.

Local price and product mix were flat.

Volume growth was driven by Industrial Solutions primarily due to increased demand in consumer electronics and healthcare markets.

Semiconductor Technologies volume growth was led by new technology ramps at advanced nodes within logic and foundry and growth in high performance computing and 5G communications markets.

Within Interconnect Solutions, the increase was driven by the July 1, 2021 acquisition of Laird PM, increases in consumer electronics, and continued volume recovery within industrial applications.

Operating EBITDA was $1,758 million for the year ended December 31, 2021, up 20 percent compared with $1,468 million for the year ended December 31, 2020 driven by strong volume growth and the acquisition of Laird PM and partially offset by higher raw material and logistic costs.

The years ended December 31, 2021 and 2020 include income of $28 million and $40 million, respectively, related to the sale of assets.

Operating EBITDA was $1,836 million for the year ended December 31, 2022, up 4 percent compared with $1,758 million for the year ended December 31, 2021 driven by strong volume growth and the acquisition of Laird PM and partially offset by higher raw material, logistics and energy costs, as well as weaker product mix in Interconnect Solutions.

WATER & PROTECTION

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2023 Versus 2022

Water & Protection net sales were $5,633 million for the year ended December 31, 2023, down 5 percent from $5,957 million for the year ended December 31, 2022 due to a 7 percent decline in volume and a 1 percent unfavorable currency impact, partially offset by a 3 percent increase in local price and product mix.

Volume declines within Safety Solutions were due to channel inventory destocking, primarily in medical packaging.

Shelter Solutions volume declines were driven by weak demand in construction markets including channel inventory destocking.

Water Solutions volume declines were primarily due to distributor destocking and weaker industrial demand in China.

Local price and product mix increased across all businesses and in all regions as the result of broad-based actions taken in the prior year to offset cost inflation.

The unfavorable currency impact is primarily driven by the Chinese yuan and the Japanese yen.

Operating EBITDA was $1,388 million for the year ended December 31, 2023, down 3 percent compared with $1,431 million for the year ended December 31, 2022 driven by decreased sales volumes, the impact of reduced production rates and unfavorable currency impacts partially offset by net pricing gains.

The currency impacts were primarily driven by the Chinese yuan and the Japanese yen.

2022 Versus 2021

Water & Protection net sales were $5,957 million for the year ended December 31, 2022, up 7 percent from $5,552 million for the year ended December 31, 2021 due to a 12 percent increase in local price, partially offset by a 4 percent unfavorable currency impact and a 1 percent decrease in volume.

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Operating EBITDA was $1,431 million for the year ended December 31, 2022, up 3 percent compared with $1,385 million for the year ended December 31, 2021 as pricing actions and more disciplined cost control more than offset higher raw material, logistics and energy costs, unfavorable impact from currency, and lower volumes.

2021 Versus 2020

Water & Protection net sales were $5,552 million for the year ended December 31, 2021, up 11 percent from $4,993 million for the year ended December 31, 2020 due to an 8 percent increase in volume, a 2 percent increase in local price, and a 1 percent favorable currency impact.

Portfolio was flat.

Volume growth across the segment was driven by ongoing recovery of end markets following the COVID-19 pandemic.

Volume gains in Safety Solutions were driven by continued recovery in end-markets for aramid fibers most notably in NOMEX® and KEVLAR®.

Within Shelter Solutions, volume growth was driven by the ongoing recovery of commercial construction and continued demand in residential construction and do-it-yourself applications.

Water Solutions volume gains reflect strong demand for water technologies led by reverse osmosis membranes in industrial and desalination markets.

Operating EBITDA was $1,385 million for the year ended December 31, 2021, up 5 percent compared with $1,313 million for the year ended December 31, 2020 as volume gains and the absence of costs associated with temporarily idling several manufacturing facilities were partially offset by higher raw material and logistics costs.

Corporate & Other

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, Multibase TM and Tedlar® product lines, previously reported in the historic Mobility & Materials segment.

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, Multibase TM and Tedlar® product lines.

Related to the M&M Divestitures, Corporate & Other includes Stranded Costs and Future Reimbursable Indirect Costs.

The results of Corporate & Other include the sales and activity of the Biomaterials, Clean Technologies, and Solamet® business units.

The results of Corporate & Other include the sales and activity of the Biomaterials (prior to its May 2022 divestiture), Clean Technologies (prior to its December 2021 divestiture), and Solamet® (prior to its June 2021 divestiture) business units.

Corporate & Other also includes certain enterprise and governance activities including non-allocated corporate overhead costs and support functions, leveraged services, non-business aligned litigation expenses and other costs not absorbed by reportable segments.

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Equity earnings $ — $ 5 $ 8

Corporate & Other net sales were $1,143 for the year ended December 31, 2022, down from $1,460 million for the year ended December 31, 2021.

For the year ended December 31, 2022 net sales decreased primarily due to the divestiture of the Biomaterials business in May 2022 and Clean Technologies business in December 2021.

For the year ended December 31, 2021, Corporate & Other net sales were $1,460 million which was consistent with net sales of $1,461 million for the year ended December, 31 2020.

Operating EBITDA was $(6) million, $9 million and $61 million for the year ended December 31, 2022, 2021 and 2020, respectively.

The decrease in EBITDA was primarily the result of portfolio actions over the three years.

In 2023, the Company expects continued demand strength in areas such as water and auto adhesives, along with stable demand across industrial end-markets including aerospace and healthcare.

The Company expects lower volumes in consumer facing markets during the first half of the year, primarily in consumer electronics and semiconductors within the Electronics & Industrial segment.

Market declines within the Water & Protection segment in construction end-markets are expected throughout 2023.

The Company expects macroeconomic pressures and demand trends will begin to correct by the end of the first half for the consumer end markets served by the Electronics & Industrial segment but cannot predict the extent or length of such correction.

As a result, the Company is unable to predict the extent to which these macroeconomic events may impact its consolidated results of operations or financial condition.

The Company continues to closely monitor macroeconomic and geopolitical developments.

For the first quarter of 2024, the Company anticipates additional inventory destocking within our industrial-based businesses along with continued weak demand in China.

Sequentially, from first quarter to the second quarter of 2024 the Company anticipates some inventory destocking abatement, seasonality factors and realization of cost savings.

For the full year 2024, the Company anticipates an electronics market recovery, including improvement in semiconductor fabrication utilization rates, as well as improved orders within industrial markets as customer inventory levels normalize.

The Company continues to closely monitor macroeconomic as well as geopolitical developments.

LIQUIDITY & CAPITAL RESOURCES

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For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

The Company held $1,302 million in marketable securities at December 31, 2022 and none at December 31, 2021.

The increase in marketable securities from the prior period is due to the investment of proceeds from the M&M Divestiture.

The Company held no investments in marketable securities at December 31, 2023 and $1,302 million at December 31, 2022.

The decrease in cash, cash equivalents and marketable securities at December 31, 2023 compared to December 31, 2022 was due to cash used in the current year to fund the $2B ASR transaction, the Spectrum Acquisition, Restricted Cash in connection with the Water District Settlement Agreement and general corporate purposes, partially offset by the proceeds from the Delrin® Divestiture.

Refer to subsequent paragraphs for further discussion of the drivers of the change in cash, cash equivalents.

Total debt at December 31, 2023 and December 31, 2022 was $7.8 billion and $8.1 billion, respectively.

The decrease was primarily due to the redemption of 2018 Senior Notes of $2.5 billion due in 2023 during the fourth quarter of 2022, repayment of all commercial paper borrowings and mark to market impact to the fair value of an interest rate swap used to hedge changes in the fair value of the hedged item due to changes in the SOFR as of December 31, 2022.

The decrease was primarily due to the repayment of the 2018 Senior Notes of $300 million due in November 2023, partially offset by the mark to market impact to the fair value of an interest rate swap used to hedge changes in the fair value of the hedged item due to changes in the SOFR as of December 31, 2023.

As of December 31, 2023, the Company is contractually obligated to make future cash payments of $7.9 billion and $4.9 billion associated with principal and interest, respectively, on debt obligations.

Related to the principal, $300 million will be due in the next twelve months and the remainder will be due subsequent to 2023.

Related to the principal, all payments will be due subsequent to 2024.

Related to interest, $394 million will be due in the next twelve months and the remainder will be due subsequent to 2024.

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Revolving Credit Facilities

On April 12, 2022, the Company entered into a $2.5 billion five-year revolving credit facility (the "Five-Year Revolving Credit Facility").

As of the effectiveness of the Five-Year Revolving Credit Facility, the Company's prior $3 billion five-year revolving credit facility entered in May 2019 was terminated.

All material conditions and covenants in the Five-Year Revolving Credit Facility are consistent with those of the prior terminated credit facility.

On April 12, 2022, the Company entered into a $2.5 billion five-year revolving credit facility (the "Five-Year Revolving Credit Facility") and terminated its $3 billion five-year revolving credit facility entered in May 2019.

The Five-Year Revolving Credit Facility is generally expected to remain undrawn and serve as a backstop to the Company’s commercial paper and letter of credit issuance.

Also on April 12, 2022, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2022 $1B Revolving Credit Facility") as the $1.0 billion 364-day revolving credit facility entered in April 2021 (the “2021 $1B Revolving Credit Facility") had an expiration date in mid-April.

As of the effectiveness of the 2022 $1B Revolving Credit Facility, the 2021 $1B Revolving Credit Facility was terminated.

Also on April 12, 2022, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2022 $1B Revolving Credit Facility") and terminated its $1.0 billion 364-day revolving credit facility entered in April 2021 (the “2021 $1B Revolving Credit Facility").

The 2022 $1B Revolving Credit Facility may be used for general corporate purposes.

In July 2022, the Company drew down $600 million under the 364-day Revolving Credit Facility in order to facilitate certain intercompany internal restructuring steps related to the M&M Divestiture.

In July 2022, the Company drew down $600 million under the 2022 $1B Revolving Credit Facility in order to facilitate certain intercompany internal restructuring steps related to the M&M Divestiture.

The Company repaid the borrowing in September 2022.

In April 2023, the Company's 2022 $1B Revolving Credit Facility expired.

In May 2023, the Company entered into a new $1 billion 364-day revolving credit facility (the "2023 $1B Revolving Credit Facility").

The 2023 $1B Revolving Credit Facility may be used for general corporate purposes.

There were no drawdowns under the facility during the year ended December 31, 2023.

The Company intends to enter a new $1 billion 364-day revolving credit facility on or about the expiration of the 2023 $1B Revolving Credit Facility.

Repayment of Senior Notes

In November 2022, the Company redeemed in full $2.5 billion in fixed-rate long term senior unsecured notes due 2023 at a redemption price equal to 100% of the aggregated principal amount plus the accrued and unpaid interest.

In November 2022, the Company redeemed in full $2.5 billion in fixed-rate long term senior unsecured notes due 2023 at a redemption price equal to 100 percent of the aggregated principal amount plus the accrued and unpaid interest.

The redemption was funded with the net proceeds from the M&M Divestiture.

In November 2023, the $300 million Floating Rate Senior Unsecured Notes matured and was repaid at par plus the accrued and unpaid interest.

The Company funded the repayment with cash on hand.

Terminated Intended Rogers Acquisition

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The termination fee was paid with cash on hand and recorded in the "Acquisition, integration and separation costs" within the Consolidated Statement of Operations.

See Note 3 to the Consolidated Financial Statements for additional information.

Commercial Paper

In April 2022, DuPont downsized its authorized commercial paper program from $3.0 billion to $2.5 billion (the “DuPont Commercial Paper Program”).

At December 31, 2022 the Company had no commercial paper outstanding compared to $150 million outstanding at the end of 2021.

At December 31, 2023 and 2022, the Company had no issuances outstanding of commercial paper.

The Company’s issuance under the Commercial Paper Program was used for general corporate purposes.

On February 1, 2021, the Company terminated its fully drawn $3.0 billion term loan facilities.

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The Company funded the repayment with proceeds from the Special Cash Payment.

Spectrum Acquisition

On August 1, 2023, the Company completed the Spectrum Acquisition for a net purchase price of approximately $1,792 million, including a net upward adjustment of approximately $43.1 million for acquired cash and net working capital, among other items.

The Company utilized existing cash balances to complete the acquisition.

Water District Settlement Agreement

The Company utilized the MOU escrow account balance of approximately $100 million and cash on hand to make its $400 million contribution to the Water District Settlement Fund.

The $400 million contribution, plus interest, to the Water District Settlement Fund is reflected as "Restricted cash and cash equivalents" on the Condensed Consolidated Balance sheets.

The $400 million contribution will be reflected as a cash outflow within cash flows from discontinued operations after the entry of judgment becomes final and non-appealable.

See Note 16 to the Consolidated Financial Statements for additional information.

Delrin® Divestiture

On November 1, 2023, the Company closed the sale of the Delrin® business to TJC LP ("TJC"), (the “Delrin® Divestiture”).

The customary transaction adjustments include $27 million of cash transferred with the Delrin® Divestiture for which DuPont was reimbursed at closing resulting in net cash proceeds of $1.25 billion.

TJC, through its subsidiaries, holds the 80.1 percent controlling interest in Derby.

See Note 4 to the Consolidated Financial Statements for additional information.

Laird Performance Materials

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The senior unsecured notes (the "2018 Senior Notes") also contain customary default provisions.

The Five-Year Revolving Credit Facility and the 2022 $1B Revolving Credit Facility contain a financial covenant, typical for companies with similar credit ratings, requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60.

The Five-Year Revolving Credit Facility and 2023 $1B Revolving Credit Facility contain a financial covenant, typical for companies with similar credit ratings, requiring that the ratio of Total Indebtedness to Total Capitalization for the Company and its consolidated subsidiaries not exceed 0.60.

At December 31, 2023, the Company was in compliance with this financial covenant.

Summary of Cash Flows

Beginning in the second quarter of 2023, the Company has segregated the cash flows from discontinued operations from the cash flows from continuing operations in accordance with ASC 230, Statement of Cash Flows.

The Consolidated Statements of Cash Flows have been recast for all periods to reflect the change in presentation.

The Company’s cash flows from operating, investing and financing activities, as reflected in the Consolidated Statements of Cash Flows, are summarized in the following table.

The cash flows related to N&B and the M&M Divestitures have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented.

Cash Flow Summary

2023 2022 2021

Cash provided by (used for):

(In millions) For the years ended December 31,

Cash provided by (used for) from continuing operations:

Operating activities

4 unchanged sentences

$ (2,989) $ (7,646) $ (7,589)

Cash (used in) provided by discontinued operations $ (306) $ (763) $ 1,414

Effect of exchange rate changes on cash, cash equivalents and restricted cash

$ (37) $ (148) $ (72)

Cash, cash equivalents and restricted cash in discontinued operations

$ — $ 39 $ 42

Cash Flows provided by Operating Activities

Cash provided by operating activities was $588 million, $2,281 million and $4,095 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The decrease in cash provided by operating activities in 2022 was primarily driven by the decrease in net income , increase in cash used in net working capital, primarily due to the use of cash from accounts payable and other assets and liabilities, net and transaction and separation related expenses.

Included within the decrease of 2022 cash flow is the impact of the absence of two months of M&M and one month of N&B net income.

Cash provided by operating activities decreased in 2021 compared with 202 0, primarily due to the use of cash from accounts and notes receivable and inventories in 2021 compared to the release of cash from those same balance sheet assets in 2020.

In 2021, these changes were driven by economic recovery resulting in sales growth/higher accounts receivable and supply chain challenges resulting in higher inventory levels.

Cash Flows provided by Operating Activities - Continuing Operations

Cash provided by operating activities of continuing operations was $2,191 million, $1,249 million and $1,846 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Cash provided by operating activities increased in 2023 compared with 2022 , primarily from improvements in working capital.

The decrease in cash provided by operating activities in 2022 was primarily driven by the increase in working capital.

The table below reflects net working capital on a continuing operations basis:

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Current ratio 2.43:1 2.78:1

Net working capital has been presented to exclude the assets and liabilities related to the M&M Divestitures.

The assets and liabilities related to the M&M Divestitures are presented as assets of discontinued operations and liabilities of discontinued operations, respectively.

Cash Flows provided by Investing Activities

Cash provided by investing activities in 2022 was $8,923 million compared to cash used for investing of $2,401 million in 2021.

The increase in cash provided from investing activities in 2022 versus the prior year is primarily attributable to the cash proceeds received from the M&M Divestiture, a decrease in cash used in acquisition of property and business partially offset by purchases of investments and the absence of proceeds from sale and maturities of investments.

Cash used for investing activities in 2021 was primarily attributable to the acquisition of Laird PM and cash proceeds received from the sales of Solamet® and Clean Technologies businesses in 2021.

In 2020, cash used for investing activities was $202 million primarily driven by cash used in capital expenditures partially offset by cash proceeds received from the sales of the TCS Business and Compound Semiconductor Solutions business units.

Net working capital has been presented to exclude the assets and liabilities related to the Delrin® Divestiture.

The assets and liabilities related to the Delrin® Divestiture are presented as assets of discontinued operations and liabilities of discontinued operations, respectively.

Cash Flows provided by Investing Activities - Continuing Operations

Cash provided by investing activities of continuing operations in 2023 was $172 million compared to cash provided by investing activities of $9,004 million in 2022.

The decrease in cash provided from investing activities in 2023 versus the 2022 is primarily attributable to the absence of cash proceeds received from the M&M Divestiture and cash paid for the Spectrum acquisition, partially offset by proceeds from the Delrin® Divestiture, net of cash divested and the absence of cash used in the purchase of investments and an increase in cash provided by the proceeds from sales and maturities of investments.

The increase in cash provided from investing activities in 2022 versus the prior year is primarily attributable to the cash proceeds received from the M&M Divestiture, a decrease in cash used in acquisition of property and business and a decrease in purchases of investments partially offset by the absence of proceeds from sale and maturities of investments.

Cash used for investing activities in 2021 of $2,298 million was primarily attributable to the acquisition of Laird PM.

Capital expenditures totaled $619 million, $662 million and $788 million for the years ended December 31, 2023, 2022 and 2021, respectively.

1 unchanged sentence

The Company may adjust its spending throughout the year as economic conditions develop.

Cash Flows used for Financing Activities

Cash used for financing activities in 2022 was $7,667 million compared to cash used for by financing activities of $6,507 million in 2021.

The increase in cash used for financing activities in 2022 versus the prior year is primarily driven by the increase in cash used for repurchases of common stocks and decrease in cash proceeds from the issuance of long-term debt.

Cash used in 2021 was primarily driven by the cash used for the repayment of long-term debt and repurchases of common stock.

In 2020, cash provided by financing activities was $3,238 million, primarily driven by the proceeds from issuance of long-term debt partially offset by cash used for the reduction in short-term and long-term debts and repurchases of common stock.

Cash Flows used for Financing Activities - Continuing Operations

Cash used for financing activities of continuing operations in 2023 was $2,989 million compared to cash used for financing activities of $7,646 million in 2022.

The decrease in cash used for financing activities in 2023 versus the 2022 is primarily attributable to the decrease in cash used for repurchases of common stocks and decrease in the payment of long-term debt.

The increase in cash used for financing activities in 2022 versus the prior year is primarily driven by the increase in cash used for repurchases of common stocks and repayment of short-term borrowings mostly offset by a decrease in cash used for the payment of long-term debt.

In 2021, cash used by financing activities was $7,589 million, primarily driven by the cash used for the repayment of long-term debt and repurchases of common stock.

Cash Flows from Discontinued Operations

Cash used from discontinued operations was $306 million compared with $763 million in the same period last year.

The cash used from discontinued operations includes MOU activity, refer to Note 4 to the Consolidated Financial Statements for additional information.

The activity for the year ended December 31, 2023, Consolidated Statements of Cash Flows present the cash flows of Delrin® as discontinued operations.

The activity for the year ended December 31, 2022, Consolidated Statements of Cash Flows present the financial results of the M&M Businesses as discontinued operations.

In 2021, cash provided by discontinued operations of $1,414 million reflects activity of the M&M Businesses and the N&B business including $1.25 billion of proceeds from the issuance of long-term debt transferred to IFF at split-off.

Refer to Note 4 to the Consolidated Financial Statements for further details.

The following table provides dividends paid to common shareholders for the years ended December 31, 2023, 2022 and 2021:

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Dividends paid to common stockholders $ 651 $ 652 $ 630

$ 652 $ 630 $ 882

The 2020 dividends include dividends paid to common stockholders prior to the closing of the N&B Transaction.

The DuPont Board of Directors on February 5, 2024 declared a first quarter 2024 dividend of $0.38 per share, a 6 percent per share increase versus the first quarter 2023 dividend, payable on March 15, 2024, to holders of record at the close of business on February 29, 2024.

Share Buyback Programs

On February 8, 2022, the Company's Board of Directors authorized an additional $1.0 billion share buyback program which expires on March 31, 2023.

On February 8, 2022, the Company's Board of Directors approved the 2022 Share Buyback Program authorizing the repurchase and retirement of up to $1 billion of common stock with a termination date of March 31, 2023.

At the end of the third quarter of 2022, the Company had repurchased and retired a total of 11.9 million shares for $750 million under the 2022 Share Buyback Program.

On November 7, 2022, DuPont’s Board of Directors approved a new share repurchase program authorizing the repurchase and retirement of up to $5 billion of common stock.

The new repurchase authorization of up to $5 billion is in addition to the $250 million remaining under the Company’s 2022 Share Buyback Program.

On November 8, 2022, the Company entered into the 2022 ASR Agreements, for the repurchase of an aggregate of approximately $3.25 billion of common stock with $250 million of such repurchases under the existing program and the remaining $3 billion under the new program.

Any additional repurchases under the new share repurchase program will be made from time to time on the open market at prevailing market prices or in privately negotiated transactions off the market, which may include additional accelerated share repurchase agreements.

In November 2022, DuPont’s Board of Directors approved the $5B Share Buyback Program authorizing the repurchase and retirement of up to $5 billion of common stock with a termination date of June 30, 2024.

In the fourth quarter 2022, DuPont entered into ASR agreements with three financial counterparties (the "$3.25B ASR Transaction").

DuPont paid with cash on hand an aggregate of $3.25 billion to the counterparties and received initial deliveries of 38.8 million shares in aggregate of DuPont common stock, which were retired immediately and recorded as a reduction to retained earnings of $2.6 billion.

The $3.25B ASR Transaction was completed during the third quarter 2023 with DuPont receiving and retiring an additional 8.0 million shares of DuPont common stock.

In connection with the completion the remaining $613 million based on the market price of the shares at the time of delivery was settled as a forward contract indexed to DuPont common stock at the time of settlement, classified within stockholders’ equity.

At the completion of the $3.25B ASR Transaction, the Company had repurchased and retired a total of 46.8 million shares at an average price of $69.44 per share.

In the third quarter 2023, DuPont entered into accelerated share repurchase agreements with three financial counterparties to repurchase an aggregate of $2.0 billion of common stock (the "$2B ASR Transaction").

The remaining $400 million was evaluated as an unsettled forward contract indexed to DuPont common stock, classified within stockholders’ equity as of December 31, 2023.

The accelerated repurchase agreements under the $2B ASR Transaction were settled during the first quarter of 2024.

The settlement resulted in the delivery of 6.7 million additional shares of DuPont common stock, which were retired immediately and will be recorded as a reduction of retained earnings in the first quarter of 2024.

In total, the Company repurchased 27.9 million shares at an average price of $71.67 per share under the $2B ASR Transaction.

The completion of the $2B ASR Transaction completes the $5B Share Buyback Program.

The $1B Program terminates on June 30, 2025, unless extended or shortened by the Board of Directors.

The timing and number of shares to be repurchased will depend on factors such as the share price, economic and market conditions, and corporate and regulatory requirements.

The new repurchase program terminates on June 30, 2024, unless extended or shortened by the Board of Directors.

During the fourth quarter, in accordance with the terms of the 2022 ASR Agreements, the Company repurchased and retired the initial deliveries of 38.8 million shares in aggregate for $3.25 billion, approximately 3.7 million shares were repurchased for $250 million under the 2022 Share Buyback Program and the remaining 35.1 million shares were repurchased for $3 billion under the $5B Share Buyback Program.

The final number of shares to be repurchased will be based on the volume-weighted average stock price for DuPont common stock during the term of the 2022 ASR Agreements, less an agreed upon discount.

The ASR transaction is being funded with proceeds from the M&M Divestitures and any remaining settlement will use cash on hand or exchange shares and is expected to be completed in the third quarter 2023.

In the first quarter 2024, consistent with its previously announced intention, DuPont entered into an ASR agreement with one counterparty for the repurchase of about $500 million of common stock;

DuPont received initial deliveries in February 2024, of 6.0 million shares of common stock.

The final number of shares to be repurchased will be based on the volume-weighted average stock price for DuPont common stock during the term of the ASR agreement, less an agreed upon discount.

Final settlement is expected in the second quarter 2024.

The Inflation Reduction Act of 2022 introduced a 1 percent nondeductible excise tax imposed on the net value of certain stock repurchases made after December 31, 2022.

The net value is determined by the fair market value of the stock repurchased during the tax year, reduced by the fair market value of stock issued during the tax year.

The Company recorded total excise tax of $21.2 million as a reduction to retained earnings for the year ended December 31, 2023.

In the first quarter of 2021, the Company's Board of Directors authorized a $1.5 billion share buyback program, which expires on June 30, 2022 ("2021 Share Buyback Program").

At the expiry of the 2021 Share Buyback Program, the Company had repurchased and retired a total of 19.6 million shares for $1.5 billion under the 2021 Share Buyback Program.

In the second quarter of 2019, the Company's Board of Directors approved a $2 billion share buyback program, which expired on June 1, 2021.

At the expiry of the 2019 Share Buyback Program, the Company had repurchased and retired a total of 29.9 million shares at a cost of $2 billion.

See Part II, Item 5.

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Contributions exceeding funding requirements may be made at the Company's discretion.

The Company expects to contribute approximately $76 million to its pension plans in 2023, including plans held in discontinued operations.

The Company expects to contribute approximately $57 million to its pension plans in 2024.

The amount and timing of the Company’s actual future contributions will depend on applicable funding requirements, discount rates, investment performance, plan design, and various other factors, separations and distributions.

See Note 19 to the Consolidated Financial Statements for additional information concerning the Company’s pension plans.

As of December 31, 2022, the Company is contractually obligated to make future cash contributions of $593 million related to pension and other post-employment benefit plans, including plans held in discontinued operations.

As of December 31, 2023, the Company is contractually obligated to make future cash contributions of $614 million related to pension and other post-employment benefit plans.

$57 million will be due in the next twelve months and the remainder will be due subsequent to 2024 with the majority due subsequent to 2028.

Restructuring

For the year ended December 31, 2023, DuPont recorded a pre-tax charge related to the 2022 Restructuring Program in the amount of $35 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of severance and related benefit costs.

Actions related to the 2022 Restructuring Program are substantially complete.

In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions").

For the years ended December 31, 2021 and December 31, 2022, DuPont recorded pre-tax charges inception to date related to the 2021 Restructuring Actions in the amounts of $46 million recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $26 million of severance and related benefit costs and $20 million of asset related charges.

For the years ended December 31, 2021 through December 31, 2023, DuPont recorded pre-tax charges inception to date related to the 2021 Restructuring Actions in the amounts of $47 million recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $27 million of severance and related benefit costs and $20 million of asset related charges.

At December 31, 2023, total liabilities related to the 2021 Restructuring Actions were $1 million for severance and related benefit costs.

Actions related to the 2021 Restructuring Program are substantially complete.

In March 2020, the Company approved restructuring actions designed to capture near-term cost reductions and to further simplify certain organizational structures in anticipation of the N&B Transaction.

As a result of these actions, the Company recorded pre-tax restructuring charges of $158 million inception-to-date, consisting of severance and related benefit costs of $106 million and asset related charges of $52 million.

Actions associated with the 2020 Restructuring Program are considered substantially complete.

See Note 6 to the Consolidated Financial Statements for more information on the Company's restructuring programs.

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Over such period, Chemours will deposit a total of $500 million into the account and DuPont and Corteva, together, will deposit an additional $500 million pursuant to the terms of their existing Letter Agreement.

DuPont's aggregate escrow deposits of $100 million and $50 million at December 31, 2022 and 2021, respectively, are reflected in "Restricted cash and cash equivalents" on the Consolidated Balance Sheet.

As of June 30, 2023, DuPont had deposited an aggregate of $100 million into the MOU Escrow Account all of which it used to fund in part its $400 million contribution to the Water District Settlement Fund.

As a result, $405 million, including interest, is reflected in "Restricted cash and cash equivalents" on the Consolidated Balance Sheets at December 31, 2023.

DuPont's aggregate MOU escrow deposits of $100 million excluding interest, at December 31, 2022 is reflected in "Restricted cash and cash equivalents - noncurrent" on the Consolidated Balance Sheets.

See Note 16 to the Consolidated Financial Statements for more information.

As of December 31, 2023, the Company expected to make cash payments related to qualified PFAS spend of $30 million in the next twelve months.

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and the approximate timing of the agreement.

As of December 31, 2022, the Company is contractually obligated to make future cash payments $159 million related to purchase obligations, of which $85 million will be due in the next twelve months and the remainder will be due subsequent to 2023.

As of December 31, 2023, the Company is contractually obligated to make future cash payments of $113 million related to purchase obligations, of which $49 million will be due in the next twelve months and the remainder will be due subsequent to 2024.

Lease obligations represents future finance and operating lease payments.

As of December 31, 2023, obligations of future lease payments are $567 million, of which $112 million will be due in the next twelve months and remainder will be due subsequent to 2024.

Other miscellaneous obligations includes liabilities related to deferred compensation, environmental remediation, and other noncurrent liabilities.

Environmental remediation obligations represents costs for remediation and restoration with respect to environmental matters and Non-PFAS clean-up responsibilities.

As of December 31, 2023, the Company is contractually obligated to make future cash payments of $148 million, of which $46 million will be due in the next twelve months and remainder will be due subsequent to 2024.

See Note 16 to the Consolidated Financial Statements for more information.

Other miscellaneous obligations includes liabilities related to deferred compensation and other noncurrent liabilities.

As of December 31, 2023, the Company is contractually obligated to make future cash payments of $97 million related to other miscellaneous obligations, the majority of which is due subsequent to 2024.

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however, due to the uncertainty regarding the timing of completion of audits and the possible outcomes, a current estimate of the range of increases or decreases that may occur within the next twelve months cannot be made.

The Company has ongoing federal, state and international income tax audits in various jurisdictions and evaluates uncertain tax positions that may be challenged by local tax authorities.

The impact, if any, of these audits to the Company’s unrecognized tax benefits is not estimable.

Deferred income taxes result from differences between the financial and tax basis of the Company's assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted.

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In some situations, these changes could be material.

At December 31, 2022, the Company had a net deferred tax liability balance of $1.0 billion, net of a valuation allowance of $0.7 billion.

At December 31, 2023, the Company had a net deferred tax liability balance of $818 million, net of a valuation allowance of $738 million.

Realization of deferred tax assets is expected to occur over an extended period of time.

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See Note 8 to the Consolidated Financial Statements for additional details related to the deferred tax liability balance.

The Inflation Reduction Act of 2022 ("IRA") was signed into law on August 16, 2022.

The IRA introduces a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations.

The Inflation Reduction Act of 2022 ("IRA") was signed into law on August 16, 2022 and is effective to applicable corporations beginning in 2023.

The IRA introduced a new 15 percent corporate alternative minimum tax (“CAMT”), based on adjusted financial statement income of certain large corporations.

Applicable corporations will be allowed to claim a credit for the minimum tax paid against regular tax in future years.

While this tax law change does not have an immediate effect, the Company will continue to evaluate its impact as further information becomes available.

The Inflation Reduction Act also includes an excise tax that will impose a 1% surcharge on stock repurchases, effective January 1, 2023.

Assessment of Income Tax Impacts related to the M&M Divestiture

In connection with the M&M Divestiture, the Company completed certain internal restructurings which resulted in estimated income tax impacts from a United States federal, state and foreign jurisdiction perspective.

The Company is an applicable corporation subject to the CAMT requirements however, the Company did not incur a CAMT liability for 2023.

The IRA also established an excise tax that imposes a 1 percent surcharge on stock repurchases, effective January 1, 2023.

Refer to Note 18 to the Consolidated Financial Statements for further information on the 1 percent surcharge on stock repurchases.

Assessment of Income Tax Impacts related to 2023 Internal Legal Entity Restructurings

During 2023, the Company completed certain internal restructurings which resulted in estimated income tax impacts from a United States federal, state, and foreign jurisdiction perspective.

The estimated tax impact of certain internal restructurings was calculated using valuations of legal entities and intellectual property, which involved the use of the income approach and assumptions, including, projected revenue growth rate, EBITDA margin, the weighted average costs of capital, capitalization rate, royalty rates, tax rate, capital expenditures, and terminal growth rates.

The Company recorded a deferred income tax benefit of $324 million for the year ended December 31, 2023, related to these internal restructurings.

Assessment of Income Tax Impacts related to the M&M Divestitures

In connection with the M&M Divestitures, the Company completed certain internal restructurings which resulted in estimated income tax impacts from a United States federal, state and foreign jurisdiction perspective.

The estimated tax impact of certain internal restructurings was calculated using valuations of components of legal entities and intellectual property, which involved the use of the income and/or market approach and assumptions, including, projected EBITDA, the weighted average costs of capital, royalty rates, tax rate, capital expenditures, and terminal growth rates for the income approach and projected EBITDA and market multiples for the market approach.

The tax effect of these internal restructurings are included in the overall tax consequences of the M&M Divestiture.

During the year ended December 31, 2022, the Company recorded net income tax expense of $127 million related to the estimated tax impact of these internal restructurings from a United States and foreign jurisdiction perspective.

The tax effect of these internal restructurings are included in the overall tax consequences of the M&M Divestitures.

The Company recorded net income tax expense of $21 million and $127 million for the years ended December 31, 2023 and 2022, respectively, related to the estimated tax impact of these internal restructurings from a United States and foreign jurisdiction perspective.

Although the Company believes the estimated tax impacts are reasonable and appropriate, these estimates required significant judgment regarding the application of tax laws and regulations.

Upon final resolution by the United States Internal Revenue Service or foreign tax authority through audit or litigation, the Company’s income tax calculations and related filing positions regarding certain elements of these transactions could be different, which could have a material impact on the Company.

Assessments of Long-Lived Assets and Goodwill

Valuation of Acquired Intangible Assets

The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition.

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The determination and allocation of fair value to the assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment, including estimates based on historical information, current market data and future expectations.

The principal assumptions in these analyses include projected revenue, gross margins, selling, administrative, research and development expenses (SARD), capital expenditures, the weighted average cost of capital, the terminal growth rates, and the forecasted tax rates for the income approach.

For the market

approach, the company uses projected EBITDA and derived multiples from comparable market transactions.

The principal assumptions in these analyses include projected revenue, gross margins, selling, administrative, research and development expenses (SARD), depreciation, changes in net working capital, capital expenditures, the weighted average cost of capital, the terminal growth rates, and the tax rates for the income approach.

For the market approach, the company uses projected EBITDA and derived multiples from comparable market transactions.

The estimates are deemed reasonable by management based on information available at the dates of acquisition;

however, estimates are i nherently uncertain.

The Company engaged an independent third-party valuation specialist to assist with the allocation of the total purchase price for the acquisition of Spectrum Plastics Group ("Spectrum") to the fair value of the net assets acquired.

This required the use of several assumptions and estimates, including, but not limited to, the customer attrition rate, the discount rate, net sales attributable to existing customers, the economic life, the EBITDA margin, the contributory asset charge, and the projected revenue for the customer-related intangible asset, the discount rate, the projected revenue, the royalty rate, the obsolescence rate, and the economic life for the developed technology, and the discount rate, the projected revenue, the royalty rate, and the economic life for the trademark/tradename.

Although the Company believes the assumptions and estimates made were reasonable and appropriate, these estimates require significant judgment by management and are based in part on historical experience and information obtained from Spectrum management.

For further information see Note 3 to the Consolidated Financial Statements.

Assessments of Long-Lived Assets and Goodwill

Assessment of the potential impairment of goodwill, other intangible assets, property, plant and equipment, investments in nonconsolidated affiliates, and other assets is an integral part of the Company's normal ongoing review of operations.

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If the Company chooses not to complete a qualitative assessment for a given reporting unit or if the initial assessment indicates that it is more likely than not that t he carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required.

If additional quantitative testing is performed, an impairment loss is recognized in the amount by which the carrying value of the reporting unit exceeds its fair value, limited to the amount of goodwill at the reporting unit.

If additional quantitative testing is performed, an impairment loss is recognized when the amount by which the carrying value of the reporting unit exceeds its fair value, limited to the amount of goodwill at the reporting unit.

The Company determines fair values for each of the reporting units using a combination of the income approach and market approach.

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The Company uses internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for each reporting unit.

Discounted cash flow valuations are completed using the following key assumptions:

projected revenue, gross margins, selling, administrative, research and development expenses (SARD), capital expenditures, the weighted average cost of capital, the terminal growth rate, and the tax rate.

Discounted cash flow valuations are completed using the following key assumptions including Level 3 unobservable inputs :

projected revenue, gross margins, selling, administrative, research and development expenses (SARD), depreciation, changes in net working capital, capital expenditures, the weighted average cost of capital, the terminal growth rate, and the tax rate.

These key assumptions are determined through evaluation of the Company as a whole, underlying business fundamentals and industry risk.

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The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective reporting units and in its internally developed forecasts.

Under the market approach, the Company applies the Guideline Public Company Method ("GPCM").

Under the market approach, the Company applies the Guideline Public Company Method ("GPCM") utilizing Level 3 unobservable inputs .

Selected peer sets are based on close competitors, publicly traded companies and reviews of analysts' reports, public filings, and industry research.

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It is reasonably possible that the judgments and estimates described above could change in future periods.

In the fourth quarter of 2022, the Company performed its annual goodwill impairment testing by applying the qualitative assessment to five of its reporting units and the quantitative assessment to two of its reporting units.

The Company considered various qualitative factors that would have affected the estimated fair value of the reporting units, and the results of the qualitative assessments indicated that it is not more likely than not that the fair values of the reporting units were less than their

carrying values.

Goodwill Impairment Testing at October 1, 2023

In the fourth quarter of 2023 at October 1, the Company performed its annual goodwill impairment testing by applying the qualitative assessment to six of its reporting units and the quantitative assessment to two of its reporting units.

For the reporting units tested under the quantitative assessment, the results indicated that the estimated fair values of the reporting units exceeded their carrying values.

The estimated fair value of one of the reporting units within Water & Protection exceeded its carrying value by approximately 10%.

The estimated fair value of the Protection reporting unit within Water & Protection exceeded its carrying value by less than 5 percent.

Given this level of fair value, the reporting unit is sensitive to changes in the significant assumptions used in the analysis.

If the reporting unit does not perform to expected levels or there are adverse changes in certain macroeconomic factors, the related goodwill may be at risk for impairment in the future.

The dynamic economic environments in which the Company's diversified product lines operate, and key economic and product line assumptions with respect to projected selling prices, market growth and inflation rates, can significantly affect the outcome of impairment tests.

Estimates based on these assumptions may differ significantly from actual results.

As part of the 2022 Segment Realignment, the Company assessed and re-defined certain reporting units effective March 1, 2022, including reallocation of goodwill on a relative fair value basis, as applicable, to reporting units impacted.

A combination of quantitative and qualitative goodwill impairment analyses was then performed for reporting units impacted by this new structure and no impairments were identified.

Goodwill Impairment Testing at December 31, 2023

In connection with the preparation of the full year 2023 financial statements, the continuation of previously disclosed challenging macroeconomic environment in the residential, non-residential, and the repair and remodel construction markets, as well as incremental channel inventory destocking in healthcare and industrial end-markets served as a triggering event requiring the Company to perform an impairment analysis of the goodwill associated with its Protection reporting unit (aggregation of the Safety and Shelter businesses) as of December 31, 2023.

The Company used a combination of the income approach and market approach as mentioned above.

As a result of the analysis performed, the Company recorded a non-cash goodwill impairment charge of $804 million recognized in “Goodwill impairment charge” in the Consolidated Statements of Operations.

Impairment and Disposals of Long-Lived Assets and Impairment of Indefinite-Lived Intangible Assets

The Company evaluates the carrying value of long-lived assets (collectively the “asset group”) to be held and used when events or changes in circumstances indicate the carrying value may not be recoverable.

The Company tests its indefinite-lived intangible assets for impairment during the fourth quarter, or more frequently when events or changes in circumstances indicate that the fair value is below carrying value.

The carrying value of a long-lived asset group is considered impaired when the anticipated future undiscounted cash flows to be derived from the asset group are less than its carrying value.

Indefinite-lived intangible assets are considered impaired when their carrying value exceeds their fair value.

In 2023, the Company identified a triggering event within Protection and assessed the indefinite-lived intangible assets and the long-lived assets of certain groups for impairment, noting no impairments were identified.

In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset group.

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The Company contributed $9 million to its funded pension plans for the year ended December 31, 2023.

The Company contributed $28 million to its funded pension plans for the years ended December 31, 2021 and December 31, 2020, respectively.

The Company contributed $23 million and $28 million to its funded pension plans for the years ended December 31, 2022 and 2021, respectively.

All values within this Long-Term Employee Benefits section are inclusive of balances and activity associated with discontinued operations.

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The Company's remaining pension plans with no plan assets are paid from operating cash flows.

The Company made benefit payments of $56 million, $60 million, and $73 million to its unfunded plans, including OPEB plans, for the years ended December 31, 2022, December 31, 2021 and December 31, 2020, respectively.

The Company made benefit payments of $57 million, $56 million, and $60 million to its unfunded plans, including OPEB plans, for the years ended December 31, 2023, 2022 and 2021, respectively.

In 2024, the Company expects to contribute approximately $57 million to its funded pension plans and its remaining plans with no plan assets.

The amount and timing of actual future contributions will depend on applicable funding requirements, discount rates, investment performance, plan design, and various other factors.

The Company's income can be significantly affected by pension and defined contribution charges/(benefits) as well as OPEB costs.

The Company's income can be affected by pension and defined contribution charges/(benefits) as well as OPEB costs.

The following table summarizes the extent to which the Company's income for the years ended December 31, 2023, December 31, 2022 and December 31, 2021 was affected by pre-tax charges related to long-term employee benefits:

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See "Pension Plans and Other Post-Employment Benefits" under the Critical Accounting Estimates section of this report for additional information on determining annual expense.

For 2023, long term employee benefit expense from continuing operations is expected to increase by about $40 million compared to 2022.

The increase is mainly due to higher interest costs.

For 2024, long term employee benefit expense from continuing operations is expected to decrease by about $15 million compared to 2023.

The decrease is mainly due to lower interest costs.

ENVIRONMENTAL MATTERS

The Company operates global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations.

The Company operates global manufacturing, facilities that are subject to a broad array of environmental laws and regulations.

Such rules are subject to change by the implementing governmental agency, and the Company monitors these changes closely.

Company policy requires that all operations fully meet or exceed legal and regulatory requirements.

In addition, the Company implements various voluntary programs to reduce its environmental footprint, which include initiatives to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water used and discharged, increase the efficiency of energy use, and reduce the generation of persistent, bioaccumulative and toxic materials.

Company policy requires that all operations meet or exceed legal and regulatory requirements.

In addition, the Company implements various voluntary programs to reduce its environmental footprint, which include initiatives to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water used and discharged, increase the efficiency of energy use, and seek to avoid, eliminate or minimize substances of concerns.

In October 2019 DuPont announced its sustainability strategy and 2030 Sustainability Goals.

The Company’s sustainability strategy and goals prioritize global challenges such as climate change, water stewardship, advancing circular economy and processes, improving health and safety, and more.

With these goals, DuPont is committed to using the Company's strength in innovation to advance progress on several of the United Nations’ Sustainable Development Goals, increasing resiliency and reducing environmental and social impacts across value chains, and ensuring people are put at the center of all the Company's work.

Executive responsibility for overall sustainability performance sits with the Chief Technology & Sustainability Officer (the “CTSO”).

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this report is not incorporated by reference and should not be considered part of this Form 10-K.

The costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, such as DuPont’s sustainability strategy, are significant and will continue to be significant for the foreseeable future.

The Company incurs, and expects to incur for the foreseeable future, costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, such as DuPont’s sustainability strategy.

Based on existing facts and circumstances, management does not believe that year-over-year changes, if any, in environmental expenses charged to current operations will have a material impact on the Company's financial position, liquidity or results of operations.

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The Company is continuously evaluating opportunities for existing and new product and service offerings to meet the anticipated demands of a low-carbon economy.

As part of DuPont’s sustainability strategy, the Company announced an Acting on Climate Goal.

The objective of the Acting on Climate goal is to reduce the Company’s greenhouse gas (GHG) emissions by 30 percent, measured from a base year of 2019, including sourcing 60 percent of electricity for operations from renewable energy and delivering carbon neutral operations by 2050.

DuPont reports on its progress against these goals in its annual sustainability report.

In 2022, the Company included its inaugural TCFD Index in its Sustainability Report and additional climate-related disclosure in its response to the CDP Climate survey.

In line with the objectives of the Acting on Climate goal, DuPont signed a virtual power purchase agreement (the “VPPA”) with a subsidiary of NextEra Energy Resources, LLC in 2021.

The VPPA went live in December 2022 and will deliver the equivalent of 135 megawatts of new wind power capacity or approximately 528,000 megawatt hours (MWh) of renewable electricity on an annual basis beginning in 2023.

The Company is actively engaged in efforts to develop constructive public policies to reduce GHG emissions and encourage lower-carbon forms of energy.

DuPont is part of several organizations, including the CEO Climate Dialogue, a collaboration between large companies and NGOs working together to advance effective climate legislation in the US.

DuPont is also part of the Alliance to Save Energy, which is an organization advocating to advance federal energy efficiency policy, as well as other organizations that advocate for clean mobility and renewable fuel.

As part of DuPont’s sustainability strategy, the Company announced in 2019 an Acting on Climate Goal to reduce the Company’s greenhouse gas (GHG) emissions, measured from a base year of 2019, including sourcing 60 percent of electricity for operations from renewable energy, and delivering carbon neutral operations by 2050.

In the second quarter of 2023, DuPont announced that it had strengthened its climate goals including, among other things, increasing its reduction targets for Scope 1 and 2 GHG emissions and establishing a Scope 3 GHG emissions reduction goal measured from a 2020 base year.

DuPont plans to report on its progress against these goals in its annual sustainability report.

In connection with its Acting on Climate goal, DuPont entered a virtual power purchase agreement, (the “VPPA”), with a subsidiary of NextEra Energy Resources, LLC in 2021.

In April 2023, DuPont announced that the Appaloosa Run Wind Energy Center, a wind energy project resulting from the VPPA with NextEra, is operational and generating clean, renewable energy.

The Appaloosa Run Wind Energy Center, located in Upton County, Texas, generates 135 megawatts of new wind power capacity or approximately 528,000 megawatt hours (MWh) of renewable electricity annually.

Public policies may bring higher operating costs as well as greater revenue and margin opportunities.

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Environmental Remediation

The Company has directly incurred environmental remediation costs of $12 million, $14 million and $6 million, for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company has incurred environmental remediation costs of $69 million, $12 million and $14 million, for the years ended December 31, 2023, 2022 and 2021, respectively.

Changes in the remediation accrual balance are summarized below:

(Dollars in millions)

(In millions)

Balance at December 31, 2021 $ 89

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Represents the net change in indemnified remediation obligations based on activity pursuant to the DWDP Separation and Distribution Agreement and Letter Agreement as discussed below and in Note 16 to the Consolidated Financial Statements.

This is not inclusive of the environmental accrual of $173 million related to eligible PFAS costs associated with the MOU.

This is not inclusive of the environmental accrual related to eligible PFAS costs associated with the MOU of $152 million and $173 million as of December 31, 2023 and 2022, respectively.

Primarily represents the increase in the Company's indemnification liability for Non-PFAS costs under the DWDP Separation and Distribution Agreement and Letter Agreement.

Considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, the potential liability may range up to $313 million above the amount accrued as of December 31, 2023.

6 unchanged sentences

This amount includes $8 million of expenditures used towards the Company's climate change initiatives.

The Company currently estimates expenditures for environmental-related capital projects to be approximately $23 million in 2023, with $9 million estimated for climate change initiatives.

The Company currently estimates expenditures for environmental-related capital projects to be approximately $25 million in 2024, with less than $5 million estimated for climate change initiatives.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis