DuPont de Nemours, Inc. (DD)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:

•Overview

•Analysis of Operations

•Result of Operations

•Segment Results

•Outlook

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Critical Accounting Estimates

•Long-Term Employee Benefits

•Environmental Matters

OVERVIEW

As of December 31, 2024, the Company has $1.6 billion of net working capital and $1.9 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continued operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance.

Intended Electronics Separation

On May 22, 2024, DuPont announced a plan to separate each of its Electronics and Water businesses in a tax-free manner to its shareholders, (the “Previously Intended Business Separations”). On January 15, 2025, DuPont announced it is targeting November 1, 2025, for the completion of the intended separation of the Electronics business (the “Intended Electronics Separation”). DuPont also announced that it would retain the Water business. The Intended Electronics Separation will not require a shareholder vote and is subject to satisfaction of customary conditions, including final approval by DuPont's Board of Directors, receipt of tax opinion from counsel, the filing and effectiveness of a Form 10 registration statement with the U.S. Securities and Exchange Commission, applicable regulatory approvals and satisfactory completion of financing.

Mobility & Materials Divestitures

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. Cash received on the Transaction Date, as adjusted for preliminary and other adjustments was $11.0 billion. 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"). 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 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 year ended December 31, 2022 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

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discontinued operations. In the comparative period, the cash flows for the year ended December 31, 2022 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, MultibaseTM 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.

Donatelle Plastics Acquisition

On July 28, 2024, DuPont completed the acquisition of Donatelle Plastics, LLC ("Donatelle Plastics"), for a net purchase price of $365 million (the "Donatelle Plastics Acquisition") which includes immaterial adjustments for acquired cash and net working capital. The net purchase price also includes the estimated fair value for a contingent earn-out liability of $40 million. Donatelle Plastics is a medical device company specializing in the design, development and manufacture of medical components and devices. Donatelle Plastics part of Industrial Solutions within the Electronics & Industrial segment. See Note 3 to the Consolidated Financial Statements for additional information.

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 part of the Electronics & Industrial segment. The net purchase price was approximately $1,781 million, including a net upward adjustment of approximately $43 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

On November 1, 2022, the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers Corporation (“Rogers”) as DuPont and Rogers were unable to obtain timely clearance from all the required regulators ("Terminated Intended Rogers Corporation Acquisition").

Other Divestitures

In May 2022, the Company completed the sale of its Biomaterials business unit, which included the Company's equity method investment in DuPont Tate & Lyle Bio Products, to the Huafon Group. Total consideration received related to the sale was approximately $240 million. 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 2022.

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ANALYSIS OF OPERATIONS

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 percent of any qualified spend and the Company and Corteva shall together bear 50 percent of any qualified spend. As of December 31, 2024, the Company has recorded an indemnification liability of $222 million in connection with the cost sharing arrangement related to future eligible PFAS costs.

Total pre-tax charges of $46 million, $487 million and $96 million related to the MOU are reflected as a loss from discontinued operations for the year ended December 31, 2024, 2023 and 2022, respectively, in the Company's Consolidated Statements of Operations.

The increase in 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”). DuPont’s contribution of $400 million to the Water District Settlement Fund 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 Company’s total contribution, including interest, of $408 million has been removed from "Restricted cash and cash equivalents - current" along with the associated "Accrued and other current liabilities" within the Consolidated Balance Sheets as of December 31, 2024, as the settlement became final in the second quarter 2024.

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

Dividends

During 2024, the Board of Directors authorized and paid quarterly dividends of $0.38 per share to shareholders of record in the first, second, third and fourth quarters, respectively.

Share Buyback Program

The Company completed its share buyback programs that were open in 2022 and 2023.

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 Share Buyback Program”). Under the $1B Share Buyback 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.

In the first half of 2024, the Company entered and completed a $500 million ASR transaction under the $1B Share Buyback Program. In total, the Company repurchased 6.9 million shares at an average price of $71.96 per share under the Q1 2024 ASR Transaction. In connection with the Previously Intended Separations and continuing in light of the Intended Electronics Separation, DuPont announced its intent not to complete the remaining $500 million in share buyback authority under the $1B Share Buyback program. See the discussion under Liquidity and Capital Resources starting on page 47 for more information.

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 $8 million and $21 million, respectively, as a reduction to retained earnings for the years ended December 31, 2024 and 2023, reflected within stockholders' equity and a corresponding liability within "Accounts Payable" in our Consolidated Balance Sheets as of December 31, 2024 and 2023.

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Interest Rate Swap Agreements

In the second quarter of 2022, the Company entered into fixed-to-floating interest rate swap agreements ("2022 Swaps") with an aggregate notional principal amount totaling $1 billion to hedge changes in the fair value of the Company’s long-term debt due to interest rate change movements. These swaps converted $1 billion of the Company’s $1.65 billion principal amount of fixed rate notes due 2038 into floating rate debt for the portion of their terms through 2032 with an interest rate based on the Secured Overnight Financing Rate ("SOFR"). Under the terms of the agreements, the Company agrees to exchange, at specified intervals, fixed for floating interest amounts based on the agreed upon notional principal amount. The 2022 Swaps expire on November 15, 2032 and are carried at fair value.

Since inception of the 2022 Swaps, fair value hedge accounting has been applied and thus, changes in the fair value of the 2022 Swaps and changes in the fair value of the related hedged portion of long-term debt were presented and net to zero in "Sundry income (expense) – net" in the Consolidated Statements of Operations. On June 5, 2024, DuPont issued a notice of redemption to the bond trustee with respect to a partial redemption of $650 million aggregate principal amount of its 2038 Notes in accordance with their terms. The redemption was effective on June 15, 2024. As a result of the announced redemption, the Company dedesignated the then current hedging relationship. At the time of dedesignation, the total amount recorded as a cumulative fair value basis adjustment on the 2038 Notes was a loss of $81 million of which $32 million was recognized as a component of the loss from partial extinguishment of debt. The remaining basis adjustment is amortized to interest expense over the remaining term of the 2038 Notes. The basis adjustment amortization for the year December 31, 2024 was $1 million. Refer to Note 15 for additional details on the partial redemption of the 2038 Notes.

In June 2024, the Company entered into two forward-starting fixed-to-floating interest rate swap agreements (“2024 Swaps”) to hedge the changes in the fair value of the Company’s long-term debt due to interest rate change movements. One swap converted $2.15 billion principal amount of the fixed rate notes due 2048 into floating rate debt for the portion of their terms from 2025 through 2048 with an interest rate based on SOFR. The other swap converted $1 billion principal amount of the 2038 Notes into floating rate debt for the portion of their terms from 2032 through 2038 with an interest rate based on SOFR. The 2024 Swaps have a mandatory early termination date of December 15, 2025 and are carried at fair value. Fair value hedge accounting has not been applied.

The 2022 Swaps and 2024 Swaps are considered economic hedges of the Company’s fixed rate debt. As such, changes in the fair value and gain or loss from net interest settlement of the 2022 Swaps after the date of dedesignation and changes in the fair value of the 2024 Swaps since inception have been recorded in “Sundry income (expense) – net” in the Consolidated Statements of Operations. The amount charged related to interest rate swaps not designated as hedges was a loss of $138 million and zero for the years December 31, 2024 and 2023, respectively.

Restructuring Programs

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"). DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $199 million inception-to-date, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $114 million of severance and related benefit costs and asset related charges of $85 million. At December 31, 2024, total liabilities related to the 2023-2024 Restructuring Program were $47 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"). DuPont recorded pre-tax charges related to the 2022 Restructuring Program in the amount of $94 million inception-to-date, 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 $14 million. At December 31, 2024, total liabilities related to the 2022 Restructuring Program were $1 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.

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RESULTS OF OPERATIONS

1. Corporate & Other includes activities of the Retained Businesses and certain divested businesses including Biomaterials, Clean Technologies and Solamet®.

2. Europe, Middle East and Africa.

2024 versus 2023

The Company reported net sales for the year ended December 31, 2024 of $12.4 billion, up 3 percent from $12.1 billion for the year ended December 31, 2023, due to a 2 percent increase in volume and a 3 percent increase in portfolio partially offset by 1 percent decreases due to local price and product mix as well as currency. The volume increase was driven by Electronics & Industrial (up 8 percent) partially offset by Water & Protection (down 2 percent) and Corporate & Other (down 3 percent). Portfolio and other changes increased by 3 percent compared to the same period last year, driven by Electronics & Industrial (up 6 percent), partially offset by Corporate & Other (down 1 percent). Local price and product mix decreased within Electronics & Industrial (down 2 percent), Water & Protection (down 1 percent) and Corporate & Other (down 1 percent). The 1 percent decrease in currency was driven by Asia Pacific (down 2 percent).

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 remained 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).

Cost of Sales

Cost of sales was $7.9 billion for the year ended December 31, 2024, up from $7.8 billion for the year ended December 31, 2023. Cost of sales increased for the year ended December 31, 2024 primarily due to increased sales volume mostly offset by lower raw material, logistics and energy costs.

Cost of sales as a percentage of net sales for the year ended December 31, 2024 was 64 percent compared with 65 percent for the year ended December 31, 2023.

For the year ended December 31, 2023, cost of sales was $7.8 billion, 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 December 31, 2022 was 65 percent.

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Research and Development Expense ("R&D")

R&D expense was $531 million for the year ended December 31, 2024, up from $508 million for the year ended December 31, 2023 and $536 million for the year ended December 31, 2022. R&D as a percentage of net sales was 4 percent for the years ended December 31, 2024, 2023 and 2022.

The increase in 2024 compared to 2023 was primarily due to higher variable compensation. 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.

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

For the year ended December 31, 2024, SG&A expenses totaled $1,552 million, up from $1,408 million in the year ended December 31, 2023 and $1,467 million for the year ended December 31, 2022. SG&A as a percentage of net sales was 13 percent, 12 percent, and 11 percent for the years ended December 31, 2024, 2023 and 2022, respectively.

The increase in SG&A cost in 2024 compared to 2023 was primarily due to higher variable compensation and incremental cost from the Spectrum and Donatelle acquisitions. 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.

Amortization of Intangibles

Amortization of intangibles was $595 million, $600 million and $590 million for the years ended December 31, 2024, 2023 and 2022, respectively. The slight decrease in amortization of intangibles in 2024 compared to 2023 was primarily due to absence of amortization in 2024 from fully amortized assets. 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. See Note 14 to the Consolidated Financial Statements for additional information on intangible assets.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $87 million, $146 million and $155 million for the years ended December 31, 2024, 2023 and 2022, respectively. For the years ended December 31, 2024 and 2023, DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $89 million and $110 million, 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 segment. See Note 6 to the Consolidated Financial Statements for additional information. Inventory write-offs associated with restructuring programs are recorded to "Cost of Sales” in the Consolidated Statements of Operations.

Goodwill Impairment Charges

For the years ended December 31, 2024 and 2022, there were no goodwill impairment charges. For the year ended December 31, 2023, there was a goodwill impairment charge of $804 million related to the Water & Protection segment.

Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs were $168 million, $20 million and $193 million for the years ended December 31, 2024, 2023 and 2022, respectively. 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, 2024, these costs were primarily related to the Previously Intended Business Separations, including the Intended Electronics Separation. 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 Corporation Acquisition, specifically the $162.5 million termination fee paid, the Biomaterials business unit divestiture and the Laird PM acquisition in 2021.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $60 million, $51 million and $75 million for the years ended December 31, 2024, 2023 and 2022, respectively. The increase in earnings of nonconsolidated affiliates for the year ended December 31, 2024 and 2023 compared to the prior years is primarily due to higher earnings in the underlying nonconsolidated affiliates.

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Sundry Income (Expense) - Net

Sundry income (expense) - net includes a variety of income and expenses such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on sales of investments, losses on debt extinguishments and assets, non-operating pension and other post-employment benefit plan credits or costs, interest rate swap mark-to-market adjustments, interest rate swap net interest settlement and certain litigation matters. Sundry income (expense) - net for the year ended December 31, 2024 was $76 million of expense compared with $102 million and $191 million of income in the years ended December 31, 2023 and 2022, respectively.

The year ended December 31, 2024 included a $138 million net loss related to interest rate swap activity including mark-to-market adjustments and a $74 million loss on debt extinguishment partially offset by $73 million of interest income. The decrease in interest income period over period is due to the decreased cash balance in 2024.

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.

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

Interest Expense

Interest expense was $366 million, $396 million, and $492 million for the years ended December 31, 2024, 2023 and 2022, respectively. The decrease in interest expense in 2024 compared to 2023 is primarily due to the absence of interest expense on the $300 million floating-rate long-term senior unsecured notes that matured in November 2023 and the partial redemption of $650 million aggregate principal amount of the 2038 notes during the second quarter 2024, partially offset by a reduction in capitalized interest.

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 Corporation Acquisition, partially offset by the increase in interest expense from the interest rate swap.

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

Provision for (benefit from) 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, 2024, the Company's effective tax rate was 34.7 percent on pre-tax income from continuing operations of $1,192 million. The effective tax rate for the year ended December 31, 2024, was principally driven by the geographic mix of earnings offset by the U.S. taxation of foreign operations as well as certain discrete tax expenses, including the settlement in the second quarter of an international tax audit for which the Company is partially indemnified. In addition, there was a $103 million tax expense recorded in connection with an internal restructuring.

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 was principally the result of the non-tax-deductible goodwill impairment charge of $804 million in the fourth quarter of 2023 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.

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

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SEGMENT RESULTS

The revenues and certain expenses of the M&M Businesses are classified as discontinued operations in the historical periods. Certain expenses, including separation costs, of the M&M Businesses are classified as discontinued operations in the current period. 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 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. The remaining portion of these indirect costs are not subject to future reimbursement (“Stranded Costs”). 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.

Effective as of January 1, 2024, Electronics & Industrial realigned certain product lines that comprise its business units (Industrial Solutions, Interconnect Solutions and Semiconductor Technologies) that are intended to optimize business operations across the segment leading to enhanced value for customers and cost savings. The net trade revenue table, within Note 5 to the Consolidated Financial Statements, has been recast for all periods presented to reflect the new structure. The realignment did not result in changes to total Electronics & Industrial segment net sales.

On July 28, 2024, DuPont completed the acquisition of Donatelle Plastics, LLC ("Donatelle Plastics"), (the "Donatelle Plastics Acquisition"). Donatelle Plastics is being integrated into Industrial Solutions within 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. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / other post-employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items.

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ELECTRONICS & INDUSTRIAL

The Electronics & Industrial segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. The segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics devices including mobile phones, computers, tablets, television monitors and other electronics applications used in a variety of industries. 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, flexible packaging products, plastic and silicone extrusions, medical silicones, specialty lubricants and critical polymer-based components and devices for medical and other industrial markets.

2024 Versus 2023

Electronics & Industrial net sales were $5,930 million for the year ended December 31, 2024, up 11 percent from $5,337 million for the year ended December 31, 2023. Net sales increased due to an 8 percent increase in volume and a 6 percent increase in portfolio actions partially offset by a 2 percent decline in local price and product mix and a 1 percent unfavorable currency impact. Volume growth in Semiconductor Technologies and Interconnect Solutions was partially offset by declines in Industrial Solutions. Within Semiconductor Technologies, volume gains were driven by semiconductor demand recovery, primarily due to AI technology applications, advanced node transitions and higher China demand, as well as higher volume in OLED materials led by new product launches. Broad based volume growth in Interconnect Solutions driven by end-market recovery, market share gains and demand from AI-driven technology ramps. Volume declines in Industrial Solutions were driven by channel inventory destocking, primarily for Kalrez® and within biopharma markets. The portfolio impact reflects the August 2023 acquisition of Spectrum and the July 2024 acquisition of Donatelle Plastics. The unfavorable currency impact is primarily driven by the Japanese yen.

Operating EBITDA was $1,717 million for the year ended December 31, 2024, up 17 percent compared with $1,472 million for the year ended December 31, 2023 primarily due to volume growth, the impact of higher production rates in Semiconductor Technologies and Interconnect Solutions, savings from restructuring actions and the earnings contribution from the Spectrum and Donatelle Plastics acquisitions partially offset by higher variable compensation and select growth investments.

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 electronics demand weakness, led by China, slightly offset by increased demand for OLED materials. 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 electronic parts and biopharma markets and lower demand in printing and packaging markets. Local price and product mix gains in Semiconductor Technologies and Industrial Solutions, as a result of actions taken to offset cost inflation, were offset by declines in Interconnect Solutions, including the impact of lower pass-through metals prices. 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.

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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.

WATER & PROTECTION

The Water & Protection segment is a leading provider of engineered products and integrated systems for a number of industries including worker safety, water purification and separation, aerospace, energy, medical packaging and building materials. The segment satisfies the growing global needs of businesses, governments, and consumers for solutions that make life safer, healthier, and better. By uniting market-driven science with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.

2024 Versus 2023

Water & Protection net sales were $5,423 million for the year ended December 31, 2024, down 4 percent from $5,633 million for the year ended December 31, 2023 due to a 2 percent decline in volume, and 1 percent declines related to local price and product mix and unfavorable currency impacts. Safety Solutions had volume declines mainly due to channel inventory destocking, primarily in medical packaging products within healthcare markets. Water Solutions volume declines were primarily due to distributor inventory destocking from weaker industrial demand in China. Shelter Solutions sales were relatively flat from mixed demand in construction markets. The unfavorable currency impact is primarily driven by the Japanese yen, and Chinese yuan, partially offset by the Euro.

Operating EBITDA was $1,360 million for the year ended December 31, 2024, down 2 percent compared with $1,388 million for the year ended December 31, 2023 driven by decreased volumes and higher variable compensation, partially offset by productivity and savings from restructuring actions.

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.

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Corporate & Other

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, MultibaseTM 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 (prior to its May 2022 divestiture) business units. Corporate & Other includes DuPont's equity interest in Derby Holdings Group related to the Delrin® Divestiture. 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.

2025 OUTLOOK

For the full year 2025, the Company anticipates ongoing strength within semiconductor markets as well as more normalized sales patterns in China. Continued growth is expected in the markets served by Interconnect Solutions driven by improved consumer electronics demand and refresh cycles for devices in support of AI adoption. Within the healthcare markets, the Company anticipates growth acceleration in demand for medical devices along with continued demand stabilization for medical packaging applications and biopharma markets. In the markets served by Water, the Company expects increased demand to drive year over year volume growth. The Company anticipates stable demand within the markets served by the Company’s other industrial-based product lines.

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LIQUIDITY & CAPITAL RESOURCES

The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries' obligations as they come due. However, DuPont is unable to predict the extent of macroeconomic related impacts which depend on uncertain and unpredictable future developments. In light of this uncertainty, the Company has taken steps to further ensure liquidity and capital resources, as discussed below.

The Company's cash and cash equivalents at December 31, 2024 and December 31, 2023 were $1.9 billion and $2.4 billion, respectively, of which $1.1 billion at December 31, 2024 and $1.3 billion at December 31, 2023 were held by subsidiaries in foreign countries, including United States territories. 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 no investments in marketable securities at December 31, 2024 and 2023. The decrease in cash and cash equivalents at December 31, 2024 compared to December 31, 2023 was due to cash used in the current year to fund the Q1 2024 ASR Transaction, the Donatelle Acquisition, partial redemption of 2038 Notes and general corporate purposes. Refer to subsequent paragraphs for further discussion of the drivers of the change in cash and cash equivalents.

Total debt at December 31, 2024 and 2023 was $7.2 billion and $7.8 billion, respectively. The decrease was primarily due to the partial redemption of $650 million of 2038 Notes discussed below.

As of December 31, 2024, the Company is contractually obligated to make future cash payments of $7.3 billion and $4.0 billion associated with principal and interest, respectively, on debt obligations. Related to the principal, $1.9 billion will be due in the next twelve months and the remainder will be due subsequent to 2025. The Company may address the maturity with cash on hand, issuance of commercial paper, utilizing existing credit facilities, accessing the debt capital markets or a combination of any of them. Related to interest, $359 million will be due in the next twelve months and the remainder will be due subsequent to 2025. The majority of interest obligations will be due in 2030 or later.

In relation to the Company’s fixed-to-floating interest rate swap agreements, there is a mandatory early termination date of December 15, 2025. The mark-to-market value on these swaps at December 31, 2024 is $116 million. The final settlement amount will depend on movements in interest rates. Refer to Note 21 to the Consolidated Financial Statements for more information on the Company’s interest rate swap agreements.

Capital Structure Actions

In connection with the Previously Intended Business Separations, on June 5, 2024, DuPont issued a notice of redemption to the bond trustee with respect to a partial redemption of $650 million aggregate principal amount of its 2038 Notes, in accordance with their terms. The partial redemption occurred on June 15, 2024, at the redemption price set forth in the indenture of the 2038 Notes. The Company funded the repayment with cash on hand. As a result of the early redemption of the debt, for the year ended December 31, 2024, the Company incurred a loss of approximately $74 million, which consisted of the redemption premium, write-off of the deferred debt issuance costs and the basis adjustment from fair value hedge accounting on the 2022 Swaps associated with this borrowing. See Note 21 for further detail on the 2022 Swaps.

In connection with the Previously Intended Business Separations and continuing in light of the Intended Electronics Separation, DuPont is considering potentially repaying, redeeming, repurchasing, or exchanging some or all of its other senior notes, which could include redemptions, tender offers, open market purchases, privately negotiated transactions, or other transactions or a combination of any of them, which will be on pricing terms that are determined at the time of any such transaction. Such transactions will depend on liquidity considerations, contractual and legal restrictions, prevailing market conditions and other factors.

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Revolving Credit Facilities

The Company has entered a $1.0 billion 364-day revolving credit facility in the second quarter of each calendar year beginning in 2022. In July 2022, the Company drew down $600 million under its 2022 $1 billion 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.

The following table summarizes the Company's credit facilities:

1.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.

2.The 2024 $1B Revolving Credit Facility is available to be used for general corporate purposes. There were no drawdowns under the facility during the year ended December 31, 2024. The Company intends to enter into a new revolving credit facility in the second quarter 2025.

Repayment of Senior Notes

In November 2022, the Company redeemed in full $2.5 billion of the 2023 Notes 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

In connection with the Terminated Intended Rogers Acquisition, on November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion. In October 2022, the facility was amended to extend the lending commitment (as amended the "Amended 2021 Term Loan Facility"). On November 1, 2022, the M&M Divestiture closed and, therefore, based on the terms of the Amended 2021 Term Loan Facility, the commitment was terminated. Separately, on November 1, 2022 the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers. The Company paid Rogers a termination fee of $162.5 million in accordance with the agreement on November 2, 2022. The termination fee was paid with cash on hand and recorded in the "Acquisition, integration and separation costs" within the Consolidated Statement of Operations.

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, 2024 and 2023, the Company had no issuances outstanding of commercial paper.

Donatelle Plastics Acquisition

On July 28, 2024, DuPont completed the acquisition of Donatelle Plastics, LLC for a net purchase price of $365 million, which includes the estimated fair value for a contingent earn-out liability of $40 million. The Company utilized existing cash balances to complete the acquisition.

Spectrum Acquisition

On August 1, 2023, the Company completed the Spectrum Acquisition for a net purchase price of approximately $1,781 million, including a net upward adjustment of approximately $43 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 judgment became final in April 2024, therefore the $400 million contribution, plus interest, to the Water District Settlement Fund is reflected as a cash outflow within cash flows from discontinued operations during the year ended December 31, 2024. See Note 16 to the Consolidated Financial Statements for additional information.

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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 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.

Credit Ratings

The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position with a balanced financial policy focused on maintaining a strong investment-grade rating and driving shareholder value and remuneration. At January 31, 2024, DuPont's credit ratings were as follows:

The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. The senior unsecured notes (the "2018 Senior Notes") also contain customary default provisions. The Five-Year Revolving Credit Facility and 2024 $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, 2024, the Company was in compliance with this financial covenant.

Summary of Cash Flows

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.

Cash Flows provided by Operating Activities - Continuing Operations

Cash provided by operating activities of continuing operations was $2,321 million, $2,191 million and $1,249 million for the years ended December 31, 2024, 2023 and 2022, respectively. Cash provided by operating activities increased in 2024 compared with 2023, primarily from higher earnings the net impact from changes in variable compensation payouts and accruals partially offset by an increase in cash used by net working capital. Cash provided by operating activities increased in 2023 compared with 2022, primarily from improvements in working capital.

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

1.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.

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Cash Flows used in/ provided by Investing Activities - Continuing Operations

Cash used in investing activities of continuing operations in 2024 was $849 million compared to cash provided by investing activities of $172 million and $9,004 million in 2023 and 2022, respectively. The change in investing activities in 2024 versus the 2023 is primarily attributable to the absence of proceeds received from sales and maturity of investments and proceeds from sales of property and business partially offset by the impact of the change in cash paid for acquisition in each year.

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 that was previously invested and reflected as a cash outflow in 2022. Cash provided by investing activities in 2022 is primarily attributable to the cash proceeds received from the M&M Divestiture partially offset by purchases of investments.

Capital expenditures totaled $579 million, $619 million and $662 million for the years ended December 31, 2024, 2023 and 2022, respectively. The Company expects 2025 capital expenditures to be about $660 million which includes separation-related capital expenditures. The Company may adjust its spending throughout the year as economic conditions develop.

Cash Flows used for Financing Activities - Continuing Operations

Cash used for financing activities of continuing operations in 2024 was $1,847 million compared to cash used for financing activities of $2,989 million and $7,646 million in 2023 and 2022, respectively. The decrease in cash used in financing activities in 2024 versus the 2023 is primarily attributable to the decrease in share buyback activities partially offset by the partial redemption of the 2038 Notes. The decrease in 2023 versus the 2022 is primarily attributable to the decrease in share buyback activities and decrease in the payment of long-term debt. Cash used for financing activities in 2022 primarily driven by the share buyback activities and the redemption of 2023 Notes.

Cash Flows used for Discontinued Operations

Cash used for discontinued operations was $474 million compared with $306 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.

Dividends

The following table provides dividends paid to common shareholders for the years ended December 31, 2024, 2023 and 2022:

Share Buyback Programs

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.

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.

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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"). 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 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.

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 Share Buyback Program”). Under the $1B Share Buyback 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 Share Buyback 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. At this time and with the continued focus on the Intended Electronic Separation, the Company does not currently plan to complete the remaining authorization under the $1B Share Buyback Program.

Also in the first quarter 2024, DuPont entered an ASR agreement with one counterparty for the repurchase of about $500 million of common stock ("Q1 2024 ASR Transaction"). DuPont paid an aggregate of $500 million to the counterparty and received initial deliveries of 6.0 million shares of DuPont common stock, which were retired immediately and recorded as a reduction of retained earnings of $400 million. The remaining $100 million was evaluated as an unsettled forward contract indexed to DuPont common stock, classified within stockholders' equity as of March 31, 2024.

In the second quarter of 2024, the Q1 2024 ASR Transaction was completed. The settlement resulted in the delivery of approximately 1.0 million additional shares of DuPont common stock, which were retired immediately and recorded as a reduction of retained earnings of $72 million. In total, the Company repurchased 6.9 million shares at an average price of $71.96 per share under the Q1 2024 ASR Transaction.

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 $8 million and $21 million, respectively, as a reduction to retained earnings for the years ended December 31, 2024 and 2023.

See Part II, Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities and Note 18 to the Consolidated Financial Statements, for additional information.

Pension and Other Post-Employment Plans

The Company's funding policy is to contribute to defined benefit pension plans based on pension funding laws and local country requirements. Contributions exceeding funding requirements may be made at the Company's discretion. The Company expects to contribute approximately $56 million to its pension plans in 2025. 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, 2024, the Company is contractually obligated to make future cash contributions of $562 million related to pension and other post-employment benefit plans. $56 million will be due in the next twelve months and the remainder will be due subsequent to 2025 with the majority due subsequent to 2029.

Restructuring

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 years ended December 31, 2023 through December 31, 2024, DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $199 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of $114 million of severance and related benefit costs and asset related charges of $85 million. At December 31, 2024, total liabilities related to the 2023-2024 Restructuring Program were $47 million for severance and related benefit costs,

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recognized in "Accrued and other current liabilities" in the Consolidated Balance Sheets. Inventory write-offs for plant line closures in connection with the 2023-2024 Restructuring Program were $25 million in "Cost of Sales" within the Consolidated Statements of Operations for the year ended December 31, 2024.

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 years ended December 31, 2023 through December 31, 2024, DuPont recorded a pre-tax charge related to the 2022 Restructuring Program in the amount of $94 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations, comprised of severance and related benefit costs. At December 31, 2024, total liabilities related to the 2022 Restructuring Program were $1 million for severance and related benefit costs, recognized in "Accrued and other current liabilities" in the Consolidated Balance Sheets. Actions related to the 2022 Restructuring Program are substantially complete.

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

Other Off-balance Sheet Arrangements

The MOU Cost Sharing Agreement

In connection with the cost sharing arrangement entered into as part of the MOU, the companies agreed to establish an escrow account to support and manage potential future eligible PFAS costs. Subject to the terms of the arrangement, contributions to the escrow account will be made annually by Chemours, DuPont and Corteva through 2028. 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 $35 million at December 31, 2024, are reflected in "Restricted cash and cash equivalents - noncurrent" 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. The judgment became final in April 2024, therefore $400 million contribution, plus interest, to the Water District Settlement Fund is reflected as a cash outflow within cash flows from discontinued operations during the year ended December 31, 2024. See Note 16 to the Consolidated Financial Statements for more information.

As of December 31, 2024, the Company expects to make cash payments related to qualified PFAS spend of $30 million in the next twelve months. Additional information regarding the MOU and funding of the escrow account can be found in Note 16 to the Consolidated Financial Statements.

Other Contractual Obligations

Purchase obligations represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities; fixed minimum or variable price provisions; and the approximate timing of the agreement. As of December 31, 2024, the Company is contractually obligated to make future cash payments of $96 million related to purchase obligations, of which $48 million will be due in the next twelve months and the remainder will be due subsequent to 2025.

Lease obligations represents future finance and operating lease payments. As of December 31, 2024, obligations of future lease payments are $469 million, of which $97 million will be due in the next twelve months and remainder will be due subsequent to 2025.

Environmental remediation obligations represents costs for remediation and restoration with respect to environmental matters and Non-PFAS clean-up responsibilities. As of December 31, 2024, the Company is contractually obligated to make future cash payments of $129 million, of which $18 million will be due in the next twelve months and remainder will be due subsequent to 2025. 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, 2024, the Company is contractually obligated to make future cash payments of $111 million related to other miscellaneous obligations, the majority of which is due subsequent to 2025.

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RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to the Consolidated Financial Statements for a description of recent accounting pronouncements.

CRITICAL ACCOUNTING ESTIMATES

The Company's significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company's operating results and financial condition.

The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters and litigation. Management's estimates are based on historical experience, facts and circumstances available at the time and various other assumptions that are believed to be reasonable. The Company reviews these matters and reflects changes in estimates as appropriate. Management believes that the following represent some of the more critical judgment areas in the application of the Company's accounting policies which could have a material effect on the Company's financial position, liquidity or results of operations.

Pension Plans and Other Post-Employment Benefits

Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets are two critical assumptions in measuring the cost and benefit obligation of the Company's pension plans. Management reviews these two key assumptions when plans are re-measured. These and other assumptions are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted by GAAP, actual results that differ from the assumptions are accumulated on a plan-by-plan basis and to the extent that such differences exceed 10 percent of the greater of the plan's benefit obligation or the applicable plan assets, the excess is amortized over the average remaining service period of active employees or the average remaining life expectancy of the inactive participants if all or almost all of a plan’s participants are inactive.

For the majority of the benefit plans, the Company utilizes the Aon AA corporate bond yield curves to determine the discount rate, applicable to each country, at the measurement date.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes in accordance with the laws and practices of those countries. Where appropriate, asset-liability studies are also taken into consideration. For plans, the long-term expected return on plan assets pension expense is determined using the fair value of assets.

The following table highlights the potential impact on the Company's pre-tax earnings due to changes in certain key assumptions with respect to the Company's pension plans based on assets and liabilities on a continuing operations basis at December 31, 2024:

Additional information with respect to pension plans, liabilities and assumptions is discussed under "Long-term Employee Benefits" and in Note 19 to the Consolidated Financial Statements.

Legal Commitments and Contingencies

The Company's results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement and antitrust claims, and claims for third-party property damage or personal injury stemming from alleged environmental torts. The Company records accruals for legal matters, including its obligations under the MOU as impacted by the Letter Agreement, when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific

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claims including unasserted claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms, and the matter's current status. Considerable judgment is required in determining whether to establish a litigation accrual when an adverse judgment is rendered against the Company in a court proceeding. In such situations, the Company will not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 16 to the Consolidated Financial Statements.

Income Taxes

The breadth of the Company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes the Company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in adjustments to the Company's tax assets and tax liabilities. It is reasonably possible that changes to the Company’s global unrecognized tax benefits could be significant; 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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For example, changes in facts and circumstances that alter the probability that the Company will realize deferred tax assets could result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the relevant period. In some situations, these changes could be material.

At December 31, 2024, the Company had a net deferred tax liability balance of $669 million, net of a valuation allowance of $772 million. Realization of deferred tax assets is expected to occur over an extended period of time. As a result, changes in tax laws, assumptions with respect to future taxable income, and tax planning strategies could result in adjustments to deferred tax assets. 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 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. The Company is an applicable corporation subject to the CAMT requirements however, the Company did not incur a CAMT liability for 2024 and 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.

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. Testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's best estimates at a particular point in time. 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. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized. In addition, the Company continually reviews its diverse portfolio of assets to ensure they are achieving their greatest potential and are aligned with the Company's growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such an assessment could result in impairment losses.

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The Company performs its annual goodwill impairment testing during the fourth quarter, or more frequently when events or changes in circumstances indicate that the fair value is below carrying value, at the reporting unit level which is defined as the operating segment or one level below the operating segment. One level below the operating segment, or component, is a business in which discrete financial information is available and regularly reviewed by segment management. The Company aggregates certain components into reporting units based on economic similarities. The Company has eight reporting units.

For purposes of goodwill impairment testing, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including reporting unit or asset specific operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than the respective carrying amount, including goodwill. 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 the 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 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.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company 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, some of which are considered significant, including Level 3 unobservable inputs: projected revenue growth, EBITDA margin, capital expenditures, weighted average cost of capital, 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. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. 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") 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. In selecting the EBITDA multiples and determining the fair value, the Company considers the size, growth, and profitability of each reporting unit versus the relevant guideline public companies. When applicable, third-party purchase offers may be utilized to measure fair value.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods.

Goodwill Impairment Testing at October 1, 2024

In the fourth quarter of 2024 at October 1, the Company performed its annual goodwill impairment testing by applying the qualitative assessment to seven of its reporting units and the quantitative assessment to one reporting unit. 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. For the reporting units tested under the quantitative assessment, the results indicated that the estimated fair values of the reporting units exceeded its carrying values. The estimated fair value of the Protection reporting unit within Water & Protection exceeded its carrying value by approximately 5 percent. Given this level of fair value, the reporting unit is sensitive to changes in the significant assumptions used in the analysis, including projected revenue growth, EBITDA margin, weighted average cost of capital, terminal growth rate and tax rate.

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LONG-TERM EMPLOYEE BENEFITS

The Company has various obligations to its employees and retirees. The Company maintains retirement-related programs in many countries that have a long-term impact on the Company's earnings and cash flows. These plans are typically defined benefit pension plans. The Company has a few medical, dental and life insurance benefits for employees, pensioners and survivors and for employees (other post-employment benefits or "OPEB" plans).

Pension coverage for employees of the Company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropriate, through separate plans. The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-effective manner possible as demographics, life expectancy and country-specific pension funding rules change. Where permitted by applicable law, the Company reserves the right to change, modify or discontinue its plans that provide pension, medical, dental and life insurance. Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement.

Pension benefits are paid primarily from trust funds established to comply with applicable laws and regulations of the sovereign country in which the pension plan operates. Unless required by law, the Company does not make contributions that are in excess of tax-deductible limits. The actuarial assumptions and procedures utilized are reviewed periodically by the plans' actuaries to provide reasonable assurance that there will be adequate funds for the payment of benefits. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general, however, improvements in plans' funded status tends to moderate subsequent funding needs.

The Company contributed $5 million to its funded pension plans for the year ended December 31, 2024. The Company contributed $9 million and $23 million to its funded pension plans for the years ended December 31, 2023 and 2022, respectively. All values within this Long-Term Employee Benefits section are inclusive of balances and activity associated with discontinued operations.

The Company does maintain one U.S. pension benefit plan. This plan is a separate unfunded plan and these benefits are paid to employees from operating cash flows. The Company's remaining pension plans with no plan assets are paid from operating cash flows. The Company made benefit payments of $46 million, $57 million, and $56 million to its unfunded plans, including OPEB plans, for the years ended December 31, 2024, 2023 and 2022, respectively.

In 2025, the Company expects to contribute approximately $56 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 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, 2024, December 31, 2023 and December 31, 2022 was affected by pre-tax charges related to long-term employee benefits, which include defined contributions and net periodic benefit costs (credits):

The above charges (benefit) for pension and OPEB are determined as of the beginning of each period. 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 2025, long term employee benefit expense from continuing operations is expected to increase by about $14 million compared to 2024. The increase is mainly due to higher expected net periodic benefit costs.

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ENVIRONMENTAL MATTERS

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 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, and greenhouse gas (GHG) 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.

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. Annual expenditures in the near term are not expected to vary significantly from the range of such expenditures experienced in the past few years. Longer term, expenditures are subject to considerable uncertainty and may fluctuate significantly.

Public policies may bring higher operating costs as well as greater revenue and margin opportunities. Legislative efforts to control or limit GHG emissions could affect the Company's energy source and supply choices as well as increase the cost of energy and raw materials derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient products, technologies, and services. Similarly, demand is expected to grow for products that facilitate adaptation to a changing climate. However, the current unsettled policy environment in the U.S., where many company facilities are located, adds an element of uncertainty to business decisions, particularly those relating to long-term capital investments.

In addition, significant differences in regional or national approaches could present challenges in a global marketplace. An effective global climate policy framework will help drive the market changes that are needed to stimulate and efficiently deploy new innovations in science and technology, while maintaining open and competitive global markets.

Environmental Operating Costs

As a result of its operations, the Company incurs costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining permits. The Company also incurs costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials.

Environmental Remediation

The Company has incurred environmental remediation costs, including indemnification remediation costs, of $21 million, $69 million and $12 million, for the years ended December 31, 2024, 2023 and 2022, respectively.

Changes in the remediation accrual balance are summarized below:

1.Excludes indemnification remediation obligations and payments.

2.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 related to eligible PFAS costs associated with the MOU of $146 million and $152 million as of December 31, 2024 and 2023, respectively.

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Considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, the potential liability may range up to $285 million above the amount accrued as of December 31, 2024. However, based on existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a material impact on the financial position, liquidity or results of operations of the Company.

Pursuant to the DWDP Separation and Distribution Agreement and the Letter Agreement discussed in Note 16 to the Consolidated Financial Statements, the Company indemnifies Dow and Corteva for certain environmental matters. The Company has recorded an indemnification liability of $84 million corresponding to the Company's accrual balance related to these matters at December 31, 2024. The indemnification liability is included in the total remediation accrual liability of $129 million.

Environmental Capital Expenditures

Capital expenditures for environmental projects, either required by law or necessary to meet the Company’s internal environmental goals, were $11 million for the year ended December 31, 2024. This amount includes $2 million of expenditures used towards the Company's climate change initiatives. The Company currently estimates expenditures for environmental-related capital projects to be approximately $12 million in 2025, with less than $3 million estimated for climate change initiatives.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:

•Overview

•Analysis of Operations

•Result of Operations

•Segment Results

•Outlook

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Critical Accounting Estimates

•Long-Term Employee Benefits

•Environmental Matters

OVERVIEW

As of December 31, 2023, the Company has $4.4 billion of net working capital and $2.4 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continued operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance.

Mobility & Materials Divestitures

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. Cash received on the Transaction Date, as adjusted for preliminary and other adjustments was $11.0 billion. 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"). 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. 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.

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The Auto Adhesives & Fluids, MultibaseTM 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

On November 1, 2022, the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers Corporation (“Rogers”) as DuPont and Rogers were unable to obtain timely clearance from all the required regulators ("Terminated Intended Rogers Acquisition").

N&B Transaction

On February 1, 2021, the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”) in a Reverse Morris Trust transaction (the “N&B Transaction”) that resulted in IFF issuing shares to DuPont stockholders. In connection with the N&B Transaction, N&B made a one-time cash payment of approximately $7.3 billion (the “Special Cash Payment”) to DuPont.

The results of operations of DuPont for all periods presented reflect the historical financial results of N&B as discontinued operations. 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. 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 N&B. See Note 4 to the Consolidated Financial Statements for additional information.

Laird Performance Materials

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.

Other Divestitures

In May 2022, the Company completed the sale of its Biomaterials business unit, which included the Company's equity method investment in DuPont Tate & Lyle Bio Products, to the Huafon Group. Total consideration received related to the sale was approximately $240 million. 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 2021 and 2022.

On December 31, 2021, the Company completed the sale of its Clean Technologies business unit, which is part of Corporate & Other. Total consideration related to the sale of the business is approximately $510 million, with cash proceeds of about $500 million reflecting adjustments for customary closing costs as defined within the purchase agreement. For the year ended December 31, 2021, a pre-tax loss of $3 million ($39 million loss net of tax, primarily driven by nondeductible goodwill) on the disposition was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations.

In the second quarter of 2021, the Company completed the sale of its Solamet® business unit, which was part of Corporate & Other. Total consideration received related to the sale of the business was approximately $190 million. 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.

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ANALYSIS OF OPERATIONS

Macroeconomic Conditions

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 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 $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 Sheets. 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 Sheets. 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.

See Notes 6 and 14 of the Consolidated Financial Statements for additional information.

Dividends

During 2023, the Board of Directors authorized and paid quarterly dividends of $0.36 per share to shareholders of record in the first, second, third and fourth quarters, respectively.

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.

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Share Buyback Program

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. 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") 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, 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.

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Interest Rate Swap Agreements

In the second quarter of 2022, the Company entered into fixed-to-floating interest rate swap agreements with an aggregate notional principal amount totaling $1 billion to hedge changes in the fair value of the Company's long-term debt due to interest rate change movements. These swaps converted the $1 billion of the Company's $1.65 billion principal amount of fixed rate notes due 2038 into floating rate debt for the portion of their terms through 2032 with an interest rate based on the Secured Overnight Finance Rate (SOFR). Under the terms of the agreements, the Company agrees to exchange, at specified intervals, fixed for floating interest amounts based on the agreed upon notional principal amount. The interest rate swaps are designated as fair value hedges and expire on November 15, 2032. For more information see Note 21 to the Consolidated Financial Statements.

Restructuring Programs

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"). 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"). 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. The 2021 Restructuring Program is considered substantially complete.

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RESULTS OF OPERATIONS

1. Corporate & Other includes activities of the Retained Businesses and certain divested businesses including Biomaterials, Clean Technologies and Solamet®.

2. Europe, Middle East and Africa.

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. Local price and product mix increased across all operating segments, including within Water & Protection (up 12 percent), Electronics & Industrial (up 2 percent) and Corporate & Other (up 10 percent). Volume increase was driven by Electronics & Industrial (up 3 percent) partially offset by Water & Protection (down 1 percent), and Corporate & Other was flat. Portfolio and other changes declined 1 percent driven by declines within Corporate & Other (down 29 percent) due to the sale of the Biomaterials, Clean Technologies and Solamet® businesses, partially offset by the addition of Laird PM in Electronics & Industrial (up 5 percent). 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).

Cost of Sales

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, 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.

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Research and Development Expense ("R&D")

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, 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.

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

For the year ended December 31, 2023, SG&A expenses totaled $1,408 million, down from $1,467 million in the year ended December 31, 2022 and $1,602 million for the year ended December 31, 2021. 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.

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

Restructuring and Asset Related Charges - Net

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, 2023 DuPont recorded a pre-tax charge related to the 2023-2024 Restructuring Program in the amount of $110 million. 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 segment. 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.

Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs were $20 million, $193 million and $81 million for the years ended December 31, 2023, 2022 and 2021, respectively. 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. 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. 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.

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Sundry Income (Expense) - Net

Sundry income (expense) - net includes a variety of income and expenses such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on divestiture and sales of investments and assets, non-operating pension and other post-employment benefit plan credits or costs, and certain litigation matters. 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.

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

Interest Expense

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

(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, 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.

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

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SEGMENT RESULTS

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 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. The remaining portion of these indirect costs are not subject to future reimbursement (“Stranded Costs”). 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. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / other post-employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items.

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ELECTRONICS & INDUSTRIAL

The Electronics & Industrial segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics including mobile devices, television monitors, personal computers and electronics used in a variety of industries. The segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. 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, flexible packaging products, plastic and silicone extrusions, medical silicones, specialty lubricants and critical polymer-based components and devices for medical and other industrial markets.

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. Net sales increased due to a 5 percent increase from portfolio changes, a 3 percent increase in volume, and a 2 percent increase in local price, and partially offset by a 3 percent unfavorable currency impact. The portfolio impact primarily reflects the July 1, 2021 acquisition of Laird PM. Volume growth was led by Semiconductor Technologies which was driven by strong end-market demand primarily due to continued transition to more advanced node technologies and high performance computing. Within Industrial Solutions, volume gains were driven by growth in healthcare and industrial-end markets as well as continued strength in electronics applications. 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 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.

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WATER & PROTECTION

The Water & Protection segment is a leading provider of engineered products and integrated systems for a number of industries including worker safety, water purification and separation, aerospace, energy, medical packaging and building materials. The segment satisfies the growing global needs of businesses, governments, and consumers for solutions that make life safer, healthier, and better. By uniting market-driven science with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.

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. Portfolio was flat. Local price increased across all businesses and in all regions, led by Shelter Solutions and Safety Solutions.

Volume growth in Water Solutions was more than offset by a decline in Safety Solutions while Shelter Solutions was flat. Water Solutions volume gains were driven by strong global demand across all technologies led by reverse osmosis membranes and ultra filtration. Safety Solutions volume declined primarily as a result of lower demand for TYVEK® garments. Shelter Solutions was flat due to weakness in the construction market largely in North America and EMEA.

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.

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Corporate & Other

Corporate & Other includes sales and activity of the Retained Businesses including the Auto Adhesives & Fluids, MultibaseTM 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 (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.

2024 OUTLOOK

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.

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LIQUIDITY & CAPITAL RESOURCES

The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries' obligations as they come due. However, DuPont is unable to predict the extent of macroeconomic related impacts which depend on uncertain and unpredictable future developments. In light of this uncertainty, the Company has taken steps to further ensure liquidity and capital resources, as discussed below.

The Company's cash and cash equivalents at December 31, 2023 and December 31, 2022 were $2.4 billion and $3.7 billion, respectively, of which $1.3 billion at December 31, 2023 and $1.2 billion at December 31, 2022 were held by subsidiaries in foreign countries, including United States territories. 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 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 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, 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. The majority of interest obligations will be due in 2029 or later.

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") 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") 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 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.

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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 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

In connection with the Terminated Intended Rogers Acquisition, on November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion. In October 2022, the facility was amended to extend the lending commitment (as amended the "Amended 2021 Term Loan Facility"). On November 1, 2022, the M&M Divestiture closed and, therefore, based on the terms of the Amended 2021 Term Loan Facility, the commitment was terminated. Separately, on November 1, 2022 the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers. The Company paid Rogers a termination fee of $162.5 million in accordance with the agreement on November 2, 2022. The termination fee was paid with cash on hand and recorded in the "Acquisition, integration and separation costs" within the Consolidated Statement of Operations.

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, 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.

Term Loan

On February 1, 2021, the Company terminated its fully drawn $3.0 billion term loan facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3.0 billion, plus accrued and unpaid interest through and including January 31, 2021. 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”). 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 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

On July 1, 2021, the Company completed the acquisition of Laird PM from Advent International for aggregate consideration of $2.4 billion, which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Interconnect Solutions business within the Electronics & Industrial segment. The Company paid for the acquisition from existing cash balances.

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Credit Ratings

The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position with a balanced financial policy focused on maintaining a strong investment-grade rating and driving shareholder value and remuneration. At January 31, 2024, DuPont's credit ratings were as follows:

The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. The senior unsecured notes (the "2018 Senior Notes") also contain customary default provisions. 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.

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:

1.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.

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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. The Company expects 2024 capital expenditures to be about $600 million. The Company may adjust its spending throughout the year as economic conditions develop.

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.

Dividends

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

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 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.

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.

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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"). 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. 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.

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, 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.

See Part II, Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities and Note 18 to the Consolidated Financial Statements, for additional information.

Pension and Other Post-Employment Plans

The Company's funding policy is to contribute to defined benefit pension plans based on pension funding laws and local country requirements. Contributions exceeding funding requirements may be made at the Company's discretion. 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, 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.

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Restructuring

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.

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, 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. 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. 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 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.

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

Other Off-balance Sheet Arrangements

The MOU Cost Sharing Agreement

In connection with the cost sharing arrangement entered into as part of the MOU, the companies agreed to establish an escrow account to support and manage potential future eligible PFAS costs. Subject to the terms of the arrangement, contributions to the escrow account will be made annually by Chemours, DuPont and Corteva through 2028. 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.

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. Additional information regarding the MOU and funding of the escrow account can be found in Note 16 to the Consolidated Financial Statements.

Other Contractual Obligations

Purchase obligations represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities; fixed minimum or variable price provisions; and the approximate timing of the agreement. 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.

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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.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to the Consolidated Financial Statements for a description of recent accounting pronouncements.

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CRITICAL ACCOUNTING ESTIMATES

The Company's significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company's operating results and financial condition.

The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters and litigation. Management's estimates are based on historical experience, facts and circumstances available at the time and various other assumptions that are believed to be reasonable. The Company reviews these matters and reflects changes in estimates as appropriate. Management believes that the following represent some of the more critical judgment areas in the application of the Company's accounting policies which could have a material effect on the Company's financial position, liquidity or results of operations.

Pension Plans and Other Post-Employment Benefits

Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets are two critical assumptions in measuring the cost and benefit obligation of the Company's pension plans. Management reviews these two key assumptions when plans are re-measured. These and other assumptions are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted by GAAP, actual results that differ from the assumptions are accumulated on a plan-by-plan basis and to the extent that such differences exceed 10 percent of the greater of the plan's benefit obligation or the applicable plan assets, the excess is amortized over the average remaining service period of active employees or the average remaining life expectancy of the inactive participants if all or almost all of a plan’s participants are inactive.

For the majority of the benefit plans, the Company utilizes the Aon AA corporate bond yield curves to determine the discount rate, applicable to each country, at the measurement date.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes in accordance with the laws and practices of those countries. Where appropriate, asset-liability studies are also taken into consideration. For plans, the long-term expected return on plan assets pension expense is determined using the fair value of assets.

The following table highlights the potential impact on the Company's pre-tax earnings due to changes in certain key assumptions with respect to the Company's pension plans based on assets and liabilities on a continuing operations basis at December 31, 2023:

Additional information with respect to pension plans, liabilities and assumptions is discussed under "Long-term Employee Benefits" and in Note 19 to the Consolidated Financial Statements.

Legal Commitments and Contingencies

The Company's results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement and antitrust claims, and claims for third-party property damage or personal injury stemming from alleged environmental torts. The Company records accruals for legal matters, including its obligations under the MOU as impacted by the Letter Agreement, when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms, and the matter's current status. Considerable judgment is required in determining whether to establish a litigation accrual when an adverse judgment is rendered against the Company in a court proceeding. In such situations, the Company will

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not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 16 to the Consolidated Financial Statements.

Income Taxes

The breadth of the Company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes the Company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in adjustments to the Company's tax assets and tax liabilities. It is reasonably possible that changes to the Company’s global unrecognized tax benefits could be significant; 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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For example, changes in facts and circumstances that alter the probability that the Company will realize deferred tax assets could result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the relevant period. In some situations, these changes could be material.

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. As a result, changes in tax laws, assumptions with respect to future taxable income, and tax planning strategies could result in adjustments to deferred tax assets. 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 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. 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 Divestitures.

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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.

Valuation of Acquired Intangible Assets

The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. 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), 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 inherently 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. Testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's best estimates at a particular point in time. 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. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized. In addition, the Company continually reviews its diverse portfolio of assets to ensure they are achieving their greatest potential and are aligned with the Company's growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such an assessment could result in impairment losses.

The Company performs its annual goodwill impairment testing during the fourth quarter, or more frequently when events or changes in circumstances indicate that the fair value is below carrying value, at the reporting unit level which is defined as the operating segment or one level below the operating segment. One level below the operating segment, or component, is a business in which discrete financial information is available and regularly reviewed by segment management. The Company aggregates certain components into reporting units based on economic similarities. The Company has seven reporting units.

For purposes of goodwill impairment testing, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including reporting unit or asset specific operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than the respective carrying amount, including goodwill. 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 the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is required.

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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.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company 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 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. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. 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") 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. In selecting the EBIT/EBITDA multiples and determining the fair value, the Company considers the size, growth, and profitability of each reporting unit versus the relevant guideline public companies. When applicable, third-party purchase offers may be utilized to measure fair value.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods.

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. 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. 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 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.

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. Fair value of the asset group is determined using a combination of a discounted cash flow model and/or market approach. Long-lived assets to be disposed of by sale, if material, are classified as held for sale and reported at the lower of carrying amount or fair value less cost to sell, and depreciation is ceased. Long-lived assets to be disposed of other than by sale are classified as held and used until they are disposed of. Depreciation is recognized over the remaining useful life of the assets.

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LONG-TERM EMPLOYEE BENEFITS

The Company has various obligations to its employees and retirees. The Company maintains retirement-related programs in many countries that have a long-term impact on the Company's earnings and cash flows. These plans are typically defined benefit pension plans. The Company has a few medical, dental and life insurance benefits for employees, pensioners and survivors and for employees (other post-employment benefits or "OPEB" plans).

Pension coverage for employees of the Company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropriate, through separate plans. The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-effective manner possible as demographics, life expectancy and country-specific pension funding rules change. Where permitted by applicable law, the Company reserves the right to change, modify or discontinue its plans that provide pension, medical, dental and life insurance. Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement.

Pension benefits are paid primarily from trust funds established to comply with applicable laws and regulations of the sovereign country in which the pension plan operates. Unless required by law, the Company does not make contributions that are in excess of tax-deductible limits. The actuarial assumptions and procedures utilized are reviewed periodically by the plans' actuaries to provide reasonable assurance that there will be adequate funds for the payment of benefits. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general, however, improvements in plans' funded status tends to moderate subsequent funding needs.

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

The Company does maintain one U.S. pension benefit plan. This plan is a separate unfunded plan and these benefits are paid to employees from operating cash flows. The Company's remaining pension plans with no plan assets are paid from operating cash flows. 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 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:

The above charges (benefit) for pension and OPEB are determined as of the beginning of each period. 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 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.

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ENVIRONMENTAL MATTERS

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 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. Executive responsibility for overall sustainability performance sits with the Chief Technology & Sustainability Officer (the “CTSO”). The CTSO role was created specifically for DuPont to capitalize on the intrinsic link between sustainability and innovation in the Company’s operating model. The CTSO reports directly to the CEO, and routinely engages with the Environmental, Health, Safety & Sustainability (EHS&S) Committee of the Board of Directors on matters of sustainability. DuPont’s sustainability initiatives and strategy are discussed further in its 2023 Sustainability Report, which is available under Sustainability in the "About Us" section of its website; this report is not incorporated by reference and should not be considered part of this Form 10-K.

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. Annual expenditures in the near term are not expected to vary significantly from the range of such expenditures experienced in the past few years. Longer term, expenditures are subject to considerable uncertainty and may fluctuate significantly.

Climate Change

The Company believes that climate change is an important global environmental issue that presents risks and opportunities. 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 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. Legislative efforts to control or limit GHG emissions could affect the Company's energy source and supply choices as well as increase the cost of energy and raw materials derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient products, technologies, and services. Similarly, demand is expected to grow for products that facilitate adaptation to a changing climate. However, the current unsettled policy environment in the U.S., where many company facilities are located, adds an element of uncertainty to business decisions, particularly those relating to long-term capital investments.

In addition, significant differences in regional or national approaches could present challenges in a global marketplace. An effective global climate policy framework will help drive the market changes that are needed to stimulate and efficiently deploy new innovations in science and technology, while maintaining open and competitive global markets.

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Environmental Operating Costs

As a result of its operations, the Company incurs costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining permits. The Company also incurs costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials.

Environmental Remediation

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:

1.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 related to eligible PFAS costs associated with the MOU of $152 million and $173 million as of December 31, 2023 and 2022, respectively.

2.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. However, based on existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a material impact on the financial position, liquidity or results of operations of the Company.

Pursuant to the DWDP Separation and Distribution Agreement and the Letter Agreement discussed in Note 16 to the Consolidated Financial Statements, the Company indemnifies Dow and Corteva for certain environmental matters. The Company has recorded an indemnification liability of $102 million corresponding to the Company's accrual balance related to these matters at December 31, 2023. The indemnification liability is included in the total remediation accrual liability of $148 million.

Environmental Capital Expenditures

Capital expenditures for environmental projects, either required by law or necessary to meet the Company’s internal environmental goals, were $23 million for the year ended December 31, 2023. 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 $25 million in 2024, with less than $5 million estimated for climate change initiatives.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:

•Overview

•Analysis of Operations

•Result of Operations

•Segment Results

•Outlook

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Critical Accounting Estimates

•Long-Term Employee Benefits

•Environmental Matters

OVERVIEW

As of December 31, 2022, the Company has $6.4 billion of net working capital and $3.7 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continued operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance.

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”). 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. Cash received on the Transaction Date, as adjusted for preliminary and other adjustments was $11.0 billion. 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. 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. 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, MultibaseTM 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.

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Terminated Intended Rogers Acquisition

On November 1, 2022, the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers Corporation (“Rogers”) as DuPont and Rogers were unable to obtain timely clearance from all the required regulators ("Terminated Intended Rogers Acquisition").

N&B Transaction

On February 1, 2021, the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”) in a Reverse Morris Trust transaction (the “N&B Transaction”) that resulted in IFF issuing shares to DuPont stockholders. In connection with the N&B Transaction, N&B made a one-time cash payment of approximately $7.3 billion (the “Special Cash Payment”) to DuPont.

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

Laird Performance Materials

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

Other Divestitures

In May 2022, the Company completed the sale of its Biomaterials business unit, which included the Company's equity method investment in DuPont Tate & Lyle Bio Products, to the Huafon Group. Total consideration received related to the sale was approximately $240 million. 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.

On December 31, 2021, the Company completed the sale of its Clean Technologies business unit, which is part of Corporate & Other. Total consideration related to the sale of the business is approximately $510 million, with cash proceeds of about $500 million reflecting adjustments for customary closing costs as defined within the purchase agreement. For the year ended December 31, 2021, a pre-tax loss of $3 million ($39 million loss net of tax, primarily driven by nondeductible goodwill) on the disposition was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations.

In the second quarter of 2021, the Company completed the sale of its Solamet® business unit, which was part of Corporate & Other. Total consideration received related to the sale of the business was approximately $190 million. 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.

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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.

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. As of December 31, 2022, the Company has recorded an indemnification liability of $186 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.

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, 2022 related to the Electronics & Industrial segment.

See Notes 6 and 14 of the Consolidated Financial Statements for additional information.

Dividends

During 2022, the Board of Directors authorized and paid quarterly dividends of $0.33 per share to shareholders of record in the first, second, third and fourth quarters, respectively.

The DuPont Board of Directors on February 6, 2023 declared a first quarter 2023 dividend of $0.36 per share, a 9 percent per share increase versus the first quarter 2022 dividend, payable on March 15, 2023, to holders of record at the close of business on February 28, 2023.

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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. 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 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.

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. 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

In the second quarter of 2022, the Company entered into fixed-to-floating interest rate swap agreements with an aggregate notional principal amount totaling $1 billion to hedge changes in the fair value of the Company's long-term debt due to interest rate change movements. These swaps converted the $1 billion of the Company's $1.65 billion principal amount of fixed rate notes due 2038 into floating rate debt for the portion of their terms through 2032 with an interest rate based on the Secured Overnight Finance Rate (SOFR). Under the terms of the agreements, the Company agrees to exchange, at specified intervals, fixed for floating interest amounts based on the agreed upon notional principal amount. The interest rate swaps are designated as fair value hedges and expire on November 15, 2032. For more information see Note 21 to the Consolidated Financial Statements.

Restructuring Programs

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.

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. At December 31, 2022, total liabilities related to the 2021 Restructuring Actions were $7 million for severance and related benefits. The 2021 Restructuring Program is considered substantially complete.

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RESULTS OF OPERATIONS

1. Corporate & Other includes activities of the Retained Businesses and certain divested businesses including Biomaterials, Clean Technologies and Solamet®.

2. Europe, Middle East and Africa.

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. Local price and product mix increased across all operating segments, including within Water & Protection (up 12 percent), Electronics & Industrial (up 2 percent) and Corporate & Other (up 10 percent). Volume increase was driven by Electronics & Industrial (up 3 percent), partially offset by Water & Protection (down 1 percent), and Corporate & Other was flat. Portfolio and other changes declined 1 percent driven by declines within Corporate & Other (down 29 percent) due to the sale of the Biomaterials, Clean Technologies and Solamet® businesses, partially offset by the addition of Laird PM in Electronics & Industrial (up 5 percent). 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.

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For the year ended December 31, 2021, cost of sales was $8.0 billion, up from $7.1 billion for the year ended December 31, 2020. 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, 2021 was 63.4 percent compared with 63.5 percent for the year ended December 31, 2020.

Research and Development Expense ("R&D")

R&D expense was $536 million for the year ended December 31, 2022, down from $557 million for the year ended December 31, 2021 and $565 million for the year ended December 31, 2020. 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. 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")

For the year ended December 31, 2022, SG&A expenses totaled $1,467 million, down from $1,602 million in the year ended December 31, 2021 and $1,492 million for the year ended December 31, 2020. SG&A as a percentage of net sales was 11 percent, 13 percent, and 13 percent for the years ended December 31, 2022, 2021 and 2020, respectively.

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 $590 million, $566 million and $542 million for the years ended December 31, 2022, 2021 and 2020, respectively. 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.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $155 million, $50 million and $814 million for the years ended December 31, 2022, 2021 and 2020, 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.

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

Goodwill Impairment Charges

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.

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Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs were $193 million, $81 million and $177 million for the years ended December 31, 2022, 2021 and 2020, respectively. 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, 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.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $75 million, $85 million and $168 million for the years ended December 31, 2022, 2021 and 2020, 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.

Sundry Income (Expense) - Net

Sundry income (expense) - net includes a variety of income and expenses such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on divestiture and sales of investments and assets, non-operating pension and other post-employment benefit plan credits or costs, and certain litigation matters. Sundry income (expense) - net for the year ended December 31, 2022 was $191 million compared with $145 million and $632 million in the years ended December 31, 2021 and 2020, respectively.

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.

Interest Expense

Interest expense was $492 million, $525 million, and $672 million for the years ended December 31, 2022, 2021 and 2020, respectively. 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.

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Provision for (Benefit from) 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, 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 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 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. 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. Future Reimbursable Indirect Costs are reported within continuing operations but are excluded from operating EBITDA as defined below. The remaining portion of these indirect costs are not subject to future reimbursement (“Stranded Costs”). Stranded Costs are reported within continuing operations in Corporate & Other and are included within Operating EBITDA.

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. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / other post-employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, excluding Future Reimbursable Indirect Costs, and adjusted for significant items.

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ELECTRONICS & INDUSTRIAL

The Electronics & Industrial segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics including mobile devices, television monitors, personal computers and electronics used in a variety of industries. The segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. 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.

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. Net sales increased due to a 5 percent increase from portfolio changes, a 3 percent increase in volume, and a 2 percent increase in local price, and partially offset by a 3 percent unfavorable currency impact. The portfolio impact primarily reflects the July 1, 2021 acquisition of Laird PM. Volume growth was led by Semiconductor Technologies which was driven by strong end-market demand primarily due to continued transition to more advanced node technologies and high performance computing. Within Industrial Solutions, volume gains were driven by growth in healthcare and industrial-end markets as well as continued strength in electronics applications. 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.

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WATER & PROTECTION

The Water & Protection segment is a leading provider of engineered products and integrated systems for a number of industries including worker safety, water purification and separation, aerospace, energy, medical packaging and building materials. The segment satisfies the growing global needs of businesses, governments, and consumers for solutions that make life safer, healthier, and better. By uniting market-driven science with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.

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. Portfolio was flat. Local price increased across all businesses and in all regions, led by Shelter Solutions and Safety Solutions.

Volume growth in Water Solutions was more than offset by a decline in Safety Solutions while Shelter Solutions was flat. Water Solutions volume gains were driven by strong global demand across all technologies led by reverse osmosis membranes and ultra filtration. Safety Solutions volume declined primarily as a result of lower demand for TYVEK® garments. Shelter Solutions was flat due to weakness in the construction market largely in North America and EMEA.

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.

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Corporate & Other

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

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.

2023 OUTLOOK

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.

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LIQUIDITY & CAPITAL RESOURCES

The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries' obligations as they come due. However, DuPont is unable to predict the extent of macroeconomic related impacts which depend on uncertain and unpredictable future developments. In light of this uncertainty, the Company has taken steps to further ensure liquidity and capital resources, as discussed below.

The Company's cash and cash equivalents at December 31, 2022 and December 31, 2021 were $3.7 billion and $2.0 billion, respectively, of which $1.2 billion at December 31, 2022 and $1.4 billion at December 31, 2021 were held by subsidiaries in foreign countries, including United States territories. 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.

Total debt at December 31, 2022 and December 31, 2021 was $8.1 billion and $10.8 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.

As of December 31, 2022, the Company is contractually obligated to make future cash payments of $8.2 billion and $5.3 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 interest, $411 million will be due in the next twelve months and the remainder will be due subsequent to 2023. The majority of interest obligations will be due in 2028 or later.

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. 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. 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. The Company repaid the borrowing in September 2022.

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

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Terminated Intended Rogers Acquisition

In connection with the Terminated Intended Rogers Acquisition, on November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion. In October 2022, the facility was amended to extend the lending commitment (as amended the "Amended 2021 Term Loan Facility"). On November 1, 2022, the M&M Divestiture closed and, therefore, based on the terms of the Amended 2021 Term Loan Facility, the commitment was terminated. Separately, on November 1, 2022 the Company announced the termination of the previously announced agreement to acquire the outstanding shares of Rogers. The Company paid Rogers a termination fee of $162.5 million in accordance with the agreement on November 2, 2022. 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.

Term Loan

On February 1, 2021, the Company terminated its fully drawn $3.0 billion term loan facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3.0 billion, plus accrued and unpaid interest through and including January 31, 2021. The Company funded the repayment with proceeds from the Special Cash Payment.

Laird Performance Materials

On July 1, 2021, the Company completed the acquisition of Laird PM from Advent International for aggregate consideration of $2.4 billion, which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Interconnect Solutions business within the Electronics & Industrial segment. The Company paid for the acquisition from existing cash balances.

Credit Ratings

The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position with a balanced financial policy focused on maintaining a strong investment-grade rating and driving shareholder value and remuneration. At January 31, 2022, DuPont's credit ratings were as follows:

The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. 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. At December 31, 2022, the Company was in compliance with this financial covenant.

Summary of Cash Flows

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.

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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 2020, 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.

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

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.

Capital expenditures totaled $743 million, $891 million and $1,194 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company expects 2023 capital expenditures to be about $650 million. 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.

Dividends

The following table provides dividends paid to common shareholders for the years ended December 31, 2022, 2021 and 2020:

1.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 6, 2023 declared a first quarter 2023 dividend of $0.36 per share, a 9 percent per share increase versus the first quarter 2022 dividend, payable on March 15, 2023, to holders of record at the close of business on February 28, 2023.

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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. 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. 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 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. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities and Note 18 to the Consolidated Financial Statements, for additional information.

Pension and Other Post-Employment Plans

The Company's funding policy is to contribute to defined benefit pension plans based on pension funding laws and local country requirements. 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 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. $76 million will be due in the next twelve months and the remainder will be due subsequent to 2023 with the majority due subsequent to 2027.

Restructuring

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 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.

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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. At December 31, 2022, total liabilities related to the 2021 Restructuring Actions were $7 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.

Other Off-balance Sheet Arrangements

The MOU Cost Sharing Agreement

In connection with the cost sharing arrangement entered into as part of the MOU, the companies agreed to establish an escrow account to support and manage potential future eligible PFAS costs. Subject to the terms of the arrangement, contributions to the escrow account will be made annually by Chemours, DuPont and Corteva through 2028. 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 December 31, 2022, the Company expected to make cash payments related to qualified PFAS spend of $66 million in the next twelve months. Additional information regarding the MOU and funding of the escrow account can be found in Note 16 to the Consolidated Financial Statements.

Other Contractual Obligations

Purchase obligations represents enforceable and legally binding agreements in excess of $1 million to purchase goods or services that specify fixed or minimum quantities; fixed minimum or variable price provisions; 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.

Lease obligations represents future finance and operating lease payments. As of December 31, 2022, obligations of future lease payments are $480 million, of which $100 million will be due in the next twelve months and remainder will be due subsequent to 2023.

Other miscellaneous obligations includes liabilities related to deferred compensation, environmental remediation, and other noncurrent liabilities. As of December 31, 2022, the Company is contractually obligated to make future cash payments of $187 million related to other miscellaneous obligations, the majority of which is due subsequent to 2023.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to the Consolidated Financial Statements for a description of recent accounting pronouncements.

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CRITICAL ACCOUNTING ESTIMATES

The Company's significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company's operating results and financial condition.

The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters and litigation. Management's estimates are based on historical experience, facts and circumstances available at the time and various other assumptions that are believed to be reasonable. The Company reviews these matters and reflects changes in estimates as appropriate. Management believes that the following represent some of the more critical judgment areas in the application of the Company's accounting policies which could have a material effect on the Company's financial position, liquidity or results of operations.

Pension Plans and Other Post-Employment Benefits

Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets are two critical assumptions in measuring the cost and benefit obligation of the Company's pension plans. Management reviews these two key assumptions when plans are re-measured. These and other assumptions are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted by GAAP, actual results that differ from the assumptions are accumulated on a plan-by-plan basis and to the extent that such differences exceed 10 percent of the greater of the plan's benefit obligation or the applicable plan assets, the excess is amortized over the average remaining service period of active employees or the average remaining life expectancy of the inactive participants if all or almost all of a plan’s participants are inactive.

For the majority of the benefit plans, the Company utilizes the Aon AA corporate bond yield curves to determine the discount rate, applicable to each country, at the measurement date.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes in accordance with the laws and practices of those countries. Where appropriate, asset-liability studies are also taken into consideration. For plans, the long-term expected return on plan assets pension expense is determined using the fair value of assets.

The following table highlights the potential impact on the Company's pre-tax earnings due to changes in certain key assumptions with respect to the Company's pension plans based on assets and liabilities on a continuing operations basis at December 31, 2022:

Additional information with respect to pension plans, liabilities and assumptions is discussed under "Long-term Employee Benefits" and in Note 19 to the Consolidated Financial Statements.

Legal Commitments and Contingencies

The Company's results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement and antitrust claims, and claims for third-party property damage or personal injury stemming from alleged environmental torts. The Company records accruals for legal matters, including its obligations under the MOU as impacted by the Letter Agreement, when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative dispute resolution mechanisms, and the matter's current status. Considerable judgment is required in determining whether to establish a litigation accrual when an adverse judgment is rendered against the Company in a court proceeding. In such situations, the Company will

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not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 16 to the Consolidated Financial Statements.

Income Taxes

The breadth of the Company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes the Company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in adjustments to the Company's tax assets and tax liabilities. It is reasonably possible that changes to the Company’s global unrecognized tax benefits could be significant; 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.

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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For example, changes in facts and circumstances that alter the probability that the Company will realize deferred tax assets could result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the relevant period. 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. Realization of deferred tax assets is expected to occur over an extended period of time. As a result, changes in tax laws, assumptions with respect to future taxable income, and tax planning strategies could result in adjustments to deferred tax assets. 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. 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 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. 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

The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. 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

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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 inherently uncertain.

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. Testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's best estimates at a particular point in time. 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. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized. In addition, the Company continually reviews its diverse portfolio of assets to ensure they are achieving their greatest potential and are aligned with the Company's growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such an assessment could result in impairment losses.

The Company performs its annual goodwill impairment testing during the fourth quarter, or more frequently when events or changes in circumstances indicate that the fair value is below carrying value, at the reporting unit level which is defined as the operating segment or one level below the operating segment. One level below the operating segment, or component, is a business in which discrete financial information is available and regularly reviewed by segment management. The Company aggregates certain components into reporting units based on economic similarities. The Company has seven reporting units.

For purposes of goodwill impairment testing, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including reporting unit or asset specific operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than the respective carrying amount, including goodwill. 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 the 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. The Company determines fair values for each of the reporting units using a combination of the income approach and market approach.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company 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. These key assumptions are determined through evaluation of the Company as a whole, underlying business fundamentals and industry risk. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. 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"). Selected peer sets are based on close competitors, publicly traded companies and reviews of analysts' reports, public filings, and industry research. In selecting the EBIT/EBITDA multiples and determining the fair value, the Company considers the size, growth, and profitability of each reporting unit versus the relevant guideline public companies. When applicable, third-party purchase offers may be utilized to measure fair value.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. 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

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carrying values. 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%. 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.

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 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. 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. Fair value of the asset group is determined using a combination of a discounted cash flow model and/or market approach. Long-lived assets to be disposed of by sale, if material, are classified as held for sale and reported at the lower of carrying amount or fair value less cost to sell, and depreciation is ceased. Long-lived assets to be disposed of other than by sale are classified as held and used until they are disposed of. Depreciation is recognized over the remaining useful life of the assets.

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LONG-TERM EMPLOYEE BENEFITS

The Company has various obligations to its employees and retirees. The Company maintains retirement-related programs in many countries that have a long-term impact on the Company's earnings and cash flows. These plans are typically defined benefit pension plans. The Company has a few medical, dental and life insurance benefits for employees, pensioners and survivors and for employees (other post-employment benefits or "OPEB" plans).

Pension coverage for employees of the Company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropriate, through separate plans. The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-effective manner possible as demographics, life expectancy and country-specific pension funding rules change. Where permitted by applicable law, the Company reserves the right to change, modify or discontinue its plans that provide pension, medical, dental and life insurance. Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement.

Pension benefits are paid primarily from trust funds established to comply with applicable laws and regulations of the sovereign country in which the pension plan operates. Unless required by law, the Company does not make contributions that are in excess of tax-deductible limits. The actuarial assumptions and procedures utilized are reviewed periodically by the plans' actuaries to provide reasonable assurance that there will be adequate funds for the payment of benefits. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general, however, improvements in plans' funded status tends to moderate subsequent funding needs.

The Company contributed $23 million to its funded pension plans for the year ended December 31, 2022. The Company contributed $28 million to its funded pension plans for the years ended December 31, 2021 and December 31, 2020, respectively. All values within this Long-Term Employee Benefits section are inclusive of balances and activity associated with discontinued operations.

The Company does maintain one U.S. pension benefit plan. This plan is a separate unfunded plan and these benefits are paid to employees from operating cash flows. 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.

In 2023, the Company expects to contribute approximately $76 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 following table summarizes the extent to which the Company's income for the years ended December 31, 2022, December 31, 2021 and December 31, 2020 was affected by pre-tax charges related to long-term employee benefits:

The above charges (benefit) for pension and OPEB are determined as of the beginning of each period. 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.

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ENVIRONMENTAL MATTERS

The Company operates global manufacturing, product handling and distribution 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. 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”). The CTSO role was created specifically for DuPont to capitalize on the intrinsic link between sustainability and innovation in the Company’s operating model. The CTSO reports directly to the CEO, and routinely engages with the Environmental, Health, Safety & Sustainability (EHS&S) Committee of the Board of Directors on matters of sustainability. DuPont’s sustainability initiatives and strategy are discussed further in its 2022 Sustainability Report, which is available under Sustainability in the "About Us" section of its website; 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. 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. Annual expenditures in the near term are not expected to vary significantly from the range of such expenditures experienced in the past few years. Longer term, expenditures are subject to considerable uncertainty and may fluctuate significantly.

Climate Change

The Company believes that climate change is an important global environmental issue that presents risks and opportunities. 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.

Public policies may bring higher operating costs as well as greater revenue and margin opportunities. Legislative efforts to control or limit GHG emissions could affect the Company's energy source and supply choices as well as increase the cost of energy and raw materials derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient products, technologies, and services. Similarly, demand is expected to grow for products that facilitate adaptation to a changing climate. However, the current unsettled policy environment in the U.S., where many company facilities are located, adds an element of uncertainty to business decisions, particularly those relating to long-term capital investments.

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In addition, significant differences in regional or national approaches could present challenges in a global marketplace. An effective global climate policy framework will help drive the market changes that are needed to stimulate and efficiently deploy new innovations in science and technology, while maintaining open and competitive global markets.

Environmental Operating Costs

As a result of its operations, the Company incurs costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining permits. The Company also incurs costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials.

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.

Changes in the remediation accrual balance are summarized below:

1.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.

Considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, the potential liability may range up to $173 million above the amount accrued as of December 31, 2022. However, based on existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a material impact on the financial position, liquidity or results of operations of the Company.

Pursuant to the DWDP Separation and Distribution Agreement and the Letter Agreement discussed in Note 16 to the Consolidated Financial Statements, the Company indemnifies Dow and Corteva for certain environmental matters. The Company has recorded an indemnification liability of $49 million corresponding to the Company's accrual balance related to these matters at December 31, 2022. The indemnification liability is included in the total remediation accrual liability of $90 million.

Environmental Capital Expenditures

Capital expenditures for environmental projects, either required by law or necessary to meet the Company’s internal environmental goals, were $31 million for the year ended December 31, 2022. This amount includes $17 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.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis of financial condition and results of operations is provided as a supplement to, and should be read in conjunction with, the consolidated financial statements and related notes to enhance the understanding of the Company’s operations and present business environment. Components of management’s discussion and analysis of financial condition and results of operations include:

•Overview

•Analysis of Operations

•Result of Operations

•Supplemental Unaudited Pro Forma Combined Financial Information

•Segment Results

•Outlook

•Liquidity and Capital Resources

•Recent Accounting Pronouncements

•Critical Accounting Estimates

•Long-Term Employee Benefits

•Environmental Matters

OVERVIEW

As of December 31, 2021, the Company has $3.8 billion of net working capital and over $2 billion in cash and cash equivalents. The Company expects its cash and cash equivalents, cash generated from operations, and ability to access the debt capital markets to provide sufficient liquidity and financial flexibility to meet the liquidity requirements associated with its continued operations. The Company continually assesses its liquidity position, including possible sources of incremental liquidity, in light of the current economic environment, capital market conditions and Company performance.

DWDP Merger & Distributions

Effective August 31, 2017, the Dow Chemical Company ("TDCC") and E. I. du Pont de Nemours and Company ("EID") each merged with subsidiaries of DowDuPont Inc. ("DowDuPont") and, as a result, TDCC and EID became subsidiaries of DowDuPont (the "DWDP Merger"). Except as otherwise indicated by the context, the term "TDCC" includes TDCC and its consolidated subsidiaries and "EID" includes EID and its consolidated subsidiaries.

DowDuPont completed a series of internal reorganizations and realignment steps in order to separate into three, independent, publicly traded companies - one for each of its agriculture, materials science and specialty products businesses. On April 1, 2019, the Company completed the separation of the materials science business through the spin-off of Dow Inc., (“Dow”) including Dow’s subsidiary TDCC (the “Dow Distribution”). On June 1, 2019, the Company completed the separation of the agriculture business through the spin-off of Corteva, Inc. (“Corteva”) including Corteva’s subsidiary EID, (the “Corteva Distribution and together with the Dow Distribution, the “DWDP Distributions”).

Following the Corteva Distribution, the Company holds the specialty products business. On June 1, 2019, DowDuPont changed its registered name from “DowDuPont Inc.” to “DuPont de Nemours, Inc.” doing business as “DuPont” (the “Company”). Beginning on June 3, 2019, the Company's common stock is traded on the NYSE under the ticker symbol “DD.”

The results of operations of DuPont for the 2019 period presented reflects the historical financial results of Dow and Corteva as discontinued operations, as applicable. The cash flows and comprehensive income related to Dow and Corteva 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. 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 Dow or Corteva.

N&B Transaction

On February 1, 2021, the Company completed the divestiture of the Nutrition & Biosciences (“N&B”) business to International Flavors & Fragrance Inc. (“IFF”) in a Reverse Morris Trust transaction (the “N&B Transaction”) that resulted in IFF issuing shares to DuPont stockholders. In connection with the N&B Transaction, N&B made a one-time cash payment of approximately $7.3 billion (the “Special Cash Payment”) to DuPont.

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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. 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 N&B.

2021 Segment Realignment

Effective February 1, 2021, in conjunction with the closing of the N&B Transaction, the Company changed its management and reporting structure (the “2021 Segment Realignment”). DuPont’s worldwide operations are managed through global businesses, which are currently reported in three reportable segments: Electronics & Industrial; Water & Protection; and Mobility & Materials. The changes became effective February 1, 2021 and have been retrospectively reflected in the segment results for all periods presented.

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ANALYSIS OF OPERATIONS

COVID-19 Update

The novel coronavirus (“COVID-19”) and its variants continue to adversely impact the broader global economy, including certain of the Company’s customers and suppliers. During 2021, the Company benefited from strong demand in certain key end-markets, principally in electronics, water filtration and continued recovery within the automotive markets and commercial construction. Although results reflect notable improvement, the COVID-19 pandemic has caused widespread supply chain challenges due to labor, raw material and component shortages. In addition, logistic challenges have increased significantly in the second half of 2021.

Intended Rogers Acquisition

On November 2, 2021, the Company announced that it had entered into a definitive agreement to acquire all the outstanding shares of Rogers Corporation (“Rogers”) for about $5.2 billion (the “Intended Rogers Acquisition”). The acquisition is expected to close by the end of the second quarter of 2022, pending receipt of regulatory approvals and satisfaction of customary closing conditions. When complete, the acquisition of Rogers, is expected to broaden the Company’s presence in the electronic materials market. Rogers is complementary to and aligned strategically with the Company’s existing Electronics & Industrial segment. The completion of the acquisition is subject to regulatory approvals and other customary closing conditions.

Mobility & Materials Segment Intended Divestiture

On November 2, 2021 the Company announced that it has initiated a divestiture process related to a substantial portion of the Mobility & Materials segment, which predominantly includes the Engineering Polymers and Performance Resins lines of business (the “In-Scope M&M Businesses”). The outcome of which, including the entry into a definitive agreement, is subject to the approval of the DuPont Board of Directors. The scope of the intended divestiture excludes certain product lines including Auto Adhesives and MultibaseTM. The divestiture of the In-Scope M&M Businesses may include a full or partial separation of the businesses from the Company. The Mobility & Materials segment will remain in its current management and reporting structure while these strategic alternatives are considered.

Laird Performance Materials

On July 1, 2021, DuPont completed the acquisition of Laird Performance Materials ("Laird PM") from Advent International (“Laird PM Acquisition”) for cash consideration of $2.404 billion, which reflects adjustments, primarily for acquired cash and net working capital. See Note 3 to the Consolidated Financial Statements for additional information.

Divestitures

On December 31, 2021, the Company completed the sale of its Clean Technologies business unit, which is part of Corporate. Total consideration related to the sale of the business is approximately $510 million, with cash proceeds of about $500 million reflecting adjustments for customary closing costs as defined within the purchase agreement. For the year ended December 31, 2021, a pre-tax loss of $3 million ($39 million loss net of tax, primarily driven by nondeductible goodwill) on the disposition was recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations.

In the second quarter of 2021, the Company completed the sale of its Solamet® business unit, which was part of Corporate. Total consideration received related to the sale of the business was approximately $190 million. 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.

In the fourth quarter of 2020, the Company entered into a definitive agreement to sell its Biomaterials business unit, which includes the Company's equity method investment in DuPont Tate & Lyle Bio Products. The sale of the Biomaterials business unit is subject to customary closing conditions and is expected to close by mid-year 2022.

In the third quarter of 2020, the Company completed the sale of its trichlorosilane business (“TCS Business”) along with its equity ownership interest in DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group,” and together with the TCS Business, the “TCS/HSC Disposal Group” and the sale of the TCS/HSC Disposal Group, the “TCS/HSC Disposal”) to the HSC Group, both of which were part of the Non-Core segment. The TCS/HSC Disposal resulted in a net pre-tax benefit of $396 million ($236 million net of tax) which was recorded in “Sundry income (expense) – net” in the Company’s Consolidated Statements of Operations.

In the first quarter of 2020, the Company completed the sale of its Compound Semiconductor Solutions business unit, a part of the Electronics & Industrial segment, to SK Siltron, for approximately $420 million. The sale resulted in a pre-tax gain of $197 million ($102 million net of tax) recorded in "Sundry income (expense) - net" in the Company's Consolidated Statements of Operations. See Note 4 of the Consolidated Financial Statements for additional information.

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Joint Settlement Agreement

On January 22, 2021, the Company, Corteva, EID 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. As of December 31, 2021, the Company has recorded an indemnification liability of $126 million in connection with the cost sharing arrangement related to future eligible PFAS costs.

Total pre-tax charges of $98 million ($76 million after-tax) and $86 million ($66 million after-tax) related to the MOU are reflected as a loss from discontinued operations for the year ended December 31, 2021 and 2020, respectively, in the Company's Consolidated Statements of Operations.

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

Goodwill, Long-Lived Asset and Indefinite-Lived Asset Impairments

During the third quarter of 2020, multiple triggering events occurred requiring the Company to perform impairment analyses associated with its Mobility & Materials segment and corporate businesses. As a result of the analyses performed, the Company recorded aggregate pre-tax, non-cash goodwill impairment charges of $183 million recognized in "Goodwill impairment charges" within its corporate businesses and aggregate pre-tax, non-cash asset impairment charges of $318 million within its Mobility & Materials segment and $52 million within corporate businesses both recognized in “Restructuring and asset related charges - net” in the Consolidated Statements of Operations.

During the second quarter of 2020, demand weakness in global automotive production resulting from the COVID-19 pandemic, along with revised views of recovery, served as a triggering event requiring the Company to perform an impairment analysis of the goodwill associated with its Mobility & Materials and Industrial Solutions reporting units. As a result of the analysis performed, the Company recorded pre-tax, non-cash goodwill impairment charges of $2,498 million recognized in "Goodwill impairment charges" in the Consolidated Statements of Operations. In connection with the Mobility & Materials impairment analysis, the Company also recorded pre-tax, non-cash impairment charges of $21 million related to indefinite-lived intangible assets recognized in “Restructuring and asset related charges - net” in the Consolidated Statements of Operations.

During the first quarter of 2020, the Company was required to perform interim impairment tests of its goodwill and long-lived assets as expectations of proceeds related to certain potential divestitures related to the businesses held in Corporate gave rise to fair value indicators and, thus, served as triggering events. As a result of the analysis performed, the Company recorded pre-tax, non-cash impairment charges related to goodwill of $533 million. The charges were recognized in "Goodwill impairment charge" in the Consolidated Statements of Operations. The Company also recorded pre-tax, non-cash impairment charges of $270 million related to long-lived assets. The charges were recognized in “Restructuring and asset related charges - net” in the Consolidated Statements of Operations.

During the second quarter of 2019, the Company was required to perform interim impairment tests of its goodwill due to the internal distribution of the specialty products legal entities from EID to DowDuPont (the "Internal SP Distribution") and changes made to its management and reporting structure. As a result of the analyses performed, the Company recorded pre-tax, non-cash impairment charges during the year ended December 31, 2019 of $242 million impacting Corporate. The charges were recognized in "Goodwill impairment charges" in the Consolidated Statements of Operations.

See Notes 6 and 14 of the Consolidated Financial Statements for additional information.

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Dividends

On February 18, 2021, the Board of Directors declared a first quarter dividend of $0.30 per share, paid on March 15, 2021, to shareholders of record on March 1, 2021. On April 28, 2021, the Board of Directors declared a second quarter dividend of $0.30 per share, paid on June 15, 2021, to shareholders of record on May 28, 2021. On June 17, 2021, the Board of Directors declared a third quarter dividend of $0.30 per share, paid on September 15, 2021, to shareholders of record on July 30, 2021. On October 14, 2021, the Board of Directors declared a fourth quarter dividend of $0.30 per share, paid on December 15, 2021, to shareholders of record on November 30, 2021.

The DuPont Board of Directors on February 7, 2022, declared a first quarter 2022 dividend of $0.33 per share, a ten percent per share increase versus the first quarter 2021 dividend, payable on March 15, 2022, to holders of record at the close of business on February 28, 2022.

Share Buyback Program

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 (the "2021 Share Buyback Program"). As of December 31, 2021, the Company had repurchased and retired a total of 14.5 million shares for $1.1 billion under the 2021 Share Buyback Program.

On June 1, 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.

In February 2022, the Company's Board of Directors authorized an additional $1.0 billion share buyback program which expires on March 31, 2023, (the “2022 Share Buyback Program”).This authorization enables the Company to repurchase shares following the expected completion of the remaining authorization under its 2021 Share Buyback Program.

Restructuring Programs

2021 Restructuring Actions

In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions"). For the year ended December 31, 2021, DuPont recorded a pre-tax charge related to the 2021 Restructuring Actions in the amount 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. At December 31, 2021, total liabilities related to the 2021 Restructuring Actions were $25 million for severance and related benefits. The Company expects actions related to this program to be substantially complete by the first half of 2022.

2020 Restructuring Program

During the first quarter of 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 (the "2020 Restructuring Program"). The Company recorded pre-tax restructuring charges of $180 million inception-to-date, consisting of severance and related benefit costs of $128 million and asset related charges of $52 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations. At December 31, 2021, total liabilities related to the program were $15 million, which represents expected future cash payments related to this program for the payment of severance and related benefits. The 2020 Restructuring Program is considered substantially complete.

2019 Restructuring Program

During the second quarter of 2019 and in connection with the ongoing integration activities, DuPont approved restructuring actions to simplify and optimize certain organizational structures following the completion of the DWDP Distributions (the "2019 Restructuring Program"). The Company recorded pre-tax restructuring charges of $125 million inception-to-date, consisting of severance and related benefit costs of $98 million and asset related charges of $27 million, recognized in "Restructuring and asset related charges - net" in the Company's Consolidated Statements of Operations. At December 31, 2021, total liabilities related to the program were $2 million, which represents expected future cash payments related to this program for the payment of severance and related benefits. The 2019 Restructuring Program is considered substantially complete.

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RESULTS OF OPERATIONS

1. Europe, Middle East and Africa.

2021 versus 2020

The Company reported net sales for the year ended December 31, 2021 of $16.7 billion, up 16 percent from $14.3 billion for the year ended December 31, 2020, due to a 10 percent increase in volume, a 4 percent increase due to local price and product mix, and a 2 percent favorable currency impact. Portfolio and other changes was flat. Volume grew across all geographic regions and across all segments, most notably Electronics & Industrial and Mobility & Materials (both up 12 percent). Local price and product mix increased across all regions and all segments with the exception of Electronics & Industrial 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 1 percent). Portfolio and other changes were flat overall as the acquisition of Laird PM in Electronics & Industrial (up 6 percent) was offset by the decline within Corporate (down 33 percent) due to the sale of businesses.

2020 versus 2019

The Company reported net sales for the year ended December 31, 2020 of $14.3 billion, down 7 percent from $15.4 billion for the year ended December 31, 2019, due to a 6 percent decrease in volume and a 1 percent decline due to local price and product mix. Portfolio and other changes and currency were flat. Volume declined across all geographic regions with the exception of Asia Pacific where it increased 3 percent. Volume gains in Electronics & Industrial (up 6 percent) were more than offset by declines in Mobility & Materials (down 11 percent) and Water & Protection (down 8 percent). Local price increased in Latin America (up 1 percent) and Water & Protection (up 2 percent). Portfolio and other changes were flat overall. The divestitures in Corporate (down 18 percent) were offset by Water & Protection (up 2 percent). Currency was flat compared with the same period last year in all segments.

Cost of Sales

Cost of sales was $10.8 billion for the year ended December 31, 2021, up from $9.5 billion for the year ended December 31, 2020. 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 approximately $230 million 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, 2021 was 64.9 percent compared with 66.3 percent for the year ended December 31, 2020.

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For the year ended December 31, 2020, cost of sales was $9.5 billion, down from $10.0 billion for the year ended December 31, 2019. Cost of sales decreased for the year ended December 31, 2020 primarily due to lower sales volume, cost synergies, and the absence in 2020 of costs previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with ASC 205 and therefore remained as costs of continuing operations for periods prior to the DWDP Distributions, offset by approximately $230 million of charges associated with temporarily idling several manufacturing plants to align supply with demand due to COVID-19, driven primarily by the Mobility & Materials segment.

Cost of sales as a percentage of net sales for the year ended December 31, 2020 was 66.3 percent compared with 65.0 percent for the year ended December 31, 2019.

Research and Development Expense ("R&D")

R&D expense was $618 million for the year ended December 31, 2021, down from $625 million for the year ended December 31, 2020, and $689 million for the year ended December 31, 2019. R&D as a percentage of net sales was 4 percent for the years ended December 31, 2021, 2020, and 2019.

R&D expense in 2021 compared to 2020 was relatively consistent, the slight decline was primarily due to productivity actions. The decrease in R&D costs in 2020 compared to 2019 was due to productivity actions as well as the absence of R&D costs previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with ASC 205 and therefore remained as a cost of continuing operations for periods prior to the DWDP Distributions.

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

For the year ended December 31, 2021, SG&A expenses totaled $1,855 million, up from $1,701 million in the year ended December 31, 2020 and down from $2,057 million for the year ended December 31, 2019. SG&A as a percentage of net sales was 11 percent, 12 percent, and 13 percent for the years ended December 31, 2021, 2020, and 2019, respectively.

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 six months of consolidating Laird PM. The decrease in SG&A costs in 2020 compared to 2019 was due to productivity actions, temporarily reducing costs due to COVID-19 restrictions, overall reduced spending, and the absence of SG&A costs previously allocated to the materials science and agriculture businesses that did not meet the definition of expenses related to discontinued operations in accordance with ASC 205 and therefore remained as costs of continuing operations for periods prior to the DWDP Distributions.

Amortization of Intangibles

Amortization of intangibles was $725 million, $696 million, and $701 million for the years ended December 31, 2021, 2020, and 2019, respectively. The increase in amortization of intangibles 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. Amortization expense in 2020 compared to 2019 was relatively flat. See Note 14 to the Consolidated Financial Statements for additional information on intangible assets.

Restructuring and Asset Related Charges - Net

Restructuring and asset related charges - net were $55 million, $845 million, and $152 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The activity for the year ended December 31, 2021 included a $46 million charge related to the 2021 Restructuring Actions, a $12 million charge related to the 2020 Restructuring Program, a $1 million charge related to the 2019 Restructuring Program and a $4 million credit related to the DowDuPont Cost Synergy 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, a $318 million impairment charge related to long-lived assets and a $21 million impairment charge related to indefinite-lived intangible assets in the Mobility & Materials segment, a $168 million charge related to the 2020 Restructuring Program, a $5 million charge related to the 2019 Restructuring Program and a $11 million charge related to the DowDuPont Cost Synergy Program. The charges for the year ended December 31, 2019 included a charge of $119 million related to the 2019 Restructuring Program and a $33 million charge to the DowDuPont Cost Synergy Program.

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

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Goodwill Impairment Charges

There were no goodwill impairment charges for the year ended December 31, 2021. Goodwill impairment charges were $3,214 million and $242 million for the years ended December 31, 2020 and 2019, respectively. For the year ended December 31, 2020, goodwill impairment charges related to a business reported in Corporate and the Mobility & Materials and Industrial Solutions reporting units. For the year ended December 31, 2019, goodwill impairment charges related to businesses reported in Corporate. See Note 14 to the Consolidated Financial Statements for additional information.

Acquisition, Integration and Separation Costs

Acquisition, integration and separation costs were $133 million, $177 million and $1,257 million for the years ended December 31, 2021, 2020 and 2019, respectively. Acquisition, integration and separation costs primarily consist of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees. For the year-ended December 31, 2021 these costs were primarily associated with the execution of strategic initiatives, including the acquisition of Laird PM, the planned divestiture of the In-Scope M&M Businesses, the Intended Rogers Acquisition, and the completed and planned divestitures of the held for sale businesses included within Corporate. For the years ended December 31, 2020 and December 31, 2019 these costs were primarily associated with the preparation and execution of activities related to the DWDP Merger, post-DWDP Merger integration, and the DWDP Distributions.

Equity in Earnings of Nonconsolidated Affiliates

The Company's share of the earnings of nonconsolidated affiliates was $94 million, $187 million, and $85 million for the years ended December 31, 2021, 2020 and 2019, respectively. 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 increase in earnings of nonconsolidated affiliates for the year ended December 31, 2020 compared to the year ended December 31, 2019 is due to higher HSC Group equity earnings in the first half of 2020, driven mainly by customer settlements in the second quarter of 2020.

Sundry Income (Expense) - Net

Sundry income (expense) - net includes a variety of income and expenses such as foreign currency exchange gains or losses, interest income, dividends from investments, gains and losses on sales of investments and assets, non-operating pension and other post-employment benefit plan credits or costs, and certain litigation matters. Sundry income (expense) - net for the year ended December 31, 2021 was $163 million compared with $667 million and $144 million in the years ended December 31, 2020 and 2019, respectively.

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, 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 $52 million, partially offset by foreign currency exchange losses of $53 million, and miscellaneous expenses of $11 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 $32 million, and income related to non-operating pension and other post-employment benefit plans of $30 million, partially offset by foreign currency exchange losses of $39 million.

The year ended December 31, 2019 included a net gain on sale of assets and investments of $144 million, income related to non-operating pension and other post-employment benefit plans of $72 million and interest income of $56 million, partially offset by foreign currency exchange losses of $104 million and miscellaneous expenses of $24 million which includes a $48 million charge reflecting a reduction in gross proceeds from lower withholding taxes related to a prior year legal settlement. The net gain on sale of assets includes income of $92 million related to a sale of assets within the Electronics & Industrial segment and as well as a gain of $28 million related to the sale of the Sustainable Solutions business unit included in Corporate.

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

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Interest Expense

Interest expense was $525 million, $672 million, and $667 million for the years ended December 31, 2021, 2020, and 2019, respectively. The decrease in interest expense in 2021 compared to 2020 primarily relates to the maturity of the November 2020 Notes, the early repayment of the $3.0 billion Term Loan Facilities in February 2021, and significant reduction of commercial paper borrowings, partially offset by structuring fees and the amortization of commitment fees related to the Intended Rogers Acquisition financing agreements. The increase in interest expense in 2020 compared to 2019 primarily relates to financing costs associated with the May 2020 Debt Offering, partially offset by reduced borrowing rates on floating rate debt. Refer to Note 15 to the Consolidated Financial Statements for additional information.

Provision for (Benefit from) 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, 2021, the Company's effective tax rate was 17.9 percent on pre-tax income from continuing operations of $2,196 million. The effective tax rate differential for the year ended December 31, 2021, 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 $2,246 million. The effective tax rate differential was principally the result of the non-tax-deductible goodwill impairment charge impacting Corporate in the first and third quarter and a non-tax-deductible goodwill impairment charge impacting the Mobility & Materials and Electronics & Industrial segments in the second quarter, coupled with an allocation of non-tax-deductible goodwill related to the TCS/HSC Disposal.

For the year ended December 31, 2019, the Company's effective tax rate was 1.6 percent on a pre-tax loss from continuing operations of $126 million. The effective tax rate differential was principally the result of the non-tax-deductible goodwill impairment charges impacting Corporate.

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

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SUPPLEMENTAL UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following supplemental unaudited pro forma financial information (the “unaudited pro forma financial statements”) was derived from DuPont’s Consolidated Financial Statements, adjusted to give effect to certain events directly attributable to the DWDP Distributions. In contemplation of the DWDP Distributions and to achieve the respective credit profiles of each of the current companies, in the fourth quarter of 2018, DowDuPont borrowed $12.7 billion under the 2018 Senior Notes and entered the Term Loan Facilities with an aggregate principal amount of $3.0 billion. Additionally, DuPont issued approximately $1.4 billion in commercial paper in May 2019 in anticipation of the Corteva Distribution (the “Funding CP Issuance” together with the 2018 Senior Notes and the Term Loan Facilities, the "DWDP Financings"). The unaudited pro forma financial statements below were prepared in accordance with Article 11 of Regulation S-X. The historical consolidated financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the DWDP Distributions and the DWDP Financings (collectively the "DWDP Transactions"), (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the results. The unaudited pro forma statements of operations for the years ended December 31, 2019 give effect to the pro forma events as if the DWDP Transactions had occurred on January 1, 2018. There were no pro forma adjustments for the years ended December 31, 2021 and 2020.

Restructuring or integration activities or other costs following the DWDP Distributions that may be incurred to achieve cost or growth synergies of DuPont are not reflected. The unaudited pro forma statements of operations provides shareholders with summary financial information and historical data that is on a basis consistent with how DuPont reports current financial information.

The unaudited pro forma financial statements are presented for informational purposes only, and do not purport to represent what DuPont's results of operations or financial position would have been had the DWDP Transactions occurred on the dates indicated, nor do they purport to project the results of operations or financial position for any future period or as of any future date.

1. See the Company's historical U.S. GAAP Consolidated Statements of Operations.

2. Certain pro forma adjustments were made to illustrate the estimated effects of the DWDP Transactions, assuming that the DWDP Transactions had occurred on January 1, 2018. The adjustments include the impact to "Cost of sales" of different pricing than historical intercompany and intracompany practices related to various supply agreements entered into with the Dow Distribution, adjustments to "Integration and separation costs" to eliminate one time transaction costs directly attributable to the DWDP Distributions, and adjustments to "Interest expense" to reflect the impact of the Financings.

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SEGMENT RESULTS

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. The Company defines Operating EBITDA as earnings (i.e., “Income from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / other post-employment benefits (“OPEB”) / charges, and foreign exchange gains / losses, adjusted for significant items. Prior to April 1, 2019, the Company's measure of profit / loss for segment reporting purposes was pro forma Operating EBITDA as this was the manner in which the Company's chief operating decision maker ("CODM") assessed performance and allocated resources. The Company defines pro forma Operating EBITDA as pro forma earnings (i.e. pro forma "Income (loss) from continuing operations before income taxes") before interest, depreciation, amortization, non-operating pension / OPEB benefits / charges, and foreign exchange gains/losses, excluding the impact of costs historically allocated to the materials science and agriculture businesses that did not meet the criteria to be recorded as discontinued operations and adjusted for significant items.

Pro forma adjustments were determined in accordance with Article 11 of Regulation S-X. Pro forma financial information is based on the Consolidated Financial Statements of DuPont, adjusted to give effect to the impact of certain items directly attributable to the DWDP Distributions, and the Term Loan Facilities, the 2018 Senior Notes and the Funding CP Issuance (together, the "DWDP Financings"), including the use of proceeds from such Financings (collectively the "DWDP Transactions"). The historical consolidated financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the DWDP Transactions, (2) factually supportable and (3) with respect to the statements of operations, expected to have a continuing impact on the results. Events that are not expected to have a continuing impact on the combined results are excluded from the pro forma adjustments. Those pro forma adjustments include the impact of various supply agreements entered into in connection with the Dow Distribution ("supply agreements") and are adjustments to "Cost of sales." The impact of these supply agreements are reflected in pro forma Operating EBITDA for the year ended December 31, 2019 as they are included in the measure of profit/loss reviewed by the CODM in order to show meaningful comparability among periods while assessing performance and making resource allocation decisions. Refer to the Supplemental Unaudited Pro Forma Combined Financial Information section for further information.

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ELECTRONICS & INDUSTRIAL

The Electronics & Industrial segment is a leading global supplier of differentiated materials and systems for a broad range of consumer electronics including mobile devices, television monitors, personal computers and electronics used in a variety of industries. The segment is a leading provider of materials and solutions for the fabrication and packaging of semiconductors and integrated circuits, and provides innovative solutions for thermal management and electromagnetic shielding as well as metallization processes for metal finishing, decorative, and industrial applications. 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 high performance elastomer and polyimide parts, medical silicones and specialty lubricants.

1.For the year ended December 31, 2019 operating EBITDA is on a pro forma basis.

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 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.

2020 Versus 2019

Electronics & Industrial net sales were $4,674 million for the year ended December 31, 2020, up from $4,446 million for the year ended December 31, 2019. Net sales increased due to a 6 percent volume increase partially offset by a 1 percent decrease in local price. Volume growth was driven by Semiconductor Technologies with continued strength and new technology in logic and foundry and increased demand in the memory segment. Volume growth within Interconnect Solutions was driven by increased material content in next-generation smartphones. Within Industrial Solutions, volume growth in KALREZ® for electronics applications, OLED materials for displays and digital printing inks for the consumer segment offset weakness in flexographic plates and declines in the automotive and aerospace end markets. Volume grew significantly in Asia Pacific.

Operating EBITDA was $1,468 million for the year ended December 31, 2020, up 1 percent compared with pro forma Operating EBITDA of $1,454 million for the year ended December 31, 2019 as volume growth, productivity and higher equity income more than offset higher raw material logistic costs and lower gains related to asset sales.

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WATER & PROTECTION

Water & Protection is the global leader in providing innovative engineered products and integrated systems for a number of industries including, worker safety, water purification and separation, transportation, energy, medical packaging and building materials. Water & Protection addresses the growing global needs of businesses, governments and consumers for solutions that make life safer, healthier and better. By uniting market-driven science and engineering with the strength of highly regarded brands, the segment strives to bring new products and solutions to solve customers' needs faster, better and more cost effectively.

1.For the year ended December 31, 2019 operating EBITDA is on a pro forma basis.

2021 Versus 2020

Water & Protection net sales were $5,552 million for the 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.

2020 Versus 2019

Water & Protection net sales were $4,993 million for the year ended December 31, 2020, down from $5,201 million for the year ended December 31, 2019 as a 2 percent increase in local price and 2 percent increase in portfolio were more than offset by a 8 percent volume decline. The portfolio impact reflects the recent acquisitions in the Water Solutions business. Volume growth in the segment was led by gains in Water Solutions and TYVEK® protective garment sales within Safety Solutions which were more than offset by weakened demand in end markets for NOMEX® and KEVLAR®. Shelter Solutions volume declined due to the COVID-19 pandemic and the resulting impact on commercial construction activity.

Operating EBITDA was $1,313 million for the year ended December 31, 2020, down 4 percent compared with pro forma Operating EBITDA of $1,370 million for the year ended December 31, 2019 due to lower volumes, the absence of licensing income, and costs associated with idling facilities more than offsetting pricing gains, improved product mix, and productivity actions.

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MOBILITY & MATERIALS

The Mobility & Materials segment provides high-performance engineering thermoplastics and advanced solutions to engineers and designers in the transportation, electronics, industrial, consumer and renewable energy end-markets to enable systems solutions for demanding applications and environments. The segment delivers a broad range of polymer-based high-performance materials in its product portfolio, including elastomers and thermoplastic and thermoset engineering polymers which are used by customers to fabricate components for mechanical, chemical and electrical systems. In addition, the segment supplies key materials for the manufacturing of photovoltaic cells and panels, including backsheet materials and silicone encapsulates and adhesives. The segment provides specialty pastes and films used in consumer electronics, automotive, and aerospace markets. Mobility & Materials is a global leader of advanced materials that provides technologies that differentiate customers’ products with improved performance characteristics enabling the transition to hybrid-electric-connected vehicles and high speed high frequency connectivity.

1.For the year ended December 31, 2019 operating EBITDA is on a pro forma basis.

2021 Versus 2020

Mobility & Materials net sales were $5,045 million for the year ended December 31, 2021, up 26 percent from $4,005 million for the year ended December 31, 2020. Net sales increased due to a 12 percent increase in local price and product mix, a 12 percent increase in volume and a 2 percent favorable currency impact. The local price increase reflects actions taken to offset higher raw material costs and higher metals pricing. Volume growth was attributable to the continued recovery of key end markets, primarily the global automotive market.

Operating EBITDA was $1,082 million for the year ended December 31, 2021, up 84 percent compared with $588 million for the year ended December 31, 2020 driven by higher volumes, pricing gains, and the absence of $170 million of charges recorded in the prior year associated with temporarily idling several manufacturing facilities which offset higher raw material and logistic costs.

2020 Versus 2019

Mobility & Materials net sales were $4,005 million for the year ended December 31, 2020, down from $4,690 million for the year ended December 31, 2019 due to a 11 percent decrease in volume and a 4 percent decrease in local price. Volume declines were due to the impact of the COVID-19 pandemic on the automotive industry and the other key industrial markets.

Operating EBITDA was $588 million for the year ended December 31, 2020, down 38 percent compared with pro forma Operating EBITDA of $954 million for the year ended December 31, 2019 driven primarily by price and volume declines due to the COVID-19 pandemic and approximately $170 million in charges associated with temporarily idling several manufacturing plants to align supply with demand.

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Corporate

Corporate 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. The sales and activity of to be divested and previously divested businesses including the operations of Biomaterials, Clean Technologies, and Solamet® business units, and the TCS Business along with its equity ownership interest in DC HSC Holdings LLC and Hemlock Semiconductor L.L.C. (the "HSC Group”) are reflected as Corporate activity. To date, the following divestitures of businesses held within Corporate have occurred:

•Clean Technologies on December 31, 2021;

•Solamet® in the third quarter 2021;

•the TCS Business and HSC Group in the third quarter 2020; and

•the Sustainable Solutions business in third quarter 2019.

Corporate net sales related to the divested businesses were $502 million, $666 million, and $1,099 million for the years ended December 31, 2021, 2020, and 2019, respectively. The decrease in sales for the year ended December 31, 2021, was driven by the timing of portfolio actions, discussed above, offset by volume growth driven by demand in carpet and apparel markets within Biomaterials and pricing gains. For the year ended December 31, 2020, sales declined due to the portfolio actions discussed above and volume declines which were led by lower demand in Biomaterials due to weakened demand in carpet and apparel markets and lower volumes in Clean Technologies.

Operating EBITDA was $(55) million and $70 million for the year ended December 31, 2021 and 2020, respectively and pro forma Operating EBITDA was $366 million for the years ended December 31, 2019. The decrease in EBITDA both years was primarily the result of portfolio actions and declines in customer settlements.

OUTLOOK

In 2022, the Company expects demand to remain strong across all segments led by on-going strength in semiconductors, along with continued demand in industrial technologies, smartphone sales, water filtration and residential construction. The Company anticipates raw material and logistic costs will remain at elevated levels in 2022. The anticipated strong demand, productivity actions and Laird PM acquisition synergies along with benefits from continued pricing actions in response to incremental cost increases, are expected to deliver earnings improvement versus 2021. The Company continues to closely monitor macroeconomic and geopolitical developments.

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LIQUIDITY & CAPITAL RESOURCES

The Company continually reviews its sources of liquidity and debt portfolio and may make adjustments to one or both to ensure adequate liquidity and increase the Company’s optionality and financing efficiency as it relates to financing cost and balancing terms/maturities. The Company’s primary source of incremental liquidity is cash flows from operating activities. COVID-19 continues to impact the broader global economy. Management expects the generation of cash from operations and the ability to access the debt capital markets and other sources of liquidity will continue to provide sufficient liquidity and financial flexibility to meet the Company’s and its subsidiaries obligations as they come due. However, DuPont is unable to predict the extent of COVID-19 related impacts which depend on uncertain and unpredictable future developments. In light of this uncertainty, the Company has taken steps to further ensure liquidity and capital resources, as discussed below.

1.The net proceeds of approximately $6.2 billion received from an offering of senior unsecured notes associated with the N&B Transaction were recorded within non-current “Restricted cash” in the Consolidated Balance Sheets at December 31, 2020 and thus are not included in "Cash and cash equivalents" as presented in the table above.

The Company's cash and cash equivalents at December 31, 2021 and December 31, 2020 were $2.0 billion and $2.5 billion, respectively, of which $1.4 billion at December 31, 2021 and $1.8 billion at December 31, 2020 were held by subsidiaries in foreign countries, including United States territories. 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.

Total debt at December 31, 2021 and December 31, 2020 was $10.8 billion and $15.6 billion, respectively. The decrease was primarily due to the termination and repayment of the Company's $3.0 billion term loan facilities in the first quarter of 2021, and the redemption of the May 2020 Notes in the second quarter of 2021, described further below, in accordance with a special mandatory redemption feature.

As of December 31, 2021, the Company is contractually obligated to make future cash payments of $10.7 billion and $5.9 billion associated with principal and interest, respectively, on debt obligations. Related to the principal, all payments will be due subsequent to 2022. Related to interest, $503 million will be due in the next twelve months and the remainder will be due subsequent to 2022. The majority of interest obligations will be due in 2027 or later.

Term Loan and Revolving Credit Facilities

In November 2018, the Company entered into a term loan agreement that establishes two term loan facilities in the aggregate principal amount of $3.0 billion, (the “Term Loan Facilities”) as well as a five-year $3.0 billion revolving credit facility (the “Five-Year Revolving Credit Facility”). Effective May 2, 2019, the Company fully drew the two Term Loan Facilities in the aggregate principal amount of $3.0 billion and the Five-Year Revolving Credit Facility became effective and available. 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.

On February 1, 2021, the Company terminated its fully drawn $3.0 billion Term Loan Facilities. The termination triggered the repayment of the aggregate outstanding principal amount of $3.0 billion, plus accrued and unpaid interest through and including January 31, 2021. The Company funded the repayment with proceeds from the Special Cash Payment.

On April 15, 2021, the Company entered into an updated $1.0 billion 364-day revolving credit facility (the “2021 $1B Revolving Credit Facility") as the $1.0 billion 364-day revolving credit facility entered in April 2020 (the “2020 $1B Revolving Credit Facility") expired mid-April. As of the effectiveness of the 2021 $1B Revolving Credit Facility, the 2020 $1B Revolving Credit Facility was terminated. The 2021 $1B Revolving Credit facility may be used for general corporate purposes. The Company intends to renew the 364-Day Revolving Credit Facility on or prior to expiration.

May 2020 Debt Offering

On May 1, 2020, the Company completed an underwritten public offering of senior unsecured notes (the “May 2020 Notes”) in the aggregate principal amount of $2.0 billion of 2.169 percent fixed rate notes due May 1, 2023 (the “May 2020 Debt Offering”). Upon consummation of the N&B Transaction, the special mandatory redemption feature of the May 2020 Debt Offering was triggered, requiring the Company to redeem all of the May 2020 Notes at a redemption price equal to 100% of the aggregate principal amount of the May 2020 Notes plus accrued and unpaid interest. The Company redeemed the May 2020 Notes on May 13, 2021 and funded the redemption with proceeds from the Special Cash Payment.

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Laird Performance Materials

On July 1, 2021, the Company completed the acquisition of Laird PM from Advent International for aggregate consideration of $2.4 billion, which reflects adjustments, including for acquired cash and net working capital. The acquisition is part of the Interconnect Solutions business within the Electronics & Industrial segment. The Company paid for the acquisition from existing cash balances.

Intended Rogers Acquisition

On November 2, 2021, the Company announced that it had entered into a definitive agreement to acquire all the outstanding shares of Rogers for about $5.2 billion. The acquisition is expected to close by the end of the second quarter of 2022 subject to regulatory approvals and other customary closing conditions.

Concurrent with the signing of the definitive agreement, the Company entered into a Bridge Commitment Letter (the “Bridge Letter”) in an aggregate principal amount of $5.2 billion to secure committed financing for the Intended Rogers Acquisition. On November 22, 2021, the Company entered into a two-year senior unsecured committed term loan agreement in the amount of $5.2 billion (the "2021 Term Loan Facility"). The 2021 Term Loan Facility is intended to fund the Intended Rogers Acquisition and will be drawn upon contemporaneously with the close of the Intended Rogers Acquisition. The 2021 Term Loan Facility is required to be repaid upon completion of the intended divestiture of the In-Scope M&M Businesses. Commensurate with the entry into the 2021 Term Loan Facility, the commitments under the Bridge Letter were terminated.

Commercial Paper

In April 2019, DuPont authorized a $3.0 billion commercial paper program (the “DuPont Commercial Paper Program”). At December 31, 2021 the Company has $150 million of commercial paper issued and outstanding.

Credit Ratings

The Company's credit ratings impact its access to the debt capital markets and cost of capital. The Company remains committed to maintaining a strong financial position with a balanced financial policy focused on maintaining a strong investment-grade rating and driving shareholder value and remuneration. At January 31, 2022, DuPont's credit ratings were as follows:

The Company's indenture covenants include customary limitations on liens, sale and leaseback transactions, and mergers and consolidations, subject to certain limitations. The senior unsecured notes (the "2018 Senior Notes") also contain customary default provisions. The 2021 Term Loan Facility, the Five-Year Revolving Credit Facility and the 2021 $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, 2021, the Company was in compliance with this financial covenant.

Summary of Cash Flows

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 have not been segregated and are included in the Consolidated Statements of Cash Flows for all periods presented, while cash flows related to the materials science and agriculture businesses are included in the Consolidated Statements of Cash Flows for the year ended December 31, 2019.

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Cash Flows from Operating Activities

Cash provided by operating activities was $2,281 million, $4,095 million and $1,409 million for the years ended December 31, 2021, 2020 and 2019, respectively. Cash provided by operating activities decreased in 2021 compared with 2020, 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 provided by operating activities increased in 2020 compared with 2019, largely due to a release of cash from net working capital in 2020 versus a use of cash for net working capital in the prior period, partially offset by lower earnings versus the prior period. Activity related to the N&B business is included in the full year of the 2020 comparative period and the first month of 2021.

1.Net working capital at December 31, 2020 has been presented to exclude the assets and liabilities related to the N&B Transaction. The assets and liabilities related to the N&B Transaction are presented as assets of discontinued operations and liabilities of discontinued operations, respectively, in the Consolidated Balance Sheets.

Cash Flows from Investing Activities

Cash used for investing activities in 2021 was $2,401 million compared to cash used for investing of $202 million in 2020. The increase in cash used was primarily attributable to the acquisition of Laird PM, and decrease in cash proceeds received from the sales of Solamet® and Clean Technologies businesses in 2021 compared to the cash proceeds received from the sales of the TCS Business and Compound Semiconductor Solutions business units in 2020 partially offset by lower capital expenditures in 2021. Cash used for investing activities in 2019 was $2,313 million primarily driven by capital expenditures and purchases of investments, which were partially offset by proceeds from sales and maturities of investments and proceeds from sales of property and business. Activity related to the N&B business is included in the full year of the comparative period and the first month of 2021.

Capital expenditures totaled $891 million, $1,194 million and $2,472 million for the years ended December 31, 2021, 2020 and 2019, respectively. The Company expects 2022 capital expenditures to be about $900 million. The Company may adjust its spending throughout the year as economic conditions develop.

Cash Flows from Financing Activities

Cash used for financing activities in 2021 was $6,507 million compared to cash provided by financing activities of $3,238 million in 2020. The difference in cash flows from financing activities in 2021 versus the prior year is primarily driven by the use of cash in repayment of long-term debt, repurchases of common stock and significant reduction in issuances of long-term debt, which was partially offset by cash provided by increase in short-term notes payable and reduction in dividends paid to stockholders due to less shares outstanding. Cash used for financing activities in 2019 was $11,550 million, primarily driven by repurchases of common stock and impact of the DWDP Distributions of the materials science and agriculture businesses to cash balances. Activity related to the N&B business is included in the full year of the comparative period and the first month of 2021.

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Dividends

The following table provides dividends paid to common shareholders for the years ended December 31, 2021, 2020, and 2019:

1.The 2019 dividends include dividends paid to DowDuPont common stockholders prior to the DWDP Distributions.

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

The DuPont Board of Directors on February 7, 2022, declared a first quarter 2022 dividend of $0.33 per share, a ten percent per share increase versus the first quarter 2021 dividend, payable on March 15, 2022, to holders of record at the close of business on February 28, 2022.

Share Buyback Programs

On June 1, 2019, the Company's Board of Directors authorized a $2.0 billion share buyback program, which expired on June 1, 2021 ("2019 Share Buyback Program"). At the expiry of the 2019 Share Buyback Program, the Company had repurchased and retired a total cost of 29.9 million shares at a cost of $2.0 billion.

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"). As of December 31, 2021, the Company had repurchased and retired a total of 14.5 million shares for $1.1 billion under the 2021 Share Buyback Program.

In February 2022, the Company's Board of Directors authorized an additional $1.0 billion share buyback program which expires on March 31, 2023, (the “2022 Share Buyback Program”). This authorization enables the Company to repurchase shares following the expected completion of the remaining authorization under its 2021 Share Buyback Program.

See Part II, Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities and Note 18 to the Consolidated Financial Statements, for additional information.

Pension and Other Post-Employment Plans

Subsequent to the DWDP Distributions, the Company retained defined benefit pension plans in a number of other countries but does not have any qualified defined benefit pension plans in the United States.

The Company's funding policy is to contribute to defined benefit pension plans based on pension funding laws and local country requirements. Contributions exceeding funding requirements may be made at the Company's discretion. The Company expects to contribute approximately $90 million to its pension plans in 2022. 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.

TDCC's funding policy was to contribute to plans when pension laws and/or economics either require or encourage funding. Prior to the Dow Distribution, TDCC made discretionary contributions exceeding funding requirements. During the three months of 2019, TDCC made contributions of $103 million to TDCC plans that were separated with Dow after the DWDP Distributions.

As of December 31, 2021, the Company is contractually obligated to make future cash payments of $922 million related to pension and other post-employment benefit plans. $90 million will be due in the next twelve months and the remainder will be due subsequent to 2022 with the majority due subsequent to 2026.

EID's funding policy was to contribute to defined benefit pension plans based on pension funding laws and local country requirements. Prior to the Corteva Distribution, EID made discretionary contributions exceeding funding requirements. During the five months of 2019, EID made $36 million contributions to plans that were separated from the Company in conjunction with the Corteva Distribution.

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Restructuring

In October 2021, the Company approved targeted restructuring actions to capture near term cost reductions (the "2021 Restructuring Actions"). For the year ended December 31, 2021, DuPont recorded a pre-tax charge related to the 2021 Restructuring Actions in the amount 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. At December 31, 2021, total liabilities related to the 2021 Restructuring Actions were $25 million for severance and related benefits. The Company expects actions related to this program to be substantially complete by the first half of 2022.

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 $180 million inception-to-date, consisting of severance and related benefit costs of $128 million and asset related charges of $52 million. Actions associated with the 2020 Restructuring Program are considered substantially complete. Future cash payments related to the 2020 Restructuring Program are anticipated to be $15 million primarily related to the payment of severance and related benefits.

In June 2019, DuPont approved restructuring actions to simplify and optimize certain organizational structures following the completion of the DWDP Distributions. As a result of these actions, the Company has recorded pre-tax restructuring charges of $125 million inception-to-date, consisting of severance and related benefit costs of $98 million, and asset related charges of $27 million. Actions associated with this program are considered substantially complete. Future cash payments related to the 2019 Restructuring Program are anticipated to be $2 million and relate to the payment of severance and related benefits.

In September and November 2017, the Company approved post-merger restructuring actions under the DowDuPont Cost Synergy Program, which was designed to integrate and optimize the organization following the DWDP Merger and in preparation for the DWDP Distributions. The Company has recorded pre-tax restructuring charges attributable to the continuing operations of DuPont of $342 million inception-to-date, consisting of severance and related benefit costs of $136 million, asset related charges of $159 million and contract termination and other charges of $47 million. The activities related to the Synergy Program are expected to result in additional cash expenditures of $6 million and relate primarily to the payment of severance and related benefit costs.

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

Other Off-balance Sheet Arrangements

Certain Guarantee Contracts

Guarantees arise in the ordinary course of business from relationships with nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specific triggering events occur. At December 31, 2021 and December 31, 2020, the Company had directly guaranteed $170 million and $167 million, respectively, of such obligations. Additional information related to the guarantees of the Subsidiaries can be found in the “Guarantees” section of Note 16 to the Consolidated Financial Statements.

The MOU Cost Sharing Agreement

In connection with the cost sharing arrangement entered into as part of the MOU, the companies agreed to establish an escrow account to address potential future PFAS costs. Subject to the terms of the arrangement, contributions to the escrow account will be made by Chemours, DuPont and Corteva, annually over an eight-year period. 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.

As per the terms of the MOU, the Company deposited $50 million to the escrow account on September 30, 2021. Additional information regarding the MOU and funding of the escrow account can be found in Note 16 to the Consolidated Financial Statements.

Other Contractual Obligations

As of December 31, 2021, the Company is contractually obligated to make future cash payments of $861 million and $528 million related to purchase and lease obligations, respectively. Related to purchases, $294 million will be due in the next twelve months and the remainder will be due subsequent to 2022. Related to leases, $110 million will be due in the next twelve months and remainder will be due subsequent to 2022.

As of December 31, 2021, the Company is contractually obligated to make future cash payments of $191 million related to other miscellaneous obligations, the majority of which is due subsequent to 2022.

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RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 to the Consolidated Financial Statements for a description of recent accounting pronouncements.

CRITICAL ACCOUNTING ESTIMATES

The Company's significant accounting policies are more fully described in Note 1 to the Consolidated Financial Statements. Management believes that the application of these policies on a consistent basis enables the Company to provide the users of the financial statements with useful and reliable information about the Company's operating results and financial condition.

The preparation of the Consolidated Financial Statements in conformity with generally accepted accounting principles ("GAAP") in the United States of America requires management to make estimates and assumptions that affect the reported amounts, including, but not limited to, receivable and inventory valuations, impairment of tangible and intangible assets, long-term employee benefit obligations, income taxes, restructuring liabilities, environmental matters and litigation. Management's estimates are based on historical experience, facts and circumstances available at the time and various other assumptions that are believed to be reasonable. The Company reviews these matters and reflects changes in estimates as appropriate. Management believes that the following represent some of the more critical judgment areas in the application of the Company's accounting policies which could have a material effect on the Company's financial position, liquidity or results of operations.

Pension Plans and Other Post-Employment Benefits

Accounting for employee benefit plans involves numerous assumptions and estimates. Discount rate and expected return on plan assets are two critical assumptions in measuring the cost and benefit obligation of the Company's pension plans. Management reviews these two key assumptions when plans are re-measured. These and other assumptions are updated periodically to reflect the actual experience and expectations on a plan specific basis as appropriate. As permitted by GAAP, actual results that differ from the assumptions are accumulated on a plan by plan basis and to the extent that such differences exceed 10 percent of the greater of the plan's benefit obligation or the applicable plan assets, the excess is amortized over the average remaining service period of active employees or the average remaining life expectancy of the inactive participants if all or almost all of a plan’s participants are inactive.

For the majority of the benefit plans, the Company utilizes the Aon AA corporate bond yield curves to determine the discount rate, applicable to each country, at the measurement date.

The Company establishes strategic asset allocation percentage targets and appropriate benchmarks for significant asset classes in accordance with the laws and practices of those countries. Where appropriate, asset-liability studies are also taken into consideration. For plans, the long-term expected return on plan assets pension expense is determined using the fair value of assets.

The following table highlights the potential impact on the Company's pre-tax earnings due to changes in certain key assumptions with respect to the Company's pension plans based on assets and liabilities at December 31, 2021:

Additional information with respect to pension plans, liabilities and assumptions is discussed under "Long-term Employee Benefits" and in Note 19 to the Consolidated Financial Statements.

Legal Contingencies

The Company's results of operations could be affected by significant litigation adverse to the Company, including product liability claims, patent infringement and antitrust claims, and claims for third party property damage or personal injury stemming from alleged environmental torts. The Company records accruals for legal matters when the information available indicates that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Management makes adjustments to these accruals to reflect the impact and status of negotiations, settlements, rulings, advice of counsel and other information and events that may pertain to a particular matter. Predicting the outcome of claims and lawsuits and estimating related costs and exposure involves substantial uncertainties that could cause actual costs to vary materially from estimates. In making determinations of likely outcomes of litigation matters, management considers many factors. These factors include, but are not limited to, the nature of specific claims including unasserted claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the

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matter through alternative dispute resolution mechanisms, and the matter's current status. Considerable judgment is required in determining whether to establish a litigation accrual when an adverse judgment is rendered against the Company in a court proceeding. In such situations, the Company will not recognize a loss if, based upon a thorough review of all relevant facts and information, management believes that it is probable that the pending judgment will be successfully overturned on appeal. A detailed discussion of significant litigation matters is contained in Note 16 to the Consolidated Financial Statements.

Income Taxes

The breadth of the Company's operations and the global complexity of tax regulations require assessments of uncertainties and judgments in estimating taxes the Company will ultimately pay. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions, outcomes of tax litigation and resolution of disputes arising from federal, state and international tax audits in the normal course of business. The resolution of these uncertainties may result in adjustments to the Company's tax assets and tax liabilities. It is reasonably possible that changes to the Company’s global unrecognized tax benefits could be significant; 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.

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. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. Significant judgment is required in evaluating the need for and magnitude of appropriate valuation allowances against deferred tax assets. The realization of these assets is dependent on generating future taxable income, as well as successful implementation of various tax planning strategies. For example, changes in facts and circumstances that alter the probability that the Company will realize deferred tax assets could result in recording a valuation allowance, thereby reducing the deferred tax asset and generating a deferred tax expense in the relevant period. In some situations, these changes could be material.

At December 31, 2021, the Company had a net deferred tax liability balance of $1.8 billion, net of a valuation allowance of $0.8 billion. Realization of deferred tax assets is expected to occur over an extended period of time. As a result, changes in tax laws, assumptions with respect to future taxable income, and tax planning strategies could result in adjustments to deferred tax assets. See Note 8 to the Consolidated Financial Statements for additional details related to the deferred tax liability balance.

Assessments of Long-Lived Assets and Goodwill

The assets and liabilities of acquired businesses are measured at their estimated fair values at the dates of acquisition. The excess of the purchase price over the estimated fair value of the net assets acquired, including identified intangibles, is recorded as goodwill. 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, future cash flow projections, the weighted average cost of capital, the terminal growth rate, and the tax rate for the income approach. For the market approach, the company uses metrics of publicly traded companies or historically completed transactions of comparable businesses. The estimates are deemed reasonable by management based on information available at the dates of acquisition, however, estimates are inherently uncertain.

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. Testing for potential impairment of these assets is significantly dependent on numerous assumptions and reflects management's best estimates at a particular point in time. 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. Changes in factors and assumptions used in assessing potential impairments can have a significant impact on the existence and magnitude of impairments, as well as the time in which such impairments are recognized. In addition, the Company continually reviews its diverse portfolio of assets to ensure they are achieving their greatest potential and are aligned with the Company's growth strategy. Strategic decisions involving a particular group of assets may trigger an assessment of the recoverability of the related assets. Such an assessment could result in impairment losses.

The Company performs its annual goodwill impairment testing during the fourth quarter at the reporting unit level which is defined as the operating segment or one level below the operating segment. One level below the operating segment, or component, is a business in which discrete financial information is available and regularly reviewed by segment management. The Company aggregates certain components into reporting units based on economic similarities. The Company has seven reporting units, of which one reporting unit has no goodwill and is reported within the held-for-sale disposal group.

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For purposes of goodwill impairment testing, the Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including reporting unit or asset specific operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of a reporting unit or asset is less than the respective carrying amount, including goodwill. 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 the 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. The Company determines fair values for each of the reporting units using a combination of the income approach and market approach.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company 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, projected margins, discount rates, tax rates, and terminal values. These key assumptions are determined through evaluation of the Company as a whole, underlying business fundamentals and industry risk. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. 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"). Selected peer sets are based on close competitors, publicly traded companies and reviews of analysts' reports, public filings, and industry research. In selecting the EBIT/EBITDA multiples and determining the fair value, the Company considers the size, growth, and profitability of each reporting unit versus the relevant guideline public companies. When applicable, third party purchase offers may be utilized to measure fair value.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods.

In the fourth quarter of 2021, the Company performed its annual goodwill impairment testing by applying the qualitative assessment to all 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.

As part of the 2021 Segment Realignment, the Company assessed and re-defined certain reporting units effective February 1, 2021, 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.

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 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. 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. Fair value of the asset group is determined using a combination of a discounted cash flow model and/or market approach. Long-lived assets to be disposed of by sale, if material, are classified as held for sale and reported at the lower of carrying amount or fair value less cost to sell, and depreciation is ceased. Long-lived assets to be disposed of other than by sale are classified as held and used until they are disposed of. Depreciation is recognized over the remaining useful life of the assets.

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Valuation of Acquired Intangible Assets

The Company engaged an independent third-party valuation specialist to assist with the allocation of the total purchase price for the acquisition of Laird Performance Materials 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, the royalty rates, 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 Laird Performance Materials management. For further information see Note 3 to the Consolidated Financial Statements.

LONG-TERM EMPLOYEE BENEFITS

The Company has various obligations to its employees and retirees. The Company maintains retirement-related programs in many countries that have a long-term impact on the Company's earnings and cash flows. These plans are typically defined benefit pension plans. The Company has a few medical, dental and life insurance benefits for employees, pensioners and survivors and for employees (other post-employment benefits or "OPEB" plans).

Pension coverage for employees of the Company's non-U.S. consolidated subsidiaries is provided, to the extent deemed appropriate, through separate plans. The Company regularly explores alternative solutions to meet its global pension obligations in the most cost-effective manner possible as demographics, life expectancy and country-specific pension funding rules change. Where permitted by applicable law, the Company reserves the right to change, modify or discontinue its plans that provide pension, medical, dental and life insurance. Benefits under defined benefit pension plans are based primarily on years of service and employees' pay near retirement.

Pension benefits are paid primarily from trust funds established to comply with applicable laws and regulations of the sovereign country in which the pension plan operates. Unless required by law, the Company does not make contributions that are in excess of tax-deductible limits. The actuarial assumptions and procedures utilized are reviewed periodically by the plans' actuaries to provide reasonable assurance that there will be adequate funds for the payment of benefits. Thus, there is not necessarily a direct correlation between pension funding and pension expense. In general, however, improvements in plans' funded status tends to moderate subsequent funding needs.

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 $497 million to its funded pension plans for the year ended December 31, 2019.

The Company does maintain one U.S. pension benefit plan. This plan is a separate unfunded plan and these benefits are paid to employees from operating cash flows. The Company's remaining pension plans with no plan assets are paid from operating cash flows. The Company made benefit payments of $60 million, $73 million, and $72 million to its unfunded plans, including OPEB plans, for the years ended December 31, 2021, December 31, 2020, and December 31, 2019, respectively.

In 2022, the Company expects to contribute approximately $90 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 following table summarizes the extent to which the Company's income for the years ended December 31, 2021, December 31, 2020, and December 31, 2019 was affected by pre-tax charges related to long-term employee benefits:

The above charges (benefit) for pension and OPEB are determined as of the beginning of each period. 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 2022, long term employee benefit expense from continuing operations is not expected to change materially as compared to 2021.

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ENVIRONMENTAL MATTERS

The Company operates global manufacturing, product handling and distribution 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 includes initiatives to reduce air emissions, minimize the generation of hazardous waste, decrease the volume of water use and discharges, increase the efficiency of energy use, and reduce the generation of persistent, bioaccumulative and toxic materials. 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”). The CTSO role was created specifically for DuPont to capitalize on the intrinsic link between sustainability and innovation in the Company’s operating model. The CTSO reports directly to the CEO, and routinely engages the Environmental, Health, Safety & Sustainability (EHS&S) Committee of the Board of Directors on matters of sustainability. DuPont’s sustainability initiatives and strategy are discussed further in its 2021 Sustainability Report, which is available under Sustainability in the "About Us" section of its website; 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. 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. Annual expenditures in the near term are not expected to vary significantly from the range of such expenditures experienced in the past few years. Longer term, expenditures are subject to considerable uncertainty and may fluctuate significantly.

Climate Change

The Company believes that climate change is an important global environmental issue that presents risks and opportunities. 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 plans to include 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 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.

Public policies may bring higher operating costs as well as greater revenue and margin opportunities. Legislative efforts to control or limit GHG emissions could affect the Company's energy source and supply choices as well as increase the cost of energy and raw materials derived from fossil fuels. Such efforts are also anticipated to provide the business community with greater certainty for the regulatory future, help guide investment decisions, and drive growth in demand for low-carbon and energy-efficient products, technologies, and services. Similarly, demand is expected to grow for products that facilitate adaptation to a changing climate. However, the current unsettled policy environment in the U.S., where many company facilities are located, adds an element of uncertainty to business decisions, particularly those relating to long-term capital investments.

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In addition, significant differences in regional or national approaches could present challenges in a global marketplace. An effective global climate policy framework will help drive the market changes that are needed to stimulate and efficiently deploy new innovations in science and technology, while maintaining open and competitive global markets.

Environmental Operating Costs

As a result of its operations, the Company incurs costs for pollution abatement activities including waste collection and disposal, installation and maintenance of air pollution controls and wastewater treatment, emissions testing and monitoring, and obtaining permits. The Company also incurs costs related to environmental related research and development activities including environmental field and treatment studies as well as toxicity and degradation testing to evaluate the environmental impact of products and raw materials.

Environmental Remediation

The Company has directly incurred environmental remediation costs of $14 million, $6 million, and $28 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Changes in the remediation accrual balance are summarized below:

1.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 Notes 4 and 16 to the Consolidated Financial Statements. This is not inclusive of the accrual of $116 million related to eligible PFAS costs associated with the MOU.

Considerable uncertainty exists with respect to environmental remediation costs, and, under adverse changes in circumstances, the potential liability may range up to $166 million above the amount accrued as of December 31, 2021. However, based on existing facts and circumstances, management does not believe that any loss, in excess of amounts accrued, related to remediation activities at any individual site will have a material impact on the financial position, liquidity or results of operations of the Company.

Pursuant to the DWDP Separation and Distribution Agreement and the Letter Agreement discussed in Notes 4 and 16 to the Consolidated Financial Statements, the Company indemnifies Dow and Corteva for certain environmental matters. The Company has recorded an indemnification liability of $46 million corresponding to the Company's accrual balance related to these matters at December 31, 2021. The indemnification liability is included in the total remediation accrual liability of $89 million.

Environmental Capital Expenditures

Capital expenditures for environmental projects, either required by law or necessary to meet the Company’s internal environmental goals, were $40 million for the year ended December 31, 2021. This amount includes $11 million of expenditures used towards the Company's climate change initiatives. The Company currently estimates expenditures for environmental-related capital projects to be approximately $48 million in 2022, with $19 million estimated for climate change initiatives.

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