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Discontinued Operations and Disposal Groups | 9 Months Ended
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Sep. 30, 2023
Discontinued Operations and Disposal Groups [Abstract] |
Assets and Liabilities Held For Sale | BUSINESS DIVESTITURES Divestiture of the Flavor Specialty Ingredients Business During the fourth quarter of 2022, the Company announced it had entered into an agreement to sell its Flavor Specialty Ingredients (“FSI”) business, which was a part of the Scent segment. The Company completed the divestiture on August 1, 2023, and received cash proceeds of approximately $190 million, which included $1 million related to the delayed transfer of the control of specific assets and liabilities of non-U.S. jurisdiction business. Concurrent with the completion of the business divestiture, the Company entered into a supply agreement arrangement with the buyer. Based on the terms of the supply agreement, an adjustment of $4 million was made against the fair value of sale consideration. In addition, approximately $15 million of proceeds were held in escrow and will be released upon satisfaction of certain conditions. The proceeds held in escrow were presented in Prepaid expenses and other current assets on the Consolidated Balance Sheets. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances. The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 190 |
Amount held in escrow | 15 |
Advance receipt for business to be transferred | (1) |
Direct costs to sell | (5) |
Proceeds attributable to supply agreement | (4) |
Fair value of sale consideration | $ | 195 |
The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration adjusted by the direct costs to sell, advance receipt for business to be transferred, amount held in escrow and the cash transferred to the buyer as part of the transaction. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
(DOLLARS IN MILLIONS) |
Fair value of sale consideration | $ | 195 |
Direct costs to sell | 5 |
Advance receipt for business to be transferred | 1 |
Amount held in escrow | (15) |
Cash transferred to the buyer | (1) |
Net proceeds received from business divestiture | $ | 185 |
The carrying amount of net assets associated with the business unit, adjusted for currency translation adjustment, was approximately $205 million. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS) | August 1, 2023
Assets |
Cash and cash equivalents | $ | 1 |
Trade receivables, net | 13 |
Inventories | 45 |
Property, plant and equipment, net | 29 |
Goodwill | 44 |
Other intangible assets, net | 73 |
Other assets | 10 |
Total assets | 215 |
Liabilities |
Accounts payable | (4) |
Deferred tax liability | (1) |
Other liabilities | (6) |
Total liabilities | (11) |
Equity |
Accumulated other comprehensive income - currency translation adjustment | 1 |
Total equity | 1 |
Carrying value of net asset (adjusted for currency translation adjustment) | $ | 205 |
As a result of the business divestiture, the Company recognized a pre-tax loss of approximately $10 million, subject to certain post-closing adjustments, presented in Other income, net on the Consolidated Statements of Income (Loss) and Comprehensive Loss for the three and nine months ended September 30, 2023. The Company has also recognized income tax effects associated with the business divestiture across multiple periods. Based on preliminary estimates, the total income taxes recognized was approximately $15 million, with approximately $3 million that was recognized during the year ended December 31, 2022. Divestiture of a Portion of the Savory Solutions Business During the fourth quarter of 2022, the Company announced it had entered into an agreement to sell a portion of its Savory Solutions business, which was part of the Nourish segment. The Company completed the divestiture on May 31, 2023, and received cash proceeds of approximately $840 million. In addition, a receivable of approximately $30 million was recorded which reflects the estimated future payment to be received as part of the sale consideration. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances. The following table summarizes the fair value of sale consideration received in connection with the business divestiture:
(DOLLARS IN MILLIONS) |
Cash proceeds from the buyer | $ | 840 |
Receivable from the buyer | 30 |
Direct costs to sell | (20) |
Fair value of sale consideration | $ | 850 |
The net proceeds received from the business divestiture presented under Cash flows from investing activities represent the cash portion of the sale consideration, which was determined as the fair value of sale consideration adjusted by the amount receivable from the buyer, direct costs to sell and the cash transferred to the buyer as part of the transaction. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:
(DOLLARS IN MILLIONS) |
Fair value of sale consideration | $ | 850 |
Direct costs to sell | 20 |
Receivable from the buyer | (30) |
Cash transferred to the buyer (including restricted cash) | (19) |
Net proceeds received from business divestiture | $ | 821 |
The carrying amount of net assets associated with the business unit, adjusted for currency translation and pension adjustments, was approximately $860 million. The major classes of assets and liabilities sold consisted of the following:
(DOLLARS IN MILLIONS) | May 31, 2023
Assets |
Cash and cash equivalents | $ | 15 |
Restricted cash | 4 |
Trade receivables, net | 69 |
Inventories | 116 |
Property, plant and equipment, net | 77 |
Goodwill | 317 |
Other intangible assets, net | 367 |
Right-of-use assets | 20 |
Other assets | 24 |
Total assets | 1,009 |
Liabilities |
Accounts payable | (44) |
Deferred tax liability | (92) |
Other liabilities | (54) |
Total liabilities | (190) |
Equity |
Accumulated other comprehensive income - currency translation adjustment | 42 |
Accumulated other comprehensive income - pension liability and postretirement | (1) |
Total equity | 41 |
Carrying value of net asset (adjusted for currency translation and pension adjustments) | $ | 860 |
As a result of the business divestiture, the Company recognized a pre-tax loss of approximately $10 million, subject to certain post-closing adjustments, presented in Other income, net on the Consolidated Statements of Income (Loss) and Comprehensive Loss for the nine months ended September 30, 2023. The Company has also recognized income tax effects associated with the business divestiture across multiple periods. Based on preliminary estimates, the total income taxes recognized was approximately $88 million, with approximately $72 million that was recognized during the year ended December 31, 2022. Liquidation of a Business in Russia As part of the liquidation of a business in Russia for the sale of the portion of the Savory Solutions business, the Company recognized a pre-tax loss of approximately $10 million presented in the Other income, net, and tax benefits of approximately $2 million presented in Provision for income taxes on the Consolidated Statements of Income (Loss) and Comprehensive Loss for the nine months ended September 30, 2023. Divestiture of Microbial Control The Company completed the divestiture of the Microbial Control business unit on July 1, 2022, which was acquired as part of the Company’s merger with Nutrition and Biosciences, Inc. (“N&B”), a wholly-owned subsidiary of DuPont, in 2021 (the “Merger”), and received net cash proceeds of approximately $1.169 billion. The Company also entered into transition services agreements with the buyer for providing certain general accounting, information technology and other services up to 19 months following the date of the sale for minimal consideration. The fair value of these transition services agreements was determined to be approximately $36 million, which was adjusted against the sale consideration and recognized as deferred transition services income. The transition services income under the transition services agreements for the three and nine months ended September 30, 2023 was approximately $6 million and $19 million, respectively, and for the three and nine months ended September 30, 2022 was approximately $6 million. The transition services income was recognized as a reduction to the costs incurred to provide services under the transition services agreements, which was included in Selling and administrative expenses on the Consolidated Statements of Income (Loss) and Comprehensive Loss. ASSETS AND LIABILITIES HELD FOR SALE During the third quarter of 2023, the Company announced the sale process of its Cosmetic Ingredients business within the Scent segment, and in the fourth quarter of 2023, the Company entered into an agreement to sell its Cosmetic Ingredients business. The transaction is subject to customary closing conditions and is expected to close in the first quarter of 2024. The planned sale does not constitute a strategic shift of the Company’s operations and does not have major effects on the Company’s operations and financial results; therefore, the transaction does not meet the discontinued operations criteria. The Company determined that the assets and liabilities of the business met the criteria to be presented as “held for sale.” As a result, as of September 30, 2023, such assets and liabilities were classified as held for sale and are reported on the Consolidated Balance Sheets. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for the business. The carrying value is subject to change based on developments leading up to the closing date. Included in the Company’s Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 are the following carrying amounts of the assets and liabilities held for sale:
(DOLLARS IN MILLIONS) | September 30, 2023 |  | December 31, 2022(2)
Assets |  |  |
Cash and cash equivalents | $ | 23 |  |  | $ | 52 |
Trade receivables, net | 15 |  |  | 85 |
Inventories | 19 |  |  | 157 |
Property, plant and equipment, net | 7 |  |  | 92 |
Goodwill | 267 |  |  | 348 |
Other intangible assets, net | 141 |  |  | 428 |
Operating lease right-of-use assets | 8 |  |  | 13 |
Other assets | 2 |  |  | 25 |
Total assets held-for-sale | $ | 482 |  |  | $ | 1,200 |
Liabilities |  |  |
Accounts payable | $ | 4 |  |  | $ | 56 |
Deferred tax liability(1) | 25 |  |  | 92 |
Other liabilities | 20 |  |  | 64 |
Total liabilities held-for-sale | $ | 49 |  |  | $ | 212 |
_______________________ (1)The Company is currently analyzing the tax impact of the sale transaction and has included preliminary numbers for the deferred tax liability, which are subject to further updates. (2)The amounts for December 31, 2022 represent the carrying amounts of the portion of the Savory Solutions business and FSI business that were classified as held for sale. The Company completed the divestitures of the businesses on May 31, 2023 and August 1, 2023, respectively. Refer to Note 3 for additional information.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//360/tableOfContent + Details
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