EIDP, Inc.: Form 10-Q for the period ended Mar 31, 2017

Cautionary Statements About Forward-Looking Statements

This report contains forward-looking statements which may be identified by their use of words like “plans,” “expects,” “will,” “anticipates,” “believes,” “intends,” “projects,” “estimates” or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the company's strategy for growth, product development, regulatory approval, market position, anticipated benefits of recent acquisitions, timing of anticipated benefits from restructuring actions, outcome of contingencies, such as litigation and environmental matters, expenditures, and financial results, Forward-looking statements including statements about the consummation of and expected benefits, including synergies, from the planned merger with The Dow Chemical Company (Dow) (the Merger Transaction) and the proposed separation of the combined company’s (DowDuPont) agriculture business, specialty products business and material science business through a series of tax-efficient transactions (the Intended Business Separations), and the FMC Transactions, as defined below, in which, among other things, FMC will acquire the Divested Ag Business, as defined below and DuPont will acquire the Acquired H&N Business, as defined below, and the anticipated benefits thereof. These and other forward-looking statements, including the failure to consummate the Merger Transaction or FMC Transactions or to make or take any filing or other action required to consummate such transactions in a timely manner or at all, are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed in any forward-looking statements.

Forward-looking statements are based on certain assumptions and expectations of future events which may not be accurate or realized. Forward-looking statements also involve risks and uncertainties, many of which are beyond the company's control. While the lists of factors presented here and in the Registration Statement are considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on DuPont’s consolidated financial condition, results of operations, credit rating or liquidity. Some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements are:

• Risks related to the DowDuPont Merger, the Intended Business Separations and the FMC Transactions including, but not limited to, (i) the completion of the Merger Transaction and the FMC Transactions on anticipated terms and timing, including obtaining regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the new combined company’s operations or the Acquired H&N Business and other conditions to the completion of the Merger Transaction and the FMC Transactions, (ii) the possibility that the Merger Transaction and the FMC Transactions may not close, including because the various approvals, authorizations and declarations of non-objections from certain regulatory and governmental authorities with respect to either the Merger Transaction or the FMC Transactions may not be obtained, on a timely basis or otherwise, including that these regulatory or governmental authorities may not approve of FMC as an acceptable purchaser of the Divested Ag Business in connection with the FMC Transactions or may impose conditions on the granting of the various approvals, authorizations and declarations of non-objections, including requiring the respective Dow, DuPont and FMC businesses, including the Acquired H&N Business (in the case of DuPont) and the Divested Ag Business (in the case of FMC), to divest certain assets if necessary to obtain certain regulatory approvals or otherwise limiting the ability of the combined company to integrate parts of the Dow and DuPont businesses and/or the DuPont and Health and Nutrition businesses, (iii) the ability of DuPont to integrate the Acquired H&N Business successfully and to achieve anticipated synergies, (iv) potential litigation or regulatory actions relating to the Merger Transaction or the FMC Transactions that could be instituted against DuPont or its directors, (v) the risk that disruptions from the Merger Transaction or the FMC Transactions will harm DuPont’s business, including current plans and operations, (vi) the ability of DuPont to retain and hire key personnel, (vii) potential adverse reactions or changes to business relationships resulting from the announcement or completion of the Merger Transaction or the FMC Transactions, (viii) uncertainty as to the long-term value of DowDuPont common stock, (ix) continued availability of capital and financing and rating agency actions, (x) legislative, regulatory and economic developments, (xi) potential business uncertainty, including changes to existing business relationships, during the pendency of the Merger Transaction or the FMC Transactions that could affect DuPont’s financial performance, (xii) certain restrictions during the pendency of the Merger Transaction or the FMC Transactions that may impact DuPont’s ability to pursue certain business opportunities or strategic transactions and (xiii) unpredictability and severity of catastrophic events, including, but not limited to, acts of terrorism or outbreak of war or hostilities, as well as management’s response to any of the aforementioned factors. These risks, as well as other risks associated with the Merger Transaction or the FMC Transactions, are more fully discussed in (1) DuPont’s most recently filed Form 10-K, 10-Q and 8-K reports, (2) DuPont’s subsequently filed Form 10-K and 10-Q

reports and (3) the joint proxy statement/prospectus included in the Registration Statement filed with the SEC in connection with the Merger Transaction;

• Volatility in energy and raw material prices;
• Failure to develop and market new products and optimally manage product life cycles;
• Outcome of significant litigation and environmental matters, including those related to divested businesses, including realization of associated indemnification assets, if any;
• Failure to appropriately manage process safety and product stewardship issues;
• Ability to obtain and maintain regulatory approval for its products especially in the Agriculture segment;
• Failure to realize all of the expected benefits from cost and productivity initiatives to the extent and as anticipated;
• Effect of changes in tax, environmental and other laws and regulations or political conditions in the United States of America (U.S.) and other countries in which the company operates;
• Conditions in the global economy and global capital markets, including economic factors such as inflation, deflation, fluctuation in currency rates, interest rates and commodity prices;
• Failure to appropriately respond to market acceptance, government rules, regulations and policies affecting products based on biotechnology;
• Impact of business disruptions, including supply disruptions, and security threats, regardless of cause, including acts of sabotage, cyber-attacks, terrorism or war, natural disasters and weather events and patterns which could affect demand as well as availability of product, particularly in the Agriculture segment;
• Ability to discover, develop and protect new technologies and enforce the company's intellectual property rights; and
• Successful integration of acquired businesses and separation of underperforming or non-strategic assets or businesses.

For further discussion of some of the important factors that could cause the company's actual results to differ materially from those projected in any such forward-looking statements, see the Risk Factors discussion set forth under Part I, Item 1A of the company's 2016 Annual Report.

Recent Developments

DuPont Dow Merger of Equals

On December 11, 2015, DuPont and Dow announced entry into an Agreement and Plan of Merger, as amended on March 31, 2017 (the Merger Agreement), under which the companies will combine in an all-stock merger of equals (the Merger Transaction) subject to satisfaction of customary closing conditions, including receipt of regulatory approval. The combined company will be named DowDuPont Inc. (DowDuPont). Following the consummation of the Merger Transaction, DuPont and Dow intend to pursue, subject to the receipt of approval by the Board of Directors of DowDuPont, the separation of the combined company’s agriculture business, specialty products business and material science business through a series of tax-efficient transactions (collectively, the Intended Business Separations).

On March 27, 2017, DuPont and Dow announced that the European Commission (EC) granted conditional regulatory clearance in Europe for the Merger Transaction conditional on DuPont and Dow fulfilling certain commitments. DuPont is required to sell certain assets related to its Crop Protection business and research and development (R&D) organization, specifically the company’s Cereal Broadleaf Herbicides and Chewing Insecticides portfolios, including Rynaxypyr®, Cyazypyr® and Indoxacarb, as well as the Crop Protection R&D pipeline and organization, excluding seed treatment, nematicides, and late-stage R&D programs. The company will continue to develop and bring to market its late-stage Crop Protection R&D programs and retain the personnel needed to support the Crop Protection marketed products and R&D programs not required to be divested per the EC’s conditional approval.

On March 31, 2017, DuPont entered into a definitive agreement (the FMC Transaction Agreement) with FMC Corporation (FMC). Under the FMC Transaction Agreement, FMC will acquire the Crop Protection business and R&D assets that DuPont is required to divest in order to obtain EC approval of the Merger Transaction as described above, (the Divested Ag Business), and DuPont has agreed to acquire certain assets relating to FMC’s Health and Nutrition segment, excluding its Omega-3 products, (the Acquired H&N Business) (collectively, the FMC Transactions). Additionally, FMC will pay DuPont $1.2 billion in cash, subject to certain adjustments as set forth in the FMC Transaction Agreement, which reflects the difference in value between the Divested Ag Business and the Acquired H&N Business. DuPont will retain accounts receivable and accounts payable associated with the Divested Ag Business, with an expected net value of $425 million at closing. The assets associated with the Divested Ag Business generated revenues in 2016 of about $1.4 billion. The FMC Health and Nutrition business being acquired, which includes texturants as food ingredients and pharmaceutical excipients, generated approximately $700 million in revenues in 2016.

The divestiture will satisfy DuPont’s commitments to the EC in connection with its conditional regulatory clearance of the merger with Dow. The FMC Transaction is expected to close in the fourth quarter of 2017, subject to the closing of the Merger Transaction, in addition to customary closing conditions, including regulatory approval of the FMC Transactions.

To accommodate the transaction with FMC, DuPont and Dow have amended the Merger Agreement to extend the “Outside Date” to August 31, 2017, and the companies anticipate closing of the merger to occur no sooner than August 1, 2017, subject to satisfaction of customary closing conditions, including receipt of regulatory approvals. The companies still expect the Intended Business Separations to occur within 18 months after closing the Merger Transaction. In addition, Dow and DuPont now expect the first step in the Intended Business Separations process will be the spin-off of the post-merger material science business. About $3 billion in aggregate cost synergies are currently expected to be realized on a run-rate basis by the combined businesses within 24 months after consummation of the Merger Transaction, with approximately $1.6 billion from the material science business; approximately $1 billion from the agriculture business; and approximately $0.4 billion from the specialty products business.

In connection with obtaining regulatory clearance for the Merger Transaction, on February 2, 2017, Dow announced that it will divest its global Ethylene Acrylic Acid (EAA) copolymers and ionomers business to SK Global Chemical Co., LTD. Consummation of the divestiture is conditioned on closing the Merger Transaction and regulatory clearance for the divestiture as other customary closing conditions.

See Note 2 to the interim Consolidated Financial Statements for additional information.

Settlement of PFOA MDL

As previously reported, approximately 3,550 lawsuits have been filed in various federal and state courts in Ohio and West Virginia alleging personal injury from exposure to perfluorooctanoic acid and its salts, including the ammonium salt (PFOA), in drinking water as a result of the historical manufacture or use of PFOA at the Washington Works plant outside Parkersburg, West Virginia. That plant is now owned and/or operated by The Chemours Company (Chemours). These personal injury lawsuits were consolidated in multi-district litigation in the United States District Court for the Southern District of Ohio (the MDL). In February 2017, DuPont and plaintiffs’ counsel agreed to a settlement in principle of the MDL; the parties executed the definitive settlement agreements in March 2017. The total settlement amount is $670.7 million in cash, half of which will be paid by Chemours and half paid by DuPont. In exchange for that payment, DuPont and Chemours will receive a complete release of all claims by the settling plaintiffs. The settlement was entered into solely by way of compromise and is not in any way an admission of liability or fault by DuPont or Chemours.

As a result at March 31, 2017, the company increased the accrual related to the MDL to $670.7 million and the indemnification asset for indemnification by Chemours to $335 million. The company recorded a charge of $335 million ($224 million net of tax) to loss from discontinued operations in the company's interim Consolidated Income Statement for the three months ended March 31, 2017 for the remainder of the settlement not subject to indemnification by Chemours. See Note 11 to the interim Consolidated Financial Statements for additional information.

2017 Restructuring Program

In the first quarter 2017, DuPont committed to take actions to improve plant productivity and better positions its businesses for productivity and growth before and after the anticipated closing of the Merger Transaction. In connection with these actions, the company expects to incur pre-tax charges of $326 million, comprised of $293 million of asset-related charges and $33 million in severance and related benefit costs (the 2017 restructuring program). The charges primarily relate to the closure of the Protection Solutions segment's Cooper River manufacturing site located near Charleston, South Carolina. The actions associated with this program are expected to be substantially complete by the end of 2017. The company anticipates including savings associated with these actions against the targeted $3 billion of cost synergies associated with the Merger Transaction.

Of the $326 million of pre-tax charges discussed above, $152 million was recognized during the three months ended March 31, 2017 in employee separation / asset related charges, net, in the company's interim Consolidated Income Statement, consisting of $33 million of severance and related benefit costs and $119 million of asset-related charges. The asset-related charges mainly consist of accelerated depreciation associated with the closure of the Cooper River manufacturing site. The remainder of the charges relate to accelerated depreciation, the majority of which will be recognized in the second quarter.

Sale of Food Safety Diagnostic Business

In December 2016, the company announced an agreement to sell its global food safety diagnostic business, a part of the Nutrition & Health segment, to Hygiena LLC. The transaction closed in February 2017 and resulted in a pre-tax gain of $162 million ($86 million net of tax). The gain was recorded in other income, net in the company's interim Consolidated Income Statements for the three months ended March 31, 2017.

Results of Operations

Overview

The following is a summary of the results of continuing operations for the three months ended March 31, 2017:

• Net sales were $7.7 billion, 5 percent above the same period last year, reflecting a 4 percent volume increase and 1 percent higher local prices. Sales grew in most segments, led by Agriculture, Performance Materials, and Electronics & Communications.
• Segment operating earnings increased in all reportable segments driven by higher volumes. Segment operating margins expanded in most reportable segments.
• First quarter results include pre-tax charges of $322 million, comprised of $170 million of costs in connection with the planned merger with Dow and the Intended Business Separations, including costs relating to integration and separation, and $152 million of restructuring charges, partially offset by a $162 million gain from the sale of the global food safety diagnostics business. First quarter results in prior year included a pre-tax gain of $369 million for the sale of the DuPont (Shenzhen) Manufacturing Limited entity.
• Income from continuing operations after taxes was $1.3 billion versus $1.2 billion for the same period in the prior year.

Net Sales

Net sales for the three months ended March 31, 2017 were $7.7 billion, up 5 percent versus $7.4 billion in the prior year reflecting 4 percent higher volume, and a 1 percent increase in local prices. Worldwide sales volume increased 4 percent, largely driven by a 16 percent volume increase in Asia Pacific where Performance Materials and Electronics & Communications had significant growth. Volume increased 8 percent in EMEA, driven by increased seed sales in Eastern Europe, and higher sales in the Performance Materials and Protection Solutions segments. The increase in local price principally reflects higher seed prices, primarily in Latin America, partly offset by a decline in the Protection Solutions segment. Net sales in developing markets, which include China, India, and countries in Southeast Asia, Latin America, Eastern and Central Europe, Middle East, and Africa, were $2.4 billion, up 15 percent, driven by higher volume. Volume largely reflects strong growth in Electronics & Communications and Performance Materials in developing Asia Pacific, and Agriculture in developing EMEA. Sales in developing markets represent 31 percent of total sales versus 29 percent last year.

The table below shows a regional breakdown of net sales based on location of customers and percentage variances from the prior year:

Cost of Goods Sold (COGS)

COGS for the first quarter 2017 increased 3 percent to $4.4 billion from $4.2 billion in the prior year. The increase principally reflects 4 percent higher sales volume. COGS as a percentage of sales decreased to 56 percent from 57 percent in the prior year, reflecting higher selling prices, lower unit costs and favorable mix.

Other Operating Charges

Other operating charges were $204 million for the first quarter of 2017 versus $185 million in the prior year, principally reflecting the absence of a $23 million prior-year benefit from a reduction in the estimated liability related to Imprelis® herbicide claims.

Selling, General and Administrative Expenses (SG&A)

SG&A expenses were $1.3 billion for the first quarter of 2017 versus $1.1 billion in the prior year, with the increase primarily driven by costs in connection with the planned merger with Dow and related activities and increases in commission expense, partially offset by cost savings. During the three months ended March 31, 2017 and 2016, the company incurred $170 million and $24 million, respectively, of transaction costs associated with the planned merger with Dow. SG&A was approximately 16 percent and 15 percent of net sales for the three months ended March 31, 2017 and 2016, respectively.

Research and Development Expense (R&D)

R&D expense was relatively flat at $416 million and $418 million in the first quarter 2017 and 2016, respectively. R&D was approximately 5 percent and 6 percent of net sales for the three months ended March 31, 2017 and 2016, respectively.

Other Income, Net

Other income, net totaled $306 million for the first quarter of 2017 compared to $372 million in the prior year, a decrease of $66 million, primarily due to the change in net gains on sales of businesses and other assets period over period, partially offset with a decrease in pre-tax exchange losses and the reversal of accrued interest related to unrecognized tax benefits. The first quarter 2017 included pre-tax gain of $162 million associated with the sale of the global food safety diagnostics business. The first quarter 2016 included a pre-tax gain of $369 million associated with the sale of DuPont (Shenzhen) Manufacturing Limited entity.

See Note 5 to the interim Consolidated Financial Statements for additional information.

Interest Expense

Interest expense totaled $84 million in the first quarter 2017 as compared to $92 million in the prior year, The $8 million decrease was primarily due to lower interest on long-term debt, partially offset by interest on commercial paper.

Employee Separation / Asset Related Charges, Net

Employee separation / asset related charges, net totaled $152 million versus $77 million in the prior year. The charges recorded in the first quarter 2017 related to the 2017 restructuring program. The charges in the first quarter 2016 included a $75 million charge related to the decision not to re-start the insecticide manufacturing facility at the La Porte site located in La Porte, Texas, as well as a $2 million net restructuring charge associated with the 2016 global cost savings and restructuring plan.

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

Provision for Income Taxes on Continuing Operations

The company's effective tax rate for the first quarter 2017 was 14.3 percent as compared to 24.8 percent in 2016. The lower effective tax rate primarily relates to the absence of the unfavorable tax consequences of a gain on the sale of an entity in the first quarter 2016, tax benefits related to a reduction in the company’s unrecognized tax benefits due to the closure of various tax statutes of limitations, as well as increased tax benefits on costs associated with the planned merger with Dow and employee separation / asset related charges. Net favorable tax consequences of the adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting, as well as changes in accruals for certain prior year tax positions, also contributed to the lower effective tax rate. Those tax benefits were partially offset by the unfavorable tax consequences of non-deductible goodwill associated with the gain on the sale of the company’s global food safety diagnostics business in the first quarter 2017.

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

Recent Accounting Pronouncements

See Note 1 to the interim Consolidated Financial Statements for a description of recent accounting pronouncements.

Segment Reviews

Summarized below are comments on individual segment net sales and operating earnings for the three month period ended March 31, 2017 compared with the same period in 2016. Segment operating earnings is defined as income (loss) from continuing operations before income taxes excluding significant pre-tax benefits (charges), non-operating pension and other post employment employee benefit costs, exchange gains (losses), corporate expenses and interest. Non-operating pension and other post employment benefit costs includes all of the components of net periodic benefit costs from continuing operations with the exception of the service cost component. See Note 15 to the interim Consolidated Financial Statements for details related to significant pre-tax benefits (charges) excluded from segment operating earnings. All references to prices are based on local price unless otherwise specified.

A reconciliation of segment operating earnings to income from continuing operations before income taxes for the three month periods ended March 31, 2017 and 2016 is included in Note 15 to the interim Consolidated Financial Statements.

The following table summarizes first quarter 2017 segment net sales and related variances versus prior year:

Agriculture - First quarter 2017 segment net sales of $3,928 million increased $142 million, or 4 percent, on price and volume growth. A benefit from currency was offset by portfolio changes. Local pricing growth was realized by double-digit increases in Brazil, driven by the continued expansion of Pioneer® brand hybrids with Leptra® insect protection, the launch of Pioneer® brand soybeans with Roundup Ready 2 Xtend®1 technology, and increased sunflower seed sales in Europe. Volume growth was driven by the shift in timing of seed deliveries, which benefited first quarter sales by approximately $140 million, insecticide growth and increased sunflower seed sales. These increases were partially offset by lower North America corn seed volumes impacted by an expected decrease in corn acreage. Operating earnings of $1,236 million increased $135 million, or 12 percent, on price and volume growth.

Electronics & Communications - First quarter 2017 segment net sales of $510 million increased $58 million, or 13 percent, as increased volume growth was partially offset by the negative impact from currency and portfolio changes. Volume growth was driven by increased demand in consumer electronics and semiconductor markets, as well as stronger photovoltaic material sales. Operating earnings of $89 million increased $30 million, or 51 percent, on volume growth and the absence of a $16 million prior year litigation expense. Operating earnings included a gain on the sale of a business offset by costs associated with a legal matter.

Industrial Biosciences - First quarter 2017 segment net sales of $368 million increased $16 million, or 5 percent, due to growth in volume and price, partially offset by the negative impact of currency. Volume growth reflected increased demand for biomaterials in carpeting and apparel, and bioactives in the grain processing market, partially offset by declines in clean technologies. Operating earnings of $75 million increased $12 million, or 19 percent, on volume growth, improved joint venture performance and cost savings, partially offset by declines in clean technologies.

Nutrition & Health - First quarter 2017 segment net sales of $789 million decreased $12 million, or 1 percent, primarily due to the negative impact of currency. Volume and price growth in probiotics and emulsifiers was offset by declines in protein solutions and systems and texturants. Operating earnings of $121 million increased $17 million, or 16 percent, on plant productivity and mix enrichment.

1 Registered trademark of Monsanto Technology LLC used under license.

Performance Materials - First quarter 2017 segment net sales of $1,368 million increased $119 million, or 10 percent, as volume growth was partially offset by the negative impact of currency. Volume growth was driven by increased demand for polymers in automotive markets, particularly in China and Europe, coupled with specialty copolymers growth in packaging and timing benefits from the second quarter 2017. Overall volume growth was constrained by lower ethylene sales as the business prepares for a planned turnaround of the ethylene cracker in the second quarter. Operating earnings of $355 million increased $82 million, or 30 percent, driven by higher volumes and cost savings.

Protection Solutions - First quarter 2017 segment net sales of $747 million increased $18 million, or 2 percent, as increased volume was partially offset by lower local price and the negative impact of currency. Volume growth reflected improved demand for Nomex® thermal-resistant fiber in oil and gas and mass transit markets, partially offset by declines in Kevlar® high-strength material, Tyvek® protective material, and surfaces. Operating earnings of $177 million increased $1 million, or 1 percent, as volume growth and cost savings offset higher raw material costs, unfavorable mix and lower plant productivity.

Liquidity & Capital Resources

Information related to the company's liquidity and capital resources can be found in the company's 2016 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Liquidity and Capital Resources. Discussion below provides the updates to this information for the three months ended March 31, 2017.

(Dollars in millions)

The company's cash, cash equivalents and marketable securities at March 31, 2017 and December 31, 2016 are $5.9 billion and $6.0 billion, respectively.

Total debt as of March 31, 2017 was $10.4 billion, a $1.9 billion increase from $8.5 billion as of December 31, 2016, due primarily to increased borrowings from commercial paper and the Repurchase Facility used to fund seasonal working capital requirements.

In March 2016, the company entered into a credit agreement that provides for a three-year, senior unsecured term loan facility in the aggregate principal amount of $4.5 billion (as amended from time to time, the Term Loan Facility). In the first quarter of 2017, the Term Loan Facility was amended to extend the date on which the commitment to lend terminates. As a result, DuPont may make up to seven term loan borrowings through July 27, 2018; amounts repaid or prepaid are not available for subsequent borrowings. The Term Loan Facility matures in March 2019 at which time all outstanding borrowings, including accrued but unpaid interest, become immediately due and payable. As of March 31, 2017, the company had borrowed $500 million and had unused commitments of $4.0 billion under the Term Loan Facility. DuPont may elect to borrow under the Term Loan Facility to meet its short-term liquidity needs.

The Term Loan Facility and the amended revolving credit facility contain customary representations and warranties, affirmative and negative covenants, and events of default that are typical for companies with similar credit ratings and generally consistent with those applicable to DuPont’s long-term public debt. The Term Loan Facility and the amended revolving credit facility contain a financial covenant requiring that the ratio of Total Indebtedness to Total Capitalization for DuPont and its consolidated subsidiaries not exceed 0.6667. At March 31, 2017, the company was in compliance with this financial covenant.

In January 2017, in line with seasonal agricultural working capital requirements, the company entered into a committed receivable repurchase agreement of up to $1.3 billion (the Repurchase Facility) that expires on November 30, 2017. Under the Repurchase Facility, the company may sell a portfolio of available and eligible outstanding customer notes receivables within the Agriculture segment to participating institutions and simultaneously agree to repurchase at a future date. See further discussion of this facility in Note 10 to the interim Consolidated Financial Statements.

The company has access to approximately $8.9 billion in unused credit lines, an increase of $1.0 billion from $7.9 billion as of December 31, 2016. The increase was primarily due to the Repurchase Facility discussed above. These unused credit lines provide support to meet the company's short-term liquidity needs and for general corporate purposes which may include funding of discretionary and non-discretionary contributions to certain benefit plans, severance plans in the event of a change in control, repayment and refinancing of debt, working capital, capital expenditures and repurchases and redemptions of securities.

In 2017, the company anticipated making contributions of about $230 million to the principal U.S. pension plan. The company is evaluating potential, additional discretionary contributions to this plan that could result in a significant reduction to the underfunded benefit obligation, a portion of which is expected to be funded through proceeds from a debt offering. Any additional contribution above the $230 million depends on various factors including market conditions, access to capital markets and tax deductible limits.

Summary of Cash Flows

Cash used for operating activities was $1.6 billion for the three months ended March 31, 2017 compared to $1.8 billion during the same period in 2016. The $0.2 billion decrease in cash used for operating activities was primarily due to the absence of the prior year prepayment to Chemours of $190 million and lower tax payments, partially offset by transaction costs associated with the merger and the Intended Business Separations, including costs relating to integration and separation planning.

Cash used for investing activities was $1.3 billion for the three months ended March 31, 2017 compared to $27 million provided by investing activities during the same period in 2016. The increase in cash used for investing activities was primarily due to increased net purchases of marketable securities, partially offset by proceeds from sales of businesses and other assets.

Cash provided by financing activities was $1.6 billion for the three months ended March 31, 2017, compared to $0.6 billion during the same period last year. The $1.0 billion increase to cash provided by financing activities was primarily due to increased short-term borrowings in commercial paper for seasonal working capital requirements.

In January 2017, the Board of Directors declared a first quarter common stock dividend of $0.38 per share. The first quarter dividend payments to shareholders during the three months ended March 31, 2017 totaled $0.3 billion.

Guarantees and Off-Balance Sheet Arrangements

For detailed information related to Guarantees, Indemnifications, and Obligations for Equity Affiliates and Others, see the company's 2016 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Off- Balance Sheet Arrangements, and Note 11 to the interim Consolidated Financial Statements.

Contractual Obligations

Information related to the company's contractual obligations at December 31, 2016 can be found in the company's 2016 Annual Report, Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, Off-Balance Sheet Arrangements.

See Note 13 to the interim Consolidated Financial Statements. See also Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk, of the company's 2016 Annual Report for information on the company's utilization of financial instruments and an analysis of the sensitivity of these instruments.

a) Evaluation of Disclosure Controls and Procedures

The company maintains a system of disclosure controls and procedures to give reasonable assurance that information required to be disclosed in the company's reports filed or submitted under the Securities Exchange Act of 1934 (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. These controls and procedures also give reasonable assurance that information required to be disclosed in such reports is accumulated and communicated to management to allow timely decisions regarding required disclosures.

As of March 31, 2017, the company's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), together with management, conducted an evaluation of the effectiveness of the company's disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, the CEO and CFO concluded that these disclosure controls and procedures are effective.

b) Changes in Internal Control over Financial Reporting

There has been no change in the company's internal control over financial reporting that occurred during the quarter ended March 31, 2017 that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting.

The following risk factor presented in the company's risk factors discussed in Part I, Item 1A, Risk Factors, in the company's 2016 Annual Report is updated solely to reflect Amendment No. 1 to the Merger Agreement which, among other things, extends the Merger Agreement to August 31, 2017.

The Merger Agreement may be terminated in accordance with its terms and the Mergers may not be completed.

The completion of the Mergers is subject to the satisfaction or waiver of a number of conditions. Those conditions include: (i) the receipt of certain domestic and foreign regulatory approvals under competition laws, including the termination or expiration of the waiting period under the HSR Act; (ii) the absence of certain governmental restraints or prohibitions preventing completion of the DuPont Merger or the Dow Merger; (iii) the approval of the shares of DowDuPont Common Stock to be issued to DuPont stockholders and Dow stockholders for listing on the NYSE; (iv) the reasonable determination by DuPont and Dow that neither the DuPont Merger nor the Dow Merger will constitute an acquisition of a 50 percent or greater interest in Dow or DuPont, under Section 355(e) of the Code; (v) the truth and correctness of the representations and warranties made by both parties (generally subject to certain “materiality” and “material adverse effect” qualifiers); (vi) the performance by DuPont and Dow of their respective obligations under the Merger Agreement in all material respects; and (vii) the receipt by both parties of legal opinions from their respective tax counsels with respect to the tax-free nature of each of the Mergers.

These conditions to the closing may not be fulfilled and, accordingly, the Mergers may not be completed. In addition, if the Mergers are not completed by August 31, 2017, either DuPont or Dow may choose not to proceed with the Mergers, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the consummation of the Mergers. In addition, DuPont or Dow may elect to terminate the Merger Agreement in certain other circumstances. If the Merger Agreement is terminated, Dow and DuPont may incur substantial fees in connection with termination of the Merger Agreement and will not recognize the anticipated benefits of the Mergers.