Exhibit 99.1

 

Dear DuPont Stockholder:

As previously announced, DuPont de Nemours, Inc. (“DuPont”) intends to separate its electronics business, which includes its semiconductor technologies and interconnect solutions businesses, into an independent public company, Qnity Electronics, Inc., referred to herein as “Qnity”. Completion of the spin-off will create two global companies with compelling growth opportunities: Qnity, a pure-play, global leader in electronics materials and solutions; and the future DuPont, a premier diversified industrial company.

We are pleased to inform you that on     , our board of directors approved the spin-off of our electronics business through the distribution to DuPont stockholders of all of the then issued and outstanding shares of common stock of a newly formed company, Qnity, which will hold our electronics business.

The spin-off of our electronics business is expected to be completed on     , 2025, and will be effected by way of a pro rata distribution of Qnity common stock to DuPont stockholders of record as of the close of business, Eastern Time, on October 22, 2025, the record date. For every      shares of DuPont common stock held on the record date, each DuPont stockholder will receive      shares of Qnity common stock. Qnity common stock issued in the distribution will be issued in book-entry form only, which means that no physical share certificates will be issued.

Following the spin-off of Qnity, DuPont common stock will continue to trade on the New York Stock Exchange (the “NYSE”) under the symbol “DD”. This transaction is the first step toward creating two independent companies that are better positioned to capitalize on significant growth opportunities and to focus their respective resources on their particular business and strategic priorities.

We expect the distribution of Qnity common stock to be tax-free to you for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. You should consult your own tax advisor as to the particular tax consequences of the distribution of Qnity common stock to you, including potential tax consequences under state, local and non-U.S. tax laws.

Stockholder approval of the distribution is not required. In addition, you do not need to take any action to receive your Qnity common stock and you do not need to pay any consideration or surrender or exchange your DuPont shares in order to receive Qnity common stock. Immediately following the distribution, you will own common stock in DuPont and Qnity. Subject to obtaining requisite approval, we intend to list the Qnity common stock on the NYSE under the symbol “Q”.

We encourage you to carefully read the enclosed information statement. A Notice of Internet Availability containing instructions describing how to access the information statement will be mailed to all DuPont stockholders who held shares of DuPont common stock as of the record date for the distribution. The information statement describes the spin-off of Qnity in detail and contains important information about Qnity, including its business, financial condition and operations, and the distribution.

The DuPont board of directors believes that creating two focused companies will maximize value for all DuPont stockholders, and this separation is an exciting step in this process. We want to thank you for your continued support of DuPont and we look forward to your support of Qnity in the future.

 

Sincerely,
Lori D. Koch Chief Executive Officer DuPont de Nemours, Inc.				Edward D. Breen Executive Chairman DuPont de Nemours, Inc.

Dear Future Qnity Stockholder,

I am excited to introduce you to Qnity Electronics, Inc. Driven by a purpose to make tomorrow’s technologies possible, Qnity will be one of the largest global leaders in materials and solutions for the semiconductor and electronics industries. As the partner of choice, we have a seat at the design table working to advance our customers’ technology roadmaps through materials science and engineering solutions that the next generation of advanced computing and connectivity applications require.

Adoption of new digital technologies is rapidly transforming every facet of our lives. We believe that advancements in high-speed connectivity and the Internet of Things, combined with the acceleration of artificial intelligence, provide tremendous growth opportunities across multiple sectors, including transportation, consumer and personal electronics, and aerospace and defense. These emerging technologies are set to fuel accelerated investments and growth in semiconductors and other advanced electronics. According to McKinsey & Company, the global semiconductor industry is expected to double this decade, reaching $1 trillion in revenue around 2030. Our leading-edge portfolio is aimed at driving exceptional value creation and our solutions are designed to tackle the industry’s toughest challenges in chip performance, signal integrity, energy efficiency, miniaturization and thermal management.

We have a broad portfolio and customer relationships founded on a heritage that spans more than 50 years. With that solid foundation, the future Qnity will be one of the largest pure-play electronics materials and solutions providers in the industry, with $4.3 billion in net sales in 2024. The new company will have approximately 10,000 employees, approximately 40 manufacturing sites and approximately 20 research labs. Our global operational footprint is aimed at facilitating optimal customer collaboration with greater speed of innovation, higher quality, lower cost and more reliable supply.

As a global technology leader, we offer a diverse portfolio serving the entire electronics value chain from chip fabrication and advanced packaging to advanced interconnects, assembly and displays. We bring differentiated technical expertise and end-to-end solutions across the full breadth and depth of our portfolio to deliver world-class innovation to our customers. Over the last three years, we have invested roughly $1 billion in research and development to strengthen our position across key markets. In addition, we continue to invest in our supply chain and manufacturing capabilities to attain world-class process technologies that prioritize quality, automation, rapid design, prototyping and streamlined supply chain management.

We believe our extensive portfolio positions us for success in a dynamic market, driving accelerated growth in attractive end markets. With excellence embedded in our technical, operational and commercial core, we seek to deliver shareholder value through top-line growth, disciplined business management and capital allocation, and strong cash flow generation.

At Qnity, tomorrow’s technologies start today. We believe our dedication to innovation, strong customer relationships and extensive investment in leading edge capabilities make us a prime candidate for accelerated growth in the rapidly evolving semiconductor and advanced electronics industries. With our strategic operational footprint, world-class process technologies and a robust portfolio that addresses the industry’s toughest challenges, we believe we are positioned to deliver exceptional value and sustained shareholder returns. Join us on this exciting journey as we power what’s next in advanced electronics.

Jon Kemp

Chief Executive Officer

Qnity Electronics, Inc.

Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

 

Preliminary and Subject to Completion, dated September 29, 2025

 

INFORMATION STATEMENT

Qnity Electronics, Inc.

Common Stock, Par Value $0.01 Per Share

 

 

This information statement is being furnished to the holders of common stock of DuPont de Nemours, Inc. (“DuPont”) in connection with the distribution of shares of common stock of Qnity Electronics, Inc. (“Qnity”). Qnity is a wholly owned subsidiary of DuPont that, at the time of the distribution, will hold DuPont’s Electronics business (as defined herein). DuPont will distribute all of the outstanding shares of Qnity common stock on a pro rata basis to its common stockholders.

Qnity is organized as a corporation under the laws of the State of Delaware.

For every      shares of DuPont common stock held of record by you as of the close of business, Eastern Time, on October 22, 2025, the record date for the distribution, you will receive      shares of Qnity common stock. No fractional shares of Qnity common stock will be issued. Instead, you will receive cash in lieu of any fractional shares. As discussed under the section entitled “The Spin-Off—Trading Between the Record Date and Distribution Date”, if you sell your DuPont common stock in the “regular-way” market after the record date and before the Spin-Off (as defined herein), you will also be selling your right to receive shares of Qnity common stock in connection with the Spin-Off. We expect the shares of Qnity common stock to be distributed by DuPont to you on     , 2025. We refer to the date of distribution of Qnity common stock as the “distribution date”. After the distribution, we will be an independent, publicly traded company.

No vote of DuPont stockholders is required to effect the distribution. Therefore, you are not being asked for a proxy to vote on the Spin-Off, and you are requested not to send us a proxy. You do not need to pay any consideration, exchange or surrender your existing shares of DuPont common stock or take any other action to receive your shares of Qnity common stock.

Until the Spin-Off occurs, Qnity will be a wholly owned subsidiary of DuPont, and consequently, DuPont will have the sole and absolute discretion to determine and change the terms of the Spin-Off (or to terminate the Spin-Off).

The distribution is intended to be tax-free to DuPont stockholders for United States federal income tax purposes, except for cash received in lieu of fractional shares. The distribution is subject to the satisfaction or waiver by DuPont of certain conditions, including the receipt of an opinion of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden”) confirming that the distribution and certain transactions entered into in connection with the distribution generally will be tax-free to DuPont and its stockholders for U.S. federal income tax purposes, except for cash received in lieu of fractional shares. Cash received in lieu of any fractional shares of DuPont common stock will generally be taxable to you.

DuPont currently owns all the issued and outstanding shares of Qnity. Accordingly, there is no current trading market for Qnity common stock, although we expect that a limited market, commonly known as a “when-issued” trading market, will develop on or about     , 2025, and we expect “regular-way” trading of Qnity common stock to begin on the first trading day after the distribution date). Subject to obtaining requisite approval, we intend to list the Qnity common stock on the New York Stock Exchange (the “NYSE”) under the symbol “Q”. Following the distribution, DuPont common stock will continue to trade on the NYSE under the symbol “DD”.

A Notice of Internet Availability containing instructions describing how to access the information statement (the “Notice of Internet Availability”) will be mailed to all DuPont stockholders who held shares of DuPont common stock as of the record date for the distribution. The information statement describes the Spin-Off of Qnity in detail and contains important information about Qnity, including its business, financial condition and operations, and the distribution.

 

 

In reviewing this information statement, you should carefully consider the matters described under the caption “Risk  Factors” beginning on page 34 of this information statement.

Neither the U.S. Securities and Exchange Commission (the “SEC”) nor any state securities commission has approved or disapproved of these securities or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.

This information statement does not constitute an offer to sell or the solicitation of an offer to buy any securities.

 

 

The date of this information statement is    , 2025

TABLE OF CONTENTS

 

		Page
INFORMATION STATEMENT SUMMARY			1
SUMMARY OF THE SPIN-OFF			19
QUESTIONS AND ANSWERS ABOUT THE SPIN-OFF			24
RISK FACTORS			34
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS			65
THE SPIN-OFF			67
DIVIDEND POLICY			76
CAPITALIZATION			77
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS			78
NOTES TO THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS			83
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			88
BUSINESS			111
MANAGEMENT			127
COMPENSATION DISCUSSION AND ANALYSIS			135
EXECUTIVE COMPENSATION			162
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS			175
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			177
OUR RELATIONSHIP WITH DUPONT FOLLOWING THE DISTRIBUTION			179
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION			193
DESCRIPTION OF MATERIAL INDEBTEDNESS			196
DESCRIPTION OF OUR CAPITAL STOCK			200
WHERE YOU CAN FIND MORE INFORMATION			210
INDEX TO THE FINANCIAL STATEMENTS			F-1

 

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The following is a summary of material information discussed in this information statement. Except as otherwise indicated or unless the context otherwise requires, the information included in this information statement about DuPont assumes the completion of all of the transactions referred to in this information statement in connection with the Spin-Off. This summary may not contain all the details concerning the Spin-Off or other information that may be important to you. To better understand the Spin-Off and our business and financial position, you should carefully review this entire information statement.

Unless otherwise indicated or the context otherwise requires, references in this information statement to:

 

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“we”, “us”, “our”, “Qnity” and the “Company” refer to Qnity Electronics, Inc., a Delaware corporation and its subsidiaries.

 

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“Applicable DuPont Percentage” means that percentage equal to (a) 100%, minus (b) the Applicable Qnity Percentage.

 

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“Applicable Qnity Percentage” means that percentage equal to (a) the quotient of (i) the Pro Forma Operating EBITDA attributable to the Electronics business and assets (measured at the time of the distribution, but prior to giving effect to the distribution), divided by (ii) the Pro Forma Operating EBITDA (measured at the time of the distribution, but prior to giving effect to the distribution) of DuPont, multiplied by (b) 100. Assuming the distribution had occurred on July 1, 2025, based on the Pro Forma Operating EBITDA attributable to the Electronics business and assets for the twelve-month period ended June 30, 2025, the Applicable Qnity Percentage would be 44%. This illustrative percentage value used in this information statement (including the sections entitled “Unaudited Pro Forma Combined Financial Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”) is subject to change based on the relationship of the Pro Forma Operating EBITDA attributable to the Electronics business and assets relative to that of DuPont (as a whole), in each case prior to the distribution. The exact calculation will not be determinable until after the distribution and will depend on many factors including the relative performance of the Electronics business and the performance of DuPont as measured immediately prior to the distribution and whether either Qnity or DuPont undertake strategic initiatives prior to the distribution. We intend to publicly disclose the actual numeric value of the Applicable Qnity Percentage once determined after the distribution.

 

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“Applicable Percentage” of Qnity or DuPont means the (a) Applicable Qnity Percentage or (b) Applicable DuPont Percentage, as applicable.

 

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“distribution date” refers to the date of the distribution, which is expected to be on     , 2025.

 

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“distribution” refers to the transaction in which DuPont will distribute to its stockholders all of the then issued and outstanding shares of Qnity common stock.

 

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“DuPont” refers to DuPont de Nemours, Inc., a Delaware corporation, and its consolidated subsidiaries, as applicable.

 

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“DuPont common stock” refers to the shares of common stock, par value $0.01 per share, of DuPont.

 

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“DuPont stockholders” refers to holders of record of the common stock of DuPont in their capacity as such.

 

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“Electronics business” refers to DuPont’s electronics business.

 

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“Qnity common stock” refers to the shares of common stock, par value $0.01 per share, of Qnity.

 

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“Industrials business” refers to DuPont’s industrials business.

 

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“Internal Reorganization” refers to the allocation, transfer or conveyance by DuPont of the entities, assets and liabilities in advance of the distribution so that Qnity and its subsidiaries are allocated, transferred or conveyed the entities, assets and liabilities of the Electronics business, while the remaining entities, assets and liabilities will remain with DuPont.

 

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“legacy liabilities” or derivative or similar words shall mean any and all liabilities of DuPont or its current or former affiliates (but for former affiliates, only to the extent arising out of, resulting from or related to occurrences prior to the date such persons ceased to be affiliates of DuPont) that are not related to the active Electronics business or Industrials business, certain of which legacy liabilities may constitute Legacy Liabilities (as defined in the Corteva Letter Agreement (as defined herein)).

 

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“Pro Forma Operating EBITDA” has the meaning set forth in the Corteva Letter Agreement.

 

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“record date” refers to October 22, 2025, the date set by the DuPont board of directors to determine the DuPont stockholders eligible to receive the distribution of Qnity common stock.

 

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“Spin-Off” refers to the separation of the Electronics business from DuPont’s other businesses following the Internal Reorganization, the distribution and the creation, as a result of the separation and distribution, of an independent, publicly traded company, Qnity Electronics, Inc., holding the entities, assets and liabilities associated with the Electronics business.

 

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Qnity’s historical assets, liabilities, products, businesses or activities generally refer to the historical assets, liabilities, products, businesses or activities of the Electronics business as conducted by DuPont prior to the completion of the Spin-Off.

You should carefully read this entire information statement, which forms a part of the registration statement on Form 10 (the “Form 10”), as well as the financial information contained in Qnity’s historical Combined Financial Statements and corresponding notes, and unaudited pro forma combined financial information and corresponding notes, each included elsewhere in this information statement. Some of the statements in this information statement constitute forward-looking statements. See the section entitled “Cautionary Statement Concerning Forward-Looking Statements”.

You should not assume that the information contained in this information statement is accurate as of any date other than the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and we undertake no obligation to update the information, except in the normal course of our public disclosure obligations.

Financial Information Presentation

The historical Combined Financial Statements and unaudited pro forma combined financial statements relate to the Electronics business, which is referred to therein as “ElectronicsCo” and “the Company”. This information statement generally describes Qnity as if the Internal Reorganization has already been completed and Qnity holds the Electronics business of DuPont that it will hold at the time of the distribution. Accordingly, this information statement includes an unaudited pro forma combined balance sheet for Qnity as well as an unaudited pro forma combined statement of operations for Qnity, which present our financial position and results of operations to give pro forma effect to the Internal Reorganization, the distribution of all the shares of Qnity common stock, and the other transactions described under the section entitled “Unaudited Pro Forma Combined Financial Statements”. The unaudited pro forma combined financial statements are presented for illustrative purposes only and should not be viewed as an indication of current or future results of operations, financial position or cash flows as if Qnity had been a separate, stand-alone company holding DuPont’s Electronics business during the periods presented.

Certain percentages and other figures provided and used in this information statement may not add up to 100.0% due to the rounding of individual components. In this information statement, we present estimated U.S. dollar amounts for the industries in which we operate.

 

iii

Trademarks, Trade Names and Service Marks

The trademarks, trade names and service marks of Qnity appearing in this information statement are, as applicable, our property, licensed to us or, prior to the completion of the distribution, the property of DuPont. The trademarks, trade names and service marks of DuPont appearing in this information statement are the property of DuPont. Solely for convenience, trademarks, trade names and service marks referred to in this information statement may appear without the “^®”, “^TM” or “^SM” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks, trade names and service marks. This information statement also contains additional trademarks, trade names and service marks belonging to other parties. We do not intend our use or display of these other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, such other parties.

Industry Information

Unless indicated otherwise, the information concerning the industries in which Qnity participates contained in this information statement is based on Qnity’s general knowledge of and expectations concerning the industry. Qnity’s competitive position and industry size are based on estimates using Qnity’s internal data and estimates, data from various industry analyses, our internal research and adjustments and assumptions that we believe to be reasonable. Further, Qnity’s estimates and assumptions involve risks and uncertainties and are subject to change based on various factors, including those discussed in the section entitled “Risk Factors”. These and other factors could cause results to differ materially from those expressed in the estimates and assumptions.

 

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RISK FACTORS

You should carefully consider the following risks and other information in this information statement in evaluating us and our common stock.

Any of the following risks, as well as additional risks and uncertainties not currently known to us, beyond our control or that we currently deem immaterial, could materially and adversely affect our business, results of operations or financial condition. Based on current information, we believe that the following identifies the most significant risks that could affect our business, results of operations or financial condition.

Risks Related to Our Business

Our results will be affected by competitive conditions and customer preferences.

Demand for our products, which impacts revenue and profit margins, will be affected by (i) the development and timing of the introduction of competitive products; (ii) our response to downward pricing trends to stay competitive; (iii) changes in customer preferences, which may be affected by announced price changes and other factors outside of our control; (iv) availability and cost of raw materials and energy, as well as our ability and success in passing through increases in such costs; (v) levels of economic growth in the geographic and end use markets served by us; (vi) changes in buying patterns, which at times may be thought to be temporary destocking, but could actually be indicative of loss of market share; and (vii) the megatrends in digital transformation, connectivity, automation and ethics, environmental impact and sustainability-driven purchasing decisions.

We face many domestic and international competitors. Some of our competitors may have better-established customer relationships than we do, which may enable them to have their products specified for use more frequently and more quickly by these customers. Further, customers continually evaluate the benefits of internal manufacturing versus outsourcing, and a customer’s decision to internally manufacture products that we provide may negatively impact us. If we are unable to maintain our competitive position, we could experience downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities and a loss of market share, any of which could have a material adverse effect on our results of operations. Further, we expect that existing and new competitors will improve their products and introduce new products with enhanced performance characteristics. The introduction of new products, more efficient production of existing products, or products sold at a lower cost by competitors could diminish our market share and increase pricing pressure on our products. Our competitors include companies outside of the U.S., including companies in countries where foreign governments seek to build a domestic-centric semiconductor ecosystem. From time to time, governments around the world may provide incentives or make other investments that could benefit and give competitive advantages to our competitors. Government incentives may not be available to us on acceptable terms or at all. If our competitors can benefit from such government incentives and we cannot, it could strengthen our competitors’ relative position and have a material adverse effect on our business.

The demand for product offerings that align with sustainability goals is expected to continue to increase. Customers are seeking products that are made using environmentally sound practices and materials, and which adhere to ethical and human rights standards. Demand for product offerings that are less carbon-intensive or that customers determine support their respective sustainability goals (in areas such as substances of concern, circular economy, waste, water, nature/biodiversity, responsible procurement, human rights) is expected to continue to increase, driven by end-user and customer demand, investor preference and government legislative and market-responsive product-specific actions. Failure to timely react to these trends and manage our product portfolio and innovation activities responsively could decrease the competitiveness of our products and result in the de-selection of us as a partner of choice. In addition, the failure to set goals, take actions, make progress and report against, commensurate with relevant market competitors, our sustainability strategy, could harm our reputation, and our ability to compete and to attract top talent, and could result in increased investor activism and the de-selection of us as a partner or supplier of choice.

 

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The markets in which we operate are driven by consumer preferences that are rapidly changing as well as frequent new product introductions and improvements. As a result, we must develop new products and services that offer distinct value to our customers in order to compete successfully. Success in achieving our growth objectives is dependent on the timing and market acceptance of our new product offerings, including our ability to renew our pipeline of new product offerings and to bring those offerings to market. This ability may be adversely affected by difficulties or delays in product development, such as the inability to identify viable new products or recognize an important technology inflection point, obtain adequate intellectual property protection or gain market acceptance of new products. Further, our inability to anticipate customers’ changing needs or adapt to emerging technological and business trends accurately, control research and development costs or execute our innovation strategy could adversely affect our ability to sustain our market positions and/or penetrate new markets.

There are no guarantees that new product offerings will prove to be commercially successful. Additionally, our expansion into new markets may result in greater-than-expected risks, liabilities and expenses.

Fluctuations in the demand for semiconductors and the overall volume of semiconductor manufacturing may decrease demand for our products and may adversely affect our business.

Our revenue is heavily dependent upon demand from the semiconductor ecosystem. The semiconductor industry has historically been, and is likely to continue to be, cyclical with periodic downturns, resulting in decreased demand for our products. The semiconductor industry may be negatively impacted by factors such as decreased consumer spending, macroeconomic uncertainty and slow or negative economic growth, which could decrease consumer spending and business investment in technologies and products that contain semiconductors. We have previously experienced a reduction in revenue and operating losses during downturns in the semiconductor industry, which can occur suddenly. During such downturns, we typically experience greater pricing pressure and shifts in product and customer mix, which can adversely affect our gross margin and net income. The semiconductor industry is also affected by seasonal shifts in demand, and as a result, we may experience short-term fluctuation in our results of operations from one period to the next. We are unable to predict the timing, duration or severity of any current or future downturns in the semiconductor industry. The fluctuating nature of the semiconductor industry requires us to maintain flexibility to respond to changes in demand, particularly during industry downturns, which may impact our ability to effectively manage our production capacity, workforce and inventory. Additionally, we may incur unexpected or additional costs to align our operations with demand. If we do not, or are unable to, adequately anticipate changes in our business environment, we may lack the infrastructure, manufacturing capacity and resources to scale up our business to meet customer expectations and compete successfully during a period of growth. Conversely, we may expand our capacity too rapidly, resulting in excess fixed costs, and lower profitability.

If we are unable to anticipate and respond to rapid technological change and customer requirements by continuing to innovate and introduce new and enhanced products and solutions, we may experience a loss of market share, decreased sales, revenue, profitability and damage to our reputation.

The electronics industry is subject to rapid technological change, changing customer requirements and frequent new product introductions. In our industry, the first company to introduce an innovative product that addresses an identified market need will often have a significant advantage over competing products. Following development, it may take several years for sales of a new product to reach a substantial level, if ever. If a product concept does not progress beyond the development stage or only achieves limited acceptance in the marketplace, we may not receive a direct return on our expenditures, we may lose market share and our revenue, and profitability may decline. A failure to successfully anticipate and respond to technological changes by developing, marketing and manufacturing new products or enhancements to our existing products could harm our business prospects and significantly reduce our sales. We cannot guarantee that the new products and technology we choose to develop and market will be successful. In addition, if new products have reliability or quality problems, we may experience reduced orders, higher manufacturing costs, delays in acceptance and payment, additional service and warranty expense and damage to our reputation.

 

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A large percentage of our net sales are generated from our international operations and are subject to economic, geopolitical, foreign exchange and other risks.

We do business globally in approximately 80 countries. The percentage of net sales generated by international operations, including U.S. exports, was approximately 88% of our total net sales for the year ended December 31, 2024. Regionally, Asia Pacific represented approximately 79% of our net sales for the year ended December 31, 2024. We expect that the percentage of our net sales derived from international operations will continue to be significant.

Risks related to international operations include:

 

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changes and uncertainties with respect to trade and export regulations that impact countries in which we conduct significant business (including potential, new and changing regulations for exports of certain technologies and goods to China), trade policies and sanctions, tariffs, international trade disputes and any responsive measures, including the recent implementation of tariffs on goods imported into the United States, particularly from China and Mexico, could (1) impose additional costs on our operations, (2) limit our ability to operate our business and (3) adversely impact us, our customers or our suppliers;

 

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positions taken by governmental agencies regarding possible national, commercial and/or security issues posed by the development, sale or export of certain raw materials, products and technologies;

 

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geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, the war between Israel and Hamas, increasing tensions with China, and other political and economic instability and uncertainty, which may result in severely diminished liquidity and credit availability, rating downgrades of sovereign debt, declining valuation of certain investments, declines in consumer confidence, declines in economic growth, volatility in unemployment rates, increased logistics costs and delays and uncertainty about economic stability;

 

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challenges in hiring and integrating workers in different countries;

 

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challenges in managing a workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, along with differing employment practices, formation of labor unions and works councils and other labor issues;

 

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challenges of maintaining appropriate business processes, procedures and internal controls and complying with legal, environmental, health and safety, anti-bribery, anti-corruption, data privacy, cybersecurity and other regulatory requirements that vary by jurisdiction;

 

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challenges in developing relationships with local customers, suppliers and governments;

 

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fluctuating pricing and availability of raw materials and supply chain interruptions or slowdowns, including as a result of difficulties, financial or otherwise, faced by segments of the transportation industry;

 

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changes in global or local economic conditions, including inflation, hyperinflation, fluctuations in interest rates and other increasing price levels in certain sectors, such as energy, impacting availability and cost of goods and services;

 

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public health crises and related implications thereof;

 

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expense and complexity of complying with U.S. and foreign import and export regulations, including the ability to obtain and renew required import and export licenses;

 

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fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against foreign currencies that are important to our business, which could cause our sales and profitability to decline;

 

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foreign exchange controls or other currency restrictions and limitation on the movement of funds, potentially leading to the inability to readily repatriate earnings from foreign operations effectively;

 

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liability for foreign taxes assessed at rates higher than those applicable to our domestic operations;

 

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imposition of a global minimum tax rate, including by the Organization for Economic Cooperation and Development (“OECD”) (as further discussed below);

 

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challenges in maintaining an effective internal control environment, including language and cultural differences, varying levels of United States Generally Accepted Accounting Principles (“U.S. GAAP”) expertise and internal control over financial reporting;

 

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challenges and costs associated with the protection of our intellectual property throughout the world;

 

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challenges associated with managing global and regional third-party service providers, including certain engineering, software development, manufacturing, IT and other functions; and

 

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customer or government efforts to encourage operations and sourcing in a particular country, including efforts to develop and grow local competitors, require local manufacturing and provide special incentives to government-backed local customers to buy from local competitors.

Furthermore, there is inherent risk, based on the complex relationships among China, Japan, South Korea, Taiwan and the U.S., that political, diplomatic and national security influences could lead to trade disputes, impacts and/or disruptions, in particular those affecting the semiconductor industry. A significant trade dispute, impact and/or disruption in any area where we do business could have a materially adverse impact on our future revenue and profits.

Sales and expenses of our non-U.S. businesses are also translated into U.S. dollars for reporting purposes and fluctuations of foreign currency against the U.S. dollar could impact U.S. dollar-denominated earnings. In addition, our assets and liabilities denominated in foreign currencies can also be impacted by foreign currency exchange rates against the U.S. dollar, which could result in exchange gain or loss from revaluation.

We will have a balance sheet hedging program and will be actively looking for opportunities in managing currency exposures related to earnings. However, foreign exchange hedging activities bear a financial cost and may not always be available or be successful in completely mitigating such exposures.

Any one or more of the above factors could adversely affect our international operations and could significantly affect our business, results of operations, financial condition and cash flows.

If we do not successfully execute our go-to-market strategy, our business and financial performance may suffer.

Our go-to-market strategy is focused on leveraging our existing portfolio of products and services as well as introducing new products and services to meet the demands of our customers in a continually changing technological landscape. To successfully execute this strategy, we must emphasize the aspects of our core business where demand remains strong, identify and capitalize on organic growth, and innovate by developing new products and services that will enable us to expand beyond our existing technology categories. Any failure to successfully execute this strategy, including any failure to invest sufficiently in strategic growth areas and support our research and development activities, could adversely affect our business, financial condition or results of operations. In addition, the process of developing new high-technology products or enhancing existing products is complex, costly and uncertain. After we develop a product, we must be able to manufacture appropriate volumes quickly while also managing costs and maintaining the high-quality level that our customers expect. Any delay in the development, forecast, production and/or marketing of a new product could result in us not being among the first to market which could further harm our competitive position. Meeting customer demand depends in part on our ability to obtain timely deliveries from our suppliers and contract manufacturers. To help ensure continuity of supply to our customers, we have increased our procurement efforts to shorten lead times. These increases in materials inventory and purchase commitments have resulted, and could continue to result, in excess and/or obsolete inventory charges if the demand for our products is ultimately less than our expectations.

 

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The costs of complying with evolving legal or regulatory requirements could negatively impact our business, results of operations, financial condition and cash flows. Environmental laws and regulations or permit requirements could result in restrictions or prohibitions on plant operations and substantial civil or criminal sanctions for actual or alleged violations, as well as the assessment of strict liability and/or joint and several liability.

We are subject to extensive federal, state, local and foreign laws, regulations, rules, ordinances and permit requirements relating to pollution, protection of the environment, product content, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances, which include certain substances of concern, and waste materials. Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving legal and regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in the legal or regulatory environment could inhibit or interrupt our operations, require modifications to our products, processes or facilities or cause us to discontinue or relocate the production of certain products. Changes to laws and regulations or the implementation of additional laws and regulations, as well as existing laws and regulations themselves, may result in costs or capital expenditures or require changes in business practice that could result in reduced margins or profitability.

Accordingly, environmental, health or safety, legal or regulatory matters could result in significant unanticipated costs or liabilities causing a negative impact on our business, cash flows and results of operations.

Our business, results of operations and financial condition could be adversely affected by environmental, litigation and other commitments and contingencies.

As a result of our operations, including past operations and those related to divested businesses and discontinued operations of DuPont and certain of our former affiliates (and their respective former affiliates), which will generally be contractually allocated between us and DuPont based on the Applicable Percentages under the Separation Agreement (see the section entitled “Our Relationship with DuPont Following the Distribution—Separation Agreement”), we incur environmental operating 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. We also incur environmental operating 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. In addition, we maintain and periodically review and adjust our accruals for probable environmental remediation and restoration costs.

We expect to continue to incur environmental operating costs since we will operate global manufacturing, product handling and distribution facilities that are subject to a broad array of environmental laws and regulations. These laws and regulations are subject to change by the implementing governmental agency, which we monitor closely. Our policy will require that our operations fully meet legal and regulatory requirements. Costs to comply with complex environmental laws and regulations, as well as internal voluntary programs and goals, are significant and we expect these costs will continue to be significant for the foreseeable future. Over the long term, such expenditures are subject to considerable uncertainty and could fluctuate significantly.

We accrue for environmental matters when it is probable that a liability has been incurred and the amount can be reasonably estimated. As remediation activities vary substantially in duration and cost from site to site, it is difficult to develop precise estimates of future site remediation costs. We base such estimates on several factors, including the complexity of the geology, the nature and extent of contamination, the type of remedy, the outcome of discussions with regulatory agencies and other Potentially Responsible Parties (“PRPs”) at multi-party sites and the number of, and financial viability of, other PRPs. Considerable uncertainty exists with respect to environmental remediation costs and, under adverse changes in circumstances, the potential liability may be materially higher than our accruals.

 

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We face risks arising from various unasserted and asserted litigation matters arising out of the normal course of our current and former business operations, including intellectual property, commercial, product liability, environmental and antitrust lawsuits. We have noted a trend in public and private suits being filed on behalf of states, counties, cities and utilities alleging harm to the general public and the environment, including waterways and watersheds. It is not possible to predict the outcome of these various proceedings. An adverse outcome in any one or more of these matters could be material to our financial results. Various factors or developments can lead to changes in current estimates of liabilities. Such factors and developments may include, but are not limited to, additional data, safety or risk assessments, as well as a final adverse judgment, significant settlement or changes in applicable law. A future adverse ruling or unfavorable development could result in future charges that could have a material adverse effect on us.

In the ordinary course of business, we may make certain commitments, including representations, warranties and indemnities relating to current and past operations, including those related to divested businesses and issue guarantees of third-party obligations. If we were required to make payments as a result, they could exceed the amounts accrued, thereby adversely affecting our results of operations.

Supply chain and operational disruptions and volatility in energy and raw material costs, could increase costs and expenses, adversely impact our sales and earnings and impact access to sources of liquidity.

Our manufacturing processes and operations depend on the continued availability of energy and raw materials, the costs of which are subject to worldwide supply and demand as well as other factors beyond our control, including potential legislation related to reducing greenhouse gas emissions, the introduction of tariffs, creating a carbon tax or implementing a cap and trade program which could create increases in costs and price volatility. Climate change increases the frequency and severity of potential supply chain and operational disruptions from weather events and natural disasters. The chronic physical impacts associated with increased temperatures, changes in weather patterns and rising sea levels, for example, could significantly increase costs and expenses and create additional supply chain and operational disruption risks.

Supply chain disruptions, plant and/or power outages, labor shortages and/or strikes, geopolitical activity, tariffs, weather events and natural disasters, including hurricanes or flooding that impact coastal regions, and global health risks or pandemics could seriously harm our operations as well as the operations of our customers and suppliers. In addition, our suppliers may experience capacity limitations in their own operations or may elect to reduce or eliminate certain product lines. To address this risk, generally, we seek to have many sources of supply for key raw materials in order to avoid significant dependence on any one or a few suppliers. In addition, and where the supply market for key raw materials is concentrated, we take additional steps to manage exposure to supply chain risk and price fluctuations through, among other things, negotiated long-term contracts some of which include minimum purchase obligations. However, there can be no assurance that such mitigation efforts will prevent future difficulty in obtaining sufficient and timely delivery of certain raw materials.

We also take actions to offset the effects of higher energy and raw material costs through selling price increases, productivity improvements and cost reduction programs. Success in offsetting higher raw material costs with price increases is largely influenced by competitive and economic conditions and could vary significantly depending on the market served. As a result, volatility in these costs may negatively impact our business, results of operations, financial condition and cash flows.

Our manufacturing operations may be adversely affected by impacts of pandemics including government actions and other responsive measures, quarantines and health and availability of essential onsite personnel. We are unable to predict the extent of pandemic related impacts on our business, results of operations, access to sources of liquidity and financial condition which depends on highly uncertain and unpredictable future developments. Our financial results may be materially and adversely impacted by a variety of factors that have not yet been determined, including potential impairments of goodwill and other assets. When necessary, we will take actions, including reducing costs, restructuring actions and delaying certain capital expenditures and non-essential spend.

 

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There can be no guaranty that such actions would notably mitigate the impact on our business, results of operations, access to sources of liquidity or financial condition and we may experience materially adverse impacts to our business, results of operations and financial condition as a result of related global economic impacts, including inflationary pressures that have occurred and may continue to occur in the future.

Failure to comply with international trade restrictions and economic sanctions laws and regulations could adversely affect our business, financial condition or results of operations.

We have operations, assets and/or generate sales in countries all over the world, including countries that are or may become the target of trade and economic restrictions from the U.S. and/or other countries, which we refer to collectively as “Economic Sanctions Laws”. Economic Sanctions Laws are complex and change with time as international relationships and confrontations between and among nations evolve. For example, the U.S. Department of the Treasury’s Office of Foreign Assets Control and the U.S. State Department monitors trade restrictions and economic sanctions and impose penalties upon U.S. persons and entities and, in some instances, non-U.S. entities, for conducting activities or transacting business with certain countries, such as recently Russia and Belarus in the context of the Russia-Ukraine conflict and China in the context of the ongoing trade tariff escalation, as well as governments, entities or individuals subject to Economic Sanctions Laws. We have established policies and procedures to assist with our compliance with Economic Sanctions Laws, and we believe we do not unlawfully conduct business in any sanctioned countries. However, given the breadth of our international operations and the scope of our sales globally, including via third-party distributors over whom we may have limited or no control, coupled with the complexity and ever-changing nature of Economic Sanctions Laws driven by geopolitical events, there can be no assurance that our controls and procedures have prevented in the past or will prevent at all times in the future a violation of these laws. Failure to comply with Economic Sanctions Laws, or allegations of such failure, could lead to investigations and/or actions being taken against us which could materially and adversely affect our reputation and have a material adverse effect on our business, financial condition or results of operations.

Changes in the global and local tax regulatory environments in, and the distribution of income among, the various jurisdictions in which we operate, could adversely impact our results of operations.

Our future results of operations could be adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates, changes in tax laws, regulations and judicial rulings (or changes in the interpretation thereof), changes in U.S. GAAP, changes in the valuation of deferred tax assets and liabilities, changes in the amount of earnings permanently reinvested offshore, the results of audits and examinations of previously filed tax returns and continuing assessments of our tax exposures and various other governmental enforcement initiatives. We have ongoing federal, state and international income tax audits in various jurisdictions, and we evaluate uncertain tax positions that may be challenged by local tax authorities. The impact, if any, of these audits to our unrecognized tax benefits is not estimable. Our tax expense includes estimates of tax reserves and reflects other estimates and assumptions, including assessments of our future earnings which could impact the valuation of our deferred tax assets.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted into law in the United States. Among other changes to the Code, the IRA imposes a 15% corporate alternative minimum tax on certain corporations. Changes in tax laws or regulations, including further regulatory developments in connection with the IRA; multi-jurisdictional changes enacted in response to the action items provided by the OECD including the OECD’s Global Anti-Base Erosion rules under Pillar Two, which introduces a global minimum corporate tax rate set at 15% on multinational enterprises; and the OECD’s, European Commission’s and other major jurisdiction’s heightened interest in and taxation of large multinational companies, increase tax uncertainty while the introduction of Pillar Two in countries where the Company operates has increased our effective tax rate and provision for income taxes in 2025. Given the unpredictability of possible further changes to and the potential interdependency of the United States or foreign tax laws and regulations, it is difficult to predict the cumulative effect of such tax laws and regulations on our results of operations.

 

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On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted into law in the United States. The OBBBA modifies international corporate income tax law by, among other things, changing the tax rates for certain Global Intangible Low-Taxed Income (now known as Net CFC Tested Income) and Foreign-Derived Intangible Income (now known as Foreign Derived Deduction Eligible Income), modifying the allocation of expenses in calculating foreign tax credits, as well as changing foreign tax credit limitations. Given the complexities of the changes and potential future clarifications of the provisions, we are currently evaluating the impact of the new legislation.

If we are unable to attract or retain key personnel and qualified employees, or maintain relations with our employees, unions and other employee representatives, it could adversely affect our ability to compete and achieve our strategic goals.

Attracting, developing and retaining talented employees is essential to our successful delivery of products and services, ability to innovate, including developing new products and technologies, and ability to identify trends and develop new markets. Many of our key personnel have significant experience in the semiconductor industry and deep technical expertise. In addition, due to the specialized and technical nature of our business, our future performance depends upon our ability to attract, develop and retain skilled employees, particularly specialized research and development and engineering personnel, in order to maintain our efficient production processes, drive innovation in our product offerings and maintain our deep customer relationships. As the semiconductor industry has grown in recent years, competition for qualified talent, particularly those with significant industry experience, has intensified. The failure to attract and retain key personnel, or effectively manage succession, could have an adverse material impact on our business, financial condition or results of operations.

If we are unable to successfully integrate, motivate and reward our employees, we may not be able to retain them or attract new employees in the future which could adversely impact our ability to compete effectively. We may be required to increase salary and/or benefits to attract and retain top performers which could increase our costs and adversely impact our results of operations.

Certain of our employees in the U.S. are covered by collective bargaining agreements. These agreements typically contain provisions regarding the general working conditions of our employees, including provisions that could affect our ability to restructure our operations, close facilities or reduce our number of employees. We may not be able to extend existing collective bargaining agreements or, upon the expiration of such agreements, negotiate such agreements in a favorable and timely manner or without work stoppages, strikes or similar actions.

The loss of one or more key employees, our inability to attract or develop additional qualified employees, any delay in hiring key personnel, any deterioration of the relationships with our employees, unions and other employee representatives, or any material work stoppage, strike or similar action could have a material adverse effect on our business results, cash flows, financial condition or prospects.

Our reliance on certain key customers, contract manufacturers and suppliers could adversely affect our overall sales and profitability.

Sales to a limited number of large customers constitute a significant portion of our overall revenue, shipments, cash flows, collections and profitability. Our top ten customers accounted for 34%, 32% and 31% of our net sales in 2024, 2023 and 2022, respectively. We would have no or limited contractual recourse if our large customers decided to stop buying and using our products in their manufacturing processes with limited advance notice to us. The cancellation, reduction or deferral of purchases of our products by any one of these customers could meaningfully reduce our revenues. The loss of one or more of these key customers, if our products are not specified for our large customers’ products or if we suffer a material reduction in their purchase orders, could impair our results of operations for the affected earnings periods. In addition, there is limited available manufacturing capacity that meets our quality standards and regulatory requirements. If we are unable to arrange for sufficient production capacity among our suppliers or contract manufacturers, or if our suppliers or contract

 

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manufacturers encounter production, quality, financial or other difficulties (including due to labor or geopolitical disturbances or natural disasters), we may be unable to meet our customers’ demands. Finally, we rely on independent distributors to distribute our products and to assist us with the marketing and sale of certain of our products. There can be no assurance that our distributors will focus adequate resources on selling our products to end users, or will be successful in selling our products, which could materially adversely affect our business and results of operations.

Our business, results of operations and reputation could be harmed by improper conduct by our employees, agents or business partners.

We are required to comply with numerous U.S. and non-U.S. laws and regulations including those related to anti-corruption, anti-money laundering, global trade, antitrust and human rights. Under these laws, companies may also be held liable for actions taken by third parties acting on their behalf, such as strategic or local partners or representatives. Our policies mandate compliance with these laws and regulations. However, we operate globally, including in parts of the world that are recognized as having governmental and commercial corruption and where local customs and practices can be inconsistent with anti-corruption and/or anti-bribery laws. Despite our policies, which mandate compliance with these laws, including the requirements to maintain accurate information and internal controls, we cannot ensure that our internal control processes will prevent improper action by employees, agents, distributors, suppliers or business partners. Violations of these laws could result in criminal or civil sanctions and even the mere allegation of such violations, could harm our ability to do business, our results of operations, financial position and reputation.

Risks related to trade disputes, regulations and policies could have an adverse impact on our operations and reduce the competitiveness or availability of our products relative to local and global competitors.

Trade regulations, policies and disputes can and have increased tariffs and trade barriers, which can and have limited our ability to sell certain products to certain customers, and otherwise impacted our global supply and distribution chains and research and development activities, particularly those arising out of relations between the U.S. and China. The U.S. government recently announced tariffs on product imports from certain countries, including Canada, Mexico and China. These actions have resulted, and are expected to further result, in retaliatory measures on U.S. goods. The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of merchandise, and our buying organization’s ability to execute our merchandise sourcing model to offset the effects of the tariffs. In addition, we are subject to export control and economic sanctions laws and regulations that restrict the delivery of some of our products and services to certain countries (and nationals thereof), to certain end users, and for certain end uses. These restrictions may prohibit the transfer of certain of our products, services and technologies, and they may require us to obtain a license from the U.S. government before delivering the controlled item or service. Obtaining export licenses may be difficult, costly and time-consuming, and we may fail to receive licenses that we apply for on a timely basis or at all. We must also comply with export control and economic sanctions laws and regulations imposed by other countries. Our export and trade control compliance program may be ineffective or circumvented, exposing us to legal liabilities. Compliance with these laws could meaningfully limit our sales in the future. Ultimately, changes in, and responses to, U.S. trade controls have the potential to reduce the competitiveness of our products and cause our sales to decline, which could have a material adverse effect on our business, financial condition and results of operations. Such risks may be especially exacerbated as they relate to China and Hong Kong, a market that is important to our business, representing approximately 34% of our net sales for the year ended December 31, 2024.

 

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Our business, results of operations and reputation could be adversely affected by industry-specific risks, including process safety, product stewardship and regulatory compliance issues.

Our business exposes us to industry-specific risks which include, but are not limited to risks arising from: product safety or quality, shifting public perception, federal, state and local regulations on manufacturing or labeling, packaging, environmental, health and safety laws and regulations and customer product liability claims.

In most jurisdictions, we must test the safety, efficacy and environmental impact of our products to satisfy regulatory requirements and obtain the needed approvals. In certain jurisdictions, we must periodically renew our approvals, which may require us to demonstrate compliance with then-current standards. The regulatory approvals process is lengthy, complex and in some markets unpredictable, with requirements that can vary by product, technology, industry and country. Regulatory standards and trial procedures are continuously changing in response to technological developments, changes in legislation and governmental, non-governmental organization (“NGO”) and societal demands for increasing levels of product safety and environmental protection. The pace of change, together with any lack of regulatory harmony could result in unintended noncompliance. Each of these laws, rules and regulations imposes costs on our business, including financial costs and potential diversion of our management’s attention, and may present risks to our business, including potential fines, restrictions on our actions and reputational damage if we do not fully comply. To maintain our right to produce or sell existing products or to commercialize new products, we must be able to demonstrate our ability to satisfy the requirements of regulatory agencies, industries and customers.

Efforts to comply with new and changing regulations have resulted in, and are likely to continue to result in, increased administrative expenses and diversion of management’s time and attention from revenue-generating activities to compliance activities. The failure to meet existing and new requirements or receive necessary permits or approvals could have near- and long-term effects on our ability to produce and sell certain current and future products which could increase operating costs and adversely affect our business, results of operations and financial condition. In addition, negative publicity related to product liability, safety, health and environmental matters may damage our reputation.

Our business, results of operations, financial condition and cash flows could be adversely affected by interruption or regulation of our information technology or network systems and storage of information and other business disruptions.

We rely on centralized and local information technology and physical networks and systems, some of which are managed or accessible by third parties, to process, transmit and store electronic information and to otherwise manage or support our business. Additionally, we collect, store, process, use and have access to certain data, including proprietary business and personal information or data that is subject to privacy and security laws, regulations, orders and controls or rules imposed by customer or other contracts. The processing and storage of personal information is increasingly subject to privacy and data security regulations, and many such regulations are country or territory-specific. The interpretation and application of data protection laws in the U.S., Europe, including the EU General Data Protection Regulation, Asia Pacific, Latin America and elsewhere are continuing to evolve and may be different across these jurisdictions. We seek to implement these requirements in a compliant manner. Violations of these laws or standards could result in criminal or civil sanctions, investigations or enforcement actions. Even the mere allegation of such violations, could harm our ability to do business, our results of operations, financial position and reputation.

Information technology system and/or network disruptions, whether caused by acts of sabotage, employee error, malfeasance or other actions, could have an adverse impact on our operations as well as the operations of our customers and suppliers. Other business disruptions may also be caused by security breaches, which could include, for example, attacks on information technology and infrastructure by hackers, viruses, breaches due to employee error, malfeasance or other actions or other disruptions. We and/or our suppliers may fail to effectively prevent, detect and recover from these or other security breaches and, therefore, such breaches could result in

 

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misuse of our assets, loss of property including trade secrets and confidential or personal information, some of which is subject to privacy and security laws, and other business disruptions. As a result, we may be subject to legal claims or proceedings, reporting errors, processing inefficiencies, negative media attention, loss of sales, interference with regulatory compliance, which could result in sanctions or penalties, liability or penalties under privacy laws, disruption in our operations and damage to our reputation, which could adversely affect our business, results of operations, financial condition and cash flows.

Like other major corporations, we are the target of cyber-attacks, from time to time, which include phishing, spam emails, hacking, social engineering, industrial espionage and malicious software. We have determined that these attacks have resulted, and could result in the future, in unauthorized parties gaining access to certain confidential business information. However, risks from previous cybersecurity incidents, have not materially affected us, including our business strategy and results of operations. Nonetheless, cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors. Geopolitical tensions or conflicts, such as increasing tensions with China including the ongoing trade tariff escalation or Russia’s invasion of Ukraine, may create a heightened risk of cybersecurity attacks. Artificial intelligence capabilities may be used by threat actors to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks. The use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers may further introduce vulnerabilities onto our IT systems and data.

We seek to actively manage the risks within our control that could lead to business disruptions and security breaches. As these threats continue to evolve, particularly around cybersecurity, we may be required to expend significant resources to enhance our control environment, processes, practices and other protective measures. Despite these efforts, such events could have a material adverse effect on our business, results of operations, financial condition and cash flows.

Our revenues and operating results have fluctuated in the past and may do so in the future, which could impact our stock price.

Our revenues and operating results may fluctuate significantly from quarter-to-quarter or year-to-year due to a number of factors, many of which are outside our control. We manage our expenses based in part on our expectations of future revenues. Because some of our expenses are relatively fixed in the short term, a change in the timing of revenue or the amount of profit we generate from a small number of transactions can unfavorably affect operating results in a particular period. Factors that may cause our financial results to fluctuate unpredictably include:

 

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our ability to develop, introduce and market new, enhanced and competitive products in a timely manner;

 

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trends in the semiconductor industry, macroeconomic and market conditions and geopolitical uncertainty;

 

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legal, tax, accounting or regulatory changes (including changes in import/export regulations and tariffs, such as regulations imposed by the U.S. government on product imports from certain countries, including China and Mexico, as well as the related trade disputes and trade barriers) or changes in the interpretation or enforcement of existing requirements;

 

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the size and timing of customer orders;

 

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consolidation of our customers, which could impact their purchasing decisions and negatively affect our revenues;

 

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procurement shortages, increased prices, the failure of suppliers to perform their obligations and additional expenses to respond promptly to any supply shortages or other supplier problems;

 

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decisions to increase or accelerate our purchasing of raw materials, components or other supplies in an effort to mitigate supply risk;

 

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changes in our capital expenditure requirements, and the schedule and timing, including potential delays, thereof;

 

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manufacturing difficulties;

 

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customer decisions to decelerate orders in order to draw down their inventory;

 

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customer cancellations of or delays in shipments, installations or customer acceptances or, alternatively, acceleration of orders from customers to increase their inventory;

 

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our customers’ rate of replacement of our consumable products or decision to delay expansion projects;

 

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changes in average selling prices, customer mix and product mix;

 

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our competitors’ introduction of new products;

 

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disruptions in transportation, communication, demand, information technology or supply, including strikes, acts of God, wars, terrorist activities and natural or man-made disasters;

 

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changes in our estimated tax rate; and

 

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foreign currency exchange rate fluctuations.

Enforcing our intellectual property rights, or defending against intellectual property claims asserted by others, could adversely affect our business, results of operations, financial condition and cash flows.

Intellectual property rights, including patents, trade secrets, know-how and confidential information, trademarks, tradenames and trade dress, are important to our business. We endeavor to protect our business, including our products, processes and services, by protecting and enforcing our intellectual property rights under the intellectual property laws of certain jurisdictions around the world. However, we may be unable to protect or enforce our intellectual property rights in key jurisdictions for various reasons including government policies and regulations. Further, changes in government policies and regulations, including changes made in reaction to pressure from NGOs, or the public generally, could impact the extent of intellectual property protection afforded by such jurisdictions.

We have designed and implemented internal controls intended to restrict unauthorized access to and use of our intellectual property, including our trade secrets and confidential information. Despite these precautions, our intellectual property is vulnerable to infringement, misappropriation and other unauthorized access and use, including through employee or licensee error or actions, theft by employees or third parties and cybersecurity incidents and other security breaches. When unauthorized access and use or counterfeit products are discovered, we report such incidents to governmental authorities for investigation, as appropriate, and take measures intended to mitigate any potential impact and to stop any unauthorized access.

Third parties may also claim our products, processes or services, or our names and marks, including new names and marks adopted by us in connection with the Spin-Off, violate their intellectual property rights. Defending such claims, even those without merit, can be time-consuming and expensive. In addition, as a result of such claims, we and/or certain of our subsidiaries have been, and may in the future be, required to enter into license agreements, modify the design of our products, processes or services, rebrand our offerings or cease the sale or other commercial exploitation of the affected products, services or brands. If challenges are resolved adversely, it could negatively impact our ability to obtain licenses on competitive terms, commercialize new products and generate sales from existing products, and we could become liable for damages.

Any one or more of the above factors could significantly affect our business, results of operations, financial condition and cash flows.

 

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Failure to effectively manage acquisitions, divestitures, partnerships and other portfolio actions could adversely impact our business, results of operations, financial condition and cash flows.

We continuously evaluate acquisition candidates that may strategically fit our business and/or growth objectives. If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on our financial results. We expect to continually review our portfolio of assets for contributions to our objectives and alignment with our growth strategy. Moreover, we might incur asset impairment charges related to acquisitions or divestitures that reduce our earnings. In addition, if the execution or implementation of acquisitions, divestitures, partnerships, joint ventures and other portfolio actions is not successful and/or we fail to effectively manage cost as our portfolio evolves, it could adversely impact our business, results of operations, financial condition and cash flows.

We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.

Our business relies in part on the availability of financing for our products and services. The capital and credit markets may experience extreme volatility or disruptions that may lead to uncertainty and liquidity issues for both borrowers and investors. Certain customers and suppliers, as well as our business, may need access to credit and trade finance lines and other financing instruments for certain transactions and to provide financial assurance as required by regulatory agencies. In connection with the foregoing, we may obtain other sources of liquidity which we expect to remain undrawn at the distribution date, but there can be no assurance that these arrangements will be sufficient to meet our needs for such transactions. Additionally, we may need to access the capital markets to supplement our existing funds and cash generated from operations to satisfy our needs for example, for working capital or capital expenditure requirements. A variety of factors beyond our control could impact the availability or cost of capital, including domestic or international economic conditions, increases in key benchmark interest rates and/or credit spreads, the adoption of new or amended banking or capital market laws or regulations, and the repricing of market risks and volatility in capital and financial markets. In the event of adverse capital and credit market conditions, we may be unable to obtain capital market financing on favorable terms, or at all, and changes in credit ratings issued by nationally recognized credit-rating agencies could adversely affect our ability to obtain capital market financing and the cost of such financing. Additionally, a large portion of our total consolidated cash will be held overseas and may not be efficiently accessible to finance or to otherwise support our capital market requirements. Such factors may impact our ability, or the ability of our customers or suppliers, to obtain debt financing, guarantees or hedging from financial institutions which may negatively impact our business.

An impairment of goodwill or intangible assets could negatively impact our financial results.

As of June 30, 2025, the carrying value of goodwill and other intangible assets totaled $8,710 million, of which goodwill was $7,501 million and other intangible assets was $1,209 million, as compared to total assets of $12,552 million. The future occurrence of a potential indicator of impairment, such as a significant adverse change in business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with significant customers, strategic decisions made in response to economic or competitive conditions, loss of key personnel, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could result in goodwill impairment charges.

In accordance with U.S. GAAP, at least annually or more frequently if impairment indicators are identified, we must assess both goodwill and indefinite-lived intangible assets for impairment. Intangible assets with finite lives are tested for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. If testing indicates that goodwill or intangible assets are impaired, their carrying values will be written down based on fair values with a charge against earnings. Where we utilize discounted cash flow methodologies in determining fair values, significant negative industry or economic trends and forecasts (projected revenue growth, EBITDA margin, weighted average cost of capital, the terminal growth rate and the

 

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tax rate), disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant change or planned changes in use of our assets, changes in the structure of our business, divestitures, market capitalization declines or increases in associated discount rates may impair our goodwill and other intangible assets. When we utilize the market approach in determining fair values, adverse changes in projected EBITDA and derived multiples from comparable market transactions may impair our goodwill. Accordingly, any determination requiring the write-off of a significant portion of goodwill or intangible assets could negatively impact our results of operations.

Risks Related to the Spin-Off

We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.

We believe that, as an independent, publicly traded company, we will be better positioned to, among other things: (i) focus our financial and operational resources on our specific business, growth profile and strategic priorities; (ii) design and implement corporate strategies and policies targeted to our operational focus and strategic priorities; (iii) guide our processes and infrastructure to focus on our core strengths; (iv) implement and maintain a capital structure designed to meet our specific needs; and (v) more effectively respond to industry dynamics. However, we may be unable to achieve some or all of the benefits that we expect to achieve as an independent company in the time we expect, if at all, for a variety of reasons, including: (i) the completion of the Spin-Off and compliance with the requirements of being an independent, publicly traded company will require significant amounts of our management’s time and effort, which may divert management’s attention from operating and growing our business; (ii) following the Spin-Off, we may be more susceptible to market fluctuations, actions by activist stockholders and other adverse events than if we were still a part of DuPont; (iii) following the Spin-Off, our businesses will be less diversified than DuPont’s businesses prior to the Spin-Off; (iv) the other actions required to separate DuPont’s and our respective businesses could disrupt our operations; (v) under the terms of the Tax Matters Agreement, we will be restricted from taking certain actions that could cause the intended Spin-Off of the Electronics business to fail to qualify as a tax-free transaction and these restrictions may limit us for a period of time from pursuing strategic transactions and equity issuances or engaging in other transactions that may increase the value of our business; and (vi) under the terms of the Corteva Letter Agreement and the Legacy Liabilities Assignment Agreement (as defined herein), we will be restricted in our ability to transfer to third parties or separate our businesses and assets without assigning certain Legacy Liabilities (as defined in the Corteva Letter Agreement) contractually allocated to us in connection with the Spin-Off to such separated businesses and assets or transferees or meeting certain other alternative conditions (see the section entitled “—The Corteva Letter Agreement contains restrictions and limitations that, as applied to us, could prevent or impair our ability to sell, divest or otherwise transfer or separate our businesses or assets in the future”). If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition, cash flows and results of operations could be materially and adversely affected.

Following the Spin-Off, we could incur substantial additional costs and experience temporary business interruptions, and we may not be adequately prepared to meet the requirements of an independent, publicly traded company on a timely or cost-effective basis.

We have historically operated as part of DuPont, and DuPont has provided us with various corporate functions. Following the Spin-Off, DuPont will not provide us with assistance other than the transition and other services described under the section entitled “Our Relationship with DuPont Following the Distribution”. These services do not include every service that we have received from DuPont in the past, and DuPont is only obligated to provide the transition services for limited periods following completion of the Spin-Off. Following the Spin-Off and the cessation of the Transition Services Agreements, we will need to provide internally or obtain from unaffiliated third parties the services we will no longer receive from DuPont. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we receive from DuPont.

 

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In connection with the Spin-Off, we have been installing and implementing information technology infrastructure to support certain of our business functions, including accounting and financial reporting, research and development, human resources, legal and compliance, insurance, communications and indirect sourcing. We may incur substantially higher costs than currently anticipated as we transition from the existing transactional and operational systems and data centers we currently use as part of DuPont. If we are unable to transition effectively, we may incur temporary interruptions in business operations. Any delay in implementing, or operational interruptions suffered while implementing, our new information technology infrastructure could disrupt our business and have a material adverse effect on our results of operations.

In addition, in connection with the Spin-Off, we will be directly subject to reporting and other obligations under the Exchange Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. Beginning with our second required Annual Report on Form 10-K, we intend to comply with Section 404 of the Sarbanes Oxley Act of 2002, as amended (the “Sarbanes Oxley Act”), which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm on the effectiveness of internal control over financial reporting. Under the Sarbanes Oxley Act, we are also required to maintain effective disclosure controls and procedures. To comply with these requirements, we may need to upgrade our systems, implement additional financial and management controls, reporting systems and procedures and hire additional accounting and finance staff. These reporting and other obligations may place large demands on management, administrative and operational resources, including accounting systems and resources. If we are unable to upgrade our financial and management controls, reporting systems, information technology systems and procedures in a timely and effective fashion, our ability to comply with financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired, and we may be unable to conclude that our internal control over financial reporting is effective. If we are not able to comply with the requirements of Section 404 of the Sarbanes Oxley Act in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of shares of our common stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Moreover, we cannot be certain that these measures would ensure that we implement and maintain adequate controls over our financial processes and reporting in the future. Even if we were to conclude, and our auditors were to concur, that our internal control over financial reporting provided reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP, because of its inherent limitations, internal control over financial reporting might not prevent or detect fraud or misstatements. This, in turn, could have an adverse impact on trading prices for shares of our common stock, and could adversely affect our ability to access the capital markets.

We have and will incur indebtedness in connection with the Spin-Off and the Qnity Cash Distribution, and the degree to which we will be leveraged following completion of the Spin-Off may materially and adversely affect our business, financial condition and results of operations.

In connection with the Spin-Off and the payment of the Qnity Cash Distribution to DuPont, we intend to incur indebtedness in an aggregate principal amount of $4.1 billion, consisting of the $2.35 billion Senior Secured Term Loan Facility, which will be drawn prior to or substantially concurrently with the Spin-Off, and the $1.0 billion of Senior Secured Notes due 2032 and $750 million of Senior Unsecured Notes due 2033, which were issued on August 15, 2025, each as more fully described in the section entitled “Description of Material Indebtedness”. We also expect to enter into the Senior Secured Revolving Facility of $1.25 billion prior to or substantially concurrently with the Spin-Off, however this facility is not expected to be utilized at the consummation of the Spin-Off, other than with respect to the issuance of letters of credit. Our capital structure remains under review and will be finalized prior to the Spin-Off. We may also add incremental term loan facilities, increase commitments under the revolving credit facility or otherwise incur additional indebtedness in the future. Such debt obligations could potentially have important consequences to us and our debt and equity investors, including:

 

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requiring a substantial portion of our cash flow from operations to make interest payments;

 

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making it more difficult to satisfy debt service and other obligations;

 

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reducing the amount of borrowings that may be obtained through offering certain of our assets as security;

 

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increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;

 

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increasing our vulnerability to general adverse economic and industry conditions;

 

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reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business;

 

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limiting our flexibility in planning for, or reacting to, changes in our business and our industry;

 

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placing us at a competitive disadvantage relative to our competitors that may not be as highly leveraged with debt;

 

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requiring us to repatriate earnings to the United States, causing withholding taxes to be applied, which in turn could increase; and

 

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limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pursue our business strategies, pay cash dividends or repurchase common stock.

To the extent that we incur additional indebtedness, the foregoing risks could increase. In addition, our actual cash requirements in the future may be greater than expected. Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.

Additionally, the Electronics business has historically relied upon DuPont to provide credit support or fund its working capital requirements and other cash requirements. After the Spin-Off, we will not be able to rely on the earnings, assets, or cash flow of DuPont, and DuPont will not provide credit support or funds to finance our working capital or other cash requirements. As a result, after the Spin-Off, we will be responsible for servicing our own debt and obtaining and maintaining sufficient working capital and other funds to satisfy our cash requirements. After the Spin-Off, our access to and cost of debt financing will be different from the historical access to and cost of debt financing under DuPont. Differences in access to and cost of debt financing may result in differences in the interest rate charged to us on financings, as well as the amount of indebtedness, types of financing structures and debt markets that may be available to us. Our ability to make payments on or refinance our indebtedness, including the debt incurred in connection with the Spin-Off, as well as any future debt that we may incur, will depend on our ability to generate cash in the future from operations, financings, or asset sales. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.

The Corteva Letter Agreement contains restrictions and limitations that, as applied to us, could prevent or impair our ability to sell, divest or otherwise transfer or separate our businesses or assets in the future.

The Letter Agreement, dated as of June 1, 2019 (the “Corteva Letter Agreement”), which is filed as Exhibit 10.5 to the Form 10 of which this information statement forms a part, by and between DuPont (f/k/a DowDuPont Inc. (“DowDuPont”)) and Corteva, Inc. (“Corteva”), sets forth, among other things, certain limitations on the ability of each of DuPont and Corteva to transfer to third parties or separate its respective businesses and assets without assigning certain of such party’s Legacy Liabilities (as defined in the Corteva Letter Agreement) to such separated businesses and assets or transferees or meeting certain other alternative conditions. Accordingly, in accordance with the terms and conditions of the Corteva Letter Agreement, in addition to the Separation Agreement, we intend to enter into the Legacy Liabilities Assignment Agreement pursuant to which, among other things, we will be bound by, and subject to, on a partially assigned basis, certain terms and conditions of the Corteva Letter Agreement, including the same limitations on our ability to transfer to third parties or separate our businesses and assets without assigning certain Legacy Liabilities (as defined in the Corteva Letter Agreement) contractually allocated to us in connection with the Spin-Off to such separated businesses and assets

 

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or transferees or meeting certain other alternative conditions, except that the value of the Minimum EBITDA (as defined in the Corteva Letter Agreement, which for DuPont prior to giving effect to the Spin-Off was $2,500,000,000) will be an amount equal to (i) $2,500,000,000 multiplied by (ii) the Applicable Qnity Percentage. For further information, see the section entitled “Our Relationship with DuPont Following the Distribution—Assignment Agreement for Legacy Liabilities”.

These restrictions limit our ability to engage in certain sale, divestiture, spin-off or other similar corporate transactions and therefore could adversely affect our ability to execute on our growth strategy and portfolio optimization, operate our business, plan for or react to market conditions and opportunities or otherwise take actions that we believe are in our best interest.

We may be subject to certain contingent liabilities, including related to PFAS, following the Spin-Off that are not probable or reasonably estimable at this time, but if later deemed probable and reasonably estimable consistent with applicable accounting guidance, may be significant and adversely affect our business, financial condition, and results of operations and cash flows.

In connection with the Spin-Off, we intend to enter into the Separation Agreement with DuPont, pursuant to which, among other things, we will be contractually allocated the Applicable Qnity Percentage of certain potential contingent liabilities, including the Applicable Qnity Percentage of any Legacy Liabilities (as defined in the Corteva Letter Agreement), funding obligations of DuPont under the Memorandum of Understanding, legacy PFAS liabilities and liabilities related to businesses and operations of DuPont that were previously discontinued or divested. For further information, see the sections entitled “Our Relationship with DuPont Following the Distribution—Separation Agreement” and “Unaudited Pro Forma Combined Financial Statements”.

Except as already recorded in our financial statements and pro forma combined financial statements, such potential liabilities are uncertain and not probable and reasonably estimable at this time, and therefore, we have not accrued any amounts for contingent liabilities in respect of the matters relating to such potential liabilities. We recognize such liabilities when it is probable that a liability has been incurred and the amount can be reasonably estimated. While we will have established processes and controls over the information to support our accounting for such liabilities with DuPont, we are reliant on the accuracy, transparency, completeness and timeliness of information from DuPont and therefore also on the accuracy, transparency, completeness and timeliness of information DuPont receives from third parties, such as Corteva and The Chemours Company (“Chemours”). Estimating indemnified costs of environmental remediation and compliance activities, in particular related to PFAS, is particularly difficult since such activities are dependent on the nature of and activity at specific sites; new and evolving analytical, operating and remediation technologies and techniques; agreed action plans; changes in environmental laws and regulations; permissible levels of specific compounds in water, air or soil; enforcement theories and policies, including efforts to recover natural resource damages; and the presence and financial viability of other potentially responsible parties.

However, if later deemed probable and reasonably estimable consistent with applicable accounting guidance, such liabilities may be significant and adversely affect our business, financial condition, and results of operations and cash flows.

In connection with the Spin-Off, we will be contractually allocated, and directly pay or indemnify DuPont for, certain liabilities, including certain PFAS liabilities. If we are required to make payments pursuant to these indemnification obligations, we may need to divert cash to meet those obligations and our business, financial condition, and results of operations and cash flows could be negatively impacted. In addition, DuPont will indemnify us for certain liabilities. These indemnification obligations may not be sufficient to insure us against the full amount of liabilities we incur, and DuPont may not be able to satisfy its indemnification obligations in the future.

Pursuant to the Separation Agreement, the Employee Matters Agreement and the Tax Matters Agreement with DuPont, we will be contractually allocated, and directly pay or indemnify DuPont for, certain liabilities

 

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(including those contractually allocated between DuPont and Qnity based on the Applicable Percentages) for uncapped amounts, which may include, among other items, associated defense costs, settlement amounts and judgments, as discussed further in the section entitled “Our Relationship with DuPont Following the Distribution”. Payments pursuant to these indemnification obligations, including those in respect of certain legacy and other liabilities (including Legacy Liabilities (as defined in the Corteva Letter Agreement), any funding obligations of DuPont under the Memorandum of Understanding, legacy PFAS liabilities and liabilities related to businesses and operations of DuPont that were previously discontinued or divested), may be significant and could negatively impact our business, particularly indemnification obligations relating to our actions that could impact the tax-free nature of the distribution. Third parties could also seek to hold us responsible for any of the liabilities contractually allocated to DuPont, including those related to DuPont’s Industrials business and DuPont’s share of those contractually allocated between DuPont and Qnity based on their respective Applicable Percentage (including Legacy Liabilities (as defined in the Corteva Letter Agreement), any funding obligations of DuPont under the Memorandum of Understanding, legacy PFAS liabilities and liabilities related to businesses and operations of DuPont that were previously discontinued or divested). DuPont will agree to indemnify us for such applicable liabilities, but such indemnification may not be sufficient to protect us against the full amount of such liabilities or our Applicable Percentage thereof, as applicable. In addition, DuPont may not be able to fully satisfy its indemnification obligations with respect to the liabilities we incur that have been contractually allocated to DuPont. Even if we ultimately succeed in recovering from DuPont any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves. Each of these risks could negatively affect our business, financial condition, results of operations and cash flows.

We are subject to risks associated with certain of our indemnification obligations under the Separation Agreement, pursuant to which we may be required to make substantial cash payments to DuPont or the applicable third party for matters solely and exclusively controlled by DuPont.

Pursuant to the Separation Agreement with DuPont, among other things, we will be contractually allocated the Applicable Qnity Percentage of certain potential liabilities, including the Applicable Qnity Percentage of certain legacy and other liabilities (including Legacy Liabilities (as defined in the Corteva Letter Agreement), any funding obligations of DuPont under the Memorandum of Understanding, legacy PFAS liabilities and liabilities related to businesses and operations of DuPont that were previously discontinued or divested). With respect to such liabilities contractually allocated between DuPont and Qnity based on the Applicable Percentages, DuPont will have, on behalf of Qnity and the other members of the Qnity group (and its and their past, present and future affiliates) (for which DuPont will have a power of attorney (the “Power of Attorney”)), and Qnity, on behalf of itself and the other members of the Qnity group (and its and their past, present and future affiliates) will irrevocably grant to DuPont, coupled with an interest, sole and exclusive authority to, among other things, commence, notice, prosecute, manage, control, conduct, administer, handle, manage, defend (or assume the defense of), litigate, arbitrate, mediate, settle, resolve, dispose of, cover or otherwise determine all matters whatsoever (including, as applicable, litigation strategy and choice of legal counsel or other professionals and any amendment, modification or supplement to any contract (including contracts with third parties) related to such liabilities) with respect to any claims related to, arising out of or resulting from any such liabilities. DuPont may also, in its sole discretion, require Qnity to remit any amounts owed in respect of Qnity’s share of such liabilities directly to the relevant third-party owed such amount. DuPont’s exercise of this authority could result in an increase in the financial burden of such liabilities borne by us, and such increase could be material to our business, financial condition and results of operations and cash flows. We will not be able to dispute whether a liability constitutes a Legacy Liability or otherwise constitutes a liability contractually allocated between DuPont and Qnity based on the Applicable Percentages without first paying the Applicable Qnity Percentage of such liability; provided that DuPont (i) has provided us with written notice of the required indemnification in good faith and (ii) has paid or will substantially concurrently pay its Applicable Percentage of such liability.

Under our amended and restated certificate of incorporation, our corporate purpose and the authority of our board of directors will be expressly limited such that, as a matter of Delaware corporate law, we and our board of directors will not be able to take any action, directly or indirectly, to challenge, breach, question, dispute,

 

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undermine, diminish, revoke, circumvent, impair, negate, supersede, prohibit, restrict, hinder, prevent, interfere with or otherwise contravene DuPont’s sole and exclusive authority to determine the matters described in the immediately above paragraph. Further, without the prior affirmative and unanimous vote of the holders of all of the outstanding shares of Series A Preferred Stock, we will not be permitted to, among other things, (i) amend, alter, change, modify, supplement, repeal or adopt any provision inconsistent with, directly or indirectly (including, without limitation, through any merger, combination, consolidation, tender offer, scheme of arrangement, sale, disposition, divestiture, acquisition, purchase, settlement, exchange, conversion (statutory or otherwise), swap, transfer, assignment, delegation, issuance, dividend, continuance, reclassification, stock split, recapitalization, reorganization, dissolution, termination, restructuring, joint venture, strategic partnership, migration, change in jurisdiction, division (statutory or otherwise), demerger, spin-off, split-off, separation, dividend, distribution, rights offering, or other corporate action or event, including, without limitation, in a single transaction or a series of related transactions (each, a “Corporate Event”)), (a) any provisions of our amended and restated certificate of incorporation or our amended and restated bylaws that so restrict our corporate purpose and limit the authority of our board of directors (and certain related provisions), or in a manner that would circumvent, revoke, impair, negate, supersede, prohibit, restrict, diminish, hinder, prevent, interfere with or otherwise adversely affect any of the powers, designations, preferences, privileges, protections or rights of the holders of the Series A Preferred Stock, or (b) any provision of the Certificate of Designation (as defined herein), or (ii) take, or attempt to take, any action, enter into any agreement, or consummate any transaction (including, without limitation, any financing transaction or Corporate Event) that would result in the Series A Preferred Stock no longer being outstanding or being held (either beneficially or of record) by any person other than the Trust, or that would otherwise circumvent, revoke, impair, negate, supersede, prohibit, restrict, diminish, hinder, prevent, interfere with or otherwise adversely affect any of the powers, designations, preferences, privileges, protections or rights of the Series A Preferred Stock. For further information regarding the voting rights of the Series A Preferred Stock, see the sections entitled “Description of Our Capital Stock—Series A Preferred Stock” and “Description of Our Capital Stock—Other Restrictions”. Additionally, as all shares of the Series A Preferred Stock will be held by the Trust, and the Trust will be prohibited under the terms of its trust documents from voting in favor of any such actions, we expect and intend that the aforementioned limitations on our corporate purpose and the authority of our board of directors will be perpetual. For further information, see the sections entitled “—Our Series A Preferred Stock has separate voting rights over certain potentially material matters and transactions, and the Trust will be required to vote against such matters and transactions”, “Our Relationship with DuPont Following the Distribution—Separation Agreement—Legal Matters”, “Description of Our Capital Stock—Series A Preferred Stock” and “Description of Our Capital Stock—Other Restrictions”.

Further, while the cost sharing arrangement under the Memorandum of Understanding related to future PFAS eligible costs reduces uncertainty, the ultimate impact on us depends on a number of factors and uncertainties that include, but are not limited to: the achievement, terms and conditions of future agreements, if any, related to the cost sharing arrangement among the parties to the Memorandum of Understanding; the outcome of any pending or future litigation related to PFAS, including personal injury claims and natural resource damages claims; the extent and cost of ongoing remediation obligations and potential future remediation obligations; changes in laws and regulations applicable to PFAS chemicals, changes in applicable health advisory levels and in chronic reference doses for PFAS in drinking water; the performance by each of the parties to the Memorandum of Understanding of their respective obligations under the cost sharing arrangement.

As a result, although we will have certain notice and informational rights with respect to such matters, such indemnification and payment obligations relate to liabilities and legal proceedings that will not be within our control, and we accordingly do not expect to be able to make definitive decisions regarding settlements or other outcomes related to Legacy Liabilities (as defined in the Corteva Letter Agreement) or those other liabilities contractually allocated between DuPont and Qnity based on the Applicable Percentages, that could influence our potential related exposure, including in respect of the timing, magnitude or probability thereof.

 

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Following the Spin-Off, we may not enjoy the same benefits of diversity, leverage and market reputation that we enjoyed as a part of DuPont.

Our business (or portions thereof) has historically benefited from DuPont’s operating diversity and purchasing power as well as opportunities to pursue integrated strategies with DuPont’s other businesses, including the Industrials business, which will remain with DuPont in connection with the Spin-Off. Following the Spin-Off, we will not have similar diversity or integration opportunities and may not have similar purchasing power or access to the capital markets.

Additionally, following the Spin-Off, we may become more susceptible to market fluctuations and other adverse events than if we had remained part of the current DuPont organizational structure. As part of DuPont, our business has been able to leverage the DuPont market reputation and performance which has allowed us to, among other things, recruit and retain key personnel to run our business. Following the Spin-Off, although we will maintain the Qnity brand, we may not enjoy the same historical market reputation as DuPont nor the same performance or brand identity, which may make it more difficult for us to recruit or retain such key personnel. We will also be more exposed to matters such as foreign currency exchange rates as a smaller, stand-alone company than we had been as a part of the larger DuPont enterprise.

We may have received better terms from unaffiliated third parties than the terms received in the commercial agreements we and/or certain of our subsidiaries will enter into with DuPont and/or certain of its subsidiaries.

In connection with the Spin-Off, we and/or certain of our subsidiaries will enter into various other agreements with DuPont and/or certain of its subsidiaries, including, but not limited to, the Tax Matters Agreement, the Employee Matters Agreement, the Transition Services Agreements, the Intellectual Property Cross-License Agreement, the Transitional House Marks Trademark License Agreement, the ESL Cost Sharing Agreement and certain other intellectual property-related, real estate-related, confidentiality-related, regulatory-related and commercial agreements, which will govern certain relationships between Qnity and DuPont following the Spin-Off that were previously provided within DuPont. Such agreements are intended to be entered into on arm’s-length terms similar to those that would be agreed with an unaffiliated third party such as a buyer in a sale transaction, but we will not have an independent board of directors or a management team independent of DuPont representing our interests while such agreements are being negotiated. In addition, until the Spin-Off is completed, we will continue to be a wholly owned subsidiary of DuPont and, accordingly, DuPont will still have the sole discretion to determine and change the terms of the separation until the distribution date. As a result of these factors, some of the terms of such agreements may not reflect terms that would have resulted from arm’s-length negotiations among unaffiliated third parties, and it is possible that we might have been able to achieve more favorable terms if the circumstances differed.

For example, under the ESL Cost Sharing Agreement, DuPont and Qnity will be responsible for 60% and 40%, respectively, of certain costs and expenses that exceed the net revenues received by DuPont from certain third parties at DuPont’s Experimental Station site (“Experimental Station”). As a result, Qnity may have to pay certain additional costs, including in the event that certain portions of Experimental Station not occupied by Qnity, DuPont or their respective subsidiaries as of the Spin-Off become vacant and DuPont does not lease such portions to a new tenant for rental rates that are at least equal to the current rental rates. Because DuPont will operate Experimental Station following the Spin-Off, such costs will be beyond our control, and our obligation to bear such costs may negatively impact our business, results of operations, financial condition and cash flows. For further information, see the section entitled “Our Relationship with DuPont Following the Distribution”.

If the distribution, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes, then we could be subject to significant tax and indemnification liabilities and stockholders receiving our common stock in the distribution could be subject to significant tax liability.

It is a condition to the distribution that DuPont receives the Tax Opinion. The Tax Opinion will rely on certain facts, assumptions and undertakings, and certain representations from DuPont and us, regarding the past and

 

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future conduct of both respective businesses and other matters, including those discussed in the risk factor immediately below. Notwithstanding the Tax Opinion, the Internal Revenue Service (“IRS”) could determine on audit that the distribution and/or certain related transactions should be treated as a taxable transaction if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated, or that the distribution should be taxable for other reasons, including if the IRS were to disagree with the conclusions of the Tax Opinion. Additionally, while DuPont does not currently intend to waive any of the conditions to the distribution described in this information statement, DuPont may waive any of the conditions to the distribution (including the receipt by DuPont of the Tax Opinion) and proceed with the distribution even if all such conditions have not been met.

If the distribution ultimately is determined to be taxable, then a stockholder of DuPont that received shares of Qnity common stock in the distribution would be treated as having received a distribution of property in an amount equal to the fair market value of such shares (including any fractional shares sold on behalf of such stockholder) on the distribution date and could incur significant income tax liabilities. Such distribution would be taxable to such stockholder as a dividend to the extent of DuPont’s current and accumulated earnings and profits, which would include any earnings and profits attributable to the gain recognized by DuPont on the taxable distribution and could include earnings and profits attributable to certain internal transactions preceding the distribution. Any amount that exceeded DuPont’s earnings and profits would be treated first as a non-taxable return of capital to the extent of such stockholder’s tax basis in its shares of DuPont stock with any remaining amount being taxed as a gain on the DuPont stock. In the event the distribution is ultimately determined to be taxable, DuPont would recognize corporate level taxable gain on the distribution in an amount equal to the excess, if any, of the fair market value of Qnity common stock distributed to DuPont stockholders on the distribution date over DuPont’s tax basis in such stock. In addition, if certain related transactions fail to qualify for tax-free treatment under U.S. federal, state, local tax and/or foreign tax law, we and DuPont could incur significant tax liabilities under U.S. federal, state, local and/or foreign tax law. For a more detailed discussion, see the section entitled “U.S. Federal Income Tax Consequences of the Distribution”.

Generally, taxes resulting from the failure of the Spin-Off to qualify for non-recognition treatment for U.S. federal income tax purposes would be imposed on DuPont or DuPont stockholders. Under the Tax Matters Agreement that we will enter into with DuPont, subject to the exceptions described below, we are generally obligated to indemnify DuPont against such taxes imposed on DuPont in certain circumstances. If the distribution fails to qualify for non-recognition treatment for U.S. federal income tax purposes for certain reasons relating to the overall structure of the distribution, then under the Tax Matters Agreement, DuPont and Qnity would share the tax liability resulting from such failure pro rata based on each of Qnity’s and DuPont’s Applicable Percentage. Furthermore, under the terms of the Tax Matters Agreement, we also generally will be responsible for any taxes imposed on DuPont that arise from the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of Section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to our, or our affiliates’, stock, assets or business, or any breach of our representations made in any representation letter provided to Skadden in connection with the Tax Opinion. DuPont will be separately responsible for any taxes imposed on Qnity that arise from the failure of the distribution to qualify as tax-free for U.S. federal income tax purposes within the meaning of Section 355 of the Code or the failure of certain related transactions to qualify for tax-free treatment, to the extent such failure to qualify is attributable to actions, events or transactions relating to DuPont’s, or its affiliates’ stock, assets or business, or any breach of DuPont’s representations made in connection with the representation letter provided to Skadden in connection with the Tax Opinion. Events triggering an indemnification obligation under the Tax Matters Agreement include events occurring after the distribution that cause DuPont to recognize a gain under Section 355(e) of the Code, as discussed further below. Such tax amounts could be significant. To the extent that we are responsible for any liability under the Tax Matters Agreement, there could be a material adverse impact on our business, financial condition, results of operations and cash flows in future reporting periods. For a more detailed discussion, see the section entitled “Our Relationship with DuPont Following the Distribution—Tax Matters Agreement”.

 

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Certain transactions with respect to our stock following the Spin-Off could cause the distribution and other related transactions to be taxable to DuPont, in which case we could be subject to significant indemnification liability.

Even if the distribution otherwise constitutes a tax-free transaction to stockholders under Section 355 of the Code, DuPont may be required to recognize corporate level tax on the distribution and certain related transactions under Section 355(e) of the Code if, as a result of transactions considered part of a plan with the distribution, there is a 50% or greater change of ownership in DuPont or us. If DuPont is required to recognize corporate level tax on the distribution and/or certain related transactions under Section 355(e) of the Code, then under the Tax Matters Agreement, we may be required to indemnify DuPont for all or a portion of such taxes, which could be a significant amount, if such taxes were the result of either direct or indirect transfers of Qnity common stock or certain reasons relating to the overall structure of the distribution. For a more detailed description, see the section entitled “Our Relationship with DuPont Following the Distribution—Tax Matters Agreement”.

We will be subject to continuing contingent tax-related liabilities of DuPont following the distribution.

After the distribution, there will be several significant areas where the liabilities of DuPont may become our obligations either in whole or in part. For example, under the Code and the related rules and regulations, each corporation that was a member of DuPont’s consolidated tax reporting group during any taxable period or portion of any taxable period ending on or before the effective time of the distribution is jointly and severally liable for the U.S. federal income tax liability of the entire consolidated tax reporting group for such taxable period. In connection with the distribution of Qnity, the parties intend to enter into a Tax Matters Agreement in order to contractually allocate certain rights and obligations of DuPont between us and DuPont. For a more detailed description, see the section entitled “Our Relationship with DuPont Following the Distribution—Tax Matters Agreement”. If DuPont were unable to pay any prior period taxes for which it is responsible, however, we could be required to pay the entire amount of such taxes, and such amounts could be significant. Other provisions of federal, state, local or foreign law may establish similar liability for other matters, including laws governing tax-qualified pension plans, as well as other contingent liabilities.

We will agree to numerous restrictions to preserve the tax-free treatment of the transactions in the United States, which may reduce our strategic and operating flexibility.

Our ability to engage in certain transactions could be limited or restricted after the distribution to preserve, for U.S. federal income tax purposes, the tax-free nature of the distribution and certain related transactions. As discussed above, even if the distribution otherwise qualifies for tax-free treatment under Section 355 of the Code, the distribution may result in corporate-level taxable gain to Qnity or DuPont under Section 355(e) of the Code if a transaction results in a change of ownership of 50% or greater in us as part of a plan or series of related transactions that includes the distribution. The process for determining whether an acquisition or issuance triggering these provisions has occurred, the extent to which any such acquisition or issuance results in a change of ownership and the cumulative effect of any such acquisition or issuance together with any prior acquisitions or issuances is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. Any acquisitions or issuances of Qnity or DuPont common stock within a two-year period after the distribution generally are presumed to be part of such a plan that includes the distribution, although such presumption may be rebutted. As a result of these limitations, under the Tax Matters Agreement that we will enter into with DuPont, for the two-year period following the distribution, we will be prohibited, except in certain circumstances, from, among other things:

 

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undertaking or permitting any transaction relating to the stock of Qnity, including issuances, redemptions or repurchases other than certain, limited, permitted issuances and repurchases;

 

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merging, consolidating or liquidating;

 

•

entering into any transaction resulting in acquisitions of a certain percentage of our assets, whether by merger or otherwise;

 

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•

affecting the relative voting rights of Qnity stock, whether by amending Qnity’s certificate of incorporation or otherwise; or

 

•

ceasing to actively conduct our business.

These restrictions may significantly limit our ability to pursue certain strategic transactions or other transactions that we may believe to otherwise be in the best interests of our stockholders or that might increase the value of our business.

We may be held liable to DuPont if we fail to perform under our agreements with DuPont, and the performance of such services may negatively affect our business and operations.

In connection with the Spin-Off, DuPont and Qnity, and/or certain of our respective affiliates, will enter into various agreements, including but not limited to, the Tax Matters Agreement, the Employee Matters Agreement, the Transition Services Agreements, the Intellectual Property Cross-License Agreement, the Transitional House Marks Trademark License Agreement, the ESL Cost Sharing Agreement and certain other intellectual property-related, real estate-related, confidentiality-related, regulatory-related and commercial agreements. See the section entitled “Our Relationship with DuPont Following the Distribution”. These agreements will provide for the performance of certain services or provision of goods by each company for the benefit of the other for a period of time after the Spin-Off. If we do not satisfactorily perform our obligations under these agreements, we may be held liable for any resulting losses suffered by DuPont subject to certain limits. In addition, during the transition support periods under the transition arrangements, our management and employees may be required to divert their attention away from its business in order to provide services to DuPont, which could adversely affect our business.

The transfer to Qnity of certain contracts, permits and other assets and rights may require the consents or approvals of, or provide other rights to, third parties and governmental authorities. If such consents or approvals are not obtained, Qnity may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance.

The Separation Agreement will provide that certain contracts, permits and other assets and rights are to be transferred from DuPont or its subsidiaries to Qnity or its subsidiaries in connection with the Spin-Off. The transfer of certain of these contracts, permits and other assets and rights may require consents or approvals of third parties or governmental authorities or provide other rights to third parties. In addition, in some circumstances, Qnity and DuPont may be joint beneficiaries of contracts, and Qnity and/or DuPont may need the consents of third parties in order to split or separate the existing contracts or the relevant portion of the existing contracts to Qnity and DuPont. Some parties may use consent requirements or other rights to seek to terminate contracts or obtain more favorable contractual terms from Qnity, which, for example, could take the form of price increases. This could require Qnity to expend additional resources in order to obtain the services or assets previously provided under the contract or require Qnity to seek arrangements with new third parties or obtain letters of credit or other forms of credit support. If Qnity is unable to obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to Qnity as part of its Spin-Off from DuPont, and Qnity may be required to seek alternative arrangements to obtain services and assets that may be more costly and/or of lower quality. The termination or modification of these contracts or permits or the failure to timely complete the transfer or separation of these contracts or permits could negatively affect Qnity’s business, financial condition, results of operations and cash flows.

Neither our historical carve-out financial information nor our unaudited pro forma combined financial information are necessarily representative of the results we would have achieved as an independent, publicly traded company and may not be a reliable indicator of our future results.

Our historical carve-out financial information and the unaudited pro forma financial information included herein may not reflect what our financial condition, results of operations and cash flows would have been had we been

 

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an independent, publicly traded company comprised solely of DuPont’s Electronics business during the periods presented or what our financial condition, results of operations and cash flows will be in the future when we are an independent company. This is primarily because:

 

•

Our historical carve-out financial information does not reflect the changes that we expect to experience in connection with the Spin-Off, including the Internal Reorganization and distribution of DuPont’s Electronics business.

 

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Our historical carve-out financial information reflects only the allocations of corporate expenses from DuPont, and thus are not necessarily representative of the costs we will incur for similar services as an independent company following the Spin-Off.

 

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Our business has historically principally satisfied its working capital requirements and obtained capital for its general corporate purposes, including acquisitions and capital expenditures, as part of DuPont’s company-wide cash management practices. Although these practices have historically generated sufficient cash to finance the working capital and other cash requirements of our business, following the Spin-Off we will no longer have access to DuPont’s cash pools nor will our cash generating revenue streams mirror those of DuPont. We may therefore need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities or other arrangements. The cost of capital for our business may be higher than DuPont’s cost of capital prior to the distribution.

 

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Currently, our business is operated under the umbrella of DuPont’s corporate organization. This integration has historically permitted our business (or portions thereof) to enjoy economies of scope and scale in costs, employees, vendor relationships and customer relationships, both as part of the DuPont organization and within the DuPont internal corporate structure. Although we and/or certain of our subsidiaries expect to enter into short-term transition agreements that will govern certain commercial and other relationships between DuPont and Qnity after the Spin-Off, those temporary arrangements may not capture the benefits our businesses have enjoyed in the past as a result of this integration. The loss of these benefits could have an adverse effect on our business, results of operations and financial condition following the completion of the Spin-Off.

 

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We will enter into transactions with DuPont that did not exist prior to the Spin-Off. See the section entitled “Our Relationship with DuPont Following the Distribution” for information regarding these transactions.

 

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Other significant changes may occur in our cost structure, management, financing and business operations as a result of the Spin-Off and our operating as a company separate from DuPont.

In addition, the unaudited pro forma financial information included in this information statement is based on the best information available, which in part includes a number of estimates and assumptions. These estimates and assumptions may prove not to be accurate, and accordingly, our unaudited pro forma financial information should not be assumed to be indicative of what our financial condition or results of operations actually would have been as a stand-alone company during the time periods presented nor to be a reliable indicator of what our financial condition or results of operations actually may be in the future.

For further information, see our historical Combined Financial Statements and corresponding notes, the unaudited pro forma combined financial information and corresponding notes, each included elsewhere in this information statement, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

 

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Although we have not identified any conflicts of interest, following the Spin-Off certain of our directors and employees may have actual or potential conflicts of interest because of their financial or equity interests in DuPont, or because of their previous positions with DuPont.

Because of their current or former positions with DuPont, certain of our expected executive officers and directors own equity interests in both us and DuPont. Continuing ownership of DuPont shares and equity awards could create, or appear to create, potential conflicts of interest if we and DuPont face decisions that could have implications for both us and DuPont. For example, our officers and directors could be motivated or seen to be motivated to make decisions benefitting DuPont that would not have been made if they had no ownership of DuPont shares or equity awards, which may in turn cause harm to our reputation. We have not currently identified any conflicts of interest; however, potential conflicts of interest could arise in connection with the resolution of any dispute between us and DuPont regarding the terms of the agreements governing the Spin-Off and our relationship with DuPont following the Spin-Off. See the section entitled “Our Relationship with DuPont Following the Distribution” for information about some of these agreements. Potential conflicts of interest may also arise out of any commercial arrangements that we or DuPont, and/or our respective affiliates, may enter into in the future. For example, due to the existing relationships between our officers and directors who have historically been employed by DuPont, our officers and directors may make or be seen to be making decisions benefitting DuPont that would not have been made if we had no such officers or directors. A dispute regarding a potential or actual conflict of interest involving us and DuPont could negatively impact our businesses, results of operations, cash flows and financial condition. In addition, public perception of such an actual or apparent conflict of interest could pose reputational risks and expose us to increased scrutiny from investors and regulators.

Prior to the Spin-Off, we will adopt a written code of conduct that will apply to our directors and executive officers, as well as employees, which will intend to promote honest and ethical conduct, including the handling of actual or apparent conflicts of interests between personal and professional relationships. See the section entitled “Management—Codes of Conduct and Financial Ethics”. The board will also adopt a set of governance principles in connection with the Spin-Off to assist with governance practices, including a requirement that directors disclose actual or potential conflicts of interest and recuse themselves from any discussion or decision affecting their personal, business or professional interests. The governance principles will also delegate the resolution of any conflict of interest question involving a director or an executive officer to the Nominating and Governance Committee and the resolution of any conflict of interest issue involving any other officer of the Company to the chief executive officer. See the section entitled “Management—Corporate Governance Guidelines” for more information on the governance principles. In addition, each of our expected officers and directors have confirmed their ongoing obligation to notify management of their outside activities, which will enable management to monitor any potential conflicts of interest, whether with DuPont or other third parties.

We may be unable to generate sufficient cash to service our indebtedness and may be forced to take other actions, which may not be successful, to satisfy our obligations under our indebtedness.

We have historically satisfied our indebtedness obligations as well as our short-term working capital requirements and financial support functions through the earnings, assets and cash flows generated by our operations. Following the Spin-Off, however, we will not be able to rely on any of the earnings, assets or cash flows that are attributable to DuPont’s Industrials business, which will remain with DuPont in connection with the Internal Reorganization.

Our ability to make payments on and to refinance our indebtedness, to obtain and maintain sufficient working capital, and to meet any dividend obligations will depend exclusively on our ability to generate cash in the future from our own operations, financings or asset sales following the Spin-Off. Our ability to generate cash is further subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. We may not generate sufficient funds to service our debt and meet our business needs, such as funding working capital or the expansion of our operations. If we are not able to repay or refinance our debt as it becomes

 

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due, we may be forced to take disadvantageous actions, including (i) reducing spending on marketing, retail trade incentives, advertising and new product innovation, (ii) reducing financing in the future for working capital, capital expenditures and general corporate purposes, (iii) seeking additional debt or equity capital, (iv) restructuring or refinancing our indebtedness, (v) selling assets or (vi) dedicating an unsustainable level of our cash flow from operations to the payment of principal and interest on our indebtedness. In addition, our ability to withstand competitive pressures and to react to changes in our industry could be impaired. Further, the level and quality of our earnings, operations, business and management, among other things, will impact the determination of our credit ratings. A decrease in the ratings assigned to us by the ratings agencies may negatively impact our access to the debt capital markets and increase our cost of borrowing. In addition, we may be unable to maintain the current credit worthiness or prospective credit rating of Qnity. Any actual or anticipated changes or downgrades in such credit rating may have a negative impact on our liquidity, capital position or access to capital markets and affect our ability to obtain any future required financing on acceptable terms or at all.

Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. We may not be able to implement any refinancing on commercially reasonable terms or at all and, even if successful, a refinancing may not allow us to meet our scheduled debt service obligations. The agreements governing our future indebtedness may restrict our ability to dispose of assets and use the proceeds of such dispositions and we may be unable to consummate any dispositions or generate proceeds sufficient to meet our debt service obligations.

The lenders who hold our debt could also accelerate amounts due in the event that we default, which could potentially trigger a default or acceleration of the maturity of our other debt.

We have and will incur indebtedness that contains restrictive covenants, which may restrict our ability to pursue our business strategies.

In connection with the Spin-Off and the Qnity Cash Distribution to DuPont, we have and will incur significant indebtedness. A portion of such indebtedness will be governed by restrictive covenants, which may limit our ability, among other things, to:

 

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incur or guarantee additional indebtedness;

 

•

make certain investments;

 

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pay dividends or make distributions on our capital stock;

 

•

agree to payment restrictions affecting our restricted subsidiaries;

 

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consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

 

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enter into transactions with our affiliates;

 

•

incur liens;

 

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sell or transfer any assets; and

 

•

prepay certain debt.

Such restrictive covenants could also limit could also limit our ability to plan for or react to market conditions, meet capital needs or make acquisitions or otherwise restrict our activities or business plans.

Restrictions under our Intellectual Property Cross-License Agreement with DuPont will limit our ability to prosecute, maintain and enforce certain intellectual property.

We will be dependent to a certain extent on DuPont to prosecute, maintain, defend and enforce certain of the intellectual property licensed under our Intellectual Property Cross-License Agreement with DuPont. For

 

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example, DuPont will have the sole right to file, prosecute maintain and defend the patents, including patents filed on trade secrets and other know-how, licensed to us. DuPont will also have the sole right to enforce the intellectual property, including patents, trade secrets and other know-how, licensed to us. If DuPont chooses to not enforce the intellectual property licensed to us under the Intellectual Property Cross-License Agreement, we may not be able to prevent competitors from making, using and selling competitive products and services.

Our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on a stand-alone basis is sufficient to satisfy their requirements for doing or continuing to do business with them.

Some of our customers, prospective customers, suppliers or other companies with whom we conduct business may need assurances that our financial stability on a stand-alone basis is sufficient to satisfy their requirements for doing or continuing to do business with them, and may require us to provide additional credit support, such as letters of credit or other financial guarantees. Any failure of parties to be satisfied with our financial stability could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Until the distribution occurs, DuPont has the sole discretion to change the terms of the distribution.

Until the distribution occurs, DuPont will have the sole and absolute discretion to determine and change the terms of the distribution, including the establishment of the record date and distribution date. These changes could be unfavorable to us. In addition, DuPont may decide at any time not to proceed with the distribution.

The business separation and related transactions may expose us to potential claims by third parties or other liabilities related to state and federal fraudulent conveyance laws and legal distribution requirements.

Although we will receive a solvency opinion from an investment bank confirming that we and DuPont will each be adequately capitalized following the distribution, third parties may seek to challenge the Spin-Off under various state and federal fraudulent conveyance laws. Fraudulent conveyances or transfers are generally defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due. An unpaid creditor could claim that DuPont or Qnity did not receive fair consideration or reasonably equivalent value in the Spin-Off, and that the Spin-Off left DuPont or Qnity insolvent or with unreasonably small capital, or that DuPont or Qnity intended or believed DuPont or Qnity would incur debts beyond their respective ability to pay such debts as they mature. Even if untrue, these claims could require much expenditure and/or much attention from the management of DuPont or Qnity in connection with legal defense or settlements. If a court were to agree with such a plaintiff, then such court could impose substantial liabilities on us or void all or certain portions of the Internal Reorganization transactions or agreements between DuPont and Qnity related to the Spin-Off, which could adversely affect our financial condition and our results of operations.

The distribution is also subject to review under state corporate distribution statutes. Under the Delaware General Corporation Law (“DGCL”), a corporation may only pay dividends to our stockholders either (i) out of our surplus (net assets minus capital) or (ii) if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Although the DuPont board of directors intends to make the distribution out of DuPont’s surplus and will receive an opinion that DuPont has adequate surplus under Delaware law to declare the dividend of our common stock in connection with the distribution, there can be no assurance that a court will not later determine that some or all of the distribution was unlawful.

Risks Related to our Capital Stock

We cannot be certain that an active trading market for our common stock will develop or be sustained after the distribution, and following the distribution, our stock price may fluctuate significantly.

A public market for our common stock does not currently exist. Subject to obtaining requisite approval, we intend to list the Qnity common stock on the NYSE under the symbol “Q”. We also expect that a limited market,

 

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commonly known as a “when-issued” trading market, will develop on or about     , 2025, and that “regular-way” trading of shares of our common stock will begin on the first trading day after the distribution date. However, we cannot guarantee that an active trading market will develop or be sustained for our common stock after the distribution. If an active trading market does not develop, our stockholders may have difficulty selling their shares of our common stock at an attractive price, or at all. In addition, we cannot predict the prices at which shares of our common stock may trade after the distribution.

Similarly, DuPont cannot predict the effect of the distribution on the trading prices of its common stock, which will continue to be listed and traded on the NYSE but will represent ownership of the remaining company, which will hold only DuPont’s Industrials business. The combined trading prices of our common stock and the common stock of DuPont after the distribution may not be equal to or greater than the trading price of DuPont common stock prior to the distribution. Until the market has fully evaluated us as a stand-alone company or DuPont without our business, the trading price of each company’s shares may fluctuate significantly.

The trading price of our common stock will be determined in the public markets and may be influenced by many factors that may cause the price to fluctuate significantly, some of which may be beyond our control, including:

 

•

our business profile and market capitalization may not fit the investment objectives of DuPont’s current stockholders, causing a shift in our initial investor base;

 

•

our common stock may not be included in some indices in which DuPont common stock is included, causing certain stockholders to be mandated to sell their shares of our common stock;

 

•

our quarterly or annual earnings, or those of other companies in our industry;

 

•

the failure of securities analysts to cover our common stock after the distribution;

 

•

actual or anticipated fluctuations in our operating results;

 

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changes in earnings estimates by securities analysts or our ability to meet those estimates or our earnings guidance;

 

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the operating and stock price performance of other comparable companies;

 

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overall market fluctuations and domestic and worldwide economic conditions; and

 

•

other factors described in this “Risk Factors” section and elsewhere in this information statement.

Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.

A large number of shares of our common stock are or will be eligible for future sale, which may cause our stock price to decline.

Upon completion of the distribution, we expect that there will be an aggregate of approximately 209,433,618 million shares of our common stock issued and outstanding, giving effect to an assumed distribution ratio of one share of our common stock for every two shares of DuPont common stock. These shares will be freely tradable without restriction or further registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”), unless the shares are owned by one of our “affiliates”, as that term is defined in Rule 405 under the Securities Act.

Any sales of a substantial number of shares of our common stock in the public market or the perception that such sales might occur, in connection with the distribution or otherwise, may cause the market price of our common stock to decline. We are unable to predict whether large amounts of our common stock will be sold in the open market following the distribution. We are also unable to predict whether a sufficient number of buyers would be in the market at that time. In addition, a portion of DuPont common stock is held by index funds tied to stock indices. If we are not included in these indices at the time of the distribution, these index funds may be required to sell our common stock they receive in the distribution.

 

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Our stockholders’ percentage of ownership in Qnity may be diluted in the future.

Our stockholders’ percentage ownership in Qnity may be diluted in the future because of equity issuances of our common stock for acquisitions, capital market transactions or otherwise, including, without limitation, outstanding equity awards resulting from the treatment of DuPont equity awards in connection with the distribution and equity awards that we may grant to our directors, officers and employees in the future. Such issuances may have a dilutive effect on our earnings per share, which could adversely affect the market price of our common stock.

In addition, our amended and restated certificate of incorporation will authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, preferences and relative, participating, optional and other special rights, including preferences over our common stock with respect to dividends and distributions, as our board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant holders of Qnity preferred stock the right to elect some number of our directors in all events or on the happening of specified events or to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of Qnity preferred stock could affect the residual value of our common stock. See the section entitled “Description of Our Capital Stock”.

We cannot guarantee the timing, amount or payment of dividends on our common stock in the future.

We expect to pay a quarterly dividend. Qnity expects to declare dividends of approximately 10% of annual net income. As an independent, publicly traded company, we will be determining the optimal allocation of capital to achieve the company’s strategy and deliver competitive returns to our stockholders, including whether to pay cash dividends to our stockholders. The timing, declaration, amount, and payment of future dividends to stockholders, if any, will fall within the discretion of our board. Our board’s decisions regarding the payment of dividends will depend on consideration of many factors, such as our financial condition, earnings, sufficiency of distributable reserves, opportunities to retain future earnings for use in the operation of our business and to fund future growth, capital requirements, debt service obligations, legal requirements, regulatory constraints, and other factors that our board deems relevant. There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends. For more information, see “Dividend Policy”.

Our Series A Preferred Stock has separate voting rights over certain potentially material matters and transactions, and the Trust will be required to vote against such matters and transactions.

In addition to our common stock, we will have Series A Preferred Stock, all issued and outstanding shares of which will be held, at the time of the distribution, by the Trust established for the purpose of voting against any and all matters subject to Series A Preferred Stock approval in the Certificate of Designation and our amended and restated certificate of incorporation.

Under our amended and restated certificate of incorporation, without the prior affirmative and unanimous vote of the holders of all of the outstanding shares of Series A Preferred Stock, we will not be permitted to, among other things, (i) amend, alter, change, modify, supplement, repeal or adopt any provision inconsistent with, directly or indirectly (including, without limitation, through any Corporate Event), (a) any provisions of our amended and restated certificate of incorporation or our amended and restated bylaws that expressly limit our corporate purpose and the authority of our board of directors such that, as a matter of Delaware corporate law, we and our board of directors will not be able to take any action, directly or indirectly, to challenge, breach, question, dispute, undermine, diminish, revoke, circumvent, impair, negate, supersede, prohibit, restrict, hinder, prevent, interfere with or otherwise contravene DuPont’s sole and exclusive authority to determine the matters described in the first paragraph of the section entitled “—We are subject to risks associated with certain of our indemnification obligations under the Separation Agreement, pursuant to which we may be required to make

 

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substantial cash payments to DuPont or the applicable third party for matters solely and exclusively controlled by DuPont”, or in a manner that would circumvent, revoke, impair, negate, supersede, prohibit, restrict, diminish, hinder, prevent, interfere with or otherwise adversely affect any of the powers, designations, preferences, privileges, protections or rights of the holders of the Series A Preferred Stock, or (b) any provision of the Certificate of Designation, or (ii) take, or attempt to take, any action, enter into any agreement, or consummate any transaction (including, without limitation, any financing transaction or Corporate Event) that would result in the Series A Preferred Stock no longer being outstanding or being held (either beneficially or of record) by any person other than the Trust, or that would otherwise circumvent, revoke, impair, negate, supersede, prohibit, restrict, diminish, hinder, prevent, interfere with or otherwise adversely affect any of the powers, designations, preferences, privileges, protections or rights of the Series A Preferred Stock. For further information regarding the voting rights of the Series A Preferred Stock, see the sections entitled “Description of Our Capital Stock—Series A Preferred Stock” and “Description of Our Capital Stock—Other Restrictions”. Additionally, as all shares of the Series A Preferred Stock will be held by the Trust, and the Trust will be prohibited under the terms of its trust documents from voting in favor of any such actions, we expect and intend that the aforementioned limitations on our corporate purpose and the authority of our board of directors will be perpetual.

Such separate voting rights by our Series A Preferred Stock may discourage or prevent third parties from initiating or entering into transactions with Qnity, or Qnity from entering into transactions, that would otherwise be attractive to Qnity or its common stockholders. For further information, see the sections entitled “—We are subject to risks associated with certain of our indemnification obligations under the Separation Agreement, pursuant to which we may be required to make substantial cash payments to DuPont or the applicable third party for matters solely and exclusively controlled by DuPont”, “Our Relationship with DuPont Following the Distribution—Separation Agreement—Legal Matters” and “Description of Our Capital Stock—Series A Preferred Stock”.

Certain provisions in Qnity’s amended and restated certificate of incorporation and amended and restated bylaws, Delaware law and in the Tax Matters Agreement and other Spin-Off-related agreements may prevent or delay an acquisition of us, which could decrease the trading price of our common stock.

Upon the distribution, Qnity’s amended and restated certificate of incorporation and amended and restated bylaws will contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids by making such practices or bids unacceptably expensive to the bidder and to encourage prospective acquirers to negotiate with our board of directors rather than to attempt a hostile takeover. See the section entitled “Description of Our Capital Stock”.

In addition, following the distribution, we will be subject to Section 203 of the DGCL. Section 203 of the DGCL provides that, subject to limited exceptions, persons that (without prior board approval) acquire, or are affiliated with a person that acquires, more than 15% of the outstanding voting stock of a Delaware corporation will not engage in any business combination with that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year period following the date on which that person or its affiliate becomes the holder of more than 15% of the corporation’s outstanding voting stock.

We believe these provisions will protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our board of directors and by providing our board of directors with more time to assess any acquisition proposal. These provisions are not intended to make us immune from takeovers. However, these provisions will apply even if an acquisition proposal or offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in our and our stockholders’ best interests. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

Several of the agreements that we and/or certain of our subsidiaries will enter into with DuPont and/or certain of its subsidiaries in connection with the Spin-Off require DuPont’s consent to any assignment of our rights and

 

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obligations, or a change of control of us, under the agreements. These consent rights may discourage, delay or prevent a change of control or similar transaction that you may consider favorable. For further information, see the section entitled “Our Relationship with DuPont Following the Distribution”.

In addition, an acquisition or further issuance of our common stock could also trigger the application of Section 355(e) of the Code. For a discussion of Section 355(e), see the section entitled “U.S. Federal Income Tax Consequences of the Distribution”. Under the Tax Matters Agreement, we would be required to indemnify DuPont for any tax imposed under Section 355(e) of the Code resulting from an acquisition or issuance of our stock, even if we did not participate in or otherwise facilitate the acquisition, and this indemnity obligation and/or certain restrictive covenants in the Tax Matters Agreement (see the section entitled “Risk Factors—Risks Related to the Spin-Off—We will agree to numerous restrictions to preserve the tax-free treatment of the transactions in the United States, which may reduce our strategic and operating flexibility.”) might discourage, delay or prevent a change of control that you may consider favorable.

Our amended and restated bylaws will provide that the Court of Chancery of the State of Delaware will be the exclusive forum for certain legal actions between us and our stockholders and that the federal district courts of the United States of the America will be the exclusive forum for certain legal actions arising under the Securities Act, which could limit our stockholders’ ability to obtain a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or employees.

Our amended and restated bylaws will provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any derivative action or proceeding brought on behalf of us, any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, other employees, stockholders or agents to us or our stockholders, any action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim governed by the internal affairs doctrine. Notwithstanding the foregoing, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or any rules or regulations promulgated thereunder. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, other employees, stockholders or agents, which may discourage such lawsuits against us or our directors, officers other employees, stockholders or agents. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder as a result of our exclusive forum provisions. These exclusive forum provisions will not apply to any action brought to enforce a duty or liability created by the Exchange Act or any rules or regulations promulgated thereunder. If a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this information statement may constitute “forward-looking statements” that involve risks and uncertainties. Forward-looking statements are based on our current assumptions regarding future business and financial performance. These statements by their nature address matters that are uncertain to different degrees. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Words such as “plans”, “expects”, “will”, “would”, “anticipates”, “believes”, “intends”, “seeks”, “projects”, “efforts”, “estimates”, “potential”, “continue”, “intend”, “may”, “could”, “should” and similar expressions, may identify such forward-looking statements. Any forward-looking statement in this information statement speaks only as of the date on which it is made. Although we believe that the forward-looking statements contained in this information statement are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results, cash flows or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:

 

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the competitive environment in which we operate;

 

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fluctuations in demand for our products;

 

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the risks from our international operations, including trade restrictions and sanctions laws;

 

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our strategy, outcomes and growth prospects;

 

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our ability to comply with complex and increasing legal and regulatory requirements;

 

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the risks from acquisitions, divestitures, alliances and other portfolio actions;

 

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interruptions in the operations of our manufacturing facilities;

 

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volatility in cost of inputs, including energy and raw materials;

 

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failure to attract and retain talented people;

 

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damage to our reputation;

 

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reliance on key customers and suppliers;

 

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failure to respond to rapid technological change;

 

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general economic trends and trends in the industry and markets in which we operate;

 

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interruptions to our information technology or network systems;

 

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failure to protect our intellectual property or allegations that we have infringed the intellectual property of others;

 

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exposure to interest rate and currency risk;

 

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cybersecurity and privacy considerations;

 

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legal proceedings and investigatory risks;

 

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environmental matters;

 

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tax matters;

 

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the impact of the commercial and credit environment on our access to capital;

 

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the Corteva Letter Agreement;

 

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contingent liabilities, and other liabilities or obligations arising from the Separation Agreement and other ancillary agreements;

 

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an active market in our common stock not developing or being sustained;

 

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significant volatility in stock price;

 

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DuPont’s failure to complete the Spin-Off as planned or at all;

 

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our failure to manage the transition to a stand-alone public company or achieve some or all of the benefits we expect to achieve from the Spin-Off; and

 

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certain factors discussed elsewhere in this information statement.

These and other factors are more fully discussed in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this information statement. Those cautionary statements are not exclusive and are in addition to other factors discussed elsewhere in this information statement. Except as required by law, we assume no obligation to update or revise any forward-looking statements.

 

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THE SPIN-OFF

Background of the Distribution

On May 22, 2024, DuPont announced its plan to separate its Electronics business through a pro rata distribution of Qnity common stock to stockholders of DuPont. The distribution is intended to be generally tax free for U.S. federal income tax purposes.

Upon the satisfaction or waiver by DuPont of the conditions to the distribution (which are described in more detail in the section entitled “—Conditions to the Distribution”), on the distribution date, DuPont will effect the distribution of all of the issued and outstanding shares of Qnity common stock on the basis of      shares of Qnity common stock for every      shares of DuPont common stock held at the close of business, Eastern Time, on October 22, 2025, the record date for the distribution. As a result of the distribution, Qnity will become an independent, publicly traded company.

In connection with the Spin-Off:

 

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we expect to incur secured and unsecured indebtedness in an aggregate principal amount of $4.1 billion, consisting of a $2.35 billion Senior Secured Term Loan Facility, which will be drawn prior to or substantially concurrently with the Spin-Off, and the $1.0 billion of Senior Secured Notes due 2032 and $750 million of Senior Unsecured Notes due 2033, which were issued on August 15, 2025, each as more fully described in the section entitled “Description of Material Indebtedness”; and

 

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using the net proceeds from the Senior Secured Term Loan Facility, the Secured Notes and the Unsecured Notes, as well as cash we have on hand (which itself will be funded by initial contributions to us by DuPont and from operations), we will make the Qnity Cash Distribution to DuPont in an amount expected to total approximately $4.122 billion, inclusive of $22 million of costs related to the Notes issuance on August 15, 2025, plus the pre-funded interest on the Notes through March 31, 2026 of $66 million (and any investment returns on any amounts held in escrow in respect of the Notes issuance).

The distribution is subject to the satisfaction or waiver by DuPont of certain conditions. For a more detailed description of these conditions, see the section entitled “—Conditions to the Distribution”. DuPont stockholders may also receive cash in lieu of any fractional shares of Qnity common stock that they would have received in the distribution. The distribution is intended to be generally tax free for U.S. federal income tax purposes, except for any cash received in lieu of fractional shares. DuPont stockholders will not be required to make any payment, surrender or exchange their DuPont common stock or take any other action to receive their shares of Qnity common stock in the distribution.

DuPont’s board of directors has the discretion to abandon the intended distribution and to alter the terms of the distribution. As a result, we cannot provide any assurances that the distribution will be completed.

Reasons for the Spin-Off

DuPont’s board of directors has met regularly to review and evaluate DuPont’s businesses and available strategic opportunities and believes that DuPont has significantly strengthened its businesses and optimized its portfolio over the years. As a continuation of that transformation, DuPont’s board of directors believes that the separation of its Electronics business as an independent, publicly traded company at this time is the best available opportunity to unlock future value potential by providing investors enhanced operational focus, differential management reporting structures, and tailored capital allocation priorities appropriate for the Electronics business on the one hand, and DuPont’s healthcare & water technologies and diversified industrials businesses on the other. The separation of the Electronics business is of particular importance at this moment given the continued and accelerating trends in the electronics and semiconductor markets, which create enhanced growth and capital investment opportunities that DuPont believes are best served by a more focused, pure-play electronics company.

 

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After considering a wide variety of factors in evaluating the Spin-Off, including the risk that the distribution is abandoned and not completed, DuPont’s board of directors believes that the potential benefits to DuPont stockholders of the Spin-Off of the Electronics business into an independent, publicly traded company with its own distinctive business and capital structure and ability to focus on its specific growth plans will provide DuPont stockholders with certain opportunities and benefits not otherwise available to DuPont.

DuPont’s board of directors believes that the Spin-Off of the Electronics business from DuPont at this time is in the best interests of DuPont and its stockholders. Among other things, DuPont’s board of directors considered the following potential benefits of the Spin-Off:

 

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Distinct Position. The Electronics business differs from DuPont’s other businesses in several respects, such as the market for products and services, manufacturing processes, research and development demands and capabilities, regulatory oversight, competitors, strategic initiatives, growth profile, cyclical trends and business cycles and secular growth drivers. The Electronics business requires significant investment in research and development and capital expenditures to support innovation, so as to address market demands and remain competitive. The purpose of the Spin-Off is to create two independent companies with tailored growth strategies and capital allocation priorities, resulting

in: Qnity, a leading global provider of differentiated electronics materials including key consumables used in semiconductor chip manufacturing, as well as advanced electronic materials enabling reliable signal integrity, power management and thermal management; and DuPont, a premier diversified industrial company powered by high performance engineered solutions and application engineering expertise, industry-leading innovation and top-tier manufacturing capabilities. Each company will provide investors with a distinct investment option that may be more attractive to current investors and will allow each company to attract different investors than the current investment option available to DuPont stockholders of one combined company.

 

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Attractive Investment Profile. DuPont believes that the creation of separate companies, each with a distinct financial profile and clear investment thesis will drive significant long-term value for all stockholders and reduce the complexities surrounding investor understanding, enabling investors to invest in each company separately based on its distinct characteristics.

 

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Value Creation From Pursuit of Emerging Growth Opportunities in Electronics. DuPont is continuing its transformation as a premier diversified industrials company and the separation of the Electronics business is a major step in its journey. The electronics market is experiencing accelerating demand for advanced semiconductor materials and interconnect solutions, led by, among others, the push for increased connectivity and stronger or more frequent connection between devices, systems and networks, thereby enabling better communication, data sharing and artificial intelligence technology applications. This acceleration in demand, coupled with the ongoing recovery in the semiconductor market from cyclic lows in 2023, has created what DuPont believes to be an opportune time to separate the Electronics business.

 

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Enhanced Means to Evaluate Financial Performance. Through the creation of two separate companies, investors should be better able to evaluate the business condition, strategy and financial performance of each company within the context of its particular industry and markets. Investors’ ability to value each company against its respective comparable peer set will enhance the likelihood that both companies achieve appropriate market valuations. It is believed that, over time following the completion of the Spin-Off, the aggregate market value of Qnity and DuPont will be higher, on a fully distributed basis and assuming the same market conditions, than if DuPont were to remain under its current configuration.

 

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Focused Capital Allocation. Each independent, publicly traded company will have a capital structure that is expected to be best suited to its specific needs and will be able to leverage its distinct growth profile and cash flow characteristics to optimize its capital structure and capital allocation strategy that

 

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better align with its streamlined business. DuPont believes that the Spin-Off will permit each company to concentrate its financial resources solely on its own operations, which will allow each company to invest capital (or return capital to its investors) at the time and in the manner most appropriate for its distinct strategic priorities and business needs. This will facilitate more efficient allocation of capital based on each company’s forecasted cash generation, business conditions and market growth, planned investments, credit rating requirements, acquisition activity and capital returns, among other factors, allowing each company to make company-specific investment decisions to drive innovation and enhance growth and returns.

 

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Improved Operational and Strategic Flexibility. Each company is expected to be able to maintain a sharper focus on its core business, operating priorities and growth opportunities, which will allow each company to respond better and more quickly to developments in its operating environment and industry landscape, without having to consider the impact on the businesses of the other company or on the balance and composition of DuPont’s pre-Spin-Off overall portfolio. DuPont believes that each company will also have increased operational flexibility to design and implement corporate strategies based on the particular characteristics of the industry in which each business operates.

 

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Dedicated Management Team with Enhanced Strategic Focus. The Spin-Off will permit each company to be led by a separate, dedicated management team with relevant expertise in its industry, able to focus on strengthening such company’s core businesses, addressing its unique operating and other needs, and pursuing distinct and targeted opportunities. Each company’s management team will be able to design and implement corporate policies and strategies that are tailored to such company’s specific business characteristics and to focus on maximizing the value of its business as well as long-term growth and profitability. In addition, the Spin-Off will provide each company’s management team the opportunity to focus on the goals and expectations, and better satisfy the needs of such company’s respective investors.

 

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Improved Management Incentive Tools. The Spin-Off will permit each publicly traded company to create equity securities, including options and restricted stock units, and to offer stock-based incentive compensation to its employees and executives that is more closely linked to the performance of such company’s business. The DuPont board of directors believes such equity-based compensation arrangements should provide enhanced incentives for performance and further enhance the ability for each publicly traded company to attract, retain and motivate qualified personnel. Recruitment and retention is expected to be enhanced by more consistent talent requirements across the businesses, allowing both recruiters and applicants greater clarity and understanding of talent needs and opportunities associated with the core business activities, principles and risks of each company.

 

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Direct Access to Capital Markets and Ability to Pursue Strategic Opportunities. Each company’s business will have direct access to the capital markets and is expected to be better situated to pursue future acquisitions, joint ventures and other strategic opportunities as well as internal expansion that is more closely aligned with such company’s strategic goals and expected growth opportunities. The Spin-Off will provide each company with its own distinct equity currency that relates solely to its business and industry to use in pursuing certain financial and strategic objectives, including acquisitions. For example, each company will be able to pursue strategic acquisitions in which potential sellers would prefer equity or to raise cash by issuing equity to public or private investors. It is expected that such future transactions will be more easily facilitated with similar businesses through the use of each company’s own equity securities as consideration.

The DuPont board of directors also considered a number of potentially negative factors, including the loss of synergies and joint purchasing power from ceasing to operate as part of a larger, more diversified company, risks relating to the creation of a new public company, such as increased costs from operating as a separate public company, potential disruptions to the businesses and loss or dilution of brand identities, possible increased administrative costs and one-time Spin-Off costs, restrictions on each company’s ability to pursue certain opportunities that may have otherwise been available in order to preserve the tax-free nature of the distribution

 

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and related transactions for U.S. federal income tax purposes, the fact that each company will be less diversified than the current configuration of DuPont’s businesses prior to the Spin-Off and the potential inability to realize the anticipated benefits of the Spin-Off.

DuPont’s board of directors concluded that the potential benefits of the Spin-Off outweighed the potential negative factors in connection therewith. However, neither DuPont nor Qnity can assure you that, following the Spin-Off, any of the benefits described above or otherwise will be realized to the extent anticipated or at all.

Formation of a Holding Company Prior to the Distribution

As part of DuPont’s plan to separate its Electronics business, on December 6, 2024, Qnity was formed by DuPont in the State of Delaware as Novus SpinCo 1, Inc. for the purpose of transferring to Qnity assets and liabilities, including any entities holding assets and liabilities, of the Electronics business. Novus SpinCo 1, Inc. changed its name to Qnity Electronics, Inc. on April 25, 2025. Prior to the transfer of the Electronics business to Qnity by DuPont, which will occur prior to the distribution, Qnity will have no operations other than those incidental to the Spin-Off. In connection with the Spin-Off, DuPont will transfer and convey to Qnity the assets and liabilities, including any entities holding assets and liabilities, of DuPont’s Electronics business (for further information, see the sections entitled “—Internal Reorganization” and “Our Relationship with DuPont Following the Distribution”). DuPont will then complete the Spin-Off through a distribution of Qnity common stock by way of a pro rata dividend to DuPont stockholders as of the record date. Following the Spin-Off, Qnity will be a separate company and the remaining company, DuPont, will not retain any ownership interest in Qnity.

Internal Reorganization

As part of the Spin-Off, and prior to the distribution, DuPont and its subsidiaries expect to complete the Internal Reorganization. The Internal Reorganization will involve the allocation, transfer or conveyance by DuPont of its assets and liabilities in advance of the distribution so that Qnity and its subsidiaries are allocated, transferred or conveyed the entities, assets and liabilities of the Electronics business, while the remaining entities, assets and liabilities will remain with DuPont and its subsidiaries. The series of reorganization transactions consisting of the Internal Reorganization may take the form of asset transfers, mergers, demergers, dividends, contributions and similar transactions, and may involve the formation of new subsidiaries in U.S. or non-U.S. jurisdictions to own and operate the Electronics or Industrials business in such jurisdictions, as applicable. As a result of the Internal Reorganization, at the time of the distribution, Qnity will directly or indirectly own and operate the Electronics business and will generally own the various assets and be obligated for the various liabilities contractually allocated to it pursuant to the Separation Agreement, Employee Matters Agreement and Tax Matters Agreement.

The Number of Shares of Qnity Common Stock You Will Receive

For every      shares of DuPont common stock that you own at the close of business, Eastern Time, on October 22, 2025, the record date, you will receive      shares of Qnity common stock on the distribution date. DuPont will not distribute any fractional shares of Qnity common stock. Instead, if you are a registered holder, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing trading prices and distribute the aggregate cash proceeds (net of discounts and commissions) of the sales pro rata (based on the fractional share such stockholder would otherwise have been entitled to receive) to each stockholder who otherwise would have been entitled to receive a fractional share in the distribution. The distribution agent, in its sole discretion, without any influence by DuPont or us, will determine when, how, through which broker-dealer and at what price to sell the whole shares. Neither we nor DuPont will be able to guarantee any minimum sale price in connection with the sale of these shares. Recipients of cash in lieu of fractional shares will not be entitled to any interest on the amounts received in lieu of fractional shares.

The aggregate net cash proceeds of these sales will be taxable for U.S. federal income tax purposes. See the section entitled “U.S. Federal Income Tax Consequences of the Distribution” for an explanation of the material

 

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U.S. federal income tax consequences of the distribution. If you are a registered holder of DuPont common stock, you will receive a check from the distribution agent in an amount equal to your pro rata share of the aggregate net cash proceeds of the sales. We estimate that it will take approximately one week from the distribution date for the distribution agent to complete the distributions of the aggregate net cash proceeds. If you hold your DuPont common stock through a bank or brokerage firm, your bank or brokerage firm will receive, on your behalf, your pro rata share of the aggregate net cash proceeds of the sales and will be responsible for transmitting to you your share of such proceeds.

When and How You Will Receive the Distribution

With the assistance of the distribution agent, subject to the satisfaction or waiver by DuPont of certain conditions, the distribution of Qnity common stock is expected to occur on     , 2025, the distribution date, to all holders of outstanding DuPont common stock on the record date.

Computershare will serve as the distribution agent in connection with the distribution, and will also serve as the transfer agent and registrar for the Qnity common stock. DuPont stockholders may receive cash in lieu of any fractional shares of Qnity common stock which they would have been entitled to receive.

If you own DuPont common stock as of the close of business on the record date, the shares of Qnity common stock that you are entitled to receive in the distribution will be issued to you electronically, as of the distribution date, in direct registration or book-entry form. If you are a registered holder, the distribution agent will credit the whole shares of Qnity common stock you receive in the distribution to a book-entry account with our transfer agent on or shortly following the distribution date. Approximately one week after the distribution date, the distribution agent will mail you a direct registration account statement that reflects the shares of Qnity common stock that have been registered in book-entry form in your name as well as a check reflecting any cash you are entitled to receive in lieu of fractional shares. “Direct registration form” refers to a method of recording share ownership when no physical share certificates are issued to stockholders, as is the case in this distribution.

Most DuPont stockholders own their shares beneficially through a bank, broker or other nominee. In such cases, the bank, broker or other nominee would be said to hold the shares in “street name” and the shares of Qnity common stock you are entitled to receive in the distribution will be issued electronically to your bank or broker and your ownership would be recorded on the bank or brokerage firm’s books. If you hold your DuPont common stock through a bank, broker or other nominee, your bank or brokerage firm will credit your account for the shares of Qnity common stock that you are entitled to receive in the distribution, and will be responsible for transmitting to you any cash in lieu of fractional shares you are entitled to receive. If you have any questions concerning the mechanics of the distribution and you hold your shares of DuPont in street name, please contact your bank or brokerage firm.

If you sell your DuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you will be selling your right to receive shares of Qnity common stock in the distribution.

Transferability of Shares You Receive

The shares of Qnity common stock distributed to DuPont stockholders in connection with the distribution will be transferable without registration under the Securities Act, except for shares received by persons who may be deemed to be our affiliates. Persons who may be deemed to be our affiliates after the distribution generally include individuals or entities that control, are controlled by or are under common control with us, which may include certain of our executive officers, directors or principal stockholders. Securities held by Qnity affiliates will be subject to resale restrictions under the Securities Act. Qnity affiliates will be permitted to sell shares of Qnity common stock only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act, such as the exemption afforded by Rule 144 under the Securities Act.

 

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Results of the Distribution

After our Spin-Off from DuPont, Qnity will be an independent, publicly traded company. Immediately following the distribution, we estimate that approximately 209,433,618 shares of our common stock will be issued and outstanding, based on the approximately 418,867,237 shares of DuPont common stock outstanding as of September 22, 2025, giving effect to an assumed distribution ratio of one share of our common stock for every two shares of DuPont common stock. The actual number of shares to be distributed will be determined by DuPont at the close of business, Eastern Time, on October 22, 2025, the record date for the distribution, based on the distribution ratio and will reflect any exercise of DuPont options and any vesting and settlement of DuPont Restricted Stock Units (“RSUs”) between the date the DuPont board of directors declares the distribution and the record date for the distribution. The distribution will not affect the number of outstanding shares of DuPont common stock, which will now reflect ownership of DuPont, or any rights of DuPont’s stockholders. DuPont will not distribute any fractional shares of Qnity common stock.

In connection with the Spin-Off, Qnity will enter into the Separation Agreement with DuPont to effect the Spin-Off and provide a framework for Qnity’s relationship with DuPont after the Spin-Off. We and/or certain of our subsidiaries will also enter into various other agreements with DuPont and/or certain of its subsidiaries, including, but not limited to, the Tax Matters Agreement, the Employee Matters Agreement, the Transition Services Agreements, the Intellectual Property Cross-License Agreement, the Transitional House Marks Trademark License Agreement, the ESL Cost Sharing Agreement and certain other intellectual property-related, real estate-related, confidentiality-related, regulatory-related and commercial agreements. These agreements will collectively provide for the contractual allocation between DuPont and Qnity of the assets, liabilities and obligations of DuPont and its subsidiaries (including investments, property, the Applicable Percentage of certain legacy and other liabilities (including Legacy Liabilities (as defined in the Corteva Letter Agreement), any funding obligations of DuPont under the Memorandum of Understanding, legacy PFAS liabilities and liabilities related to businesses and operations of DuPont that were previously discontinued or divested), employee benefits, intellectual property and tax-related assets and liabilities) attributable to periods prior to, at and after Qnity’s Spin-Off from DuPont and will govern certain relationships between Qnity and DuPont following the Spin-Off. For a more detailed description of these agreements, see the section entitled “Our Relationship with DuPont Following the Distribution”.

Market for Qnity Common Stock

There is currently no public trading market for Qnity common stock. Qnity has filed an application to list its common stock on the NYSE. Qnity has not and will not set the initial price of its common stock. The initial price will be established by the public markets.

Qnity cannot predict the price at which its common stock will trade after the distribution. The combined trading prices, after the distribution, of the shares of Qnity common stock that each DuPont stockholder will receive in the distribution and DuPont common stock held at the record date may not equal the “regular-way” trading price of a share of DuPont common stock immediately prior to the distribution. The price at which Qnity common stock trades may fluctuate significantly, particularly until an orderly public trading market develops. Trading prices for Qnity common stock will be determined in the public markets and may be influenced by many factors. See the section entitled “Risk Factors—Risks Related to our Capital Stock”.

Incurrence of Debt

In connection with the Spin-Off, we expect to incur indebtedness in an aggregate principal amount of $4.1 billion, consisting of a $2.35 billion Senior Secured Term Loan Facility, which will be drawn prior to or substantially concurrently with the Spin-Off, and the $1.0 billion of Senior Secured Notes due 2032 and $750 million of Senior Unsecured Notes due 2033, which were issued on August 15, 2025. We also expect to enter into the Senior Secured Revolving Facility of $1.25 billion prior to or substantially concurrently with the Spin-Off, however this facility is not expected to be utilized at the consummation of the Spin-Off, other than with respect to the issuance of letters of

 

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credit. Our capital structure remains under review and will be finalized prior to the Spin-Off. The Qnity Cash Distribution to DuPont (funded from the Notes issuance and borrowings under the Senior Secured Term Loan Facility we expect to enter into, as well as cash we have on hand (which itself will be funded by initial contributions to us by DuPont and from operations)), is expected to total approximately $4.122 billion, inclusive of $22 million of costs related to the Notes issuance on August 15, 2025, plus the pre-funded interest on the Notes through March 31, 2026 of $66 million (and any investment returns on any amounts held in escrow in respect of the Notes issuance). As a result of such transactions, we anticipate having approximately $4.1 billion of outstanding indebtedness upon completion of the Spin-Off. For more information, see the section entitled “Description of Material Indebtedness”.

Trading Between the Record Date and Distribution Date

Beginning on or shortly before the record date and continuing through the last trading day prior to the distribution date, DuPont expects that there will be two markets in DuPont common stock: a “regular-way” market and an “ex-distribution” market. Shares of DuPont common stock that trade on the “regular-way” market will trade with an entitlement to receive the shares of Qnity common stock distributed pursuant to the distribution. Shares of DuPont common stock that trade on the “ex-distribution” market will trade without an entitlement to receive the Qnity common stock distributed pursuant to the distribution. Therefore, if you sell DuPont common stock in the “regular-way” market on or prior to the last trading day prior to the distribution date, you will be selling your right to receive Qnity common stock in the distribution. If you own DuPont common stock at the close of business on the record date and sell those shares on the “ex-distribution” market on or prior to the last trading day prior to the distribution date, you will receive the shares of Qnity common stock that you are entitled to receive pursuant to your ownership of DuPont common stock as of the record date.

Furthermore, we anticipate that trading in Qnity common stock will begin on a “when-issued” basis on or about     , 2025 and will continue through the last trading day prior to the distribution date. “When-issued” trading in the context of a Spin-Off refers to a sale or purchase made conditionally on or before the distribution date because the securities of the separated entity have not yet been distributed. The “when-issued” trading market will be a market for Qnity common stock that will be distributed to holders of DuPont common stock on the distribution date. If you owned DuPont common stock at the close of business on the record date, you would be entitled to Qnity common stock distributed pursuant to the distribution. You may trade this entitlement to shares of Qnity common stock, without DuPont common stock you own, on the “when-issued” market. We anticipate that trading on a “when-issued” basis will continue through the last trading day prior to the distribution date. At the open of trading on the first trading day after the distribution date, “regular-way” trading of Qnity common stock will begin.

Conditions to the Distribution

We expect that the distribution will be effective on     , 2025, the distribution date; provided that, among other conditions described in this information statement, the following conditions will have been satisfied or waived by DuPont:

 

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the SEC having declared effective the Form 10 under the Exchange Act (or the Form 10 having otherwise become effective pursuant to and in accordance with Section 12(d) of the Exchange Act), no stop order relating to the Form 10 being in effect, no proceedings seeking such a stop order being pending before or threatened by the SEC and this information statement (or Notice of Internet Availability hereof) having been distributed to DuPont stockholders;

 

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the listing of Qnity common stock on the NYSE having been approved, subject to official notice of distribution;

 

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the DuPont board of directors having received an opinion from a nationally recognized independent appraisal firm to the effect that, following the distribution, we and DuPont will each be solvent and adequately capitalized, and that DuPont has adequate surplus under Delaware law to declare the dividend of Qnity common stock, in each case, after giving effect to the Qnity Cash Distribution;

 

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the Internal Reorganization having been effectuated prior to the distribution;

 

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•

the DuPont board of directors having declared the dividend of Qnity common stock to effect the distribution and having approved the distribution and all related transactions, which approval may be given or withheld in the DuPont board of directors’ absolute and sole discretion (and such declaration or approval not having been withdrawn);

 

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DuPont, as Qnity’s sole stockholder immediately prior to the Spin-Off, having elected the individuals set forth in the section entitled “Management” to be members of our board of directors following the distribution, and those directors having resigned from the DuPont board of directors, as applicable;

 

•

each of us and DuPont and each of our or DuPont’s applicable subsidiaries having entered into all ancillary agreements to which it and/or such subsidiary is contemplated to be a party;

 

•

no events or developments having occurred or existing that, in the sole and absolute judgment of the DuPont board of directors, make it inadvisable to effect the distribution or that would result in the distribution and related transactions not being in the best interest of DuPont or its stockholders;

 

•

no order, injunction or decree by any governmental entity of competent jurisdiction or other legal restraint or prohibition preventing consummation of all or any portion of the distribution or any of the related transactions, including the transfers of assets and liabilities contemplated by the Separation Agreement, will be pending, threatened, issued or in effect, and no other outside event having occurred that prevents the consummation of all or a portion of the distribution;

 

•

the receipt by DuPont of the Tax Opinion;

 

•

the Qnity Cash Distribution having been completed and not rescinded; and

 

•

Qnity having issued to DuPont one share of Series A Preferred Stock and DuPont having contributed such one share of Series A Preferred Stock to the Trust.

The fulfillment of the foregoing conditions does not create any obligations on DuPont’s part to effect the distribution. While DuPont does not currently intend to waive any of the conditions (including the receipt by DuPont of the Tax Opinion) to the distribution described in this information statement, DuPont may waive any of the conditions to the distribution and proceed with the distribution even if all such conditions have not been met. If the distribution is completed and the DuPont board of directors waived any such condition, such waiver could have a material adverse effect on DuPont’s and Qnity’s respective businesses, financial condition or results of operations, the trading price of DuPont’s or Qnity’s common stock, or the ability of shareholders to sell their shares after the distribution. If DuPont elects to proceed with the distribution notwithstanding that one or more of the conditions to the distribution has not been met, DuPont will evaluate the applicable facts and circumstances at that time and make such additional disclosure and take such other actions as DuPont determines to be necessary and appropriate in accordance with applicable law. The DuPont board of directors has the ability, in its sole discretion, to amend, modify or abandon the distribution and related transactions at any time prior to the distribution date.

Regulatory Approvals

We must complete the necessary registration under U.S. federal securities laws of Qnity common stock, as well as the applicable listing requirements of the NYSE for such shares.

Other than the requirements discussed above, we do not believe that any other material governmental or regulatory filings or approvals will be necessary to consummate the distribution.

No Appraisal Rights

DuPont stockholders will not have any appraisal rights in connection with the distribution.

 

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Reasons for Furnishing this Information Statement

We are furnishing this information statement solely to provide information to DuPont stockholders who will receive shares of Qnity common stock in the distribution. You should not construe this information statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of DuPont. We believe that the information contained in this information statement is accurate as of the date set forth on the cover. Changes to the information contained in this information statement may occur after that date, and neither DuPont nor we undertake any obligation to update the information except in the normal course of DuPont’s and our public disclosure obligations and practices.

 

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DIVIDEND POLICY

Qnity expects to pay a quarterly dividend. Qnity expects to declare dividends of approximately 10% of annual net income.

The declaration, payment and amount of any dividends following the distribution will be subject to the sole discretion of Qnity’s post-distribution, independent board of directors and, in the context of Qnity’s financial policy, will depend upon many factors, including Qnity’s financial condition and prospects, Qnity’s capital requirements and access to capital markets, covenants associated with certain of Qnity’s debt obligations, legal requirements and other factors that the Qnity board of directors may deem relevant, and there can be no assurances that Qnity will continue to pay a dividend in the future. There can also be no assurance that, after the distribution, the combined annual dividends on the common stock of Qnity and DuPont, if any, will be equal to the annual dividends on DuPont common stock prior to the distribution.

 

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CAPITALIZATION

The following table sets forth Qnity’s cash and cash equivalents and capitalization as of June 30, 2025, on a historical and on a pro forma basis giving effect to the Spin-Off and the other transactions described in the sections entitled “Unaudited Pro Forma Combined Financial Statements” and “Notes to the Unaudited Pro Forma Combined Financial Statements”, as if they occurred on June 30, 2025. The historical cash and cash equivalents and capitalization for Qnity (referred to as ElectronicsCo in the historical Combined Financial Statements and related notes) are derived from the unaudited condensed combined balance sheet as of June 30, 2025. Explanations for the pro forma adjustments can be found under the sections entitled “Unaudited Pro Forma Combined Financial Statements” and “Notes to the Unaudited Pro Forma Combined Financial Statements”. The following table should be reviewed in conjunction with the sections entitled “Unaudited Pro Forma Combined Financial Statements”, “Notes to the Unaudited Pro Forma Combined Financial Statements”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited Combined Financial Statements and the unaudited condensed Combined Financial Statements and corresponding notes included elsewhere in this information statement.

 

		As of June 30, 2025
In millions		Historical				Pro Forma
Cash and cash equivalents		$	179			$	661	(1)
Borrowings and capital lease obligations:
Short-term			—				24
Long-term			—				4,001	(2)
Total borrowings and capital lease obligations		$	—			$	4,025
Equity:
Common stock - par value $0.01 per share			—				2
Preferred stock			—				2
Additional paid-in capital			—				7,338
Net Parent Investment			11,121				—
Accumulated other comprehensive loss			(191	)			(205	)
Noncontrolling interests			268				268
Total equity			11,198				7,405
Total capitalization		$	11,198			$	11,430

(1)

The amount of cash and cash equivalents retained by Qnity following the Spin-Off, after giving effect to the Spin-Off and the anticipated debt incurred, will depend upon each of Qnity’s and DuPont’s cash flow prior to the Spin-Off and any adjustments to effect the desired capital structure and capital allocation strategy of each of Qnity and DuPont.

(2)	Excludes $1.25 billion of availability under our Senior Secured Revolving Facility, which we expect to enter into prior to or substantially concurrently with the Spin-Off, and expect to be undrawn at the consummation of the Spin-Off, other than with respect to the issuance of letters of credit.

 

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UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial information has been derived from our historical combined financial statements, which were prepared on a carve-out basis as we did not operate as a stand-alone entity for the periods presented. While the historical combined financial statements reflect the past results of Qnity (referred to as ElectronicsCo in the historical Combined Financial Statements and related notes) as the Company was historically managed under DuPont, this unaudited pro forma combined financial information gives effect to the Spin-Off of Qnity into an independent, publicly traded company.

The unaudited pro forma condensed combined balance sheet as of June 30, 2025, gives effect to the Spin-Off and related transactions as if they occurred on June 30, 2025. The unaudited pro forma combined statements of operations for the six months ended June 30, 2025 and for the year ended December 31, 2024, gives effect to the Spin-Off and related transactions as if they had occurred on January 1, 2024, the beginning of our most recently completed fiscal year.

The unaudited pro forma combined financial information has been prepared in accordance with Article 11 of the SEC’s Regulation S-X to reflect transaction accounting and autonomous entity adjustments to present the financial condition and results of operations as if we were a separate stand-alone entity. Additionally, the unaudited pro forma combined financial information includes a presentation of management adjustments that management believes are necessary to enhance an understanding of the pro forma effects of the Spin-Off. The unaudited pro forma combined financial information has been adjusted to give effect to the following:

 

•

the effect of our anticipated post-Spin-Off capital structure, including the incurrence of indebtedness, which we currently expect will be in an aggregate principal amount of $4,100 million, subject to final determination and approval by the DuPont board of directors. For the purposes of these unaudited pro forma combined financial statements, we have assumed, as of June 30, 2025, such aggregate principal amount is equal to $4,100 million, which is reflective of the Notes issuance on August 15, 2025 and borrowings under the Senior Secured Term Loan Facility expected to be entered into by Qnity. We have also assumed that the net proceeds of the Notes issuance and borrowings under the Senior Secured Term Loan Facility we expect to entered into, as well as cash we have on hand (which itself will be funded by initial contributions to us by DuPont and from operations), will be used to fund the Qnity Cash Distribution to DuPont of approximately $4,122 million, inclusive of $22 million of costs related to the Notes issuance on August 15, 2025, plus the pre-funded interest on the Notes through March 31, 2026 of $66 million (and any investment returns on any amounts held in escrow in respect of the Notes issuance). The amount of cash and cash equivalents retained by Qnity following the Spin-Off, after giving effect to the Spin-Off and the borrowings, will depend upon each of Qnity’s and DuPont’s cash flow prior to the Spin-Off and any adjustments to effect the desired capital structure and capital allocation strategy of each of Qnity and DuPont;

 

•

the contribution and/or the contractual allocation of assets and liabilities to Qnity pursuant to the Separation Agreement (to the extent not already reflected in our audited historical combined financial statements), including the Applicable Qnity Percentage of certain legacy and other liabilities;

 

•

the impacts of the Tax Matters Agreement and Employee Matters Agreement, both to be entered into with DuPont in connection with the Spin-Off;

 

•

the impact of the Transition Services Agreements and other commercial agreements to be entered into with DuPont in connection with the Spin-Off (see the section entitled “Our Relationship with DuPont Following the Distribution—Other Agreements”);

 

•

transaction and incremental costs expected to be incurred as an autonomous entity and specifically related to the Spin-Off; and

 

•

other adjustments as described in the accompanying notes to the unaudited pro forma combined financial information.

 

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The unaudited pro forma combined financial information, including the adjustments discussed above, is based upon available information at the time of this filing, and related estimates and assumptions that we believe are reasonable and supportable. The unaudited pro forma combined financial information is for illustrative and informational purposes only. The unaudited pro forma combined financial information may not necessarily reflect what our financial condition, results of operations or cash flows would have been had we been a stand-alone company during the periods presented, or what our financial condition, results of operations and cash flows may be in the future. In addition, the unaudited pro forma combined financial information has been derived from Qnity’s (referred to as ElectronicsCo in the historical Combined Financial Statements and related notes) historical Combined Financial Statements, which have been prepared from DuPont’s historical accounting records. All of the allocations and estimates in our historical Combined Financial Statements are based on assumptions that management believes are reasonable.

The unaudited pro forma combined financial information reported below should be read in conjunction with the section of this information statement entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical Combined Financial Statements included elsewhere in this information statement.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET As of June 30, 2025
(In millions)		Historical				Transaction Accounting Adjustments						Autonomous Entity Adjustments								Pro Forma
						Note 1						Note 2
Assets
Current Assets
Cash and cash equivalents		$	179			$	482			(a)		$	—							$	661
Accounts and notes receivable - net			741				185			(d)			—								926
Inventories			662				—						—								662
Prepaid expenses and other current assets			40				(25	)		(a),(d)			—								15
Total current assets			1,622				642						—								2,264
Property, plant and equipment - net of accumulated depreciation			1,614				14			(e)			—								1,628
Other Assets
Goodwill			7,501				—						—								7,501
Other intangible assets			1,209				—						—								1,209
Investments and noncurrent receivables			418				—						—								418
Deferred income tax assets			44				(9	)		(d)			—								35
Deferred charges and other assets			144				118			(a),(d),(g)			356				(l)				618
Total other assets			9,316				109						356								9,781
Total Assets		$	12,552			$	765					$	356								$13,673
Liabilities and Equity
Current Liabilities
Current portion of long-term debt		$	—			$	24			(a)		$	—							$	24
Accounts payable			557				—						—								557
Income taxes payable			123				(30	)		(d)			—								93
Accrued and other current liabilities			127				115			(c),(d),(g)			28				(l)				270
Total current liabilities			807				109						28								944
Long-Term Debt			—				4,001			(a)			—								4,001
Other Noncurrent Liabilities													—
Pensions-noncurrent			73				19			(g)			—								92
Deferred income tax liabilities			235				36			(d)			—								271
Other noncurrent obligations			239				322			(c),(d)			399				(l),(m)				960
Total other noncurrent liabilities			547				377						399								1,323
Total Liabilities			1,354				4,487						427								6,268
Commitments and contingent liabilities
Equity
Common stock-par value $0.01 per share			—				2			(h)			—								2
Preferred stock			—				2			(i)			—								2
Additional paid-in capital			—				7,409			(a),(c),(d) (e),(g),(h)			(71	)			(l),(m)				7,338
Parent company net investment			11,121				(11,121	)		(h),(i)			—								—
Accumulated other comprehensive loss			(191	)			(14	)		(d),(g)			—								(205	)
Total Shareholders’ Equity			10,930				(3,722	)					(71	)							7,137
Noncontrolling interests			268				—						—								268
Total equity			11,198				(3,722	)					(71	)							7,405
Total Liabilities and Equity		$	12,552			$	765					$	356							$	13,673
See accompanying notes to unaudited pro forma combined financial information.

 

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS For the six months ended June 30, 2025
(In millions, except per share amounts)		Historical				Transaction Accounting Adjustments								Autonomous Entity Adjustments						Pro Forma
							Note 1								Note 2
Net sales		$	2,288			$	—							$	—					$	2,288
Cost of sales			1,217				—								(3	)		(k)			1,214
Research and development expenses			172				—								(1	)		(k)			171
Selling, general and administrative expenses			294				12				(c)				(3	)		(k)			303
Amortization of intangibles			105				—								—						105
Restructuring and asset related charges - net			19				—								—						19
Equity in earnings of nonconsolidated affiliates			22				—								—						22
Sundry income (expense) - net			(2	)			1				(f)				—						(1	)
Interest expense			—				125				(b)				—						125
Income before income taxes		$	501			$	(136	)						$	7					$	372
Provision for (benefit from) income taxes			104				(14	)			(j)				2			(n)			92
Net income		$	397			$	(122	)						$	5					$	280
Net income attributable to noncontrolling interests			16				—														16
Net income attributable to Qnity		$	381			$	(122	)						$	5					$	264
Earnings per share
Basic																		(o)		$	1.26
Diluted																		(o)		$	1.26
Weighted-average number of common shares outstanding
Basic																		(o)			209.4
Diluted																		(o)			209.4

See accompanying notes to unaudited pro forma combined financial information.

 

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UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS

For the year ended December 31, 2024

 

(In millions, except per share amounts)		Historical				Transaction Accounting Adjustments								Autonomous Entity Adjustments								Pro Forma
							Note 1								Note 2
Net sales		$	4,335			$	—							$	—							$	4,335
Cost of sales			2,339				—								(8	)			(k)				2,331
Research and development expenses			314				—								(1	)			(k)				313
Selling, general and administrative expenses			603				16				(c)				(6	)			(k)				613
Amortization of intangibles			232				—								—								232
Restructuring and asset related charges - net			8				—								—								8
Equity in earnings of nonconsolidated affiliates			37				—								—								37
Sundry income (expense) - net			25				5				(f)				—								30
Interest expense			—				252				(b)				—								252
Income (loss) before income taxes		$	901			$	(263	)						$	15							$	653
Provision for income taxes			177				(19	)			(j)				3				(n)				161
Net income (loss)		$	724			$	(244	)						$	12							$	492
Net income attributable to noncontrolling interests			31				—								—								31
Net income attributable to Qnity		$	693			$	(244	)						$	12							$	461
Earnings per share
Basic																			(o	)		$	2.20
Diluted																			(o	)		$	2.20
Weighted-average number of common shares outstanding
Basic																			(o	)			209.4
Diluted																			(o	)			209.4

See accompanying notes to unaudited pro forma combined financial information.

 

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