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88
NOTE 9 – GOODWILL AND OTHER INTANGIBLE ASSETS
The following tables show changes in the carrying amount of goodwill for the years ended December 31, 2013 and 2012, by
operating segment:
2013 Goodwill Electronic
and
Functional
Materials
Coatings and
Infrastructure
Solutions
Ag
Sciences
Perf
Materials
Perf
Plastics
Feedstocks
and Energy Total
In millions
Gross goodwill at Jan 1, 2013 $ 4,945 $ 4,052 $ 1,558 $ 1,169 $ 1,381 $ 63 $ 13,168
Accumulated impairments at
Jan 1, 2013 — — — (429) — — (429)
Net goodwill at Jan 1, 2013 $ 4,945 $ 4,052 $ 1,558 $ 740 $ 1,381 $ 63 $ 12,739
Acquisition of a seed company — — 5 — — — 5
Sale of Dow Plastics Additives
product line — — — (3) — — (3)
Foreign currency impact 18 24 — 1 14 — 57
Net goodwill at Dec 31, 2013 $ 4,963 $ 4,076 $ 1,563 $ 738 $ 1,395 $ 63 $ 12,798
Accumulated impairments at
Dec 31, 2013 — — — 429 — — 429
Gross goodwill at Dec 31, 2013 $ 4,963 $ 4,076 $ 1,563 $ 1,167 $ 1,395 $ 63 $ 13,227
2012 Goodwill Electronic
and
Functional
Materials
Coatings and
Infrastructure
Solutions
Ag
Sciences
Perf
Materials
Perf
Plastics
Feedstocks
and Energy Total
In millions
Gross goodwill at Jan 1, 2012 $ 4,934 $ 4,041 $ 1,558 $ 1,168 $ 1,375 $ 63 $ 13,139
Accumulated impairments at
Jan 1, 2012 — — — (209) — — (209)
Net goodwill at Jan 1, 2012 $ 4,934 $ 4,041 $ 1,558 $ 959 $ 1,375 $ 63 $ 12,930
Lightscape Materials, Inc 3 — — — — — 3
Goodwill impairment — — — (220) — — (220)
Foreign currency impact 8 11 — 1 6 — 26
Net goodwill at Dec 31, 2012 $ 4,945 $ 4,052 $ 1,558 $ 740 $ 1,381 $ 63 $ 12,739
Accumulated impairments at
Dec 31, 2012 — — — 429 — — 429
Gross goodwill at Dec 31, 2012 $ 4,945 $ 4,052 $ 1,558 $ 1,169 $ 1,381 $ 63 $ 13,168
Goodwill Impairments
The Company performs an impairment test for goodwill annually during the fourth quarter. Qualitative factors may be assessed
by the Company to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount. The qualitative factors assessed by the Company include, but are not limited to, GDP growth rates, long-term
hydrocarbon and energy prices, equity and credit market activity, discount rates, foreign exchange rates and overall financial
performance. Qualitative factors assessed for the reporting units include, but are not limited to, changes in industry and market
structure, competitive environments, planned capacity and new product launches, cost factors such as raw material prices, and
financial performance of each reporting unit.
2013 Goodwill Impairment Testing
In 2013, the Company assessed qualitative factors for 14 of its 19 units carrying goodwill. The qualitative assessment indicated
that it was more likely than not that the fair value exceeded carrying value for those reporting units included in the qualitative
test. The Company performed the first step of the quantitative testing for the remaining 5 reporting units. The Company utilized
a discounted cash flow methodology to calculate the fair value of the reporting units. Based on the fair value analysis,
management concluded that fair value exceeded carrying value for all reporting units. As a result, no additional quantitative
testing was required for the reporting units.