Dow Chemical 2013 Annual Report Download - page 71

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On December 18, 2013, the European Union (“EU”) initiated a state aid proceeding against the German government in relation
to Germany’s current version of the Renewable Energy Act (“EEG”). Under review is the legality of the German EEG law. The
outcome of the proceeding is uncertain. However, if it is determined the German EEG violated EU state aid rules, it could
result in the retroactive adjustment of German EEG exemptions granted to companies since 2012. The Company operates
several manufacturing sites in Germany.
CORPORATE
Included in the results for Corporate are:
• results of insurance company operations;
• results of Ventures (which includes new business incubation platforms focused on identifying and pursuing new
commercial opportunities);
• Venture Capital;
• gains and losses on sales of financial assets;
• stock-based compensation expense and severance costs;
• asbestos-related defense and resolution costs;
• foreign exchange results;
• non-business aligned technology licensing and catalyst activities;
• environmental operations;
• enterprise level mega project activities; and
• certain corporate overhead costs and cost recovery variances not allocated to the operating segments.
Corporate
In millions 2013 2012 2011
Sales $ 306 $ 243 $ 325
Equity losses $ (39) $ (103) $ (39)
EBITDA $ 861 $ (1,939) $ (1,507)
Certain items impacting EBITDA $ 1,788 $ (1,032) $ (513)
2013 Versus 2012
Sales for Corporate, which primarily relate to the Company's insurance operations, were $306 million in 2013 up from $243
million in 2012.
EBITDA for 2013 was a gain of $861 million, compared with a loss of $1,939 million in 2012. Compared with the same period
last year, EBITDA for 2013 was favorably impacted by a $2.161 billion gain from the K-Dow arbitration and a gain of $26
million on the sale of the Company's ownership interest in Dow Kokam LLC. EBITDA for 2013 was negatively impacted by
$326 million of losses related to the early extinguishment of debt; $44 million of implementation costs related to the
Company's restructuring programs; and $29 million of asset impairments and related costs, including a $10 million loss related
to asset impairment charges at a formulated electrolytes manufacturing joint venture. EBITDA in 2013 was also negatively
impacted by an increase in performance-based compensation costs. See Notes 5, 11, 14 and 16 to the Consolidated Financial
Statements for additional information on these matters.
EBITDA for 2012 was negatively impacted by $113 million of severance costs related to the workforce reduction component of
the Company's 1Q12 Restructuring plan and $701 million in restructuring charges as part of the 4Q12 Restructuring plan,
including impairments of long-lived and other assets of $313 million, severance costs of $375 million and costs associated with
exit or disposal activities of $13 million. EBITDA was also impacted by $22 million of implementation costs related to the
Company's restructuring programs, $123 million of losses related to the early extinguishment of debt and a $73 million loss
included in equity earnings related to project development and other costs associated with Sadara. See Notes 3, 8, 11 and 16 to
the Consolidated Financial Statements for additional information on these charges.
2012 Versus 2011
Sales were $243 million in 2012 down from $325 million in 2011.
EBITDA for 2012 was a loss of $1,939 million, compared with a loss of $1,507 million in 2011. Compared with 2011,
EBITDA for 2012 was favorably impacted by a decrease in performance-based compensation costs (including stock-based
compensation and decreased participation in the Employee Stock Purchase Plan), lower foreign currency losses and lower
Corporate expenses. EBITDA in 2012 was negatively impacted by $1,032 million of certain items, as previously discussed.