Dow Chemical 2013 Annual Report Download - page 77

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Restructuring
The Company announced two restructuring programs in 2012 in response to macroeconomic uncertainties and changing and
volatile economic conditions, particularly in Western Europe. During 2013, cash payments of $276 million were made for
employee severance and exit or disposal activities. The Company expects to make additional cash payments of $177 million,
primarily by March 31, 2015, related to severance costs, contract cancellation fees and environmental remediation. See Note 3
to the Consolidated Financial Statements for additional information regarding the Company’s restructuring plans.
The Company expects to incur additional costs in the future related to its restructuring activities, as the Company continually
looks for ways to enhance the efficiency and cost effectiveness of its operations, and to ensure competitiveness across its
businesses and geographic areas. Future costs are expected to include demolition costs related to closed facilities and
restructuring plan implementation costs; these will be recognized as incurred. The Company also expects to incur additional
employee-related costs, including involuntary termination benefits, related to its other optimization activities. These costs
cannot be reasonably estimated at this time.
Contractual Obligations
The following table summarizes the Company’s contractual obligations, commercial commitments and expected cash
requirements for interest at December 31, 2013. Additional information related to these obligations can be found in Notes 14,
16, 17, 18 and 22 to the Consolidated Financial Statements.
Contractual Obligations at December 31, 2013 Payments Due by Year
In millions 2014 2015 2016 2017 2018
2019 and
beyond Total
Long-term debt – current and noncurrent (1) $ 697 $ 407 $ 1,366 $ 775 $ 930 $ 13,678 $17,853
Deferred income tax liabilities – noncurrent (2) — — — — — 718 718
Pension and other postretirement benefits 902 911 958 817 677 3,816 8,081
Other noncurrent obligations (3) 24 383 310 298 173 2,227 3,415
Uncertain tax positions, including interest and
penalties (4) 8 — — — — 341 349
Other contractual obligations:
Minimum lease commitments 249 244 218 181 151 1,580 2,623
Purchase commitments – take-or-pay and
throughput obligations 2,858 2,580 2,175 1,924 1,818 6,883 18,238
Purchase commitments – other (5) 149 21 19 17 16 32 254
Expected cash requirements for interest (6) 935 910 888 866 816 7,404 11,819
Total $ 5,822 $ 5,456 $ 5,934 $ 4,878 $ 4,581 $ 36,679 $63,350
(1) Excludes unamortized debt discount of $336 million. Includes $41 million of capital lease obligations.
(2) Deferred income tax liabilities may vary according to changes in tax laws, tax rates and the operating results of the Company. As a
result, it is impractical to determine whether there will be a cash impact to an individual year. All noncurrent deferred income tax
liabilities have been reflected in “2019 and beyond.”
(3) Annual payments to resolve asbestos litigation will vary based on changes in defense strategies, changes in state and national law, and
claims filing and resolution rates. As a result, it is impractical to determine the anticipated payments in any given year. Therefore, the
majority of the noncurrent asbestos-related liability of $434 million has been reflected in “2019 and beyond.”
(4) Due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities, the Company is
unable to determine the timing of payments related to its uncertain tax positions, including interest and penalties. Amounts beyond the
current year are therefore reflected in “2019 and beyond.”
(5) Includes outstanding purchase orders and other commitments greater than $1 million, obtained through a survey conducted within the
Company.
(6) Cash requirements for interest was calculated using current interest rates at December 31, 2013, and includes approximately $2.24
billion of various floating rate notes.
Off-Balance Sheet Arrangements
Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions,
agreements or other contractual arrangements. The Company holds a variable interest in a joint venture accounted for under the
equity method of accounting. The Company is not the primary beneficiary of the joint venture and therefore is not required to
consolidate the entity (see Note 19 to the Consolidated Financial Statements). See Note 15 to the Consolidated Financial
Statements for information regarding the transfer of financial assets.
Guarantees arise during the ordinary course of business from relationships with customers and nonconsolidated affiliates when
the Company undertakes an obligation to guarantee the performance of others if specific triggering events occur. The Company
had outstanding guarantees at December 31, 2013 of $5,782 million, up from $2,181 million at December 31, 2012. The