Dow Chemical 2009 Annual Report Download - page 66

Table of Contents
In June 2009, Dow’s Board of Directors approved a restructuring plan that incorporated actions related to the Company’s acquisition of Rohm and Haas
as well as additional actions to advance the Company’s strategy and to respond to continued weakness in the global economy. The restructuring plan included
the shutdown of a number of facilities and a global workforce reduction. As a result, the Company recorded restructuring charges totaling $677 million in the
second quarter of 2009, which included asset write-downs and write-offs of $454 million, severance costs of $155 million and costs associated with exit or
disposal activities of $68 million. The impact of the charges was shown as “Restructuring charges” in the consolidated statements of income and was reflected
in the Company’s segment results as follows: $68 million in Electronic and Specialty Materials, $171 million in Coatings and Infrastructure, $73 million in
Performance Products, $1 million in Basic Plastics, $75 million in Basic Chemicals, $65 million in Hydrocarbons and Energy and $224 million in
Corporate.
See Note C to the Consolidated Financial Statements for details on the restructuring charges.
In addition to the charges related to the 2009 restructuring plan, the Company recorded the following adjustments to its restructuring plans during 2009:
in the first quarter, the Company recorded additional severance of $19 million related to 2008 restructuring activities, reflected in Corporate; in the second
quarter, the Company recorded a $15 million reduction in the 2007 restructuring reserve, reflected in the Health and Agricultural Sciences segment; and in the
fourth quarter, the Company recorded a $5 million reduction to the 2007 restructuring reserve and $13 million in additional charges related to the 2009
restructuring activities, both reflected in Corporate. Additionally, in the fourth quarter of 2009, the Company reduced the restructuring liability assumed from
Rohm and Haas by $9 million, reflected in "Cost of sales" and impacting Corporate.
On December 5, 2008, the Company’s Board of Directors approved a restructuring plan as part of a series of actions to advance the Company’s strategy
and respond to the severe economic downturn in the latter part of the year. The restructuring plan included the shutdown of a number of facilities and a global
workforce reduction, which are targeted for completion by the end of 2010. As a result of the shutdowns and global workforce reduction, the Company
recorded pretax restructuring charges of $785 million in the fourth quarter of 2008. The charges consisted of asset write-downs and write-offs of
$336 million, costs associated with exit or disposal activities of $128 million and severance costs of $321 million. The impact of the charges is shown as
“Restructuring charges” in the consolidated statements of income and was reflected in the Company’s segment results as follows: $10 million in Electronic and
Specialty Materials, $16 million in Coatings and Infrastructure, $68 million in Performance Systems, $39 million in Performance Products, $98 million in
Basic Plastics, $106 million in Basic Chemicals, $18 million in Hydrocarbons and Energy, and $430 million in Corporate. In addition to the charges related
to the 2008 restructuring plan, the Company also recorded additional pretax charges of $60 million related to the 2007 restructuring plan, primarily impacting
the Basic Plastics segment, and a reduction of $6 million related to the 2006 restructuring plan. When the 2008 restructuring plan has been fully
implemented, the Company expects to realize ongoing annual savings of approximately $700 million.
On December 3, 2007, the Company’s Board of Directors approved a restructuring plan that included the shutdown of a number of assets and
organizational changes within targeted support functions to improve the efficiency and cost effectiveness of the Company’s global operations. As a result of
these shutdowns and organizational changes, which were substantially complete at the end of 2009, the Company recorded pretax restructuring charges
totaling $590 million in 2007. The charges consisted of asset write-downs and write-offs of $422 million, costs associated with exit or disposal activities of
$82 million and severance costs of $86 million. The charges were reflected in the Company’s segment results as follows: $27 million in Electronic and
Specialty Materials, $20 million in Coatings and Infrastructure, $77 million in Health and Agricultural Sciences, $155 million in Performance Systems,
$59 million in Performance Products, $96 million in Basic Plastics, $7 million in Basic Chemicals, $44 million in Hydrocarbons and Energy, and
$105 million in Corporate. In 2007, the Company also recorded a $12 million reduction of the 2006 restructuring charges, which included an $8 million
reduction of the estimated severance costs (included in Corporate) and a $4 million reduction of the reserve for contract termination fees (included in
Performance Products). The Company expects to realize ongoing annual savings of approximately $180 million related to the 2007 restructuring plan.
During 2009, a pretax charge of $7 million was recorded for purchased in-process research and development (“IPR&D”) related to the purchase of lithium
ion battery technology by the Ventures business, impacting Corporate. During 2008, pretax charges totaling $44 million were recorded for purchased IPR&D
related to acquisitions within the Health and Agricultural Sciences segment. Purchased IPR&D in 2007 amounted to $57 million in pretax charges;
$50 million was related to
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