Dow Chemical 2011 Annual Report Download - page 181

87
The decision was made to shut down a number of small manufacturing facilities to optimize the assets of the
Company. Write-downs of $96 million were recorded in the second quarter of 2009, primarily impacting the
Electronic and Functional Materials ($46 million) and Coatings and Infrastructure Solutions ($48 million)
segments.
The restructuring charges in the second quarter of 2009 also included the write-off of capital project spending ($20 million)
and other assets ($7 million) associated with plant closures. These charges were reflected in the results of the operating
segments impacted by the restructuring activities.
Costs Associated with Exit or Disposal Activities
The restructuring charges for costs associated with exit or disposal activities totaled $68 million in the second quarter of 2009
and included environmental remediation of $64 million, impacting Corporate, with the remainder relating to contract
termination fees and other charges. In the fourth quarter of 2009, the Company increased the reserve by $13 million to reflect
additional expense for pension settlements related to the Rohm and Haas acquisition.
Severance Costs
The restructuring charges included severance of $155 million for the separation of approximately 2,500 employees under the
terms of the Company’s ongoing benefit arrangements, primarily over two years. These costs were charged against Corporate.
At December 31, 2009, severance of $72 million had been paid and a currency adjusted liability of $84 million remained for
approximately 1,221 employees. At December 31, 2010, severance of $149 million had been paid and a currency adjusted
liability of $6 million remained for approximately 189 employees. In the first quarter of 2011, the remaining severance of
$6 million was paid, bringing the program to a close.
The following table summarizes the activities related to the Company’s restructuring reserve:
2009 Restructuring Activities
In millions
Restructuring charges recognized in the second
quarter of 2009
Adjustment to reserve
Charges against reserve
Cash payments
Foreign currency impact
Reserve balance at December 31, 2009
Adjustments to reserve
Charges against reserve
Cash payments
Foreign currency impact
Reserve balance at December 31, 2010
Cash payments
Reserve balance at March 31, 2011
Impairment of
Long-
Lived Assets
and Other Assets
$ 454
—
(454)
—
—
$ —
21
(21)
—
—
$ —
—
$ —
Costs associated
with Exit or
Disposal
Activities
$ 68
13
(13)
—
—
$ 68
7
(7)
—
—
$ 68
—
$ 68
Severance
Costs
$ 155
—
—
(72)
1
$ 84
1
—
(77)
(2)
$ 6
(6)
$ —
Total
$ 677
13
(467)
(72)
1
$ 152
29
(28)
(77)
(2)
$ 74
(6)
$ 68
The shutdowns related to the 2009 restructuring plan were substantially completed in the first quarter of 2011, with the
remaining liabilities primarily related to environmental remediation to be paid over time.
Dow expects to incur future costs 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 across
geographic areas. Future costs are expected to include demolition costs related to the closed facilities, which 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.
2010 Adjustments to 2009 and 2008 Restructuring Plans
In 2010, the Company recorded additional charges related to the 2009 restructuring plan, as follows: $13 million charge to
adjust the impairment of long-lived assets and other assets related to the FTC required divestitures; $8 million charge related to
the shutdown of a small manufacturing facility; $7 million charge related to additional costs associated with exit or disposal
activities related to FTC required divestitures; and $1 million charge for additional severance related to FTC required