Dow Chemical 2011 Annual Report Download - page 182

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divestitures. The impact of these charges is shown as “Restructuring charges” in the consolidated statements of income and was
reflected in the following operating segments: Coatings and Infrastructure Solutions ($20 million), Electronic and Functional
Materials ($8 million), and Corporate ($1 million).
In 2010, the Company decreased the severance reserve for the 2008 restructuring plan by $3 million to adjust the reserve to
the remaining future payments. The impact of this adjustment is shown as “Restructuring charges” in the consolidated
statements of income and was reflected in Corporate.
2009 Adjustments to 2008 and 2007 Restructuring Plans
In 2009, the Company increased the severance reserve for the 2008 restructuring plan by $19 million, for an additional
workforce reduction of approximately 500 employees. The increase was reflected in Corporate.
In 2009, the Company reduced the 2007 restructuring reserve related to contract termination fees by $15 million as a result
of the Company’s acquisition of Rohm and Haas, impacting the Agricultural Sciences segment. The initial liability established
in 2007 included contract termination fees related to the cancellation of contract manufacturing agreements between the
Company and Rohm and Haas. Following the completion of the acquisition, the liability for these fees was reversed. The
Company also reduced the severance reserve for the 2007 restructuring plan by $5 million as redeployment opportunities for
affected employees were identified. The decrease was reflected in Corporate.
Restructuring Reserve Assumed from Rohm and Haas
Included in liabilities assumed in the April 1, 2009 acquisition of Rohm and Haas was a reserve of $122 million for severance
and employee benefits for the separation of 1,255 employees under the terms of Rohm and Haas’ ongoing benefit arrangement.
The separations resulted from plant shutdowns, production schedule adjustments, productivity improvements and reductions in
support services. In the fourth quarter of 2009, the Company decreased the severance reserve assumed from Rohm and Haas by
$9 million, recorded in “Cost of sales,” to adjust the reserve to the expected future severance payments. In the nine-month
period following the acquisition, severance of $43 million was paid, leaving a currency adjusted liability of $68 million for
approximately 552 employees at December 31, 2009.
In 2010, the Company decreased the restructuring reserve $34 million due to the divestiture of the Powder Coatings
business and to adjust the reserve to expected future severance payments. The impact of this adjustment is shown as “Cost of
sales” in the consolidated statements of income and was reflected in Corporate. In 2010, severance of $25 million was paid,
leaving a currency adjusted liability of $12 million at December 31, 2010; $5 million for employees who had left the Company
and continued to receive annuity payments primarily through the third quarter of 2011 and $7 million for approximately
44 employees.
In the first quarter of 2011, the Company decreased the restructuring reserve $6 million to adjust the reserve to the
expected future severance payments. The impact of this adjustment is shown as "Cost of sales" in the consolidated statements
of income and was reflected in Corporate. Severance payments of $7 million were made in the first half of 2011, bringing the
program to a close.
Restructuring Reserve Assumed from Rohm and Haas
In millions
Reserve balance assumed on April 1, 2009
Cash payments
Adjustment to reserve
Foreign currency impact
Reserve balance at December 31, 2009
Cash payments
Adjustments to reserve
Foreign currency impact
Reserve balance at December 31, 2010
Cash payments
Adjustments to reserve
Foreign currency impact
Reserve balance at June 30, 2011
Severance
Costs
$ 122
(43)
(9)
(2)
$ 68
(25)
(34)
3
$ 12
(7)
(6)
1
$ —