Dow Chemical 2011 Annual Report Download - page 88

54
The Company undertook a restructuring plan in 2009 and assumed Rohm and Haas' restructuring liabilities as described
below (additional details are provided in Note C to the Consolidated Financial Statements):
• On June 30, 2009, the Board of Directors approved a restructuring plan related to the Company’s acquisition of Rohm
and Haas (the “2009 Plan”). The restructuring activities under this plan were substantially completed in the first
quarter of 2011, with remaining liabilities primarily related to environmental remediation to be paid over time.
• Included in the liabilities assumed with the April 1, 2009 acquisition of Rohm and Haas was a reserve of $122 million
for severance and employee benefits for the separation of employees associated with Rohm and Haas’ 2008
restructuring initiatives. The restructuring activities under this plan were completed in the second quarter of 2011.
The Company 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 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 and pension plan settlement costs, related to its other optimization activities. These costs cannot be
reasonably estimated at this time.
Management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its
business obligations.
Working Capital at December 31
In millions
Current assets
Current liabilities
Working capital
Current ratio
2011
$ 23,422
13,634
$ 9,788
1.72:1
2010
$ 24,130
13,896
$ 10,234
1.74:1
Working capital decreased from December 31, 2010 to December 31, 2011 principally due to decreased cash and cash
equivalents largely due to the retirement of long-term debt. At December 31, 2011, trade receivables were $4.9 billion, up from
$4.6 billion at December 31, 2010. Days-sales-outstanding-in-receivables (excluding the impact of sales of receivables) was
44 days at December 31, 2011 compared with 43 days at December 31, 2010. At December 31, 2011, total inventories were
$7.6 billion, up from $7.1 billion at December 31, 2010. Days-sales-in-inventory at December 31, 2011 was 64 days compared
with 62 days at December 31, 2010.
As shown in the following table, net debt is equal to total gross debt minus “Cash and cash equivalents” and "Marketable
securities and interest-bearing deposits." As Dow continues to strengthen its balance sheet and increase financial flexibility,
management is principally focused on net debt, as Dow believes this is the best measure of the Company’s financial leverage.
At the end of 2009, the Company’s net debt as a percent of total capitalization had risen to 48.0 percent, due to increased
financing related to the acquisition of Rohm and Haas. By the end of 2011, net debt as a percent of total capitalization had been
reduced to 40.8 percent.