Dow Chemical 2012 Annual Report Download - page 107

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As a result of the 1Q12 Restructuring activities, the Company recorded pretax restructuring charges of $357 million in the
first quarter of 2012 consisting of costs associated with exit or disposal activities of $150 million, severance costs of $113
million and asset write-downs and write-offs of $94 million. The impact of these charges is shown as "Restructuring charges" in
the consolidated statements of income and reflected in the Company's segment results as shown in the following table.
1Q12 Restructuring Charges by
Operating Segment
Costs
Associated with
Exit or
Disposal
Activities
Impairment of
Long-Lived
Assets and
Other Assets
In millions
Severance
Costs Total
Electronic and Functional Materials $ —$ —$ 17$ 17
Coatings and Infrastructure Solutions 4—3741
Performance Materials 146 — 40 186
Corporate — 113 — 113
Total 1Q12 Restructuring charges $ 150 $ 113 $ 94 $ 357
Adjustment to restructuring charges:
Coatings and Infrastructure Solutions — — (4) (4)
Net 1Q12 Restructuring charges $ 150 $ 113 $ 90 $ 353
Details regarding the components of the 1Q12 Restructuring charge are discussed below:
Costs Associated with Exit or Disposal Activities
The restructuring charges for costs associated with exit or disposal activities totaled $150 million in the first quarter of
2012 and included contract cancellation fees of $149 million, impacting Performance Materials ($146 million) and
Coatings and Infrastructure Solutions ($3 million), and asbestos abatement costs of $1 million impacting Coatings and
Infrastructure Solutions.
Severance Costs
The restructuring charges in the first quarter of 2012 included severance of $113 million for the separation of
approximately 900 employees under the terms of the Company's ongoing benefit arrangements, primarily by December 31,
2013. These costs were charged against Corporate. At December 31, 2012, severance of $82 million had been paid and a
liability of $31 million remained for 248 employees.
Impairment of Long-Lived Assets and Other Assets
The restructuring charges related to the write-down and write-off of assets in the first quarter of 2012 totaled $94 million.
Details regarding the write-downs and write-offs are as follows:
• The Company evaluated its facilities that manufacture STYROFOAM™ brand insulation and as a result, the decision
was made to shut down facilities in Balatonfuzfo, Hungary; Estarreja, Portugal; and Charleston, Illinois. In addition, a
facility in Terneuzen, The Netherlands was idled and impaired. Write-downs associated with these facilities of
$37 million were recorded in the first quarter of 2012 against the Coatings and Infrastructure Solutions segment. The
Netherlands facility was shut down at the end of the second quarter of 2012. The remaining facilities were shut down
in the fourth quarter of 2012.
• The decision was made to shut down and/or consolidate certain manufacturing assets in the Polyurethanes and Epoxy
businesses in Texas and Germany. Write-downs associated with these assets of $15 million were recorded in the first
quarter of 2012 against the Performance Materials segment. The manufacturing assets in Texas were shutdown in the
second quarter of 2012. The German manufacturing assets were shut down by year-end 2012.
• Certain capital projects were canceled resulting in the write-off of project spending of $42 million against the
Performance Materials ($25 million) and Electronic and Functional Materials ($17 million) segments.
During the fourth quarter of 2012, the Company recorded a favorable adjustment to the 1Q12 Restructuring charge
related to the impairment of long-lived assets and other assets of $4 million, impacting the Coatings and Infrastructure
Solutions segment.