Dow Chemical 2012 Annual Report Download - page 108

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The following table summarizes the activities related to the Company's 1Q12 Restructuring reserve:
1Q12 Restructuring Activities Costs
Associated with
Exit or
Disposal
Activities
In millions
Severance
Costs
Impairment of
Long-Lived
Assets and
Other Assets Total
Restructuring charges recognized in the
first quarter of 2012 $ 150 $ 113 $ 94 $ 357
Adjustments to the reserve — — (4) (4)
Charges against the reserve — — (90) (90)
Cash payments (45) (82) — (127)
Noncash settlements (47) — — (47)
Foreign currency impact (2) — — (2)
Reserve balance at December 31, 2012 $ 56 $ 31 $ — $ 87
The reserve balance is included in the consolidated balance sheets as "Accrued and other current liabilities" and "Other
noncurrent obligations."
Dow expects to incur additional costs in the future related to its 1Q12 and 4Q12 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 geographic areas. Future costs are expected to include demolition costs related to closed facilities and
restructuring plan implementation costs; these 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 United States Federal Trade Commission ("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 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.
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. A currency adjusted liability of $68 million for approximately 552 employees remained 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.