Dow Chemical 2012 Annual Report Download - page 109

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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
Severance
Costs
Reserve balance at December 31, 2009 $ 68
Cash payments (25)
Adjustments to reserve (34)
Foreign currency impact 3
Reserve balance at December 31, 2010 $ 12
Cash payments (7)
Adjustments to reserve (6)
Foreign currency impact 1
Reserve balance at June 30, 2011 $—
NOTE 4 – ACQUISITIONS
Rohm and Haas Acquisition and Integration Related Expenses
During the first quarter of 2011, pretax charges totaling $31 million were recorded for integration costs related to the April 1,
2009 acquisition of Rohm and Haas Company ("Rohm and Haas"). During 2010, pretax charges totaling $143 million were
recorded for integration expenses. These charges are shown as “Acquisition-related integration expenses” in the consolidated
statements of income and reflected in Corporate.
NOTE 5 – DIVESTITURES
Divestiture of Contract Manufacturing Business
On December 31, 2011, the Company sold the shares of Chemoxy International Limited, a contract manufacturing company
located in the United Kingdom, to Crossco (1255) Limited. All assets and liabilities aligned with this company were sold
including receivables; inventory; property, plant and equipment; customer lists; trademarks; software; and trade and other
payables. The sale was completed for $6 million, net of working capital adjustments and costs to sell, with proceeds subject to
customary post-closing adjustments to be finalized in subsequent periods. The value of the net assets divested was $48 million.
The Company recorded a $42 million pretax loss on the sale, included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Performance Materials. The Company recorded an after-tax gain of $44 million on the
sale, primarily related to a tax benefit triggered by the recognition of capital losses on the share sale.
Post-closing adjustments were finalized in the fourth quarter of 2012 and the Company recognized a pretax and after-tax
gain of $8 million for the post-closing adjustments. The gain was included in "Sundry income (expense) - net" and reflected in
Performance Materials.
Divestiture of Polypropylene Business
On July 27, 2011, the Company entered into a definitive agreement to sell its global Polypropylene business (a Performance
Plastics business) to Braskem SA. The definitive agreement specified the assets and liabilities related to the business to be
included in the sale: the Company's polypropylene manufacturing facilities at Schkopau and Wesseling, Germany, and Freeport
and Seadrift, Texas; railcars; inventory; receivables; business know-how; certain product and process technology; and customer
contracts and lists. On September 30, 2011, the sale was completed for $459 million, net of working capital adjustments and
costs to sell, with proceeds subject to customary post-closing adjustments to be finalized in subsequent periods. Immaterial
post-closing adjustments were finalized in the second quarter of 2012. The proceeds included a $474 million receivable that
was paid to the Company on October 3, 2011. Dow's Polypropylene Licensing and Catalyst business and related catalyst
facilities were excluded from this sale. The transaction resulted in several long-term supply, service and purchase agreements
between Dow and Braskem SA, which are expected to generate significant ongoing cash flows. As a result, the divestiture of
this business was not reported as discontinued operations.
Divestiture of the Styron Business Unit
On June 17, 2010, the Company completed the sale of its Styron busines unit ("Styron") to an affiliate of Bain Capital Partners