Dow Chemical 2012 Annual Report Download - page 125
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99
written down to zero in the fourth quarter of 2012. In addition, an equity investment was impaired. The equity investment,
classified as a Level 3 measurement, was valued at $33 million using unobservable inputs, including assumptions a market
participant would use to measure the fair value of the investment. These impairment charges, totaling $576 million, were
included in "Restructuring charges" in the consolidated statements of income. See Note 3 for additional information.
In the fourth quarter of 2012, the Company performed its annual goodwill impairment testing utilizing a discounted cash
flow methodology as its valuation technique. As a result of this testing, the Company recognized a $220 million goodwill
impairment charge related to its Dow Formulated Systems reporting unit (part of the Performance Materials segment), which
was included in "Goodwill impairment loss" in the consolidated statements of income. See Note 9 for additional information.
2011 Fair Value Measurements on a Nonrecurring Basis
After evaluating expected future investments in conjunction with expected future cash flows, a $27 million asset impairment
charge was recognized in the fourth quarter of 2011 related to a manufacturing facility in Brazil aligned with the Polyurethanes
business. The long-lived assets and supplies associated with this facility were written down to zero. The charge was included in
"Cost of sales" in the consolidated statements of income and reflected in the Performance Materials segment. The decision was
made to shut down this facility as part of the 1Q12 Restructuring plan.
2010 Fair Value Measurements on a Nonrecurring Basis
After evaluating expected future investments in conjunction with expected future cash flows, a $48 million asset impairment
charge was recognized in the Polyurethanes business in the fourth quarter of 2010. The Company’s evaluation of strategic
alternatives for Epoxy capacity resulted in an$18 million asset impairment charge in the fourth quarter of 2010. Due to a
change in the scope of a capital project, a $9 million asset impairment charge was recognized in Dow Automotive Systems in
the fourth quarter of 2010. In all cases, the assets were written down to zero. The charges were included in "Cost of sales" in
the consolidated statements of income and reflected in the Performance Materials segment.