Dow Chemical 2013 Annual Report Download - page 101

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As a result of the 4Q12 Restructuring activities, the Company recorded pretax restructuring charges of $990 million in the
fourth quarter of 2012 consisting of costs associated with exit or disposal activities of $39 million, severance costs of
$375 million and asset write-downs and write-offs of $576 million. The impact of these charges is shown as "Restructuring
charges (credits)" in the consolidated statements of income and reflected in the Company's segments results as shown in the
following table:
4Q12 Restructuring Charges by Operating Segment
Costs
Associated with
Exit or
Disposal
Activities
Impairment of
Long-Lived
Assets, Other
Assets and
Equity Method
Investments
In millions
Severance
Costs Total
Electronic and Functional Materials $ 5 $ — $ 43 $ 48
Coatings and Infrastructure Solutions — — 16 16
Performance Materials 14 — 178 192
Performance Plastics 7 — 19 26
Feedstocks and Energy — — 7 7
Corporate 13 375 313 701
Total 4Q12 Restructuring charges $ 39 $ 375 $ 576 $ 990
Adjustments to 4Q12 Restructuring charges
2013 - Performance Plastics (6) — — (6)
Net 4Q12 Restructuring charges $ 33 $ 375 $ 576 $ 984
Details regarding the components of the 4Q12 Restructuring charges are discussed below:
Costs Associated with Exit or Disposal Activities
The restructuring charges for costs associated with exit or disposal activities totaled $39 million in the fourth quarter of
2012 and included $9 million of curtailment costs associated with other postretirement benefit plans, impacting Corporate;
contract cancellation fees of $25 million, impacting Performance Materials ($13 million), Performance Plastics
($7 million), Electronic and Functional Materials ($5 million); and environmental remediation of $5 million impacting
Performance Materials ($1 million) and Corporate ($4 million).
Severance Costs
The restructuring charges in the fourth quarter of 2012 included severance of $375 million for the separation of
approximately 2,850 employees under the terms of the Company's ongoing benefit arrangements, primarily by March 31,
2015. These costs were charged against Corporate. At December 31, 2013, severance of $236 million had been paid and a
liability of $139 million remained for 759 employees.
Impairment of Long-Lived Assets, Other Assets and Equity Method Investments
The restructuring charges related to the write-down and write-off of assets in the fourth quarter of 2012 totaled
$576 million. Details regarding the write-downs and write-offs are as follows:
• As a result of weak global demand for lithium-ion batteries, the Company recorded a pretax impairment charge of
$303 million related to the write-down of Dow Kokam LLC's long-lived assets, impacting Corporate. At the time of
the impairment, Dow had a 63.6 percent ownership interest in Dow Kokam LLC. The impact to Dow, after
adjustments for income taxes and the portion attributable to noncontrolling interests, was $189 million.
• In response to global economic conditions and competitive dynamics, the decision was made to shut down and/or
consolidate a number of manufacturing facilities, with an impact of $246 million, summarized as follows:
• A Dow Automotive Systems diesel particulate filters manufacturing facility in Midland, Michigan was shut down,
resulting in the write-down of assets associated with this facility of $114 million, impacting the Performance
Materials segment. The facility was shut down in the fourth quarter of 2012.
• Certain Oxygenated Solvents manufacturing facilities in Texas City, Texas were consolidated and/or shut down,
resulting in an asset write-down of $36 million against the Performance Materials segment. The assets were shut
down in the fourth quarter of 2012.