Dow Chemical 2013 Annual Report Download - page 104

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• 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 shut down in the
second quarter of 2012. The German manufacturing assets were shut down in 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.
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
Adjustments to the reserve (16) — — (16)
Cash payments (15) (28) — (43)
Noncash settlements (8) — — (8)
Foreign currency impact (1) — — (1)
Reserve balance at December 31, 2013 $ 16 $ 3 $ — $ 19
The reserve balance is included in the consolidated balance sheets as "Accrued and other current liabilities." The 1Q12
Restructuring activities were substantially completed in 2013, with remaining liabilities related to severance and contract
cancellation fees to be settled over time.
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.
2013 Adjustments to 1Q12 and 4Q12 Restructuring Plans
In 2013, the Company reduced the 4Q12 Restructuring reserve related to contract cancellation fees by $6 million, impacting
Performance Plastics. The Company also reduced the 1Q12 Restructuring reserve related to the adjustment of contract
cancellation fees and asbestos abatement costs by $16 million, impacting Coatings and Infrastructure Solutions ($1 million) and
Performance Materials ($15 million).
Restructuring Reserve Assumed from Rohm and Haas
Included in liabilities assumed in the April 1, 2009 acquisition of Rohm and Haas Company ("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 $12 million remained 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.