Dow Chemical 2014 Annual Report Download - page 60

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Restructuring Charges (Credits)
On March 27, 2012, the Company's Board of Directors approved a restructuring plan ("1Q12 Restructuring"). The 1Q12
Restructuring plan included the shutdown of a number of facilities and a global workforce reduction. These actions were
substantially completed at December 31, 2013. As a result of the 1Q12 Restructuring activities, the Company recorded pretax
restructuring charges of $357 million in the first quarter of 2012 consisting of costs associated with exit and disposal activities
of $150 million, severance costs of $113 million and asset write-downs and write-offs of $94 million. The impact of these
charges is shown as "Restructuring charges (credits)" in the consolidated statements of income and reflected in the Company's
segment results as follows: $41 million in Infrastructure Solutions, $203 million in Performance Materials & Chemicals and
$113 million in Corporate. 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 Infrastructure
Solutions segment.
On October 23, 2012, the Company's Board of Directors approved a second restructuring plan ("4Q12 Restructuring"). The
restructuring plan included the shutdown of a number of facilities, an impairment charge related to the write-down of Dow
Kokam LLC's ("Dow Kokam") long-lived assets and a global workforce reduction. These actions were substantially completed
at December 31, 2014. 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
follows: $136 million in Consumer Solutions, $24 million in Infrastructure Solutions, $96 million in Performance Materials &
Chemicals, $33 million in Performance Plastics and $701 million in Corporate.
During the fourth quarter of 2013, the Company recognized a pretax gain of $16 million for adjustments to asbestos abatement
costs and contract cancellation fees related to the 1Q12 Restructuring plan and a $6 million pretax gain for adjustments to
contract cancellation fees related to the 4Q12 Restructuring plan. These gains were included in "Restructuring charges
(credits)" in the consolidated statements of income and reflected in Performance Materials & Chemicals ($15 million),
Performance Plastics ($6 million) and Infrastructure Solutions ($1 million).
During the fourth quarter of 2014, the Company recognized a pretax gain of $3 million for adjustments to contract cancellation
fees related to the 4Q12 Restructuring plan. The gain was included in "Restructuring charges (credits)" in the consolidated
statements of income and reflected in Performance Materials & Chemicals. See Note 3 to the Consolidated Financial
Statements for details on the 2012 Restructuring programs.
Asbestos-related Charge
The Company recorded a pretax charge of $78 million (reflected in Corporate) for an increase in the asbestos-related liability
for pending and future claims (excluding defense and processing costs). Union Carbide Corporation, a wholly owned
subsidiary of the Company, determined that an adjustment to the asbestos accrual was required due to an increase in
mesothelioma claim activity compared with what had been previously forecasted. See Note 14 to the Consolidated Financial
Statements for details on the asbestos-related charge.
Equity in Earnings of Nonconsolidated Affiliates
Dow’s share of the earnings of nonconsolidated affiliates in 2014 was $835 million, compared with $1,034 million in 2013 and
$536 million in 2012. In 2014, equity earnings decreased primarily due to lower earnings at EQUATE, TKSC and MEGlobal
and increased losses at Sadara which were partially offset by increased earnings at Dow Corning. In 2013, equity earnings
increased compared with 2012 primarily due to increased earnings at Dow Corning, EQUATE, TKSC and MEGlobal as well as
improved results from The SCG-Dow Group, Sadara and Map Ta Phut Olefins Company Limited. Equity earnings for 2013
also included a $10 million loss related to asset impairment charges at a formulated electrolytes manufacturing joint venture
(reflected in Corporate). In 2012, equity earnings decreased primarily due to lower earnings at Dow Corning, MEGlobal and
The SCG-Dow Group as well as equity losses from Sadara equal to the Company's share of development expenses. Equity
earnings for 2012 also included a $73 million loss related to project development and other costs associated with the
contribution of development costs to Sadara (reflected in Corporate).
During 2012, Dow Corning's sales of solar-grade polycrystalline silicon products declined, driven by depressed prices and
declining sales volume that resulted from the July 2012 Chinese Ministry of Commerce ("MOFCOM") antidumping and
countervailing duty investigations of U.S. and Korean-based solar-grade polycrystalline silicon products. In response to these
market conditions, Dow Corning recorded an impairment charge in the fourth quarter of 2012 related to the abandonment of a
partially constructed polycrystalline silicon plant expansion. The Company's share of this charge was $59 million. Dow
Corning also delayed the start-up of another polycrystalline silicon plant expansion, pending market condition improvements.