Dow Chemical 2015 Annual Report Download - page 46

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Matters in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 10 to the
Consolidated Financial Statements for additional information regarding goodwill and the impairment tests conducted.
In 2014, the Company performed qualitative testing for 9 of the 14 reporting units carrying goodwill and quantitative testing
for the remaining five reporting units. As a result of this testing, no goodwill impairments were identified.
In the fourth quarter of 2014, the Company recognized a pretax charge of $50 million related to the impairment of intangible
assets in the Dow Electronic Materials business, which is included in "Goodwill and other intangible asset impairment losses"
in the consolidated statements of income and reflected in Consumer Solutions. See Notes 10 and 12 to the Consolidated
Financial Statements for additional information on this impairment.
In 2013, the Company performed qualitative testing for 14 of the 19 reporting units carrying goodwill and quantitative testing
for the remaining five reporting units. As a result of this testing, no goodwill impairments were identified.
Restructuring Charges (Credits)
On April 29, 2015, Dow's Board of Directors approved actions to further streamline the organization and optimize the
Company’s footprint as a result of the split-off of the chlorine value chain. These actions, which will further accelerate Dow’s
value growth and productivity targets, will result in a reduction of approximately 1,750 positions across a number of businesses
and functions and adjustments to the Company's asset footprint to enhance competitiveness. These actions are expected to be
completed primarily by March 31, 2017. As a result of these actions, the Company recorded pretax restructuring charges of
$375 million in the second quarter of 2015 consisting of costs associated with exit or disposal activities of $10 million,
severance costs of $196 million and asset write-downs and write-offs of $169 million. During the fourth quarter of 2015, the
Company recorded a restructuring charge adjustment of $40 million, primarily related to severance costs for the separation of
approximately 500 additional positions. 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: $16 million in Agricultural
Sciences, $67 million in Consumer Solutions, $26 million in Infrastructure Solutions, $12 million in Performance Plastics and
$294 million in Corporate. See Note 3 to the Consolidated Financial Statements for details on the Company's 2015
restructuring program.
In 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.
In 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).
Asbestos-related Charge
In 2014, 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 15 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 2015 was $674 million, compared with $835 million in 2014 and
$1,034 million in 2013. In 2015, equity earnings decreased as higher earnings at The SCG-Dow Group and Map Ta Phut
Olefins Company Limited were more than offset by increased equity losses from Sadara, lower equity earnings from Univation
resulting from the May 5, 2015, step acquisition and lower earnings from EQUATE, TKOC and MEGlobal. Equity earnings in
2015 were also impacted by a $29 million loss related to AgroFresh Solutions' fair value step-up of its inventories and start-up
costs and a loss recognized by Sadara related to the write-off of design engineering work for an Epoxy Plant, of which Dow's
share was $27 million. 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
included a $10 million loss related to asset impairment charges at a formulated electrolytes manufacturing joint venture
(reflected in Corporate).