Dow Chemical 2015 Annual Report Download - page 47

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In January 2014, the Chinese Ministry of Commerce issued a final determination that China's solar-grade polycrystalline silicon
industry suffered material damage because of dumping, which resulted in antidumping duties of 53.3 percent and
countervailing duties of 2.1 percent on future imports from Dow Corning's Hemlock Semiconductor Group into China. During
the fourth quarter of 2014, Dow Corning determined its polycrystalline silicon plant expansion in Clarksville, Tennessee, which
was delayed in 2012, would not be economically viable and made the decision to permanently abandon the assets. This
decision was made after review of sustained adverse market conditions and continued oversupply, the cost of operating the
facility and the ongoing impact of tariffs on polycrystalline silicon imported into China. Dow's share of the charge related to
this asset abandonment was $500 million (reflected in Infrastructure Solutions). As a result of the significant change in the use
of this asset, Dow Corning assessed whether the carrying value of all remaining polycrystalline silicon assets might be
impaired. Dow Corning's estimates of future undiscounted cash flows indicated the polycrystalline silicon asset group was
recoverable.
In May 1995, Dow Corning filed for protection under Chapter 11 of the U.S Bankruptcy Code to address pending and claimed
liabilities arising from breast implant product lawsuits. On June 1, 2004, Dow Corning's Joint Plan of Reorganization (the
"Plan") became effective and Dow Corning emerged from bankruptcy. Under the Plan, Dow Corning established and agreed to
fund a products liability settlement program (the "Settlement Facility"). The Plan contains a cap on the amount of payments
required from Dow Corning to fund the Settlement Facility. During the fourth quarter of 2014, Dow Corning, with the
assistance of a third-party advisor, developed an estimate of the future Implant Liability based on evidence that the actual
funding required for the Settlement Facility is expected to be lower than the full funding cap set forth in the Plan. As a result,
Dow Corning reduced its Implant Liability by approximately $1.3 billion. The revised Implant Liability reflected Dow
Corning’s best estimate of its remaining obligations under the Plan. Dow’s share of the Implant Liability reduction was
$407 million ($155 million reflected in Consumer Solutions and $252 million reflected in Infrastructure Solutions). In the
fourth quarter of 2015, Dow Corning further reduced its Implant Liability. Dow's share of the Implant Liability reduction was
$20 million ($8 million reflected in Consumer Solutions and $12 million reflected in Infrastructure Solutions). See Note 9 to
the Consolidated Financial Statements for additional information on nonconsolidated affiliates.
On December 10, 2015, the Company entered into a definitive agreement to restructure the ownership of Dow Corning. Under
the terms of the agreement, Dow will become the 100 percent owner of Dow Corning, currently a 50:50 joint venture between
Dow and Corning. Dow and Corning will maintain their current equity stake in Hemlock Semiconductor Group. The
transaction is expected to close in the first half of 2016.
Sundry Income (Expense) - Net
Sundry income (expense) - net includes a variety of income and expense items such as the gain or loss on foreign currency
exchange, dividends from investments, and gains and losses on sales of investments and assets. Sundry income (expense) - net
for 2015 was net income of $4,592 million, compared with net expense of $27 million in 2014 and net income of
$2,554 million in 2013.
In 2015, sundry income (expense) - net included a $2,233 million gain on the split-off of the Company's chlorine value chain
(reflected in Performance Materials & Chemicals (gain of $1,984 million), Performance Plastics (gain of $317 million), and
Corporate (loss of $68 million)), a $723 million gain on the sale of MEGlobal (reflected in Performance Materials &
Chemicals), a $682 million gain on the divestiture of ANGUS Chemical Company (reflected in Performance Materials &
Chemicals), a $20 million gain on the divestiture of the global Sodium Borohydride business (reflected in Performance
Materials & Chemicals), a $618 million gain related to the divestiture of the AgroFresh business (net of an $8 million loss for
mark-to-market adjustments on the fair value of warrants receivable and reflected in Agricultural Sciences), a $361 million gain
on the Univation step acquisition (reflected in Performance Plastics) and gains on sales of assets and investments. These gains
more than offset foreign currency exchange losses, including a $98 million loss related to the impact of the Argentine peso
devaluation (reflected in Corporate), a $53 million loss on asset impairments and related costs (reflected in Infrastructure
Solutions), an $8 million loss related to the early extinguishment of debt (reflected in Corporate) and $119 million of costs
associated with portfolio and productivity actions (reflected in Corporate). See Notes 4, 5, 6, 9, 12, 13 and 17 to the
Consolidated Financial Statements for additional information.
In 2014, sundry income (expense) - net included a gain related to the termination of an off-take agreement and gains on asset
sales which were more than offset by foreign currency exchange losses, venture capital investment losses and $49 million of
costs associated with portfolio and productivity actions (reflected in Corporate).
In 2013, sundry income (expense) - net included a gain of $2,161 million related to damages awarded to the Company in the K-
Dow arbitration proceeding (reflected in Corporate), a $451 million gain on the sale of the Polypropylene Licensing and
Catalysts business (reflected in Performance Plastics), an $87 million gain on the sale of a 7.5 percent ownership interest in
Freeport LNG Development, L.P. (reflected in Performance Plastics), a $26 million gain on the sale of the Company's