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 |
• | 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. |
• | An asset write-down of $17 million for a sodium borohydride manufacturing facility in Delfzijl, The Netherlands was recorded against the Electronic and Functional Materials segment in the fourth quarter of 2012. The manufacturing facility was shut down in the third quarter of 2013. |
• | Two Interconnect Technologies manufacturing facilities, one in Lucerne, Switzerland and the other in Marlborough, Massachusetts, will be shut down, resulting in a charge in the fourth quarter of 2012 related to the write-down of assets of $13 million against the Electronics and Functional Materials segment. The manufacturing facility in Massachusetts was shut down in the fourth quarter of 2013; the manufacturing facility in Switzerland is expected to be shut down in the fourth quarter of 2014. |
• | An asset write-down of $10 million for a polyethylene manufacturing facility in Tessenderlo, Belgium was recorded against the Performance Plastics segment in the fourth quarter of 2012. The manufacturing facility was shut down in the second quarter of 2013. |
• | Certain Dow Building and Construction manufacturing assets in Midland, Michigan were shut down in the fourth quarter of 2012. As a result, an asset write-down of $9 million was recorded against the Coatings and Infrastructure Solutions segment. |
• | Dow Formulated Systems manufacturing capacity was consolidated in the United States, resulting in the shut down of a Solon, Ohio manufacturing facility and an asset write-down of $5 million in the fourth quarter of 2012, impacting the Performance Materials segment. The manufacturing facility was shut down in the third quarter of 2013. |
• | The decision was made to shut down a number of small manufacturing, research and development, and administrative facilities to optimize the assets of the Company. Write-downs of $42 million were recorded in the fourth quarter of 2012, impacting Performance Materials ($20 million), Electronic and Functional Materials ($13 million), Coatings and Infrastructure Solutions ($4 million) and Corporate ($5 million). These facilities are expected to be shut down no later than the fourth quarter of 2014. |
• | Certain capital projects were canceled resulting in the write-off of project spending of $8 million against the Feedstocks and Energy ($7 million) and Coatings and Infrastructure Solutions ($1 million) segments. |
• | Due to a change in the Company's strategy regarding its ownership in Nippon Unicar Company Limited ("NUC"), a 50:50 joint venture, the Company determined its equity investment in NUC to be other-than-temporarily impaired and recorded a $9 million write-down of its interest in NUC against the Performance Plastics segment in the fourth quarter of 2012. Dow divested its ownership interest in NUC on July 1, 2013. |
• | The fourth quarter of 2012 restructuring charge also included the write-off of other assets associated with plant closures totaling $10 million. These charges are reflected in the results of the operating segments impacted by the restructuring activities. |
4Q12 Restructuring Activities | Costs Associated with Exit or Disposal Activities | Impairment of Long-Lived Assets, Other Assets and Equity Method Investments | ||||||||||||||
In millions | Severance Costs | Total | ||||||||||||||
Restructuring charges recognized in the fourth quarter of 2012 | $ | 39 | $ | 375 | $ | 576 | $ | 990 | ||||||||
Charges against the reserve | (9 | ) | — | (576 | ) | (585 | ) | |||||||||
Cash payments | — | (8 | ) | — | (8 | ) | ||||||||||
Reserve balance at December 31, 2012 | $ | 30 | $ | 367 | $ | — | $ | 397 | ||||||||
Adjustments to the reserve | (6 | ) | — | — | (6 | ) | ||||||||||
Cash payments | (5 | ) | (228 | ) | — | (233 | ) | |||||||||
Reserve balance at December 31, 2013 | $ | 19 | $ | 139 | $ | — | $ | 158 |
1Q12 Restructuring Charges by Operating Segment | Costs Associated with Exit or Disposal Activities | Impairment of Long-Lived Assets and Other Assets | ||||||||||||||
In millions | Severance Costs | Total | ||||||||||||||
Electronic and Functional Materials | $ | — | $ | — | $ | 17 | $ | 17 | ||||||||
Coatings and Infrastructure Solutions | 4 | — | 37 | 41 | ||||||||||||
Performance Materials | 146 | — | 40 | 186 | ||||||||||||
Corporate | — | 113 | — | 113 | ||||||||||||
Total 1Q12 Restructuring charges | $ | 150 | $ | 113 | $ | 94 | $ | 357 | ||||||||
Adjustment to 1Q12 Restructuring charges: | ||||||||||||||||
2012 - Coatings and Infrastructure Solutions | — | — | (4 | ) | (4 | ) | ||||||||||
2013 - Coatings and Infrastructure Solutions | (1 | ) | — | — | (1 | ) | ||||||||||
2013 - Performance Materials | (15 | ) | — | — | (15 | ) | ||||||||||
Net 1Q12 Restructuring charges | $ | 134 | $ | 113 | $ | 90 | $ | 337 |
• | The Company evaluated its facilities that manufacture STYROFOAM™ brand insulation and as a result, the decision was made to shut down facilities in Balatonfuzfo, Hungary; Estarreja, Portugal; and Charleston, Illinois. In addition, a facility in Terneuzen, The Netherlands was idled and impaired. Write-downs associated with these facilities of $37 million were recorded in the first quarter of 2012 against the Coatings and Infrastructure Solutions segment. The Netherlands facility was shut down at the end of the second quarter of 2012. The remaining facilities were shut down in the fourth quarter of 2012. |
• | 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. |
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 |
Restructuring Reserve Assumed from Rohm and Haas In millions | Severance Costs | ||
Reserve balance at December 31, 2010 | $ | 12 | |
Cash payments | (7 | ) | |
Adjustments to reserve | (6 | ) | |
Foreign currency impact | 1 | ||
Reserve balance at June 30, 2011 | $ | — |