RESTRUCTURING

1Q12 Restructuring

On March 27, 2012, the Company's Board of Directors approved a restructuring plan ("1Q12 Restructuring") to optimize its portfolio, respond to changing and volatile economic conditions, particularly in Western Europe, and to advance the Company's Efficiency for Growth program, which was initiated by the Company in the second quarter of 2011. The 1Q12 Restructuring plan includes the elimination of approximately 900 positions. In addition, the Company will shut down a number of manufacturing facilities. These actions are expected to be completed primarily by 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 or 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" in the consolidated statements of income and reflected in the Company's segment results as shown in the following table.



1Q12 Restructuring Charges by Operating Segment	Costs Associated with Exit or Disposal Activities		Severance Costs		Impairment of Long-Lived Assets and Other Assets
In millions	Costs Associated with Exit or Disposal Activities		Severance Costs		Impairment of Long-Lived Assets and Other Assets		Total
Electronic and Functional Materials	$	—	$	—	$	17	$	17
Coatings and Infrastructure Solutions	4		—		37		41
Performance Materials	146		—		40		186
Corporate	—		113		—		113
Total	$	150	$	113	$	94	$	357

Details regarding the components of the 1Q12 Restructuring charges are discussed below:

Costs Associated with Exit or Disposal Activities

The restructuring charges for costs associated with exit or disposal activities totaled $150 million in the first quarter of 2012 and included contract cancellation fees of $149 million, impacting Performance Materials ($146 million) and Coatings and Infrastructure Solutions ($3 million), and asbestos abatement costs of $1 million impacting Coatings and Infrastructure Solutions.

Severance Costs

The restructuring charges in the first quarter of 2012 included severance of $113 million for the separation of approximately 900 employees under the terms of the Company's ongoing benefit arrangements, primarily over the next two years. These costs were charged against Corporate. At September 30, 2012, severance of $71 million had been paid and a liability of $42 million remained for 345 employees.

Impairment of Long-Lived Assets and Other Assets

The restructuring charges related to the write-down and write-off of assets in the first quarter of 2012 totaled $94 million. Details regarding the write-downs and write-offs are as follows:

•

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 will be shut down by year-end 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 shutdown in the second quarter of 2012. The German manufacturing assets will be shutdown by year-end 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.

The following table summarizes the activities related to the Company's 1Q12 Restructuring reserve:



1Q12 Restructuring Activities	Costs Associated with Exit or Disposal Activities						Impairment of Long-Lived Assets and Other Assets
In millions	Costs Associated with Exit or Disposal Activities			Severance Costs			Impairment of Long-Lived Assets and Other Assets			Total
Restructuring charges recognized in the first quarter of 2012	$	150		$	113		$	94		$	357
Charges against the reserve	—			—			(94		)	(94		)
Reserve balance at March 31, 2012	$	150		$	113		$	—		$	263
Cash payments	(41		)	(17		)	—			(58		)
Noncash settlements	(12		)	—			—			(12		)
Foreign currency impact	(2		)	—			—			(2		)
Reserve balance at June 30, 2012	$	95		$	96		$	—		$	191
Cash payments	(2		)	(54		)	—			(56		)
Noncash settlements	(16		)	—			—			(16		)
Foreign currency impact	—			—			—			—
Reserve balance at September 30, 2012	$	77		$	42		$	—		$	119

Dow expects to incur additional costs in the future related to its 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 across geographic areas. Future costs are expected to include demolition costs related to closed facilities; 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.

Subsequent Event

On October 23, 2012, the Board of Directors of the Company approved a restructuring plan ("4Q12 Restructuring") to advance the next stage of the Company's transformation and to address macroeconomic uncertainties. The 4Q12 Restructuring plan accelerates the Company's structural cost reduction program and will affect approximately 3,000 positions. The 4Q12 Restructuring plan also includes asset impairments related to the shutdown of approximately 20 manufacturing facilities, the write-off of certain capital project spending and an impairment charge related to the write-down of Dow Kokam LLC's long-lived assets. As a result of these activities, the Company will record a pre-tax charge in the fourth quarter of 2012 ranging from $900 million to $1.1 billion. These actions are expected to be completed primarily over the next two years.