RESTRUCTURING

4Q12 Restructuring

On October 23, 2012, the Company's Board of Directors approved a restructuring plan ("4Q12 Restructuring") to advance the next stage of the Company's transformation and to address macroeconomic uncertainties. The restructuring plan affected approximately 2,850 positions and resulted in the shutdown of approximately 20 manufacturing facilities. 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 shown in the following table:



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	Costs Associated with Exit or Disposal Activities			Severance Costs				Total
Consumer Solutions	$	—		$	—	$	136	$	136
Infrastructure Solutions	—			—		24		24
Performance Materials & Chemicals	19			—		77		96
Performance Plastics	8			—		25		33
Corporate	12			375		314		701
Total 4Q12 Restructuring charges	$	39		$	375	$	576	$	990
Adjustments to 4Q12 Restructuring charges
2013 - Performance Plastics	(6		)	—		—		(6		)
2014 - Performance Materials & Chemicals	(3		)	—		—		(3		)
Net 4Q12 Restructuring charges	$	30		$	375	$	576	$	981

Details regarding the components of the 4Q12 Restructuring charges are discussed below:

Costs Associated with Exit or Disposal Activities

The restructuring charges for costs associated with exit or disposal activities totaled $39 million in the fourth quarter of 2012 and included $9 million of curtailment costs associated with other postretirement benefit plans, impacting Corporate; contract cancellation fees of $25 million, impacting Performance Materials & Chemicals ($17 million) and Performance Plastics ($8 million); and environmental remediation of $5 million, impacting Performance Materials & Chemicals ($2 million) and Corporate ($3 million).

Severance Costs

The restructuring charges in the fourth quarter of 2012 included severance of $375 million for the separation of approximately 2,850 employees under the terms of the Company's ongoing benefit arrangements, which is expected to be completed by March 31, 2015. These costs were charged against Corporate. At December 31, 2014, severance of $342 million had been paid and a liability of $33 million remained for approximately 230 employees.

Impairment of Long-Lived Assets, Other Assets and Equity Method Investments

The restructuring charges related to the write-down and write-off of assets in the fourth quarter of 2012 totaled $576 million. Details regarding the write-downs and write-offs are as follows:

•

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 and capital projects associated with this facility of $114 million, impacting the Consumer Solutions segment. The facility was shut down in the fourth quarter of 2012.


•	Certain Industrial Solutions 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 & Chemicals 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 Performance Materials & Chemicals 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, were shut down or sold, resulting in a charge in the fourth quarter of 2012 related to the write-down of assets of $13 million against the Consumer Solutions segment. The manufacturing facility in Massachusetts was shut down in the fourth quarter of 2013; the manufacturing facility in Switzerland was sold in the third quarter of 2014.


•	An asset write-down of $9 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 Energy & Water Solutions 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 Infrastructure Solutions segment.


•	Polyurethanes 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 $6 million in the fourth quarter of 2012, impacting the Performance Materials & Chemicals 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 & Chemicals ($15 million), Infrastructure Solutions ($12 million), Consumer Solutions ($9 million) and Corporate ($6 million). Most of these facilities were shut down by the end of the fourth quarter of 2014.


•	Certain capital projects were canceled resulting in the write-off of project spending of $8 million against the Performance Plastics ($7 million) 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.

The following table summarizes the activities related to the Company's 4Q12 Restructuring reserve, which is included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets:



4Q12 Restructuring Activities	Costs Associated with Exit or Disposal Activities						Impairment of Long-Lived Assets, Other Assets and Equity Method Investments
In millions	Costs Associated with Exit or Disposal Activities			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
Adjustments to the reserve	(3		)	—			—			(3		)
Cash payments	(4		)	(106		)	—			(110		)
Reserve balance at December 31, 2014	$	12		$	33		$	—		$	45

The 4Q12 Restructuring activities were substantially completed in 2014, with remaining liabilities related to severance, contract cancellation fees and environmental remediation to be settled over time.

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 included the elimination of approximately 900 positions. In addition, the Company shut down a number of manufacturing facilities. 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 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 (credits)" 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					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
Infrastructure Solutions	$	4		$	—	$	37		$	41
Performance Materials & Chemicals	146			—		57			203
Corporate	—			113		—			113
Total 1Q12 Restructuring charges	$	150		$	113	$	94		$	357
Adjustment to 1Q12 Restructuring charges:
2012 - Infrastructure Solutions	—			—		(4		)	(4		)
2013 - Infrastructure Solutions	(1		)	—		—			(1		)
2013 - Performance Materials & Chemicals	(15		)	—		—			(15		)
Net 1Q12 Restructuring charges	$	134		$	113	$	90		$	337

Details regarding the components of the 1Q12 Restructuring charge 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 & Chemicals ($146 million) and Infrastructure Solutions ($3 million), and asbestos abatement costs of $1 million impacting 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 by December 31, 2013. These costs were charged against Corporate. At December 31, 2013, severance of $110 million had been paid and a liability of $3 million remained for 42 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 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 & Chemicals 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 & Chemicals segment.

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.

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



1Q12 Restructuring Activities	Costs Associated with Exit or Disposal Activities
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
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

The 1Q12 Restructuring activities were substantially completed in 2013, with remaining liabilities related to severance and contract cancellation fees to be settled over time.

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 geographic areas. Future costs are expected to include demolition costs related to closed facilities; these costs 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.

2014 Adjustments to the 4Q12 Restructuring Plan

In 2014, the Company reduced the 4Q12 Restructuring reserve related to contract cancellation fees by $3 million, impacting Performance Materials & Chemicals.

2013 Adjustments to 1Q12 and 4Q12 Restructuring Plans

In 2013, the Company reduced the 4Q12 Restructuring reserve related to contract cancellation fees by $6 million, impacting Performance Plastics. The Company also reduced the 1Q12 Restructuring reserve related to the adjustment of contract cancellation fees and asbestos abatement costs by $16 million, impacting Infrastructure Solutions ($1 million) and Performance Materials & Chemicals ($15 million).