RESTRUCTURING, GOODWILL IMPAIRMENT AND ASSET RELATED CHARGES - NET

The "Restructuring, goodwill impairment and asset related charges - net" line in the consolidated statements of income is used to record charges for restructuring programs, goodwill impairment, and other asset related charges, which includes other asset impairments.

Restructuring Plans

DowDuPont Cost Synergy Program

In September and November 2017, DowDuPont approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the "Synergy Program") which is designed to integrate and optimize the organization following the Merger and in preparation for the Intended Business Separations. Based on all actions approved to date under the Synergy Program, the Company expects to record total pretax restructuring charges of approximately $1.3 billion, comprised of approximately $525 million to $575 million of severance and related benefit costs; $400 million to $440 million of asset write-downs and write-offs, and $290 million to $310 million of costs associated with exit and disposal activities.

As a result of these actions, the Company recorded pretax restructuring charges of $687 million in 2017, consisting of severance and related benefit costs of $357 million, asset write-downs and write-offs of $287 million and costs associated with exit and disposal activities of $43 million. The impact of these charges is shown as "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. The Company expects to record the remaining restructuring charges over the next two years and expects the Synergy Program to be substantially complete by the end of 2019.

The following table summarizes the activities related to the Synergy Program, of which $231 million was included in "Accrued and other current liabilities" and $118 million was included in "Other noncurrent obligations" in the consolidated balance sheets.



DowDuPont Synergy Program	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities		Total
In millions	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities		Total
2017 restructuring charges	$	357		$	287		$	43	$	687
Charges against the reserve	—			(287		)	—		(287		)
Cash payments	(51		)	—			—		(51		)
Reserve balance at Dec 31, 2017	$	306		$	—		$	43	$	349

Asset Write-downs and Write-offs

The restructuring charges related to the write-down and write-off of assets in 2017 totaled $287 million. Details regarding the write-downs and write-offs are as follows:


•	The Company will close or consolidate several manufacturing, R&D and administrative facilities around the world aligned with seed and crop protection activities, including the write-down of other non-manufacturing assets. As a result, the Company recorded a charge of $94 million. These facilities will be shut down or consolidated by the end of the fourth quarter of 2019.

•

The Company recorded a charge of $83 million for asset write-downs and write-offs aligned with electronics and imaging product lines, including the shutdown of a metalorganic manufacturing facility in Cheonan, South Korea, the write-off of in-process research and development and other intangible assets, and the consolidation of certain R&D facilities. The Korean facility will be shut down by the second quarter of 2018.


•	The Company recorded a charge of $22 million for asset write-downs and write-offs aligned with an energy project, including the write-off of capital projects and other non-manufacturing assets.


•	The Company wrote-off $21 million of assets aligned with safety and construction products, including intangible assets as a result of the Clean Filtration Technologies plant shutdown in the fourth quarter of 2017.


•	The Company recorded a charge of $67 million for other miscellaneous asset write-downs and write-offs, including the shutdown of several small manufacturing facilities and the write-off of non-manufacturing assets, certain corporate facilities and data centers. These manufacturing facilities will be shut down over the next two years.

Costs Associated with Exit and Disposal Activities

The restructuring charges for costs associated with exit and disposal activities, including contract cancellation penalties and environmental remediation liabilities, totaled $43 million in 2017.

2016 Restructuring

On June 27, 2016, Dow's Board approved a restructuring plan that incorporated actions related to the ownership restructure of Dow Corning. These actions, aligned with Dow’s value growth and synergy targets, will result in a global workforce reduction of approximately 2,500 positions, with most of these positions resulting from synergies related to the ownership restructure of Dow Corning. These actions are expected to be substantially completed by June 30, 2018.

As a result of these actions, the Company recorded pretax restructuring charges of $449 million in the second quarter of 2016, consisting of severance and related benefit costs of $268 million, asset write-downs and write-offs of $153 million and costs associated with exit and disposal activities of $28 million. The impact of these charges is shown as "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.

The following table summarizes the activities related to the Company's 2016 restructuring reserve, which was primarily included in "Accrued and other current liabilities" in the consolidated balance sheets.



2016 Restructuring Charges	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities			Total
In millions	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities			Total
2016 restructuring charges	$	268		$	153		$	28		$	449
Charges against the reserve	—			(153		)	—			(153		)
Cash payments	(67		)	—			(1		)	(68		)
Reserve balance at Dec 31, 2016	$	201		$	—		$	27		$	228
Adjustments to the reserve ¹	—			—			(7		)	(7		)
Cash payments	(150		)	—			(3		)	(153		)
Reserve balance at Dec 31, 2017	$	51		$	—		$	17		$	68


1.	Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.

Asset Write-downs and Write-offs

The restructuring charges related to the write-down and write-off of assets in the second quarter of 2016 totaled $153 million. Details regarding the write-downs and write-offs are as follows:


•	The Company recorded a charge of $70 million for asset write-downs and write-offs including the shutdown of a solar manufacturing facility in Midland, Michigan; the write-down of a solar facility in Milpitas, California; and, the write-off of capital projects and in-process research and development. The Midland facility was shut down in the third quarter of 2016.


•	To enhance competitiveness and streamline costs associated with the ownership restructure of Dow Corning, a silicones manufacturing facility in Yamakita, Japan, will be shut down by the end of 2018. In addition, an idled facility was shut down in the second quarter of 2016. As a result, the Company recorded a charge of $25 million.


•	The Company recorded a charge of $25 million to close and/or consolidate certain corporate facilities and data centers. These facilities will be shut down no later than the end of the second quarter of 2018.


•	A decision was made to shut down a small manufacturing facility and to write-down other non-manufacturing assets, including a cost method investment and certain aircraft. As a result, the Company recorded a charge of $33 million. The manufacturing facility was shut down in the second quarter of 2016.

Costs Associated with Exit and Disposal Activities

The restructuring charges for costs associated with exit and disposal activities, including contract cancellation penalties, environmental remediation and warranty liabilities, were $28 million in the second quarter of 2016.

2015 Restructuring

On April 29, 2015, Dow's Board approved actions to further streamline the organization and optimize the Company’s footprint as a result of the separation of a significant portion of Dow’s chlorine value chain. These actions, which further accelerated Dow’s value growth and productivity targets, resulted in a reduction of approximately 1,750 positions and adjustments to the Company's asset footprint to enhance competitiveness. These actions were substantially completed at June 30, 2017.

As a result of these actions, the Company recorded pretax restructuring charges of $375 million in the second quarter of 2015 consisting of severance and related benefit costs of $196 million, asset write-downs and write-offs of $169 million and costs associated with exit and disposal activities of $10 million. In the fourth quarter of 2015, the Company recorded restructuring charge adjustments of $40 million, including severance and related benefit costs of $39 million for the separation of approximately 500 additional positions as part of the Company's efforts to further streamline the organization, and $1 million of costs associated with exit and disposal activities. The impact of these charges is shown as "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.

The following table summarizes the activities related to the Company's 2015 restructuring reserve.



2015 Restructuring Charges	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities			Total
In millions	Severance and Related Benefit Costs			Asset Write-downs and Write-offs			Costs Associated with Exit and Disposal Activities			Total
2015 restructuring charges	$	196		$	169		$	10		$	375
Charges against the reserve	—			(169		)	—			(169		)
Adjustments to the reserve ¹	39			—			1			40
Impact of currency	—			—			(1		)	(1		)
Cash payments	(92		)	—			—			(92		)
Reserve balance at Dec 31, 2015	$	143		$	—		$	10		$	153
Charges against the reserve	—			3			—			3
Adjustments to the reserve ¹	—			(3		)	6			3
Cash payments	(98		)	—			(8		)	(106		)
Reserve balance at Dec 31, 2016	$	45		$	—		$	8		$	53
Adjustments to the reserve ¹	(9		)	—			(1		)	(10		)
Cash payments	(33		)	—			—			(33		)
Reserve balance at Jun 30, 2017	$	3		$	—		$	7		$	10


1.	Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.

The Company also recorded $14 million of restructuring charges to "Net income attributable to noncontrolling interests" in the consolidated statements of income in the second quarter of 2015 for the noncontrolling interests' portion of the charge.

The 2015 restructuring activities were substantially completed at June 30, 2017, with remaining liabilities for severance and related benefit costs and costs associated with exit and disposal activities to be settled over time.

Asset Write-downs and Write-offs

Asset write-downs and write-offs in the second quarter of 2015 totaled $169 million. Details regarding the write-downs and write-offs are as follows:

•

As a result of changing market dynamics in certain end-use markets, select manufacturing facilities and non-core assets aligned with electronics and imaging products were shut down in 2016. The assets impacted included certain display films and metalorganic precursors, including a metalorganic materials manufacturing site in North Andover, Massachusetts, and related operations in Taoyuan, Taiwan, as well as certain display films’ manufacturing assets aligned with SKC Haas Display Films Co., Ltd., a former majority-owned joint venture located in Cheonan, South Korea. The Company recorded a $51 million charge for asset write-downs and write-offs.


•	The Company shut down and/or consolidated manufacturing capacity aligned with safety and construction products during 2016. As a result, the Company recorded a charge of $15 million.


•	A manufacturing facility that produces water soluble polymers in Institute, West Virginia, was shut down in the fourth quarter of 2015. As a result, an asset write-down of $14 million was recorded.


•	A photovoltaic plant in Schkopau, Germany, was permanently shut down in the second quarter of 2015, resulting in an asset write-off of $12 million.


•	Select operations for seed and crop protection products were shut down, closed or idled in the second half of 2015, resulting in a pretax charge of $8 million for the write-down of assets.


•	A decision was made to shut down two small manufacturing facilities and an administrative facility to optimize the Company's asset footprint, resulting in a charge of $14 million. The manufacturing facilities were shut down in 2015 and the administrative facility was shut down in 2017.


•	Due to a change in the Company's strategy to monetize and exit certain Venture Capital portfolio investments, a write-down of $55 million was recorded.

Costs Associated with Exit and Disposal Activities

The restructuring charges for costs associated with exit and disposal activities, primarily environmental remediation and contract penalties, totaled $10 million in the second quarter of 2015.

Dow expects to incur additional costs in the future related to its restructuring activities. Future costs are expected to include demolition costs related to closed facilities and restructuring plan implementation costs; 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.

Goodwill Impairment

Upon completion of the goodwill impairment testing in the fourth quarter of 2017, the Company determined the fair value of the Coatings & Performance Monomers reporting unit was lower than its carrying amount. As a result, the Company recorded an impairment charge of $1,491 million in the fourth quarter of 2017, included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income. See Note 13 for additional information on the impairment charge.

Asset Related Charges

2017 Charges

In the fourth quarter of 2017, the Company recognized a $622 million pretax impairment charge related to a biopolymers manufacturing facility in Santa Vitoria, Minas Gerais, Brazil. The Company determined it will not pursue an expansion of the facility’s ethanol mill into downstream derivative products, primarily as a result of cheaper ethane-based production as well as the Company’s new assets coming online in the U.S. Gulf Coast which can be used to meet growing market demands in Brazil. As a result of this decision, cash flow analysis indicated the carrying amount of the impacted assets was not recoverable. The impairment charge was included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income. See Notes 22 and 23 for additional information.

The Company also recognized other pretax impairment charges of $317 million in the fourth quarter of 2017, including charges related to manufacturing assets of $230 million, an equity method investment of $81 million and other assets of $6 million. The impairment charges were included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. See Note 22 for additional information.

2016 Charges

In the fourth quarter of 2016, the Company recognized a $143 million pretax impairment charge related to its equity interest in AFSI due to a decline in the market value of AFSI. The impairment charge was included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. See Notes 5, 12, 22 and 23 for additional information.

2015 Charges

As a result of the Company’s continued actions to optimize its footprint, the Company recognized an impairment charge of $144 million in the fourth quarter of 2015, related to manufacturing assets and facilities and an equity method investment. The impairment charge was included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. See Note 22 for additional information.