United states securities and exchange commission

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 $74 million in 2017.

The Company 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
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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.
Restructuring Plans Initiated Prior to Merger

Dow 2016 Restructuring Plan

On June 27, 2016, Dow's Board of Directors ("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, Dow 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 and reflected in the segment results in the table that follows. The table also summarizes the activities related to Dow'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
Performance Materials & Coatings		$	—		$	27		$	15		$	42
Industrial Intermediates & Infrastructure		—			70			13			83
Packaging & Specialty Plastics		—			10			—			10
Corporate		268			46			—			314
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 and related to Performance Materials & Coatings.

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:

•

Dow 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 charge was related to Industrial Intermediates & Infrastructure. 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, Dow recorded a charge of  $25 million related to Performance Materials & Coatings.

•	Dow will close and/or consolidate certain corporate facilities and data centers. Write-downs of  $25 million were related to Corporate. 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. Write-downs of  $33 million  were recorded, related to Performance Materials & Coatings ( $2 million ), Packaging & Specialty Plastics ( $10 million ) and Corporate ( $21 million ). The manufacturing facility was shut down in the second quarter of 2016.

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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 2016.

Dow 2015 Restructuring Plan

On April 29, 2015, Dow's Board approved actions to further streamline the organization and optimize Dow’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 across a number of businesses and functions and adjustments to Dow's asset footprint to enhance competitiveness. These actions were substantially completed at June 30, 2017.

As a result of these actions, Dow 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, Dow 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 Dow'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 and reflected in Dow's segment results in the table that follows. The table also summarizes the activities related to Dow'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
Agriculture		$	—		$	8		$	6		$	14
Performance Materials & Coatings		—			10			—			10
Packaging & Specialty Plastics		—			12			—			12
Electronics & Imaging		—			51			—			51
Nutrition & Biosciences		—			14			2			16
Safety & Construction		—			15			2			17
Corporate		196			59			—			255
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 2		—			(3		)	6			3
Cash payments		(98		)	—			(8		)	(106		)
Reserve balance at Dec 31, 2016		$	45		$	—		$	8		$	53
Adjustments to the reserve 3		(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 unfavorable adjustments to severance and related benefit costs were related to Corporate and costs associated with exit and disposal activities were related to Agriculture.
2.	Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. The favorable adjustment to asset write-downs and write-offs was related to Safety & Construction. The unfavorable adjustment to costs associated with exit and disposal activities was related to Agriculture ( $5 million ) and Nutrition & Biosciences ( $1 million ).
3.	Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. The favorable adjustments to severance and related benefit costs were related to Corporate and costs associated with exit and disposal activities were related to Agriculture.

Dow 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.
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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 the Electronics & Imaging business 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. Dow recorded a $51 million charge for these asset write-downs and write-offs, related to the Electronics & Imaging segment.

•	Dow shut down and/or consolidated manufacturing capacity in the Safety & Construction segment during 2016. As a result, Dow recorded a charge of $15 million for asset write-offs.

•	A Nutrition & Health manufacturing facility 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 against the Nutrition & Biosciences segment.

•	A Packaging and Specialty Plastics plant in Schkopau, Germany, was permanently shut down in the second quarter of 2015, resulting in an asset write-off of $12 million , related to the Packaging & Specialty Plastics segment.

•	Select operations in the Agriculture segment 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 Dow's asset footprint. Write-downs of $14 million were recorded, related to Performance Materials & Coatings ( $10 million ) and Corporate ( $4 million ). The manufacturing facilities were shut down in 2015 and the administrative facility was shut down in 2017.

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

Costs Associated with Exit and Disposal Activities

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