Reconciliation of "Income from continuing operations, net of tax" to Pro Forma Operating EBITDA
2017
2016
In millions
Income from continuing operations, net of tax
$
1,669
$
4,404
+ Provision (Credit) for income taxes on continuing operations
(476
)
9
Income from continuing operations before income taxes
$
1,193
$
4,413
+ Depreciation and amortization
3,969
2,862
- Interest income 1
147
107
+ Interest expense and amortization of debt discount
1,082
858
- Foreign exchange gains (losses), net 1
(63
)
(126
)
+ Pro forma adjustments
3,179
4,298
Pro forma EBITDA
$
9,339
$
12,450
- Adjusted significant items 2
(6,827
)
(1,664
)
Pro forma Operating EBITDA
$
16,166
$
14,114
1.
Included in "Sundry income (expense) - net."
2.
Significant items, excluding the impact of one-time transaction costs directly attributable to the Merger and reflected in the pro forma adjustments.
Reconciliation of "Income from continuing operations, net of tax" to Operating EBITDA
2015
In millions
Income from continuing operations, net of tax
$
7,783
+ Provision for income taxes on continuing operations
2,147
Income from continuing operations before income taxes
$
9,930
+ Depreciation and amortization
2,521
- Interest income 1
71
+ Interest expense and amortization of debt discount
946
- Foreign exchange losses, net 1
(190
)
EBITDA
$
13,516
- Significant items
3,828
Operating EBITDA
$
9,688
1.
Included in "Sundry income (expense) - net."
186
Table of Contents The adjusted significant items for 2017 and 2016 are presented on a pro forma basis. The 2015 significant items represent historical Dow only. The following tables summarize the pretax impact of adjusted significant items and significant items by segment that are excluded from pro forma Operating EBITDA and Operating EBITDA above:
Adjusted Significant Items by Segment for 2017
Agri-culture
Perf. Materials & Coatings
Ind. Interm. & Infrast.
Pack. & Spec. Plastics
Elect. & Imaging
Nutrition & Biosciences
Transp. & Adv. Polymers
Safety & Const.
Corp.
Total
In millions
Gains on sales of businesses/entities 1
$
635
$
—
$
—
$
227
$
—
$
162
$
—
$
—
$
7
$
1,031
Integration and separation costs 2
—
—
—
—
—
—
—
—
(1,499
)
(1,499
)
Merger-related inventory step-up amortization 3
(425
)
—
—
(120
)
(144
)
(404
)
(212
)
(178
)
—
(1,483
)
Litigation related charges, awards and adjustments 4
(469
)
—
—
137
—
—
—
—
—
(332
)
Restructuring, goodwill impairment and asset related charges - net 5
(134
)
(1,578
)
(17
)
(716
)
(128
)
(7
)
(6
)
(318
)
(690
)
(3,594
)
Settlement and curtailment items 6
—
—
—
—
—
—
—
—
(892
)
(892
)
Transaction costs and productivity actions 7
—
—
—
—
—
—
—
—
(58
)
(58
)
Total
$
(393
)
$
(1,578
)
$
(17
)
$
(472
)
$
(272
)
$
(249
)
$
(218
)
$
(496
)
$
(3,132
)
$
(6,827
)
1.
Includes the sale of the DAS Divested Ag Business ( $635 million ), the sale of Dow's EAA Business ( $227 million ), the sale of DuPont's global food safety diagnostic business ( $162 million ) and post-closing adjustments on the split-off of Dow's chlorine value chain ( $7 million ). See Notes 4 and 6 for additional information.
2.
Integration and separation costs related to the Merger, post-Merger integration and Intended Business Separation activities, and costs related to the ownership restructure of Dow Corning.
3.
Includes the fair value step-up of DuPont's inventories as a result of the Merger and the acquisition of the H&N Business of $1,469 million and the amortization of a basis difference related to the fair value step-up of inventories of $14 million . See Note 3 for additional information.
4.
Includes an arbitration matter with Bayer CropScience ( $469 million charge) and a patent infringement matter with Nova Chemicals Corporation ( $137 million gain). See Note 16 for additional information.
5.
Includes Board approved restructuring plans, goodwill impairment, and asset related charges, which includes other asset impairments. See Note 5 for additional information.
6.
Includes a settlement charge related to the payment of plan obligations to certain participants of a Dow U.S. non-qualified pension plan as a result of the Merger. See Note 19 for additional information.
7.
Includes implementation costs associated with Dow's restructuring programs and other productivity actions.
