BUSINESS COMBINATIONS

Merger of Equals of Dow and DuPont

At the effective time of the Merger, each share of common stock, par value $2.50 per share, of Dow ("Dow Common Stock") (excluding any shares of Dow Common Stock that were held in treasury immediately prior to the effective time of the Merger, which were automatically canceled and retired for no consideration) was converted into the right to receive one fully paid and non-assessable share of common stock, par value $0.01 per share, of DowDuPont ("DowDuPont Common Stock"). Upon completion of the Merger, (i) each share of common stock, par value $0.30 per share, of DuPont (“DuPont Common Stock”) (excluding any shares of DuPont Common Stock that were held in treasury immediately prior to the effective time of the Merger, which were automatically canceled and retired for no consideration) was converted into the right to receive 1.2820 fully paid and non-assessable shares of DowDuPont Common Stock, in addition to cash in lieu of any fractional shares of DowDuPont Common Stock, and (ii) each share of DuPont Preferred Stock $4.50 Series and DuPont Preferred Stock $3.50 Series (collectively, the “DuPont Preferred Stock”) issued and outstanding immediately prior to the effective time of the Merger remains issued and outstanding and was unaffected by the Merger.

As provided in the Merger Agreement, at the effective time of the Merger, Dow stock options and other equity awards were generally automatically converted into stock options and equity awards with respect to DowDuPont Common Stock and DuPont stock options and other equity awards, after giving effect to the exchange ratio, were converted into stock options and equity awards with respect to DowDuPont Common Stock, and otherwise generally on the same terms and conditions under the applicable plans and award agreements immediately prior to the effective time of the Merger. See Notes 17 and 20 for additional information.

DowDuPont intends to pursue, subject to the receipt of approval by the Board of Directors of DowDuPont, the separation of the combined Company's agriculture, materials science and specialty products businesses through one or more tax-efficient transactions ("Intended Business Separations").

Preliminary Allocation of Purchase Price

Based on an evaluation of the provisions of ASC 805, "Business Combinations" ("ASC 805"), Dow was determined to be the accounting acquirer in the Merger. DowDuPont has applied the acquisition method of accounting with respect to the assets and liabilities of DuPont, which have been measured at fair value as of the date of the Merger.

DuPont's assets and liabilities were measured at estimated fair values at August 31, 2017, primarily using Level 3 inputs. Estimates of fair value represent management's best estimate and require a complex series of judgments about future events and uncertainties. Third-party valuation specialists were engaged to assist in the valuation of these assets and liabilities.

The total fair value of consideration transferred for the Merger was $74,680 million. Total consideration is comprised of the equity value of the DowDuPont shares at August 31, 2017, that were issued in exchange for DuPont shares, the cash value for fractional shares, and the portion of DuPont's share awards and share options earned at August 31, 2017. Share awards and share options converted to DowDuPont equity instruments, but not vested, were $144 million at August 31, 2017, which will be expensed over the remaining future vesting period.

The following table summarizes the fair value of consideration exchanged as a result of the Merger:



Merger Consideration
In millions (except exchange ratio)
DuPont Common Stock outstanding at Aug 31, 2017	868.3
DuPont exchange ratio	1.2820
DowDuPont Common Stock issued in exchange for DuPont Common Stock	1,113.2
Fair value of DowDuPont Common Stock issued ¹	$	74,195
Fair value of DowDuPont equity awards issued in exchange for outstanding DuPont equity awards ²	485
Total consideration	$	74,680


1.	Amount was determined based on the price per share of Dow Common Stock of $66.65 on August 31, 2017.


2.	Represents the fair value of replacement awards issued for DuPont's equity awards outstanding immediately before the Merger and attributable to the service periods prior to the Merger. The previous DuPont equity awards were converted into the right to receive 1.2820 shares of DowDuPont Common Stock.

The acquisition method of accounting requires, among other things, that identifiable assets acquired and liabilities assumed be recognized on the balance sheet at fair value as of the acquisition date. In determining the fair value, DowDuPont utilized various forms of the income, cost and market approaches depending on the asset or liability being fair valued. The estimation of fair value required significant judgments related to future net cash flows (including net sales, cost of products sold, selling and marketing costs, and working capital/contributory asset charges), discount rates reflecting the risk inherent in each cash flow stream, competitive trends, market comparables and other factors. Inputs were generally determined by taking into account historical data, supplemented by current and anticipated market conditions, and growth rates.

The table below presents the preliminary fair value that was allocated to DuPont's assets and liabilities based upon fair values as determined by DowDuPont. The valuation process to determine the fair values is not yet complete. The Company estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information currently available and continues to adjust those estimates upon refinement of market participant assumptions for integrating businesses, finalization of tax returns in the pre-merger period and application of push-down accounting at the subsidiary level. The preliminary fair values are substantially complete with the exception of identifiable intangible assets, property, plant and equipment, income taxes and goodwill. As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period, but no later than one year from the date of the acquisition. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized. Final determination of the fair values may result in further adjustments to the values presented in the following table:



DuPont Assets Acquired and Liabilities Assumed on Aug 31, 2017	Estimated fair value as previously reported ¹		Measurement period adjustments ²			Estimated fair value adjusted
In millions
Fair Value of Assets Acquired
Cash and cash equivalents	$	4,005	$	—		$	4,005
Marketable securities	2,849		—			2,849
Accounts and notes receivable - Trade	6,199		—			6,199
Accounts and notes receivable - Other	1,652		—			1,652
Inventories	8,886		(79		)	8,807
Other current assets	360		—			360
Assets held for sale	3,184		564			3,748
Investment in nonconsolidated affiliates	1,685		(31		)	1,654
Other investments	50		—			50
Noncurrent receivables	84		—			84
Property	12,122		(181		)	11,941
Goodwill ³	45,501		(396		)	45,105
Other intangible assets ³	27,844		(623		)	27,221
Deferred income tax assets	487		(203		)	284
Deferred charges and other assets	1,942		—			1,942
Total Assets	$	116,850	$	(949	)	$	115,901
Fair Value of Liabilities Assumed
Notes payable	$	4,046	$	—		$	4,046
Long-term debt due within one year	1,273		—			1,273
Accounts payable - Trade	2,344		—			2,344
Accounts payable - Other	939		—			939
Income taxes payable	140		—			140
Accrued and other current liabilities	3,517		—			3,517
Liabilities held for sale	104		11			115
Long-Term Debt	9,878		—			9,878
Deferred income tax liabilities	9,408		(940		)	8,468
Pension and other postretirement benefits - noncurrent	8,092		(36		)	8,056
Other noncurrent obligations	2,028		—			2,028
Total Liabilities	$	41,769	$	(965	)	$	40,804
Noncontrolling interests	401		16			417
Net Assets (Consideration for the Merger)	$	74,680	$	—		$	74,680


1.	As previously reported in the Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2017.

The Company recorded measurement period adjustments in the fourth quarter of 2017 to reflect facts and circumstances in existence as of the Merger. These measurement period adjustments primarily related to changes in preliminary valuation assumptions, including market participant estimates of cash flows and estimates of asset useful lives, as well as other initial estimates. All measurement period adjustments were offset against goodwill.


3.	See Note 13 for additional information.

The significant fair value adjustments included in the preliminary allocation of purchase price are discussed below.

Inventories

Acquired inventory is comprised of finished goods of $4,929 million, work in process of $3,055 million and raw materials and supplies of $823 million. The fair value of finished goods was calculated as the estimated selling price, adjusted for costs of the selling effort and a reasonable profit allowance relating to the selling effort. The fair value of work in process inventory was primarily calculated as the estimated selling price, adjusted for estimated costs to complete the manufacturing, estimated costs of the selling effort, as well as a reasonable profit margin on the remaining manufacturing and selling effort. The fair value of raw materials and supplies was determined to approximate the historical carrying value. For inventory accounted for under the FIFO method and average cost method, the preliminary fair value step-up of inventories will be recognized in "Cost of sales" as the inventory is sold. For inventory accounted for under the LIFO method, the acquired inventory becomes the LIFO base layer inventory. The pretax amount of inventory step-up recognized for the period ended December 31, 2017, was $1,538 million, of which $1,434 million was reflected in "Cost of sales" within "Income from continuing operations before income taxes" and $104 million was reflected in "Loss from discontinued operations, net of tax" in the consolidated statements of income.

Property

Property, plant and equipment is comprised of machinery and equipment of $7,466 million, buildings of $2,583 million, construction in progress of $980 million and land and land improvements of $912 million. The preliminary estimated fair value was primarily determined using a market approach for land and certain types of equipment, and a replacement cost approach for property, plant and equipment. The market approach for certain types of equipment represents a sales comparison that measures the value of an asset through an analysis of sales and offerings of comparable assets. The replacement cost approach used for all other depreciable property, plant and equipment measures the value of an asset by estimating the cost to acquire or construct comparable assets and adjusts for age and condition of the asset.

Goodwill

The excess of the consideration for the Merger over the preliminary net fair value of assets and liabilities acquired was recorded as goodwill. The Merger resulted in the recognition of $45,105 million of goodwill, which is not deductible for tax purposes. Goodwill largely consists of expected cost synergies resulting from the Merger and the Intended Business Separations, the assembled workforce of DuPont and future technology and customers.

Other Intangible Assets

Other intangible assets primarily consist of acquired customer-related assets, developed technology, trademarks/tradenames and germplasm. The preliminary customer-related value was determined using the excess earnings method while the preliminary developed technology, trademarks/tradenames and germplasm values were primarily determined utilizing the relief from royalty method. Both the excess earnings and relief from royalty methods are forms of the income approach. Refer to Note 13 for further information on other intangible assets.

Deferred Income Tax Assets and Liabilities

The deferred income tax assets and liabilities include the expected future federal, state and foreign tax consequences associated with temporary differences between the preliminary fair values of the assets acquired and liabilities assumed and the respective tax bases. Tax rates utilized in calculating deferred income taxes generally represent the enacted statutory tax rates at the effective date of the Merger in the jurisdictions in which legal title of the underlying asset or liability resides. Refer to Note 8 for further information related to the remeasurement of deferred income tax assets and liabilities as a result of the enactment of the U.S. Tax Cuts and Jobs Act in December 2017.

The preliminary fair value of “Deferred income tax assets” includes a $172 million adjustment to derecognize certain historical net operating losses that will not be fully realized as a result of the Merger. Included in the fair value adjustment related to “Deferred income tax liabilities” is a $546 million adjustment reflecting a change in determination as to the reinvestment strategy of certain foreign operations of DuPont.

Pension and Other Postretirement Liabilities

DowDuPont recognized a pretax net liability of $8,413 million, representing the unfunded portion of DuPont’s defined-benefit pension and other postretirement benefit ("OPEB") plans. Dow and DuPont did not merge their pension and OPEB plans as a result of the Merger. Refer to Note 19 for further information on pension and OPEB.

Other Assets Acquired and Liabilities Assumed

DowDuPont utilized the carrying values net of allowances to value accounts and notes receivable and accounts payable as well as other current assets and liabilities as it was determined that carrying values represented the fair value of those items at the Merger date.

The following table provides "Net sales" and "Loss from continuing operations before income taxes" of DuPont included in the Company's results since the Merger. Included in the results from DuPont was $180 million of "Restructuring, goodwill impairment and asset related charges - net" (see Note 5 for additional information), $1,434 million that was recognized in "Cost of sales" as inventory was sold related to the fair value step-up of inventories and $314 million of "Integration and separation costs" in the consolidated statements of income.



DuPont Results of Operations	Sep 1 -
In millions	Dec 31, 2017
Net sales	$	7,033
Loss from continuing operations before income taxes	$	(1,578	)

Unaudited Supplemental Pro Forma Information

The DowDuPont unaudited pro forma results presented below were prepared pursuant to the requirements of ASC 805 and give effect to the Merger as if it had been consummated on January 1, 2016. The pro forma results have been prepared for comparative purposes only and do not necessarily represent what the revenue or results of operations would have been had the Merger been completed on January 1, 2016. In addition, these results are not intended to be a projection of future operating results and do not reflect synergies that might be achieved from DowDuPont.

The pro forma results include adjustments for the preliminary purchase accounting impact (including, but not limited to, depreciation and amortization associated with the acquired tangible and intangible assets, amortization of the fair value adjustment to investment in nonconsolidated affiliates, and reduction of interest expense related to the fair value adjustment to long-term debt, along with the related tax impacts), the alignment of accounting policies, and the elimination of transactions between Dow and DuPont. Other adjustments were reflected in the pro forma results as follows:

•

From January 1, 2016 through December 31, 2017, Dow and DuPont collectively incurred $455 million of after tax costs ($553 million pretax) to prepare for and close the Merger. These Merger costs were reflected within the results of operations in the pro forma results presented below as if they were incurred on January 1, 2016. The costs incurred related to integration and to prepare for the Intended Business Separations were reflected in the pro forma results in the period in which they were incurred.

•

The Company incurred an after tax charge of $931 million ($1,113 million pretax) in 2017 related to the fair value step‑up of inventories acquired and sold, excluding the acquired inventory related to DuPont's Seed business. The 2017 pro forma results were adjusted to exclude this charge. The pro forma results for 2016 were adjusted to include this charge, as well as estimated charges of $60 million after tax ($69 million pretax) related to the remaining fair value step-up of inventories to be sold, excluding acquired inventory related to DuPont's Seed business.

•

To align with seasonality, charges related to the fair value step-up of acquired inventory related to DuPont’s Seed business were reflected in the pro forma results based on actual quantity of units sold during those periods as if the fair value step‑up of inventories had occurred on January 1, 2016. Accordingly, $300 million of after tax charges ($431 million pretax) for the year ended December 31, 2017 and $1,222 million of after tax charges ($1,667 million pretax) for the year ended December 31, 2016, were reflected in the pro forma results.

•

The pro forma results for the year ended December 31, 2016 were adjusted to include charges related to change in control provisions within a U.S. non-qualified pension plan for Dow and within other certain employee agreements as if they were incurred on January 1, 2016. The majority of which related to charges for the payment of pension plan obligations of $594 million after tax ($892 million pretax) recorded in the fourth quarter of 2017. See Note 19 for further information.


•	The 2017 pro forma results were adjusted to exclude a $170 million after tax charge incurred in September 2017 related to the impact of changes in tax attributes. The pro forma results for the year ended December 31, 2016, were adjusted to include this charge as if it were incurred on January 1, 2016.

The unaudited pro forma results for all periods presented below exclude the results of operations of the DuPont Divested Ag Business, as defined in the "Acquisition of Health and Nutrition Business" section below, as this divestiture was reflected as discontinued operations. The Dow global Ethylene Acrylic Acid copolymers and ionomers business ("EAA Business"), through August 31, 2017, and a portion of Dow Agrosciences’ Brazil corn seed business ("DAS Divested Ag Business") divestitures are included in the results from continuing operations in the unaudited pro forma results presented below, for all periods presented, as these divestitures do not qualify for discontinued operations.



DowDuPont Pro Forma Results of Operations	2017		2016
In millions (except share amounts)	2017		2016
Net sales	$	79,686	$	71,321
Income from continuing operations, net of tax	$	4,677	$	2,341
Earnings per common share from continuing operations - basic	$	1.94	$	0.84
Earnings per common share from continuing operations - diluted	$	1.92	$	0.83

Integration and Separation Costs

"Integration and separation costs" have been and are expected to be significant. The Company incurred "Integration and separation costs," reflected in "Income from continuing operations before income taxes" in the consolidated statements of income, of $1,101 million and $349 million for the years ended December 31, 2017 and 2016, respectively. These costs to date primarily consisted of financial advisory, information technology, legal, accounting, consulting, and other professional advisory fees associated with the preparation and execution of activities related to the Merger, post-merger integration and separation, and the ownership restructure of Dow Corning. While the Company assumed that a certain level of expenses would be incurred, there are many factors that could affect the total amount or the timing of these expenses, and many of the expenses that will be incurred are, by their nature, difficult to estimate.

Acquisition of H&N Business

On March 31, 2017, DuPont entered into a definitive agreement (the "FMC Transaction Agreement") with FMC Corporation ("FMC") for FMC to acquire the assets related to DuPont's crop protection business and research and development ("R&D") organization (the "Divested Ag Business") that DuPont was required to divest in order to obtain European Commission ("EC") approval of the Merger Transaction. In addition, under the FMC Transaction Agreement, DuPont agreed to acquire certain assets relating to FMC’s Health and Nutrition segment, excluding its Omega-3 products (the "H&N Business") (the sale of the Divested Ag Business and acquisition of the H&N Business referred to collectively as the "FMC Transactions"). See Note 4 for further discussion of the Divested Ag Business.

On November 1, 2017, DuPont completed the FMC Transactions through the acquisition of the H&N Business and the divestiture of the Divested Ag Business. The acquisition will be integrated into Nutrition & Biosciences to enhance the Company’s position as a leading provider of sustainable, bio-based food ingredients and allow for expanded capabilities in the pharma excipients space. DuPont accounted for the acquisition in accordance with ASC 805, which requires the assets acquired and liabilities assumed to be recognized on the balance sheet at their fair values as of the acquisition date.

The following table summarizes the fair value of consideration exchanged as a result of the FMC Transactions:



Consideration Exchanged in FMC Transactions
In millions
Fair Value of Divested Ag Business ¹	$	3,665
Less: Cash received ²	1,200
Less: Favorable contracts ³	495
Fair Value of the H&N Business	$	1,970


1.	Refer to Note 4 for additional information.


2.	The FMC Transactions include a cash consideration payment to DuPont of approximately $1,200 million, which reflects the difference in value between the Divested Ag Business and the H&N Business, subject to certain customary inventory and net working capital adjustments.


3.	Upon closing and pursuant to the terms of the FMC Transaction Agreement, DuPont entered into favorable supply contracts with FMC. DuPont recorded these contracts as intangible assets recognized at the fair value of off-market contracts. See Notes 4 and 13 for additional information.

The table below presents the preliminary fair value that was allocated to the assets acquired and liabilities assumed. The purchase accounting and purchase price allocation for the H&N Business are substantially complete. However, the Company continues to refine the preliminary valuation of certain acquired assets, such as inventories, other intangible assets, deferred income taxes and property, which could impact the amount of residual goodwill recorded. The Company will finalize the amounts recognized as it obtains the information necessary to complete the analysis, but no later than one year from the date of the acquisition. Final determination of the fair values may result in further adjustments to the values presented in the following table:



H&N Business Assets Acquired and Liabilities Assumed on Nov 1, 2017
(In millions)
Fair Value of Assets Acquired
Cash and cash equivalents	$	16
Accounts and notes receivable - Trade and other	144
Inventories	314
Property	505
Goodwill	718
Other intangible assets	435
Other current assets, deferred charges and other non-current assets	16
Total Assets	$	2,148
Fair Value of Liabilities Assumed
Accounts payable, accrued and other current liabilities	70
Deferred income tax liabilities	108
Total Liabilities	$	178
Net Assets (Consideration for the H&N Business)	$	1,970

The significant fair value adjustments included in the preliminary allocation of purchase price are discussed below.

Inventories

Acquired inventory is comprised of finished goods of $153 million, work in process of $85 million, raw materials and supplies of $76 million. Fair value of inventory was calculated using a net realizable value approach for finished goods and work in process and a replacement cost approach for raw materials and supplies. For inventory accounted for under the FIFO method and average cost method, the preliminary fair value step-up of inventory will be recognized in "Costs of sales" as the inventory is sold. The preliminary fair value step-up of inventory of $100 million will be recognized in "Cost of sales" as the inventory is sold. The pretax amount recognized for the period November 1 through December 31, 2017, was $35 million, which was reflected in "Cost of sales" in the consolidated statements of income.

Property

Property, plant and equipment is comprised of machinery and equipment of $363 million, buildings of $63 million, land and land improvements of $39 million, construction in progress of $31 million and other property of $9 million. The preliminary estimated fair values were determined using a combination of a market approach and replacement cost approach.

Goodwill

The excess of the consideration for the H&N Business over the preliminary net fair value of assets acquired and liabilities assumed resulted in the recognition of $718 million of goodwill, of which $208 million is tax-deductible. Goodwill is attributable to the H&N Business’s workforce and expected cost synergies in procurement, production and market access.

Other Intangible Assets

Other intangible assets includes acquired customer-related intangible assets of $268 million, developed technology of $130 million and trademarks/tradenames of $37 million. The preliminary customer-related fair value was determined using the excess earnings method while the preliminary developed technology and trademarks/tradenames fair values were primarily determined utilizing the relief from royalty method.

DowDuPont evaluated the disclosure requirements under ASC 805 and determined the H&N Business was not considered a material business combination for purposes of disclosing the revenue and earnings of the H&N Business since the date of acquisition or supplemental pro forma information.

Ownership Restructure of Dow Corning

On June 1, 2016, Dow announced the closing of the transaction with Corning Incorporated ("Corning"), Dow Corning and HS Upstate Inc., (“Splitco”), pursuant to which Corning exchanged with Dow Corning its 50 percent equity interest in Dow Corning for 100 percent of the stock of Splitco which held Corning's historical proportional interest in the Hemlock Semiconductor Group ("HSC Group") and approximately $4.8 billion in cash (the “DCC Transaction”). As a result of the DCC Transaction, Dow Corning, previously a 50:50 joint venture between Dow and Corning, became a wholly owned subsidiary of Dow. In connection with the DCC Transaction, on May 31, 2016, Dow Corning incurred $4.5 billion of indebtedness in order to fund the contribution of cash to Splitco. See Notes 12, 13, 15 and 23 for additional information.

At June 1, 2016, Dow's equity interest in Dow Corning, excluding the HSC Group, was $1,968 million. This equity interest was remeasured to fair value. As a result, Dow recognized a non-taxable gain of $2,445 million in the second quarter of 2016, net of closing costs and other comprehensive loss related to Dow's interest in Dow Corning. The gain was included in "Sundry income (expense) - net" in the consolidated statements of income and related to Performance Materials & Coatings ($1,617 million), Electronics & Imaging ($512 million) and Transportation & Advanced Polymers ($316 million). Dow recognized a tax benefit of $141 million on the DCC Transaction in the second quarter of 2016, primarily due to the reassessment of a previously recognized deferred tax liability on the basis difference in Dow’s investment in Dow Corning.

Dow utilized an income approach with a discounted cash flow model to determine the fair value of Dow Corning. The valuation process resulted in a fair value of $9,636 million. The following table summarizes the fair values of Dow Corning's assets and liabilities, excluding the HSC Group, which are now fully consolidated by Dow. The valuation process was complete at December 31, 2016.



Dow Corning Assets Acquired and Liabilities Assumed on Jun 1, 2016
In millions
Fair Value of Previously Held Equity Investment, excluding the HSC Group	$	4,818
Fair Value of Assets Acquired
Cash and cash equivalents	$	1,050
Accounts and notes receivable - Trade	647
Accounts and notes receivable - Other	223
Inventories	1,147
Other current assets	51
Investment in nonconsolidated affiliates	110
Noncurrent receivables	112
Net property	3,996
Other intangible assets ¹	2,987
Deferred income tax assets	999
Other assets	98
Total Assets Acquired	$	11,420
Fair Value of Liabilities Assumed
Accounts payable - Trade	$	374
Income taxes payable	260
Accrued and other current liabilities	404
Other current liabilities	112
Long-Term Debt	4,672
Deferred income tax liabilities	1,858
Pension and other postretirement benefits - noncurrent ²	1,241
Other noncurrent obligations	437
Total Liabilities Assumed	$	9,358
Noncontrolling interests	$	473
Goodwill	$	3,229


1.	Includes $30 million of trademarks/tradenames, $1,200 million of developed technology, $2 million of software and $1,755 million of customer-related intangibles. See Note 13 for additional information.


2.	Includes pension and other postretirement benefits as well as long-term disability obligations.

The DCC Transaction resulted in the recognition of $3,229 million of goodwill which is not deductible for tax purposes. Goodwill largely consisted of expected synergies resulting from the DCC Transaction. Cost synergies will be achieved through a combination of workforce consolidation and savings from actions such as harmonizing energy contracts at large sites, optimizing warehouse and logistics footprints, implementing materials and maintenance best practices, combining information technology service structures and leveraging existing research and development knowledge management systems. See Note 13 for additional information on goodwill, including the allocation by segment.

The fair value of "Accounts and notes receivables - Trade" acquired was $647 million, with gross contractual amounts receivable of $654 million. The fair value step-up of "Inventories" acquired was an increase of $317 million, which was expensed to "Cost of sales" over a three-month period beginning on June 1, 2016, and related to Performance Materials & Coatings ($213 million), Electronics & Imaging ($69 million) and Transportation & Advanced Polymers ($35 million). Liabilities assumed from Dow Corning on June 1, 2016, included certain contingent liabilities relating to breast implant and other product liability claims which were valued at $290 million and included in "Other noncurrent obligations" and commercial creditor issues which were valued at $105 million and included in “Accrued and other current liabilities” in the consolidated balance sheets. See Note 16 for additional information on these contingent liabilities. Gross operating loss carryforwards of $568 million were assumed from Dow Corning on June 1, 2016. The operating loss carryforwards expire either in years beyond 2020 or have an indefinite carryforward period.

Dow evaluated the disclosure requirements under ASC 805 and determined the DCC Transaction was not considered a material business combination for purposes of disclosing the revenue and earnings of Dow Corning since the date of the ownership restructure as well as supplemental pro forma information.

Beginning in June 2016, the results of Dow Corning, excluding the HSC Group, were fully consolidated in Dow’s consolidated statements of income. Prior to June 2016, Dow’s 50 percent share of Dow Corning’s results of operations was reported in “Equity in earnings of nonconsolidated affiliates” in the consolidated statements of income. The results of the HSC Group continue to be treated as an equity method investment and reported as “Equity in earnings of nonconsolidated affiliates” in the consolidated statements of income.

Step Acquisition of Univation Technologies, LLC

On May 5, 2015, Univation Technologies, LLC ("Univation"), previously a 50:50 joint venture between Dow and ExxonMobil Chemical Company ("ExxonMobil"), became a wholly owned subsidiary of Dow as a result of ExxonMobil redeeming its entire equity interest in Univation in exchange for certain assets and liabilities of Univation. Dow's equity interest in Univation of $159 million, previously classified as "Investment in nonconsolidated affiliates" in the consolidated balance sheets, was remeasured to fair value which resulted in a non-taxable gain of $361 million recognized in the second quarter of 2015, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Packaging & Specialty Plastics.

Beginning in May 2015, Univation's results of operations were fully consolidated in Dow's consolidated statements of income. Prior to May 2015, Dow's 50 percent share of Univation's results of operations was reported in "Equity in earnings of nonconsolidated affiliates" in the consolidated statements of income.