[January 29, 2015] |
|
Dow Reports Fourth Quarter and Full-Year Results
The Dow Chemical Company (NYSE: DOW):
Fourth Quarter 2014 Highlights
-
Dow reported earnings per share of $0.85 on an adjusted basis(1)
or $0.63 on an as-reported basis. This compares with earnings of $0.65
per share on an adjusted basis in the year-ago period, or $0.79 per
share on an as-reported basis.
-
EBITDA rose 15 percent versus the prior year on an adjusted basis(2),
reaching a fourth quarter record of $2.4 billion, or $2.1 billion on
an as-reported basis(3). Adjusted EBITDA grew in every
operating segment, led by Agricultural Sciences (up 40 percent),
Performance Materials & Chemicals (up 18 percent) and Performance
Plastics (up 6 percent).
-
EBITDA margin expanded 218 basis points on an adjusted basis(4)
versus the year-ago period, with increases across all operating
segments, as the Company's integration and targeted end-markets
enabled continued price stability in a declining raw material
environment. Margin expansion was driven primarily by Agricultural
Sciences (up 300 basis points), Consumer Solutions (up 279 basis
points) and Infrastructure Solutions (up 203 basis points), due
primarily to increased demand for advantaged technologies in key
end-markets.
-
Sales were $14.4 billion, flat versus the same quarter last year, as
volume increased in both developed geographies (up 4 percent) as well
as emerging geographies (up 5 percent). Volume gains were offset by
price declines driven primarily by Western Europe (down 14 percent),
which included currency headwinds.
-
Dow expanded volume in most segments - led by Agricultural Sciences
(up 9 percent). Double-digit increases in Epoxy and Polyurethanes
drove volume gains in Performance Materials & Chemicals (up 7
percent). Demand also rose in Performance Plastics (up 3 percent).
-
Dow reported an operating rate of 86 percent for the quarter, up
4 percentage points versus the year-ago period - representing the
fifth consecutive quarter of year-over-year operating rate increases.
Gains were driven primarily by strong demand in Performance Plastics,
coupled with ongoing productivity improvements in Performance
Materials & Chemicals.
-
Cash flow from operations was $2.8 billion for the quarter - an
increase of more than $500 million versus the year-ago period -
demonstrating the Company's ongoing focus on working capital
efficiency.
-
Dow continued to drive shareholder remuneration actions, returning
$1.6 billion to shareholders in the quarter through declared dividends
and repurchases, and completing its $4.5 billion repurchase program in
the period. This quarter, the Company announced a 14 percent dividend
increase and expanded its share buyback program by an additional
$5 billion.
Comment
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:
"Dow achieved a record end to a strong year, with another quarter of
year-over-year operating EPS, EBITDA and EBITDA margin growth. This is
nine quarters in a row of these metrics increasing year over year. Our
operating model of integration with geographic and market
diversification showed its superiority during volatile commodity
environments, as evidenced by demand growth in most segments. Our
strategic decisions continued to drive long-term value across Dow's
integrated, diversified portfolio, while our self-help and productivity
measures are firmly delivering cash and lowering costs.
"We are delivering on the commitments we have made - even as we ramped
up the pace of investment in our long-term growth projects. In addition,
we announced two significant transactions in the quarter in our drive
toward delivering our target of $7 billion to $8.5 billion of released
value through aggressive portfolio management measures. Collectively,
these achievements underscore Dow's fundamental drive to maximize
shareholder value-creation at every turn."
2014 Full-Year Highlights
-
Dow reported full-year 2014 earnings of $3.11 per share on an adjusted
basis, or as-reported earnings of $2.87 per share. This compares with
adjusted earnings of $2.48 per share in the prior year - an increase
of 25 percent - or $3.68 per share on an as-reported basis.
-
Adjusted EBITDA rose $975 million versus the prior year, reaching a
full-year record at $9.3 billion, or $8.9 billion on an as-reported
basis. Adjusted EBITDA grew in all operating segments. The largest
increase was achieved by Performance Plastics, which grew adjusted
EBITDA more than $460 million, reflecting the Company's differentiated
product portfolio, diverse markets and global reach. Adjusted EBITDA
also rose in Performance Materials & Chemicals - up $225 million - as
a result of ongoing steps to enhance productivity.
-
The Company expanded adjusted EBITDA margins 140 basis points, with
increases reported in all operating segments. Margin expansion was led
by Consumer Solutions (up 214 basis points), Performance Plastics (up
168 basis points), and Infrastructure Solutions (up 141 basis points)
on increasing demand, productivity improvements and strategic
end-market alignment.
-
Sales were $58.2 billion, up 2 percent versus the prior year.
Increases were reported in all geographic areas on an adjusted basis(5).
Sales grew in North America, with revenue in the United States up 4
percent due to sales growth across all operating segments. Emerging
geographic regions increased sales 4 percent and represented
35 percent of Dow's total revenue mix.
-
Dow accelerated portfolio management actions throughout the year, with
$2 billion in proceeds expected from divestitures of non-strategic
assets and businesses signed or completed in 2014. Since 2013, the
Company has signed or completed transactions that are expected to
generate $2.9 billion in proceeds - demonstrating progress against its
previously stated target.
-
The Company delivered $6.5 billion of cash flow from operations in
2014, demonstrating Dow's continued focus on productivity. Excluding
the K-Dow award, this reflects a more than $320 million increase
versus 2013 - representing a second consecutive year of record cash
flow.
-
Dow reported adjusted return on capital(6) of 10.8 percent
- an increase of 108 basis points versus the prior year.
|
|
Three Months Ended
|
|
|
Dec. 31,
|
|
Dec. 31,
|
In millions, except per share amounts
|
|
2014
|
|
2013
|
Net Sales
|
|
$14,384
|
|
$14,386
|
Adjusted Sales
|
|
$14,384
|
|
$14,375
|
|
|
|
|
|
Net Income Available for Common Stockholders
|
|
$734
|
|
$963
|
Net Income Available for Common Stockholders,
excluding Certain Items
|
|
$992
|
|
$793
|
|
|
|
|
|
Earnings per Common Share
|
|
$0.63
|
|
$0.79
|
Adjusted Earnings Per Share
|
|
$0.85
|
|
$0.65
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
In millions, except per share amounts
|
|
2014
|
|
2013
|
Net Sales
|
|
$58,167
|
|
$57,080
|
Adjusted Sales
|
|
$58,167
|
|
$56,861
|
|
|
|
|
|
Net Income Available for Common Stockholders
|
|
$3,432
|
|
$4,447
|
Net Income Available for Common Stockholders,
excluding Certain Items
|
|
$3,709
|
|
$2,981
|
|
|
|
|
|
Earnings per Common Share
|
|
$2.87
|
|
$3.68
|
Adjusted Earnings Per Share
|
|
$3.11
|
|
$2.48
|
|
|
|
|
|
Review of Fourth Quarter Results
The Dow Chemical Company (NYSE: DOW) reported adjusted earnings per
share of $0.85, or $0.63 on an as-reported basis. This compares with
adjusted earnings of $0.65 per share in the year-ago period, or $0.79
per share on an as-reported basis.
The Company reported adjusted EBITDA of $2.4 billion, or EBITDA of
$2.1 billion. Adjusted EBITDA grew 15 percent versus the year-ago
period, with increases reported in every operating segment, led by
Agricultural Sciences (up 40 percent), Performance Materials & Chemicals
(up 18 percent) and Performance Plastics (up 6 percent).
Adjusted EBITDA margin expanded 218 basis points versus the year-ago
period, with increases across all operating segments, as the Company's
integration and targeted end-markets enabled continued price stability
in a declining raw material environment. Margin expansion was driven
primarily by Agricultural Sciences (up 300 basis points), Consumer
Solutions (up 279 basis points) and Infrastructure Solutions (up 203
basis points), due primarily to increased demand for advantaged
technologies in key end-markets.
Dow reported sales of $14.4 billion in the fourth quarter, flat versus
the same quarter last year, as volume increased in both developed
geographies (up 4 percent) as well as emerging geographies (up 5
percent). Volume gains were offset by price declines driven primarily by
Western Europe (down 14 percent), which included currency headwinds.
The Company expanded volume in most segments - led by Agricultural
Sciences (up 9 percent). Double-digit increases in Epoxy and
Polyurethanes drove volume gains in Performance Materials & Chemicals
(up 7 percent). Demand also rose in Performance Plastics (up 3 percent).
Research and Development (R&D) expenses and Selling, General and
Administrative (SG&A) expenses together decreased $64 million versus the
year-ago period, due to Dow's focused approach and productivity actions.
Dow reported an operating rate of 86 percent for the quarter, up
4 percentage points versus the year-ago period - representing the fifth
consecutive quarter of year-over-year operating rate increases. Gains
were driven primarily by steady demand in Performance Plastics, coupled
with ongoing productivity improvements in Performance Materials &
Chemicals. Cash flow from operations was $2.8 billion for the quarter -
an increase of more than $500 million versus the year-ago period -
demonstrating the Company's ongoing focus on working capital efficiency.
Certain Items in the quarter included a gain related to Dow Corning's
implant liability adjustment, a loss related to Dow Corning's
Clarksville, Tenn. site abandonment, asset impairments and other items
(See Supplemental Information at the end of the release for a
description of Certain Items affecting results.).
The Company reported adjusted equity earnings(7) of
$221 million, or $128 million as-reported. This compares with adjusted
equity earnings of $264 million, or $254 million on an as-reported basis
in the same quarter last year.
Dow continued to drive shareholder remuneration actions, returning
$1.6 billion to shareholders in the quarter through declared dividends
and repurchases, and completing its $4.5 billion repurchase program in
the period. This quarter, the Company announced a 14 percent dividend
increase and expanded its share buyback program by an additional
$5 billion.
Agricultural Sciences
Agricultural Sciences reported record fourth quarter sales of $1.9
billion, up 5 percent versus the year-ago period. Sales gains were
broad-based across all geographies, led by growth in Latin America. The
segment reported record full-year sales of $7.3 billion, up 2 percent
versus the year-ago period driven by the introduction and ramp up of new
products and technologies.
Crop Protection reported record fourth quarter sales, up 3 percent
versus the year-ago period, driven by broad-based sales gains in all
geographies. Higher sales were reported in herbicides, insecticides and
fungicides. Sales of new crop protection products increased by 23
percent versus the year-ago period, led by Spinetoram and Isoclast™
insecticides. Crop Protection achieved a full-year sales record.
Seeds also reported record fourth quarter sales, up 9 percent versus the
year-ago period, including one-time gains related to the end of DuPont
Pioneer's development of Enlist™ soybeans. On a full-year basis, the
business delivered volume growth in soybeans and cotton.
Equity earnings for the segment were $1 million. This compares with a
loss of $2 million in the year-ago period. The segment reported record
fourth quarter EBITDA of $222 million, up 40 percent versus the same
quarter last year, primarily driven by the launch of new products and
growth in targeted crops.
Consumer Solutions
Consumer Solutions reported fourth quarter sales of $1.1 billion, flat
versus the year-ago period. Double-digit sales gains in North America
were offset by sales declines in other geographic areas.
Dow Automotive Systems reported higher sales, due to the continued
growth of innovative structural adhesives and strength in North America.
In Dow Electronic Materials, gains from continued mobile device growth
in Semiconductor
Technologies were more than offset by declines in Display Technologies
as a result of lower sales in films and filters and OLED materials.
Consumer Care reported lower sales primarily due to unfavorable currency
while overall demand was comparable to the prior period.
Equity earnings for the segment were $196 million, or $41 million on an
adjusted basis. This compares with $30 million in the year-ago period.
The segment reported EBITDA of $325 million. Adjusted EBITDA was
$243 million, up 15 percent versus the same quarter last year. Strong
volume and cost discipline offset price declines, enabling the segment
to drive EBITDA growth.
Infrastructure Solutions
Infrastructure Solutions reported fourth quarter sales of $2 billion,
down 4 percent versus the year-ago period, driven by declines in Europe,
Middle East, Africa & India (EMEAI).
Energy & Water Solutions delivered sales gains in all regions, due to
strong demand in reverse osmosis and microbial control technologies.
Growth was more than offset by long acrylate monomer market conditions
and weak Western Europe construction related demand in Dow Building &
Construction and Dow Coating Materials.
Equity losses for the segment were $178 million. On an adjusted basis,
equity earnings were $70 million, which compares with $40 million in the
year-ago period. The segment reported negative EBITDA of $104 million.
Adjusted EBITDA was $244 million, up $31 million versus the same quarter
last year, as a result of productivity actions and demand growth in
attractive markets.
Performance Materials & Chemicals
Performance Materials & Chemicals reported fourth quarter sales of $3.9
billion, up 5 percent versus the year-ago period, with gains in all
geographic regions.
Polyurethanes achieved record fourth quarter sales on double-digit
revenue growth with gains in all regions. Strong operational performance
enabled growth from solid market demand and ongoing industry supply
disruptions. Productivity actions and improving demand in Epoxy
delivered double-digit sales gains with growth in all regions.
Collectively, these sales gains more than offset declines in Industrial
Solutions from fewer projects in concentrated solar power applications,
as well as decreased de-icing sales due to warmer weather.
Equity earnings for the segment were $54 million. This compares with
$124 million in the year-ago period. The segment reported EBITDA of $636
million, versus EBITDA of $483 million, or $538 million on an adjusted
basis in the same quarter last year - up 18 percent, as a result of
improved market dynamics coupled with ongoing productivity actions.
Performance Plastics
Performance Plastics reported fourth quarter sales of $5.5 billion, down
3 percent versus the year-ago period, primarily due to declines in
Hydrocarbons and Energy. Excluding Hydrocarbons and Energy, sales were
down 1 percent versus the same quarter last year. On the same basis,
sales increases in North America and Latin America were more than offset
by declines in Asia Pacific and EMEAI.
Dow Packaging and Specialty Plastics sales were flat as volume growth in
higher value markets, such as pipe and hygiene and medical was offset by
the unfavorable impact of currency. Firmer pricing in Dow Elastomers and
Dow Electrical and Telecommunications and continued market growth in
transportation, consumer durables and infrastructure more than offset
volume declines due to tight supply conditions. Hydrocarbons and Energy
sales were down due to weakening conditions in global oil and gas
markets.
Equity earnings for the segment were $57 million. This compares with $79
million in the year-ago period. The segment reported EBITDA of $1.2
billion in the quarter. In the year-ago period the segment reported
EBITDA of $1.7 billion, or $1.1 billion on adjusted basis, delivering
profitable growth on solid market demand.
Review of Results for 2014
Dow reported full-year 2014 earnings of $3.11 per share on an adjusted
basis, or as-reported earnings of $2.87 per share. This compares with
adjusted earnings of $2.48 per share in the prior year - an increase of
25 percent - or $3.68 per share on an as-reported basis.
Adjusted EBITDA rose $975 million versus the prior year, reaching a
full-year record at $9.3 billion, or $8.9 billion on an as reported
basis. Adjusted EBITDA grew in all operating segments. The largest
increase was achieved by Performance Plastics, which grew adjusted
EBITDA more than $460 million, reflecting the Company's differentiated
product portfolio, diverse markets and global reach. Adjusted EBITDA
also rose in Performance Materials & Chemicals - up $225 million - as a
result of ongoing steps to enhance productivity.
The Company expanded adjusted EBITDA margins 140 basis points, with
increases reported in all operating segments. Margin expansion was led
by Consumer Solutions (up 214 basis points), Performance Plastics (up
168 basis points), and Infrastructure Solutions (up 141 basis points) on
increasing demand, productivity improvements and strategic end-market
alignment.
For the full year, Dow reported sales of $58.2 billion, up 2 percent
versus the prior year. Increases were reported in all geographic areas
on an adjusted basis. Sales grew in North America, with revenue in the
United States up 4 percent due to sales growth across all operating
segments. Emerging geographic regions increased sales 4 percent and
represented 35 percent of Dow's total revenue mix.
Research and Development (R&D) expenses and Selling, General and
Administrative (SG&A) expenses together decreased $18 million on a
full-year basis due to Dow's focused approach and productivity actions.
Dow accelerated portfolio management actions throughout the year, with
$2 billion in proceeds expected from divestitures of non-strategic
assets and businesses signed or completed in 2014. Since 2013, the
Company has signed or completed transactions that are expected to
generate $2.9 billion in proceeds - demonstrating progress against its
previously stated target.
The Company delivered $6.5 billion of cash flow from operations in 2014,
demonstrating Dow's continued focus on productivity. Excluding the K-Dow
award, this reflects a more than $320 million increase versus 2013 -
representing a second consecutive year of record cash flow.
Dow reported adjusted return on capital of 10.8 percent - which
represents a 108 basis point increase versus the prior year.
The Company reported full-year adjusted equity earnings of $928 million,
or $835 million on an as-reported basis. This compares with full-year
adjusted equity earnings of $1,044 million, or $1,034 million on an
as-reported basis, versus 2013.
Certain Items in the year included a gain related to Dow Corning's
implant liability adjustment, a loss related to Dow Corning's
Clarksville, Tenn. site abandonment, asset impairments and other items
(See Supplemental Information at the end of the release for a
description of Certain Items affecting results.).
Outlook
Commenting on the Company's outlook, Liveris said:
"Against the backdrop of ongoing macroeconomic, currency and energy
market uncertainty, we continue to see positive underlying demand
fundamentals. Dow is well positioned to continue to optimize returns in
this environment: Our advantaged global cost positions are enabling us
to increase asset utilization, while selling into higher value sectors.
Tightening supply and demand is acting to offset some of the challenges
that are a result of falling oil prices.
"Our differentiated technologies and end-market selection will enable us
to maximize returns in sectors less susceptible to pricing volatility.
Our business model works across all economic cycles, as we can extract
value through different parts of our integrated value chains - depending
on the cycle. We believe lower oil prices are a relative positive for
Dow and a boost for the global economy.
"We will continue to control those factors firmly within our control -
demanding operational and commercial excellence, driving proactive
portfolio management and productivity actions, executing financial
discipline, efficiently managing our cash and investing in people,
markets and assets for long-term growth.
"This year will see several major milestones for Dow, with the start-up
of the first units in Sadara and our Texas PDH unit in Texas, as well as
the controlled launch of Enlist™. As our strategic catalysts continue to
gain traction, the advantage they provide will further differentiate Dow
against our competitors, fortifying our long-term position and
accelerating shareholder remuneration."
Dow will host a live webcast of its fourth quarter and full-year
earnings conference call with investors to discuss its results, business
outlook and other matters today at 9:00 a.m. ET on www.dow.com
(1)
|
|
"Adjusted or operating earnings per share" is defined as earnings
per share excluding the impact of "Certain Items." See Supplemental
Information at the end of the release for a description of these
items, as well as a reconciliation of adjusted earnings per share to
"Earnings per common share - diluted."
|
(2)
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Adjusted EBITDA is defined as EBITDA excluding the impact of
"Certain Items."
|
(3)
|
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EBITDA is defined as earnings (i.e., "Net Income") before interest,
income taxes, depreciation and amortization. A reconciliation of
EBITDA to "Net Income Available for The Dow Chemical Company Common
Stockholders" is provided following the Operating Segments table.
|
(4)
|
|
Adjusted EBITDA margin is defined as EBITDA excluding the impact of
Certain Items as a percentage of reported sales.
|
(5)
|
|
"Adjusted sales" is defined as Net Sales excluding sales related to
prior-period divestitures.
|
(6)
|
|
"Adjusted Return on Capital" is on a trailing twelve month basis and
defined as Adjusted Net Operating Profit After Tax divided by
Average Total Capital. "Adjusted Net Operating Profit After Tax" is
defined as Adjusted Net Income plus Preferred Stock Dividends plus
Net Income Attributable to Noncontrolling Interests plus gross
interest expense less tax on gross interest expense. "Adjusted Net
Income" is defined as Net Income excluding the impact of "Certain
Items." "Total Capital" is defined as Total Debt plus The Dow
Chemical Company's Stockholders' Equity plus Redeemable
Non-controlling Interest plus Non-redeemable Non-controlling
Interests
|
(7)
|
|
"Adjusted equity earnings" is defined as "Equity Earnings" excluding
"Certain Items.
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™Trademark of The Dow Chemical Company ("Dow") or an affiliated
company of Dow.
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About Dow
Dow (NYSE: DOW) combines the power of science and technology to
passionately innovate what is essential to human progress. The Company
is driving innovations that extract value from the intersection of
chemical, physical and biological sciences to help address many of the
world's most challenging problems such as the need for clean water,
clean energy generation and conservation, and increasing agricultural
productivity. Dow's integrated, market-driven, industry-leading
portfolio of specialty chemical, advanced materials, agrosciences and
plastics businesses delivers a broad range of technology-based products
and solutions to customers in approximately 180 countries and in
high-growth sectors such as packaging, electronics, water, coatings and
agriculture. In 2014, Dow had annual sales of more than $58 billion and
employed approximately 53,000 people worldwide. The Company's more than
6,000 products are manufactured at 201 sites in 35 countries across the
globe. References to "Dow" or the "Company" mean The Dow Chemical
Company and its consolidated subsidiaries unless otherwise expressly
noted. More information about Dow can be found at www.dow.com.
Use of non-GAAP measures: Dow's management believes that measures of
income excluding certain items ("non-GAAP" measures) provide relevant
and meaningful information to investors about the ongoing operating
results of the Company. Such measurements are not recognized in
accordance with accounting principles generally accepted in the United
States of America ("GAAP") and should not be viewed as an alternative to
GAAP measures of performance. Reconciliations of non-GAAP measures to
GAAP measures are provided in the Supplemental Information tables.
Note: The forward-looking statements contained in this document
involve risks and uncertainties that may affect the Company's
operations, markets, products, services, prices and other factors as
discussed in filings with the Securities and Exchange Commission. These
risks and uncertainties include, but are not limited to, economic,
competitive, legal, governmental and technological factors. Accordingly,
there is no assurance that the Company's expectations will be realized.
The Company assumes no obligation to provide revisions to any
forward-looking statements should circumstances change, except as
otherwise required by securities and other applicable laws.
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Financial Statements (Note A)
|
The Dow Chemical Company and Subsidiaries
|
Consolidated Statements of Income
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions, except per share amounts (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net Sales
|
|
$
|
14,384
|
|
|
$
|
14,386
|
|
|
$
|
58,167
|
|
|
$
|
57,080
|
|
Cost of sales
|
|
11,611
|
|
|
12,068
|
|
|
47,464
|
|
|
47,594
|
|
Research and development expenses
|
|
428
|
|
|
477
|
|
|
1,647
|
|
|
1,747
|
|
Selling, general and administrative expenses
|
|
823
|
|
|
838
|
|
|
3,106
|
|
|
3,024
|
|
Amortization of intangibles
|
|
106
|
|
|
117
|
|
|
436
|
|
|
461
|
|
Other intangible asset impairment losses (Note B)
|
|
50
|
|
|
-
|
|
|
50
|
|
|
-
|
|
Restructuring credits (Note C)
|
|
(3
|
)
|
|
(22
|
)
|
|
(3
|
)
|
|
(22
|
)
|
Asbestos-related charge (Note D)
|
|
78
|
|
|
-
|
|
|
78
|
|
|
-
|
|
Equity in earnings of nonconsolidated affiliates (Note E)
|
|
128
|
|
|
254
|
|
|
835
|
|
|
1,034
|
|
Sundry income (expense) - net (Note F)
|
|
(58
|
)
|
|
474
|
|
|
(27
|
)
|
|
2,554
|
|
Interest income
|
|
19
|
|
|
12
|
|
|
51
|
|
|
41
|
|
Interest expense and amortization of debt discount
|
|
262
|
|
|
262
|
|
|
983
|
|
|
1,101
|
|
Income Before Income Taxes
|
|
1,118
|
|
|
1,386
|
|
|
5,265
|
|
|
6,804
|
|
Provision for income taxes (Note G)
|
|
279
|
|
|
358
|
|
|
1,426
|
|
|
1,988
|
|
Net Income
|
|
839
|
|
|
1,028
|
|
|
3,839
|
|
|
4,816
|
|
Net income (loss) attributable to noncontrolling interests
|
|
20
|
|
|
(20
|
)
|
|
67
|
|
|
29
|
|
Net Income Attributable to The Dow Chemical Company
|
|
819
|
|
|
1,048
|
|
|
3,772
|
|
|
4,787
|
|
Preferred stock dividends
|
|
85
|
|
|
85
|
|
|
340
|
|
|
340
|
|
Net Income Available for The Dow Chemical Company Common Stockholders
|
|
$
|
734
|
|
|
$
|
963
|
|
|
$
|
3,432
|
|
|
$
|
4,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share - basic
|
|
$
|
0.64
|
|
|
$
|
0.80
|
|
|
$
|
2.91
|
|
|
$
|
3.72
|
|
Earnings per common share - diluted (Note H)
|
|
$
|
0.63
|
|
|
$
|
0.79
|
|
|
$
|
2.87
|
|
|
$
|
3.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.42
|
|
|
$
|
0.32
|
|
|
$
|
1.53
|
|
|
$
|
1.28
|
|
Weighted-average common shares outstanding - basic
|
|
1,146.9
|
|
|
1,190.1
|
|
|
1,170.9
|
|
|
1,186.2
|
|
Weighted-average common shares outstanding - diluted (Note H)
|
|
1,160.9
|
|
|
1,201.1
|
|
|
1,187.0
|
|
|
1,290.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
544
|
|
|
$
|
533
|
|
|
$
|
2,136
|
|
|
$
|
2,051
|
|
Capital Expenditures
|
|
$
|
1,106
|
|
|
$
|
884
|
|
|
$
|
3,572
|
|
|
$
|
2,302
|
|
See Notes to the Consolidated Financial Statements.
The Dow Chemical Company and Subsidiaries
Notes to the Consolidated Financial Statements
Note A: The unaudited consolidated financial statements
reflect all adjustments which, in the opinion of management, are
considered necessary for a fair presentation of the results for the
periods covered. These statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31,
2013. Except as otherwise indicated by the context, the terms "Company"
and "Dow" as used herein mean The Dow Chemical Company and its
consolidated subsidiaries.
Note B: In the fourth quarter of 2014, the Company recognized
a pretax charge of $50 million related to the impairment of intangible
assets in the Dow Electronic Materials business.
Note C: During the fourth quarter of 2013, the Company
recognized a pretax gain of $22 million for adjustments to contract
cancellation fees and asbestos abatement costs related to the Company's
2012 Restructuring plans.
Note D: During the fourth quarter of 2014, the Company
recorded a pretax charge of $78 million related to an increase in the
asbestos-related liability for pending and future claims.
Note E: In the fourth quarter of 2014, the Company recognized
a gain of $407 million related to Dow Corning Corporation's ("Dow
Corning") adjustment of its implant liability. In the fourth quarter of
2014, the Company also recognized a loss of $500 million related to Dow
Corning's abandonment of a polycrystalline silicon manufacturing
facility in Clarksville, Tennessee. In the fourth quarter of 2013, the
Company recognized a $10 million loss related to asset impairment
charges at a formulated electrolytes manufacturing joint venture.
Note F: In the fourth quarter of 2014, the Company recognized
a pretax charge of $19 million for nonrecurring transaction costs
associated with the planned separation of a significant portion of the
Company's chlorine value chain, consisting primarily of financial and
professional advisory fees and legal fees; a pretax charge of $12
million was recognized in the third quarter of 2014; and a pretax charge
of $18 million was recognized in the second quarter of 2014.
In the second quarter of 2013, the Company recognized a pretax gain
of $2.161 billion related to damages awarded to the Company in the K-Dow
arbitration proceeding.
In the fourth quarter of 2013, the Company recognized a pretax gain
of $451 million related to the divestiture of the Dow Polypropylene
Licensing and Catalysts business; a pretax gain of $87 million was
recognized on the sale of a 7.5 percent ownership interest in Freeport
LNG Development, L.P.; and a $26 million pretax gain was recognized on
the sale of the Company's ownership interest in Dow Kokam LLC.
In the fourth quarter of 2013, the Company recognized a pretax loss
of $156 million on the early extinguishment of debt; a pretax loss of
$110 million was recognized in the second quarter of 2013; and a pretax
loss of $60 million was recognized in the first quarter of 2013.
Note G: During the fourth quarter of 2013, the Company
recognized a tax charge of $53 million for the accrual of additional
penalties and interest related to court rulings on two separate matters;
a tax charge of $223 million was recognized in the first quarter of 2013
related to court rulings on two separate matters that resulted in the
adjustment of uncertain tax positions.
Note H: During the second quarter of 2013, the Company
recorded a gain related to the K-Dow arbitration, which significantly
increased net income for the year ended December 31, 2013. As a result
of the net income increase, the assumed conversion of the Company's
Cumulative Convertible Perpetual Preferred Stock, Series A into
potential shares of the Company's common stock is dilutive for the
twelve-month period ended December 31, 2013. In accordance with U.S.
GAAP, "Weighted-average common shares outstanding - diluted" increased
by 96.8 million shares and "Net Income Attributable to The Dow Chemical
Company" was used in the calculation of "Earnings per common share -
diluted" for the twelve-month period ended December 31, 2013. See
Supplementary Information for further details.
|
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2014
|
|
2013
|
Assets
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents (variable interest entities restricted -
2014: $190; 2013: $147)
|
|
$
|
5,654
|
|
|
$
|
5,940
|
|
Accounts and notes receivable:
|
|
|
|
|
|
|
Trade (net of allowance for doubtful receivables - 2014: $110; 2013:
$148)
|
|
4,685
|
|
|
4,935
|
|
Other
|
|
4,687
|
|
|
4,712
|
|
Inventories
|
|
8,101
|
|
|
8,303
|
|
Deferred income tax assets - current
|
|
812
|
|
|
743
|
|
Other current assets
|
|
328
|
|
|
344
|
|
Total current assets
|
|
24,267
|
|
|
24,977
|
|
Investments
|
|
|
|
|
|
|
Investment in nonconsolidated affiliates
|
|
4,201
|
|
|
4,501
|
|
Other investments (investments carried at fair value - 2014: $2,009;
2013: $2,056)
|
|
2,439
|
|
|
2,541
|
|
Noncurrent receivables
|
|
620
|
|
|
365
|
|
Total investments
|
|
7,260
|
|
|
7,407
|
|
Property
|
|
|
|
|
|
|
Property
|
|
55,230
|
|
|
55,114
|
|
Less accumulated depreciation
|
|
37,179
|
|
|
37,660
|
|
Net property (variable interest entities restricted - 2014: $2,726;
2013: $2,646)
|
|
18,051
|
|
|
17,454
|
|
Other Assets
|
|
|
|
|
|
|
Goodwill
|
|
12,632
|
|
|
12,798
|
|
Other intangible assets (net of accumulated amortization - 2014:
$3,737; 2013: $3,270)
|
|
3,768
|
|
|
4,314
|
|
Deferred income tax assets - noncurrent
|
|
2,135
|
|
|
1,964
|
|
Asbestos-related insurance receivables - noncurrent
|
|
62
|
|
|
86
|
|
Deferred charges and other assets
|
|
621
|
|
|
501
|
|
Total other assets
|
|
19,218
|
|
|
19,663
|
|
Total Assets
|
|
$
|
68,796
|
|
|
$
|
69,501
|
|
Liabilities and Equity
|
Current Liabilities
|
|
|
|
|
|
|
Notes payable
|
|
$
|
551
|
|
|
$
|
443
|
|
Long-term debt due within one year
|
|
394
|
|
|
697
|
|
Accounts payable:
|
|
|
|
|
|
|
Trade
|
|
4,481
|
|
|
4,590
|
|
Other
|
|
2,299
|
|
|
2,290
|
|
Income taxes payable
|
|
361
|
|
|
435
|
|
Deferred income tax liabilities - current
|
|
105
|
|
|
133
|
|
Dividends payable
|
|
563
|
|
|
467
|
|
Accrued and other current liabilities
|
|
2,839
|
|
|
2,916
|
|
Total current liabilities
|
|
11,593
|
|
|
11,971
|
|
Long-Term Debt (variable interest entities nonrecourse - 2014:
$1,229; 2013: $1,360)
|
|
18,838
|
|
|
16,820
|
|
Other Noncurrent Liabilities
|
|
|
|
|
|
|
Deferred income tax liabilities - noncurrent
|
|
622
|
|
|
718
|
|
Pension and other postretirement benefits - noncurrent
|
|
10,459
|
|
|
8,176
|
|
Asbestos-related liabilities - noncurrent
|
|
438
|
|
|
434
|
|
Other noncurrent obligations
|
|
3,290
|
|
|
3,302
|
|
Total other noncurrent liabilities
|
|
14,809
|
|
|
12,630
|
|
Redeemable Noncontrolling Interest
|
|
202
|
|
|
156
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Preferred stock, series A
|
|
4,000
|
|
|
4,000
|
|
Common stock
|
|
3,107
|
|
|
3,054
|
|
Additional paid-in capital
|
|
4,846
|
|
|
3,928
|
|
Retained earnings
|
|
23,045
|
|
|
21,407
|
|
Accumulated other comprehensive loss
|
|
(8,017
|
)
|
|
(4,827
|
)
|
Unearned ESOP shares
|
|
(325
|
)
|
|
(357
|
)
|
Treasury stock at cost
|
|
(4,233
|
)
|
|
(307
|
)
|
The Dow Chemical Company's stockholders' equity
|
|
22,423
|
|
|
26,898
|
|
Non-redeemable noncontrolling interests
|
|
931
|
|
|
1,026
|
|
Total equity
|
|
23,354
|
|
|
27,924
|
|
Total Liabilities and Equity
|
|
$
|
68,796
|
|
|
$
|
69,501
|
|
See Notes to the Consolidated Financial Statements.
|
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Operating Segments
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Sales by operating segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
1,856
|
|
|
$
|
1,774
|
|
|
$
|
7,290
|
|
|
$
|
7,137
|
|
Consumer Solutions
|
|
1,124
|
|
|
1,126
|
|
|
4,639
|
|
|
4,562
|
|
Infrastructure Solutions
|
|
1,959
|
|
|
2,044
|
|
|
8,429
|
|
|
8,339
|
|
Performance Materials & Chemicals
|
|
3,912
|
|
|
3,740
|
|
|
15,114
|
|
|
14,824
|
|
Performance Plastics
|
|
5,465
|
|
|
5,632
|
|
|
22,386
|
|
|
21,910
|
|
Corporate
|
|
68
|
|
|
70
|
|
|
309
|
|
|
308
|
|
Total
|
|
$
|
14,384
|
|
|
$
|
14,386
|
|
|
$
|
58,167
|
|
|
$
|
57,080
|
|
EBITDA (1) by operating segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
222
|
|
|
$
|
159
|
|
|
$
|
962
|
|
|
$
|
894
|
|
Consumer Solutions
|
|
325
|
|
|
212
|
|
|
1,130
|
|
|
933
|
|
Infrastructure Solutions
|
|
(104
|
)
|
|
119
|
|
|
817
|
|
|
941
|
|
Performance Materials & Chemicals
|
|
636
|
|
|
483
|
|
|
2,193
|
|
|
1,913
|
|
Performance Plastics
|
|
1,194
|
|
|
1,672
|
|
|
4,422
|
|
|
4,503
|
|
Corporate
|
|
(220
|
)
|
|
(320
|
)
|
|
(580
|
)
|
|
1,361
|
|
Total
|
|
$
|
2,053
|
|
|
$
|
2,325
|
|
|
$
|
8,944
|
|
|
$
|
10,545
|
|
Certain items increasing (decreasing) EBITDA by operating segment (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Consumer Solutions
|
|
82
|
|
|
-
|
|
|
82
|
|
|
-
|
|
Infrastructure Solutions
|
|
(348
|
)
|
|
(94
|
)
|
|
(348
|
)
|
|
(94
|
)
|
Performance Materials & Chemicals
|
|
-
|
|
|
(55
|
)
|
|
-
|
|
|
(55
|
)
|
Performance Plastics
|
|
-
|
|
|
544
|
|
|
-
|
|
|
544
|
|
Corporate
|
|
(97
|
)
|
|
(172
|
)
|
|
(127
|
)
|
|
1,788
|
|
Total
|
|
$
|
(363
|
)
|
|
$
|
223
|
|
|
$
|
(393
|
)
|
|
$
|
2,183
|
|
EBITDA excluding certain items by operating segment
|
|
|
|
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
222
|
|
|
$
|
159
|
|
|
$
|
962
|
|
|
$
|
894
|
|
Consumer Solutions
|
|
243
|
|
|
212
|
|
|
1,048
|
|
|
933
|
|
Infrastructure Solutions
|
|
244
|
|
|
213
|
|
|
1,165
|
|
|
1,035
|
|
Performance Materials & Chemicals
|
|
636
|
|
|
538
|
|
|
2,193
|
|
|
1,968
|
|
Performance Plastics
|
|
1,194
|
|
|
1,128
|
|
|
4,422
|
|
|
3,959
|
|
Corporate
|
|
(123
|
)
|
|
(148
|
)
|
|
(453
|
)
|
|
(427
|
)
|
Total
|
|
$
|
2,416
|
|
|
$
|
2,102
|
|
|
$
|
9,337
|
|
|
$
|
8,362
|
|
Continued
|
|
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Operating Segments (Continued)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Equity in earnings (losses) of nonconsolidated affiliates by
operating segment (included in EBITDA)
|
Agricultural Sciences
|
|
$
|
1
|
|
|
$
|
(2
|
)
|
|
$
|
4
|
|
|
$
|
5
|
|
Consumer Solutions
|
|
196
|
|
|
30
|
|
|
281
|
|
|
107
|
|
Infrastructure Solutions
|
|
(178
|
)
|
|
40
|
|
|
(6
|
)
|
|
126
|
|
Performance Materials & Chemicals
|
|
54
|
|
|
124
|
|
|
322
|
|
|
480
|
|
Performance Plastics
|
|
57
|
|
|
79
|
|
|
257
|
|
|
355
|
|
Corporate
|
|
(2
|
)
|
|
(17
|
)
|
|
(23
|
)
|
|
(39
|
)
|
Total
|
|
$
|
128
|
|
|
$
|
254
|
|
|
$
|
835
|
|
|
$
|
1,034
|
|
(1)
|
|
The Company uses EBITDA (which Dow defines as earnings (i.e., "Net
Income") before interest, income taxes, depreciation and
amortization) as its measure of profit/loss for segment reporting
purposes. EBITDA by operating segment includes all operating items
relating to the businesses, except depreciation and amortization;
items that principally apply to the Company as a whole are assigned
to Corporate. A reconciliation of EBITDA to "Net Income Available
for The Dow Chemical Company Common Stockholders" is provided below.
|
|
|
|
|
|
Reconciliation of EBITDA to "Net Income Available for The Dow
Chemical Company Common Stockholders"
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
EBITDA
|
|
$
|
2,053
|
|
|
$
|
2,325
|
|
|
$
|
8,944
|
|
|
$
|
10,545
|
- Depreciation and amortization
|
|
692
|
|
|
689
|
|
|
2,747
|
|
|
2,681
|
+ Interest income
|
|
19
|
|
|
12
|
|
|
51
|
|
|
41
|
- Interest expense and amortization of debt discount
|
|
262
|
|
|
262
|
|
|
983
|
|
|
1,101
|
Income Before Income Taxes
|
|
$
|
1,118
|
|
|
$
|
1,386
|
|
|
$
|
5,265
|
|
|
$
|
6,804
|
- Provision for income taxes
|
|
279
|
|
|
358
|
|
|
1,426
|
|
|
1,988
|
- Net income (loss) attributable to noncontrolling interests
|
|
20
|
|
|
(20
|
)
|
|
67
|
|
|
29
|
- Preferred stock dividends
|
|
85
|
|
|
85
|
|
|
340
|
|
|
340
|
Net Income Available for The Dow Chemical Company Common Stockholders
|
|
$
|
734
|
|
|
$
|
963
|
|
|
$
|
3,432
|
|
|
$
|
4,447
|
(2)
|
|
See Supplemental Information for a description of certain items
affecting results in 2014 and 2013.
|
|
|
|
|
|
Sales by Geographic Area (1)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
North America
|
|
$
|
5,200
|
|
|
$
|
5,108
|
|
|
$
|
21,422
|
|
|
$
|
20,849
|
Europe, Middle East, Africa and India
|
|
4,574
|
|
|
4,692
|
|
|
19,671
|
|
|
19,208
|
Asia Pacific
|
|
2,342
|
|
|
2,387
|
|
|
9,135
|
|
|
9,229
|
Latin America
|
|
2,268
|
|
|
2,199
|
|
|
7,939
|
|
|
7,794
|
Total
|
|
$
|
14,384
|
|
|
$
|
14,386
|
|
|
$
|
58,167
|
|
|
$
|
57,080
|
|
|
|
|
|
Sales Volume and Price by Operating Segment and Geographic Area
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31, 2014
|
|
December 31, 2014
|
Percentage change from prior year
|
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
Agricultural Sciences
|
|
9
|
%
|
|
(4
|
)%
|
|
5
|
%
|
|
3
|
%
|
|
(1
|
)%
|
|
2
|
%
|
Consumer Solutions
|
|
3
|
|
|
(3
|
)
|
|
-
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
Infrastructure Solutions
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
1
|
|
|
-
|
|
|
1
|
|
Performance Materials & Chemicals
|
|
7
|
|
|
(2
|
)
|
|
5
|
|
|
2
|
|
|
-
|
|
|
2
|
|
Performance Plastics
|
|
3
|
|
|
(6
|
)
|
|
(3
|
)
|
|
-
|
|
|
2
|
|
|
2
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
North America
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
Europe, Middle East, Africa and India
|
|
9
|
|
|
(11
|
)
|
|
(2
|
)
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
Asia Pacific
|
|
-
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
-
|
|
|
(1
|
)
|
Latin America
|
|
2
|
|
|
1
|
|
|
3
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
Developed geographies
|
|
4
|
%
|
|
(6
|
)%
|
|
(2
|
)%
|
|
1
|
%
|
|
-
|
%
|
|
1
|
%
|
Emerging geographies (2)
|
|
5
|
|
|
(1
|
)
|
|
4
|
|
|
2
|
|
|
1
|
|
|
3
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
|
|
|
|
|
Sales Volume and Price by Operating Segment and Geographic Area
|
Excluding Divestitures (3)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31, 2014
|
|
December 31, 2014
|
Percentage change from prior year
|
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
Agricultural Sciences
|
|
9
|
%
|
|
(4
|
)%
|
|
5
|
%
|
|
3
|
%
|
|
(1
|
)%
|
|
2
|
%
|
Consumer Solutions
|
|
3
|
|
|
(3
|
)
|
|
-
|
|
|
3
|
|
|
(1
|
)
|
|
2
|
|
Infrastructure Solutions
|
|
(2
|
)
|
|
(2
|
)
|
|
(4
|
)
|
|
1
|
|
|
-
|
|
|
1
|
|
Performance Materials & Chemicals
|
|
7
|
|
|
(2
|
)
|
|
5
|
|
|
2
|
|
|
-
|
|
|
2
|
|
Performance Plastics
|
|
3
|
|
|
(6
|
)
|
|
(3
|
)
|
|
1
|
|
|
2
|
|
|
3
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
North America
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
|
1
|
%
|
|
2
|
%
|
|
3
|
%
|
Europe, Middle East, Africa and India
|
|
9
|
|
|
(11
|
)
|
|
(2
|
)
|
|
4
|
|
|
(1
|
)
|
|
3
|
|
Asia Pacific
|
|
-
|
|
|
(2
|
)
|
|
(2
|
)
|
|
1
|
|
|
-
|
|
|
1
|
|
Latin America
|
|
2
|
|
|
1
|
|
|
3
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
Developed geographies
|
|
4
|
%
|
|
(6
|
)%
|
|
(2
|
)%
|
|
1
|
%
|
|
-
|
%
|
|
1
|
%
|
Emerging geographies (2)
|
|
5
|
|
|
(1
|
)
|
|
4
|
|
|
3
|
|
|
1
|
|
|
4
|
|
Total
|
|
4
|
%
|
|
(4
|
)%
|
|
-
|
%
|
|
2
|
%
|
|
-
|
%
|
|
2
|
%
|
(1)
|
|
Sales to customers in the Indian subcontinent, previously reported
with Asia Pacific, are now aligned with Europe, Middle East, Africa
and India; prior period sales have been adjusted to reflect this
realignment.
|
(2)
|
|
Emerging geographies includes Eastern Europe, Middle East, Africa,
India, Latin America and Asia Pacific excluding Australia, Japan and
New Zealand.
|
(3)
|
|
Excludes sales related to Nippon Unicar Company, Limited, divested
on July 1, 2013, and sales of the Polypropylene Licensing and
Catalysts business, divested on December 2, 2013.
|
|
|
|
Supplemental Information
Description of Certain Items Affecting Results:
The following table summarizes the impact of certain items recorded in
the three-month periods ended December 31, 2014 and December 31, 2013:
|
|
|
|
|
|
|
Certain Items Impacting Results
|
|
Pretax Impact (1)
|
|
Net Income (2)
|
|
EPS - Diluted (3)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions, except per share amounts (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Adjusted to exclude certain items (non-GAAP measures)
|
|
|
|
|
|
|
|
$
|
992
|
|
|
$
|
793
|
|
|
$
|
0.85
|
|
|
$
|
0.65
|
|
Certain items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments and related costs
|
|
$
|
(73
|
)
|
|
$
|
(194
|
)
|
|
(47
|
)
|
|
(132
|
)
|
|
(0.04
|
)
|
|
(0.11
|
)
|
Warranty accrual adjustment of exited business
|
|
(100
|
)
|
|
-
|
|
|
(63
|
)
|
|
-
|
|
|
(0.05
|
)
|
|
-
|
|
Restructuring plan implementation costs
|
|
-
|
|
|
(13
|
)
|
|
-
|
|
|
(11
|
)
|
|
-
|
|
|
(0.01
|
)
|
1Q12 Restructuring credits
|
|
-
|
|
|
16
|
|
|
-
|
|
|
16
|
|
|
-
|
|
|
0.01
|
|
4Q12 Restructuring credits
|
|
-
|
|
|
6
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
0.01
|
|
Asbestos-related charge
|
|
(78
|
)
|
|
-
|
|
|
(49
|
)
|
|
-
|
|
|
(0.04
|
)
|
|
-
|
|
Gain on sale of Dow Polypropylene Licensing and Catalysts business
|
|
-
|
|
|
451
|
|
|
-
|
|
|
356
|
|
|
-
|
|
|
0.29
|
|
Gain on sale of a 7.5 percent ownership interest in Freeport LNG
Development, L.P.
|
|
-
|
|
|
87
|
|
|
-
|
|
|
69
|
|
|
-
|
|
|
0.06
|
|
Gain on sale of ownership interest in Dow Kokam LLC
|
|
-
|
|
|
26
|
|
|
-
|
|
|
18
|
|
|
-
|
|
|
0.01
|
|
Dow Corning implant liability adjustment
|
|
407
|
|
|
-
|
|
|
378
|
|
|
-
|
|
|
0.32
|
|
|
-
|
|
Loss related to Dow Corning's Clarksville, Tennessee site abandonment
|
|
(500
|
)
|
|
-
|
|
|
(465
|
)
|
|
-
|
|
|
(0.40
|
)
|
|
-
|
|
Chlorine value chain separation costs
|
|
(19
|
)
|
|
-
|
|
|
(12
|
)
|
|
-
|
|
|
(0.01
|
)
|
|
-
|
|
Loss on early extinguishment of debt
|
|
-
|
|
|
(156
|
)
|
|
-
|
|
|
(98
|
)
|
|
-
|
|
|
(0.08
|
)
|
Uncertain tax position adjustments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(53
|
)
|
|
-
|
|
|
(0.04
|
)
|
Total certain items
|
|
$
|
(363
|
)
|
|
$
|
223
|
|
|
$
|
(258
|
)
|
|
$
|
170
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.14
|
|
Reported (GAAP amounts)
|
|
|
|
|
|
|
|
$
|
734
|
|
|
$
|
963
|
|
|
$
|
0.63
|
|
|
$
|
0.79
|
|
(1)
|
|
Impact on "Income Before Income Taxes."
|
(2)
|
|
"Net Income Available for The Dow Chemical Company Common
Stockholders."
|
(3)
|
|
"Earnings per common share - diluted."
|
|
|
|
The following table summarizes the impact of certain items recorded in
the twelve-month periods ended December 31, 2014 and December 31, 2013:
|
|
|
|
|
|
|
Certain Items Impacting Results
|
|
Pretax Impact (1)
|
|
Net Income (2)
|
|
EPS - Diluted (3) (4)
|
|
|
Twelve Months
|
|
Twelve Months
|
|
Twelve Months
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions, except per share amounts (Unaudited)
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Adjusted to exclude certain items (non-GAAP measures)
|
|
|
|
|
|
|
|
$
|
3,709
|
|
|
$
|
2,981
|
|
|
$
|
3.11
|
|
|
$
|
2.48
|
|
Certain items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments and related costs
|
|
$
|
(73
|
)
|
|
$
|
(194
|
)
|
|
(47
|
)
|
|
(132
|
)
|
|
(0.04
|
)
|
|
(0.11
|
)
|
Warranty accrual adjustment of exited business
|
|
(100
|
)
|
|
-
|
|
|
(63
|
)
|
|
-
|
|
|
(0.05
|
)
|
|
-
|
|
Restructuring plan implementation costs
|
|
-
|
|
|
(44
|
)
|
|
-
|
|
|
(32
|
)
|
|
-
|
|
|
(0.03
|
)
|
1Q12 Restructuring credits
|
|
-
|
|
|
16
|
|
|
-
|
|
|
16
|
|
|
-
|
|
|
0.01
|
|
4Q12 Restructuring credits
|
|
-
|
|
|
6
|
|
|
-
|
|
|
5
|
|
|
-
|
|
|
0.01
|
|
Asbestos-related charge
|
|
(78
|
)
|
|
-
|
|
|
(49
|
)
|
|
-
|
|
|
(0.04
|
)
|
|
-
|
|
Gain from K-Dow arbitration
|
|
-
|
|
|
2,161
|
|
|
-
|
|
|
1,647
|
|
|
-
|
|
|
1.37
|
|
Gain on sale of Dow Polypropylene Licensing and Catalysts business
|
|
-
|
|
|
451
|
|
|
-
|
|
|
356
|
|
|
-
|
|
|
0.29
|
|
Gain on sale of 7.5 percent ownership in Freeport LNG Development,
L.P.
|
|
-
|
|
|
87
|
|
|
-
|
|
|
69
|
|
|
-
|
|
|
0.06
|
|
Gain on sale of ownership interest in Dow Kokam LLC
|
|
-
|
|
|
26
|
|
|
-
|
|
|
18
|
|
|
-
|
|
|
0.01
|
|
Dow Corning implant liability adjustment
|
|
407
|
|
|
-
|
|
|
378
|
|
|
-
|
|
|
0.32
|
|
|
-
|
|
Loss related to Dow Corning's Clarksville, Tennessee site abandonment
|
|
(500
|
)
|
|
-
|
|
|
(465
|
)
|
|
-
|
|
|
(0.40
|
)
|
|
-
|
|
Chlorine value chain separation costs
|
|
(49
|
)
|
|
-
|
|
|
(31
|
)
|
|
-
|
|
|
(0.03
|
)
|
|
-
|
|
Loss on early extinguishment of debt
|
|
-
|
|
|
(326
|
)
|
|
-
|
|
|
(205
|
)
|
|
-
|
|
|
(0.17
|
)
|
Adjustment of uncertain tax positions
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(276
|
)
|
|
-
|
|
|
(0.23
|
)
|
Total certain items
|
|
$
|
(393
|
)
|
|
$
|
2,183
|
|
|
$
|
(277
|
)
|
|
$
|
1,466
|
|
|
$
|
(0.24
|
)
|
|
$
|
1.21
|
|
Dilutive effect of assumed preferred stock conversion into
shares of common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.01
|
)
|
Reported (GAAP amounts) (5) (6)
|
|
|
|
|
|
|
|
$
|
3,432
|
|
|
$
|
4,447
|
|
|
$
|
2.87
|
|
|
$
|
3.68
|
|
(1)
|
|
Impact on "Income Before Income Taxes."
|
(2)
|
|
"Net Income Available for The Dow Chemical Company Common
Stockholders."
|
(3)
|
|
"Earnings per common share - diluted."
|
(4)
|
|
For the year ended December 31, 2013, conversion of the Company's
Cumulative Convertible Perpetual Preferred Stock, Series A
("Preferred Stock") into shares of the Company's common stock was
excluded from the calculation of "Diluted earnings per share
adjusted to exclude certain items" as well as the earnings per share
impact of certain items because the effect of including them would
have been antidilutive.
|
(5)
|
|
For the year ended December 31, 2013, an assumed conversion of the
Company's Preferred Stock into shares of the Company's common stock
was included in the calculation of diluted earnings per share
(reported GAAP amount).
|
(6)
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The Company used "Net Income Attributable to The Dow Chemical
Company" when calculating diluted earnings per share (reported GAAP
amount) for the twelve-month period ended December 31, 2013, as it
excludes preferred dividends of $340 million.
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|
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The following table presents diluted share counts for the three- and
twelve-month periods ended December 31, 2014 and December 31, 2013,
including the effect of an assumed conversion of the Company's
Cumulative Convertible Perpetual Preferred Stock, Series A into shares
of the Company's common stock:
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|
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Common Shares - Diluted
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|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Share count - diluted, excluding preferred stock conversion to
common shares
|
|
1,160.9
|
|
|
1,201.1
|
|
|
1,187.0
|
|
|
1,193.6
|
Potential common shares from assumed conversion of preferred stock,
included in reported GAAP EPS calculation
|
|
N/A
|
|
N/A
|
|
N/A
|
|
96.8
|
Share count - diluted, including assumed preferred stock conversion
to common shares
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1,290.4
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Results in the fourth quarter of 2014 were impacted by the following
items:
-
Pretax charges of $73 million for asset impairments related to the Dow
Electronic Materials business. The charges were included in "Cost of
sales" ($23 million) and "Other intangible asset impairment losses"
($50 million) in the consolidated statements of income and reflected
in Consumer Solutions.
-
Pretax charge of $100 million for a warranty accrual adjustment
related to an exited business. The charge was included in "Cost of
sales" in the consolidated statements of income and reflected in
Infrastructure Solutions.
-
Pretax charge of $78 million related to an increase in the
asbestos-related liability for pending and future claims (excluding
future defense and processing costs). The charge is shown as
"Asbestos-related charge" in the consolidated statements of income and
reflected in Corporate.
-
A gain of $407 million related to Dow Corning Corporation's ("Dow
Corning") adjustment of its implant liability. Dow Corning is a 50
percent owned joint venture of the Company. The gain was included in
"Equity in earnings of nonconsolidated affiliates" in the consolidated
statements of income and reflected in Consumer Solutions ($155
million) and Infrastructure Solutions ($252 million).
-
A loss of $500 million related to Dow Corning's abandonment of a
polycrystalline silicon manufacturing facility in Clarksville,
Tennessee. The loss was included in "Equity in earnings of
nonconsolidated affiliates" in the consolidated statements of income
and reflected in Infrastructure Solutions.
-
Pretax charges of $19 million for nonrecurring transaction costs
associated with the planned separation of a significant portion of the
Company's chlorine value chain, consisting primarily of financial and
professional advisory fees and legal fees ("Chlorine value chain
separation costs"). The charges were included in "Sundry income
(expense) - net" in the consolidated statements of income and
reflected in Corporate.
Results in the fourth quarter of 2013 were impacted by the following
items:
-
Pretax charges of $194 million for asset impairments and related
costs, including the shutdown of manufacturing facilities, in the
Chlor-Alkali and Vinyl business, Energy & Water Solutions business,
Performance Monomers business, Epoxy business, Polyurethanes business
and Corporate. The charges were included in "Cost of sales" ($181
million), "Amortization of intangibles" ($3 million) and "Equity in
earnings of nonconsolidated affiliates" ($10 million) in the
consolidated statements of income and reflected in Infrastructure
Solutions ($95 million), Performance Materials & Chemicals ($70
million) and Corporate ($29 million).
-
Pretax charges of $13 million for implementation costs related to the
Company's restructuring programs. The charges were included in "Cost
of sales" ($10 million), "Research and development expenses" ($2
million) and "Selling, general and administrative expenses" ($1
million) in the consolidated statements of income and reflected in
Corporate.
-
Pretax gain of $16 million for adjustments to asbestos abatement costs
and contract cancellation fees related to the 1Q12 Restructuring plan.
The gain was included in "Restructuring credits" in the consolidated
statements of income and reflected in Infrastructure Solutions ($1
million) and Performance Materials & Chemicals ($15 million).
-
Pretax gain of $6 million for adjustments to contract cancellation
fees related to the 4Q12 Restructuring plan. The gain was included in
"Restructuring credits" in the consolidated statements of income and
reflected in Performance Plastics.
-
A $451 million pretax gain on the December 2, 2013 divestiture of the
Dow Polypropylene Licensing and Catalysts business, included in
"Sundry income (expense) - net" in the consolidated statements of
income and reflected in Performance Plastics.
-
Pretax gain of $87 million on the sale of a 7.5 percent ownership
interest in Freeport LNG Development, L.P., included in "Sundry income
(expense) - net" in the consolidated statements of income and
reflected in Performance Plastics.
-
Pretax gain of $26 million on the sale of the Company's ownership
interest in Dow Kokam LLC, included in "Sundry income (expense) - net"
in the consolidated statements of income and reflected in Corporate.
-
Pretax loss of $156 million on the early extinguishment of debt,
included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Corporate.
-
A tax charge of $53 million for the accrual of additional penalties
and interest related to court rulings on two separate matters that
resulted in the adjustment of uncertain tax positions.
In addition to the items described above for the fourth quarter of 2014,
results for the year ended December 31, 2014 were impacted by the
following item:
-
Pretax charges of $30 million for chlorine value chain separation
costs. The charges were included in "Sundry income (expense) - net" in
the consolidated statements of income and reflected in Corporate.
In addition to the items described above for the fourth quarter of 2013,
results for the year ended December 31, 2013 were impacted by the
following items:
-
Pretax charges of $31 million for implementation costs related to the
Company's restructuring programs. The charges were included in "Cost
of sales" ($30 million) and "Selling, general and administrative
expenses" ($1 million) in the consolidated statements of income and
reflected in Corporate.
-
Pretax loss of $170 million on the early extinguishment of debt,
included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Corporate.
-
Pretax gain of $2.161 billion related to damages awarded to the
Company in the K-Dow arbitration proceeding. The gain was included in
"Sundry income (expense) - net" in the consolidated statements of
income and reflected in Corporate.
-
A tax charge of $223 million related to court rulings on two separate
matters that resulted in the adjustment of uncertain tax positions.
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