The Dow Chemical Company (NYSE: DOW):
Third Quarter 2011 Highlights
- Dow reported earnings of $0.69 per
share. This compares with reported earnings of $0.45 per share
in the same period last year. The Company delivered earnings of
$0.62 per share excluding certain items(1), compared with
$0.54 per share on the same basis in the year-ago period.
- On a reported basis, the Company
delivered EBITDA(2) of $2.1 billion. EBITDA excluding certain
items was $2.0 billion, the highest third quarter result in Dow’s
history. This contributed to record year-to-date EBITDA on the same
basis of $6.8 billion, up 21 percent year-over-year.
- Sales were $15.1 billion, up
17 percent versus the year-ago period. Double-digit sales
increases were reported across all operating segments and
geographic areas. Sales in emerging geographies reached
$5 billion, representing a new quarterly record, and the
Company also achieved record sales in China.
- Volume growth in Latin America
(7 percent) and Asia Pacific (5 percent) offset decreases
in the United States and Western Europe, which were each
down 3 percent. Volume growth in emerging geographies was
led by China (12 percent), India (11 percent) and Brazil
(10 percent).
- Price was up 17 percent, and rose
in all operating segments, more than offsetting a $1.7 billion
increase in purchased feedstock and energy costs. Double-digit
price gains were achieved in all geographic areas and in most
operating segments.
- Dow continued to deliver against its
innovation targets. Year-to-date sales from new products introduced
in the past five years represented 30 percent of the Company’s
total sales. Among its milestones, the Company recently announced
the commercial launch of the DOW™ POWERHOUSE™ Solar Shingle, first
in Colorado and rolling into targeted states through 2012.
- Equity earnings were $375 million
on a reported basis, or $289 million excluding certain items,
which represents a 15 percent increase year-over-year. The
Company achieved $964 million of equity earnings, or
$878 million excluding certain items through the third
quarter, a year-to-date record.
- Dow reduced debt by nearly $500 million
in the quarter, bringing its net debt(3) to total capitalization to
40.9 percent. Year to date, the Company has reduced debt by
$4.2 billion.
Comment
Andrew N. Liveris, Dow’s chairman and chief executive officer,
stated:
“Dow delivered broad-based sales gains and significant earnings
growth this quarter, reflecting the strength of our transformed
business portfolio. Our diversified geographic presence was also on
display, as our investments in emerging regions enabled us to
capitalize on growth where it is happening most rapidly, even as
developed regions paused in their economic recovery.
“We achieved record EBITDA for both the quarter and year to
date. This performance demonstrates that our strategy is delivering
results, as we commercialize our R&D pipeline, strengthen our
balanced and integrated portfolio, build upon our formidable
feedstock advantage, and drive efficiencies throughout our business
to deliver earnings growth.
“This quarter shows clearly that Dow has the agility and
flexibility to respond to rapidly changing economic conditions. We
took actions again this quarter to provide near-term flexibility in
anticipation of volatile economic environments, while also
continuing to invest for long-term growth. We are operating from a
position of financial strength. Dow is an enterprise that is built
for times like these – and is built to grow.”
Three Months Ended In millions, except per share amounts
Sept 30,
2011
Sept 30,
2010
Net Sales $15,109 $12,868 Net Income Available for Common
Stockholders $815 $512 Net Income Available for Common
Stockholders, excluding Certain Items
$729
$620
Earnings per Common Share – diluted $0.69 $0.45 Earnings per
Common Share – diluted, excluding Certain Items $0.62 $0.54
Review of Third Quarter Results
The Dow Chemical Company (NYSE: DOW) reported sales of
$15.1 billion, a 17 percent increase compared with the
same period last year, with top-line growth driven by price.
Double-digit sales gains were reported in all operating segments,
with the largest percentage increases in Feedstocks and Energy
(34 percent) and Agricultural Sciences (27 percent).
Double-digit sales increases were also reported in all geographic
areas, with the largest growth in Latin America (21 percent)
and Europe, Middle East and Africa (EMEA) (19 percent). In
emerging geographies, sales reached $5 billion, a new
quarterly record for the Company.
Price rose 17 percent at the Company level. Broad-based
price gains were achieved in all geographic areas, led by EMEA
(21 percent) and North America (17 percent). Double-digit
price gains were reported in all operating segments, except
Electronic and Functional Materials (up 8 percent) and Agricultural
Sciences (up 9 percent). Price gains offset a
$1.7 billion increase in purchased feedstock and energy
costs.
At the Company level, volume was flat versus the same quarter
last year, as demand gains in Latin America (7 percent) and
Asia Pacific (5 percent) offset decreases in North America
(3 percent) and EMEA (2 percent). Volume growth in
emerging geographies was 7 percent, led by China
(12 percent), India (11 percent) and Brazil
(10 percent). Across operating segments volume gains were
reported in Agricultural Sciences (18 percent), Electronic and
Functional Materials (3 percent) and Performance Plastics
(1 percent).
Dow delivered $2.1 billion of EBITDA. EBITDA excluding
certain items was $2.0 billion, representing the highest third
quarter result in the Company’s history. Electronic and Functional
Materials achieved a new quarterly EBITDA record. EBITDA for the
first nine months of the year was $6.4 billion. Year-to-date
EBITDA performance of $6.8 billion excluding certain items
represents a record and a 21 percent increase
year-over-year.
Reported earnings for the current quarter were $0.69 per
share, compared with reported earnings of $0.45 per share in
the same period last year. The Company delivered $0.62 per
share excluding certain items, compared with $0.54 per share
on the same basis in the year-ago period. Certain items in the
current quarter consisted of a pretax $86 million gain related to
cash collected on a previously impaired note receivable related to
Equipolymers, a nonconsolidated affiliate. The gain is shown as
"Equity in earnings of nonconsolidated affiliates" in the
consolidated statements of income and reflected in Performance
Plastics. (See Supplemental Information at the end of the release
for a description of certain items affecting results in all periods
presented.)
Dow’s global operating rate was 83 percent, down
3 percentage points from the year-ago period. Sequentially,
the Company’s operating rate decreased 1 percentage point.
Selling, General and Administrative (SG&A) expenses were up
8 percent versus the year-ago period, driven in part by
increased spending in Agricultural Sciences in support of product
launches and growth initiatives.
Research and Development (R&D) expenses were flat with the
year-ago period. The Company continued to preferentially invest in
its technology pipeline, most notably in Agricultural Sciences and
Electronic and Functional Materials, each with a double-digit
increase in R&D investment.
Equity earnings were $375 million on a reported basis.
Equity earnings were $289 million excluding certain items, which
represents a 15 percent increase. Dow has achieved
$964 million of equity earnings, or $878 million
excluding certain items through the third quarter, representing a
year-to-date record.
The Company continued to make solid progress in deleveraging its
balance sheet, reducing debt by nearly $500 million in the
third quarter of 2011. As a result, net debt to total
capitalization fell to 40.9 percent. Year to date Dow has reduced
debt by $4.2 billion.
The Company continued to surpass its growth synergy targets,
delivering $1.7 billion in sales on an annual run-rate basis.
Sequentially, the Company’s growth synergy run-rate grew 14
percent.
“Dow delivered broad-based sales gains and significant earnings
growth this quarter, reflecting the strength of our transformed
business portfolio,” said Andrew N. Liveris, Dow’s chairman and
chief executive officer. “Our diversified geographic presence was
also on display, as our investments in emerging regions enabled us
to capitalize on growth where it is happening most rapidly, even as
developed regions paused in their economic recovery.
“We achieved record EBITDA for both the quarter and year to
date. This performance demonstrates that our strategy is delivering
results, as we commercialize our R&D pipeline, strengthen our
balanced and integrated portfolio, build upon our formidable
feedstock advantage, and drive efficiencies throughout our business
to deliver earnings growth.
“This quarter shows clearly that Dow has the agility and
flexibility to respond to rapidly changing economic conditions. We
took actions again this quarter to provide near-term flexibility in
anticipation of volatile economic environments, while also
continuing to invest for long-term growth. We are operating from a
position of financial strength. Dow is an enterprise that is built
for times like these – and is built to grow.”
Electronic and Functional Materials
Sales in Electronic and Functional Materials were
$1.2 billion, up 11 percent from the same quarter last
year, driven by volume growth of 3 percent and a price gain of
8 percent.
Dow Electronic Materials reported the strongest demand growth in
the Semiconductor Technologies and Display Technologies businesses,
driven by new product introductions, positions in higher-growth
advanced technology nodes and solid growth in organic light
emitting diode (OLED) materials. In Asia Pacific, Dow Electronic
Materials reported demand growth across all business units. The
business recorded several customer wins in the quarter involving
chemical mechanical planarization pads and slurries, photoresist
and display films.
Functional Materials reported a double-digit increase in sales
versus the year-ago period, driven primarily by price. Dow Wolff
Cellulosics reported double-digit volume growth in EMEA and demand
gains in North America, driven by food and pharmaceuticals demand.
Dow Microbial Control continued to see volume growth in North
America, led by ongoing demand from energy end-markets. Dow Home
and Personal Care reported volume growth in all geographic areas
excluding North America, with the largest gains in Latin America
and Asia Pacific.
Equity earnings were $23 million, reflecting the contribution
from Dow Corning. This result was flat with the same period last
year. EBITDA for the segment was $306 million, which compares with
EBITDA of $277 million in the year-ago period.
Coatings and Infrastructure Solutions
Coatings and Infrastructure Solutions sales were $1.9 billion,
with volume down 4 percent and price up 14 percent.
Double-digit price gains were reported in all businesses except Dow
Water and Process Solutions, where price was up 5 percent.
Dow Building and Construction reported a double-digit price gain
overall, with increases in all geographic areas. Ongoing depressed
demand conditions in North America and EMEA were offset by
double-digit growth in the emerging regions. Results for the
business were partly impacted by ongoing investment in the DOW™
POWERHOUSE™ Solar Shingle, for which the business recently
announced its commercial launch. Dow Coating Materials reported
double-digit price gains across all geographic areas except EMEA,
offsetting soft demand conditions. Dow Water and Process Solutions
reported price and volume gains in EMEA, North America and Asia
Pacific. The business saw double-digit demand growth in the
emerging regions, fueled by strong gains in ion exchange resins,
notably in Greater China.
Equity earnings were $72 million, largely reflecting the
contribution from Dow Corning. This result is down slightly from
the $75 million reported in the year-ago period. EBITDA for
the segment was $372 million, which compares with EBITDA of
$382 million in the same period last year.
Agricultural Sciences
Agricultural Sciences reported record third quarter sales of
$1.2 billion, up 27 percent compared with the year-ago
period. Volume increased 18 percent and price rose 9 percent.
Double-digit sales and volume gains were reported in all geographic
areas, led by Latin America. The business continues to benefit from
solid industry fundamentals, with elevated farm income levels
providing strong incentive for farmers to maximize yields.
Agricultural Chemicals reported demand growth of more than
20 percent driven by continued adoption of new products and
increased sales of range and pasture herbicides in Latin America,
cereal herbicides in Europe, and corn and soybean herbicides in the
United States. In Seeds, Traits and Oils, corn seed volume grew
more than 15 percent versus the same period last year.
Year to date, Seeds, Traits and Oils has reported demand growth
of more than 25 percent, with significant gains in key crops,
including corn and cotton. The business finished a solid cotton
season in the United States, having grown 10 share points over
the last two seasons to nearly 20 percent in 2011, helped by
an increase in U.S. planted acres and continued penetration of
PhytoGen® cottonseeds. In corn, the business continued to report
good adoption of SmartStax® hybrids in North America.
EBITDA for the segment was $75 million, compared with a
loss of $12 million in the year-ago period.
Performance Materials
Sales in Performance Materials were $3.7 billion, with
volume down 3 percent and price up 15 percent.
Double-digit price gains were reported in all geographic areas and
in most businesses in response to higher raw material costs. Volume
growth in Latin America and North America was more than offset by
declines in EMEA and Asia Pacific.
Amines reported price and volume gains globally, with notable
demand growth in the emerging regions. The business continued to
see solid fundamentals in agriculture and energy end-markets. Dow
Automotive Systems reported price and volume expansion in all
geographic areas. The business reported double-digit demand growth
globally for its adhesives platform, and recorded gains for
technology-differentiated products in acoustical applications and
polyurethane-based formulations. Dow Formulated Systems reported
price increases in all geographic areas. However, demand continued
to be restrained by weak construction end-markets in developed
regions, as well as a pause in wind energy investments in Asia
Pacific.
Epoxy reported a modest sales gain versus the year-ago period,
with double-digit price increases in all geographic areas. Demand
grew in all geographic areas except EMEA, where the business chose
to forego low-margin volume. Oxygenated Solvents reported
double-digit price gains in all geographic areas, while volume fell
slightly as demand growth in emerging geographies partially offset
declines in developed regions. Polyglycols, Surfactants and Fluids
reported a double-digit price gain and modest volume growth
globally. The business recorded demand growth in de-icing
applications in anticipation of the winter season, and strong sales
of high temperature heat transfer fluids used in solar applications
in EMEA. Polyurethanes reported strong price gains globally and a
slight gain in volume. In North America, the business reported
double-digit volume growth driven by demand in furniture and
bedding applications. The business recently announced the
successful start-up of its new joint venture propylene oxide
facility in Thailand.
EBITDA for the quarter was $478 million, compared with $513
million in the year-ago period.
Performance Plastics
Sales in Performance Plastics rose 16 percent to $4.1 billion,
with a 1 percent gain on volume, and a 15 percent increase on
price. The division reported strong performance in Dow Elastomers,
which had double-digit volume growth and price increases.
Polyethylene recorded another strong quarter of volume growth in
Asia Pacific as it continues to benefit from its joint venture
facility in Thailand. However, the business experienced margin
contraction year-over-year due to higher planned turnaround
expenditures, an increase in ethylene production costs and a
softening in demand in the developed regions. Dow Packaging and
Converting reported a modest gain in volume driven by growth in
Asia Pacific and Latin America. Results in Dow Electrical and
Telecommunications were partially impacted by a decline in volume
due to monetary tightening policies and decreased infrastructure
activity from state-owned utilities in emerging geographies.
Equity earnings for the segment were $150 million, which
compares with $58 million in the year-ago period. Equity earnings
in the quarter included a pretax $86 million gain related to cash
collected on a previously impaired note receivable related to
Equipolymers, a nonconsolidated affiliate. Excluding this certain
item, equity earnings were $64 million. EBITDA for the segment
was $834 million, or $748 million excluding certain items. This
compares with EBITDA of $900 million in the same period last year,
or $898 million excluding certain items.
Feedstocks and Energy
Sales in Feedstocks and Energy were $2.9 billion, up 34 percent
from the same period last year. Volume decreased 2 percent and
price rose 36 percent.
The Chlor-Alkali/Chlor-Vinyl business reported strong sales
growth, with double-digit price increases in North America, Latin
America and Europe. The largest price gains were reported in
caustic soda, driven by tight supply and continued strong demand in
the alumina and pulp and paper industries. Vinyl chloride monomer
volume decreased due to the shutdown of an asset in Plaquemine,
coupled with an ongoing weak outlook in construction end-markets.
Ethylene Oxide/Ethylene Glycol sales increased 23 percent from the
year-ago period, driven by price.
Equity earnings were $153 million for the quarter, which
compares with $98 million in the year-ago period, driven by strong
results in MEGlobal and Kuwait Olefins Company. EBITDA for the
segment was $263 million, compared with $154 million in the
same period last year.
Outlook
Commenting on the Company’s outlook, Liveris said:
“As we said at our recent Investor Day, we see ongoing
volatility in the pace of global economic recovery, and
consequently are prepared for jagged economic conditions over the
near-term. Well-recognized headwinds in developed regions continue
to restrain consumer spending and business investment. However, in
emerging regions, growth in the middle class continues to drive
demand, particularly as it pertains to infrastructure and
urbanization. And we continue to see bright spots in
recession-resistant sectors such as agriculture, food packaging,
energy and water – markets where Dow commands leadership
positions.
“Our enhanced financial flexibility, industry-leading feedstock
strength and diverse, well-balanced portfolio provide a new
earnings foundation, and position us well to continue driving
toward our profitability targets with confidence. Our
diversification across sectors and geographies allows us to take
advantage of growth where it occurs around the world. In the midst
of these uncertain times, we have an enterprise that is strong and
stable, with the levers in place to mitigate risk and achieve our
financial targets.”
Dow will host a live Webcast of its third quarter earnings
conference call with investors to discuss its results, business
outlook and other matters today at 10:00 a.m. ET on
www.dow.com.
(1)
See Supplemental Information at the end of
the release for a description of these items.
(2)
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.
(3)
Net debt equals total debt (“Notes
payable” plus “Long-term debt due within one year” plus “Long-Term
Debt”) minus “Cash and cash equivalents.”
TMTrademark of The Dow Chemical Company or an affiliated company
of Dow.
®PhytoGen is a trademark of PhytoGen Seed Company, LLC.
®SmartStax multi-event technology developed by Dow AgroSciences
LLC and Monsanto. SmartStax is a trademark of Monsanto Technology
LLC.
About Dow
Dow (NYSE: Dow) combines the power of science and technology
with the “Human Element” to passionately innovate what is essential
to human progress. The Company connects chemistry and innovation
with the principles of sustainability to help address many of the
world’s most challenging problems such as the need for clean water,
renewable energy generation and conservation, and increasing
agricultural productivity. Dow’s diversified industry-leading
portfolio of specialty chemical, advanced materials, agrosciences
and plastics businesses deliver a broad range of technology-based
products and solutions to customers in approximately
160 countries and in high growth sectors such as electronics,
water, energy, coatings and agriculture. In 2010, Dow had annual
sales of $53.7 billion and employed approximately
50,000 people worldwide. The Company’s more than 5,000
products are manufactured at 188 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.
Financial Statements (Note A)
The Dow Chemical Company and Subsidiaries Consolidated
Statements of Income Three Months Ended Nine Months
Ended In millions, except per share amounts (Unaudited) Sep
30, 2011 Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Net Sales $ 15,109
$ 12,868 $ 45,888
$ 39,903 Cost of sales 12,928 10,841 38,596
33,962 Research and development expenses 402 403 1,213 1,217
Selling, general and administrative expenses 691 640 2,086 1,950
Amortization of intangibles 125 124 373 377 Restructuring charges
(Note B) — — — 29 Acquisition and integration related expenses
(Note C) — 35 31 98 Equity in earnings of nonconsolidated
affiliates (Note D) 375 251 964 799 Sundry income (expense) - net
(Note E) 47 (10 ) (322 ) 168 Interest income 9 7 26 24 Interest
expense and amortization of debt discount 305
362 1,010 1,105
Income Before Income Taxes 1,089 711
3,247 2,156 Provision for
income taxes 186 114
546 348 Net Income 903
597 2,701
1,808 Net income attributable to noncontrolling interests 3
— 24
9 Net Income Attributable to The Dow Chemical Company 900
597 2,677
1,799 Preferred stock dividends 85
85 255 255 Net
Income Available for The Dow Chemical Company Common Stockholders
$ 815 $ 512 $
2,422 $ 1,544
Per Common
Share Data: Earnings per common share - basic $ 0.70 $ 0.45 $ 2.08
$ 1.37 Earnings per common share - diluted $ 0.69
$ 0.45 $ 2.07
$ 1.35
Common stock dividends declared
per share of common stock $ 0.25 $ 0.15 $ 0.65 $ 0.45
Weighted-average common shares outstanding - basic 1,152.3 1,128.0
1,147.2 1,123.6 Weighted-average common shares outstanding -
diluted 1,160.9 1,145.5
1,157.8 1,140.7
Depreciation $ 539 $ 555 $ 1,624 $ 1,717 Capital Expenditures
$ 651 $ 497 $
1,620 $ 1,188
Notes to the Consolidated Financial Statements:
Note A: The unaudited interim 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, 2010. 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 June 2009, Dow's Board of Directors approved a
restructuring plan that incorporated actions related to the
Company's acquisition of Rohm and Haas Company as well as
additional actions to advance the Company's strategy and respond to
continued weakness in the global economy. In the first half of
2010, the Company recorded adjustments to the 2009 restructuring
plan of $29 million. See Supplemental Information for additional
information.
Note C: On April 1, 2009, Dow completed the acquisition
of Rohm and Haas Company. During the first quarter of 2011, pretax
charges totaling $31 million were recorded for integration costs
related to the acquisition. During the third quarter of 2010,
integration costs totaled $35 million ($98 million year to
date).
Note D: In the third quarter of 2011, the Company
recognized an $86 million gain related to cash collected on a
previously impaired note receivable related to Equipolymers, a
nonconsolidated affiliate.
Note E: In the first half of 2011, the Company recognized
a pretax loss of $482 million on the early extinguishment of debt;
a pretax loss of $46 million was recognized in the third quarter of
2010.
The Dow Chemical Company and
Subsidiaries Consolidated Balance Sheets In
millions (Unaudited) Sep 30, 2011 Dec 31, 2010
Assets Current Assets Cash and cash equivalents (variable
interest entities restricted - 2011: $86; 2010: $145) $ 2,206 $
7,039 Accounts and notes receivable: Trade (net of allowance for
doubtful receivables - 2011: $124; 2010: $128) 5,081 4,616 Other
5,035 4,428 Inventories 8,416 7,087 Deferred income tax assets -
current 683 611 Other current assets 333
349 Total current assets 21,754
24,130 Investments Investment in nonconsolidated
affiliates 3,574 3,453 Other investments (investments carried at
fair value - 2011: $1,942; 2010: $2,064) 2,426 2,542 Noncurrent
receivables 333 388 Total
investments 6,333 6,383 Property
Property 52,839 51,648 Less accumulated depreciation 35,046
33,980 Net property (variable interest
entities restricted - 2011: $1,855; 2010: $1,388) 17,793
17,668 Other Assets Goodwill 12,994
12,967 Other intangible assets (net of accumulated amortization -
2011: $2,216; 2010: $1,805) 5,212 5,530 Deferred income tax assets
- noncurrent 2,001 2,079 Asbestos-related insurance receivables -
noncurrent 206 220 Deferred charges and other assets 658
611 Total other assets 21,071
21,407 Total Assets $ 66,951
$ 69,588
Liabilities and Equity
Current Liabilities Notes payable $ 887 $ 1,467 Long-term debt due
within one year 1,674 1,755 Accounts payable: Trade 4,429 4,356
Other 2,260 2,249 Income taxes payable 427 349 Deferred income tax
liabilities - current 110 105 Dividends payable 375 257 Accrued and
other current liabilities 2,725 3,358
Total current liabilities 12,887
13,896 Long-Term Debt (variable interest entities
nonrecourse - 2011: $891; 2010: $167) 17,042
20,605 Other Noncurrent Liabilities Deferred income
tax liabilities - noncurrent 1,298 1,295 Pension and other
postretirement benefits - noncurrent 7,042 7,492 Asbestos-related
liabilities - noncurrent 635 663 Other noncurrent obligations
2,906 2,995 Total other
noncurrent liabilities 11,881 12,445
Stockholders’ Equity Preferred stock, series A 4,000 4,000
Common stock 2,954 2,931 Additional paid-in capital 2,526 2,286
Retained earnings 19,400 17,736 Accumulated other comprehensive
loss (4,290 ) (4,399 ) Unearned ESOP shares (438 ) (476 ) Treasury
stock at cost — (239 ) The Dow Chemical
Company’s stockholders’ equity 24,152
21,839 Noncontrolling interests 989
803 Total equity 25,141
22,642 Total Liabilities and Equity $ 66,951
$ 69,588
See Notes to the Consolidated Financial Statements.
The Dow Chemical Company and
Subsidiaries Operating Segments Three Months
Ended Nine Months Ended In millions (Unaudited) Sep 30, 2011
Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Sales by operating segment
Electronic and Functional Materials $ 1,205 $ 1,087 $ 3,536 $ 3,144
Coatings and Infrastructure Solutions 1,905 1,734 5,639 5,049
Agricultural Sciences 1,205 948 4,311 3,593 Performance Materials
3,698 3,311 11,097 10,552 Performance Plastics 4,114 3,540 12,598
11,381 Feedstocks and Energy 2,905 2,176 8,456 5,951 Corporate
77 72 251
233 Total $ 15,109
$ 12,868 $ 45,888 $
39,903 EBITDA (1) by operating segment Electronic and
Functional Materials $ 306 $ 277 $ 850 $ 775 Coatings and
Infrastructure Solutions 372 382 990 979 Agricultural Sciences 75
(12 ) 768 568 Performance Materials 478 513 1,523 1,377 Performance
Plastics 834 900 2,773 2,623 Feedstocks and Energy 263 154 765 319
Corporate (229 ) (432 ) (1,296 )
(1,197 ) Total $ 2,099 $
1,782 $ 6,373 $ 5,444
Certain items increasing (decreasing) EBITDA by operating
segment (2) Electronic and Functional Materials $ — $ — $ — $ (8 )
Coatings and Infrastructure Solutions — — — (20 ) Agricultural
Sciences — — — — Performance Materials — — — 41 Performance
Plastics 86 2 86 12 Feedstocks and Energy — — — — Corporate
— (131 ) (513 )
(195 ) Total $ 86 $ (129 )
$ (427 ) $ (170 ) EBITDA excluding certain
items by operating segment Electronic and Functional Materials $
306 $ 277 $ 850 $ 783 Coatings and Infrastructure Solutions 372 382
990 999 Agricultural Sciences 75 (12 ) 768 568 Performance
Materials 478 513 1,523 1,336 Performance Plastics 748 898 2,687
2,611 Feedstocks and Energy 263 154 765 319 Corporate (229 )
(301 ) (783 ) (1,002 )
Total $ 2,013 $ 1,911
$ 6,800 $ 5,614
Continued
The Dow Chemical Company and
Subsidiaries Operating Segments (Continued) Three
Months Ended Nine Months Ended In millions (Unaudited) Sep
30, 2011 Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Equity in earnings (losses) of
nonconsolidated affiliates by operating segment (included in
EBITDA) Electronic and Functional Materials $ 23 $ 23
$ 72 $ 76 Coatings and Infrastructure Solutions 72 75
219 247 Agricultural Sciences — 2 3 3 Performance Materials (11 )
(4 ) (20 ) 9 Performance Plastics 150 58 271 182 Feedstocks and
Energy 153 98 446 294 Corporate (12 ) (1 )
(27 ) (12 ) Total $ 375
$ 251 $ 964
$ 799
(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 includes all operating items
related to the businesses, except depreciation and amortization,
and excludes items that principally apply to the Company as a
whole. 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 Nine Months Ended In millions (Unaudited)
Sep 30, 2011 Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 EBITDA $ 2,099 $ 1,782 $
6,373 $ 5,444 - Depreciation and amortization 714 716
2,142 2,207 + Interest income 9 7 26 24 - Interest expense and
amortization of debt discount 305 362
1,010 1,105 Income Before
Income Taxes $ 1,089 $ 711
$ 3,247 $ 2,156 - Provision for
income taxes 186 114 546 348 - Net income attributable to
noncontrolling interests 3 — 24 9 - Preferred stock dividends
85 85 255
255 Net Income Available for The Dow Chemical Company
Common Stockholders $ 815 $ 512
$ 2,422 $ 1,544
(2) See Supplemental Information for a description of certain
items affecting results in 2011 and 2010.
Sales by Geographic Area
Three Months Ended Nine Months Ended In millions (Unaudited)
Sep 30, 2011
Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 North America $ 5,375 $ 4,700 $ 16,473
$ 14,639 Europe, Middle East and Africa 5,125 4,293
16,196 13,761 Asia Pacific 2,659 2,257 7,885 7,119 Latin America
1,950
1,618 5,334
4,384 Total $
15,109 $ 12,868 $ 45,888
$ 39,903
Sales Volume and Price by Operating
Segment and Geographic Area
Three Months Ended Nine Months Ended September 30, 2011
September 30, 2011 Percentage change from prior year Volume
Price Total Volume
Price Total Electronic and Functional
Materials 3 % 8 % 11 % 5 %
7 % 12 % Coatings and Infrastructure Solutions
(4 ) 14 10 (3 ) 15 12 Agricultural Sciences 18 9 27 15 5 20
Performance Materials (3 ) 15 12 (9 ) 14 5 Performance Plastics 1
15 16 (4 ) 15 11 Feedstocks and Energy (2 ) 36
34 9
33 42 Total — % 17
% 17 %
(1
)%
16 % 15 % North America (3
)%
17 % 14 % (1 )% 14 % 13 % Europe, Middle East and Africa (2 ) 21 19
(2 ) 20 18 Asia Pacific 5 13 18 (1 ) 12 11 Latin America 7
14 21
7 15 22
Total — % 17 % 17 %
(1 )% 16 % 15 %
Sales Volume and Price by Operating Segment and
Geographic Area
Excluding Divestitures (3)
Three Months Ended Nine Months Ended September 30, 2011
September 30, 2011 Percentage change from prior year Volume
Price Total Volume
Price Total Electronic and Functional
Materials 3 % 8 % 11 % 5 %
7 % 12 % Coatings and Infrastructure Solutions
(4 ) 14 10 — 15 15 Agricultural Sciences 18 9 27 15 5 20
Performance Materials (3 ) 15 12 1 16 17 Performance Plastics 1 15
16 5 16 21 Feedstocks and Energy (2 ) 36
34 10
33 43 Total — %
17 % 17 % 5 % 17 %
22 % North America (3 )% 17 % 14 % 1 % 14 % 15 %
Europe, Middle East and Africa (2 ) 21 19 7 22 29 Asia Pacific 5 13
18 7 13 20 Latin America 7 14
21 11 15
26 Total — % 17 %
17 % 5 % 17 %
22 %
(3)
Excludes sales of the acrylic monomer
business and a portion of the specialty latex business divested on
January 25, 2010, sales of the Powder Coatings business divested on
June 1, 2010 and sales of Styron divested on June 17, 2010.
Supplemental Information
Description of Certain Items Affecting Results:
The following table summarizes the impact of certain items
recorded in the three-month periods ended
September 30, 2011 and September 30, 2010:
Certain Items Impacting Results Pretax Impact
(1)
Net Income (2)
EPS -
Diluted (3) Three Months Ended Three Months Ended Three Months
Ended In millions, except per share amounts (Unaudited) Sep
30, 2011 Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Excluding certain items (non-GAAP measures)
$ 729 $ 620 $ 0.62 $ 0.54
Certain items: Labor-related litigation matter $ — $ (50 ) — (33 )
— (0.03 ) Acquisition-related integration costs — (35 ) — (23 ) —
(0.02 ) Gain on collection of impaired note receivable 86 — 86 —
0.07 — Gain (Loss) on Divestiture of Styron — 2 — (23 ) — (0.02 )
Loss on early extinguishment of debt —
(46 ) — (29 ) —
(0.02 ) Total certain items $ 86
$ (129 ) $ 86 $
(108 ) $ 0.07 $ (0.09 ) Reported
(GAAP amounts) $
815 $ 512 $ 0.69
$ 0.45 (1) Impact on "Income Before
Income Taxes" (2) "Net Income Available for The Dow Chemical
Company Common Stockholders” (3) "Earnings per common share -
diluted"
Results in the third quarter of 2011 were favorably impacted by
one item:
- Pretax $86 million gain related to cash
collected on a previously impaired note receivable related to
Equipolymers, a nonconsolidated affiliate. The gain is shown as
"Equity in earnings of nonconsolidated affiliates" in the
consolidated statements of income and reflected in Performance
Plastics.
Results in the third quarter of 2010 were impacted by four
items:
- Pretax charge of $50 million for a
labor-related litigation matter included in “Cost of sales” and
reflected in Corporate.
- Pretax charges totaling
$35 million for integration costs related to the April 1,
2009 acquisition of Rohm and Haas Company (“Rohm and Haas”). The
charges are included in “Acquisition and integration related
expenses” in the consolidated statements of income and reflected in
Corporate.
- Net $2 million pretax increase in
the gain (net $23 million loss after tax) on the divestiture
of Styron, sold to an affiliate of Bain Capital Partners on
June 17, 2010. The adjustment included a net gain on the
subsequent sale of two small, related joint ventures, working
capital adjustments and additional costs to sell. The net pretax
gain was included in “Sundry income (expense) - net” and reflected
in Performance Plastics.
- Pretax loss of $46 million on the
early extinguishment of debt included in “Sundry income (expense) -
net” and reflected in Corporate.
The following table summarizes the impact of certain items
recorded in the nine-month periods ended
September 30, 2011 and September 30, 2010:
Certain Items Impacting Results Pretax Impact
(1)
Net Income (2)
EPS -
Diluted (3) Nine Months Ended Nine Months Ended Nine Months
Ended In millions, except per share amounts (Unaudited) Sep
30, 2011 Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Sep 30, 2011
Sep 30, 2010 Excluding certain items (non-GAAP measures)
$ 2,670 $ 1,725 $ 2.29 $ 1.50
Certain items: Labor-related litigation matter $ — $ (50 ) — (33 )
— (0.03 ) Restructuring charges — (29 ) — (16 ) — (0.02 )
Acquisition-related integration costs (31 ) (98 ) (20 ) (64 ) (0.02
) (0.05 ) Gain on collection of impaired note receivable 86 — 86 —
0.07 — Gain (Loss) on Divestiture of Styron — 53 — (39 ) — (0.03 )
Loss on early extinguishment of debt (482 )
(46 ) (314 ) (29 ) (0.27
) (0.02 ) Total certain items $ (427 )
$ (170 ) $ (248 ) $ (181 )
$ (0.22 ) $ (0.15 ) Reported (GAAP
amounts) $ 2,422
$ 1,544 $ 2.07
$ 1.35 (1) Impact on "Income Before
Income Taxes" (2) "Net Income Available for The Dow Chemical
Company Common Stockholders” (3) "Earnings per common share -
diluted"
In addition to the item described above for the third quarter of
2011, results for the nine-month period ended
September 30, 2011 were unfavorably impacted by two
items:
- Pretax charges totaling
$31 million for integration costs related to the April 1,
2009 acquisition of Rohm and Haas. The charges are included in
“Acquisition and integration related expenses” in the consolidated
statements of income and reflected in Corporate.
- Pretax loss of $482 million on the
early extinguishment of debt, included in “Sundry income (expense)
- net” and reflected in Corporate.
In addition to the items described above for the third quarter
of 2010, results for the nine-month period ended
September 30, 2010 were impacted by the following
items:
- Pretax adjustments to the 2009
restructuring charge of $29 million, including
$16 million related to additional asset impairments,
approximately half of which was related to a consolidated joint
venture, and $13 million for additional exit or disposal
activities related to the divestitures of certain acrylic monomer
assets and the hollow sphere particle business. The charges were
shown as “Restructuring charges” in the consolidated statements of
income and reflected in Electronic and Functional Materials
($8 million), Coatings and Infrastructure Solutions
($20 million) and Corporate ($1 million).
- Pretax charges totaling
$63 million in the first six months of 2010 for integration
costs related to the April 1, 2009 acquisition of Rohm and
Haas. The charges are included in “Acquisition and integration
related expenses” and reflected in Corporate.
- Pretax gain of $51 million
($16 million loss after tax) on the divestiture of Styron. The
pretax gain was included in “Sundry income (expense) - net” and was
reflected in Performance Materials ($41 million) and
Performance Plastics ($10 million).
Dow (NYSE:DOW)
Historical Stock Chart
From May 2024 to Jun 2024
Dow (NYSE:DOW)
Historical Stock Chart
From Jun 2023 to Jun 2024