Dow Reports Fourth Quarter and Full-Year Results
Earnings Per Share Increases to $2.94, or $0.93 on an Operating Basis
– Up 9 Percent Versus the Year-Ago Period; Operating EBITDA
Margin Expands to 20.9 Percent, with Growth in All Segments – Highest
Quarterly Level in More than a Decade;
Full-Year EBITDA Reaches All-Time High of $9.6 Billion on an
Operating Basis, or $13.3 Billion on a Reported Basis; Company
Delivers Full-Year Cash from Operations of $7.5 Billion – Up 16 Percent; Return
On Capital Grows 130 Basis Points Year-Over-Year to 12.1 Percent on an
Operating Basis, or 19.6 Percent on a Reported Basis
The Dow Chemical Company (NYSE: DOW):
Fourth Quarter 2015 Highlights
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Dow reported earnings per share of $2.94, or operating earnings per
share of $0.93(1). This compares with earnings of $0.63 per
share in the year-ago period, or earnings of $0.85 per share on an
operating basis. Certain Items in the quarter primarily reflected a
$1.96 gain from the split-off of Dow Chlorine Products, a $0.52 gain
related to the sale of Dow’s direct ownership interest in MEGlobal, as
well as an $0.11 charge for asset impairments and related costs.
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Sales were $11.5 billion, down 20 percent versus the year-ago period,
or 15 percent excluding the impact of divestitures and acquisitions,
due to local price declines, of which the largest contributors were
Hydrocarbons and Energy, and currency.
-
Volume, excluding the impact of divestitures and acquisitions, rose 4
percent, representing the ninth consecutive quarter of growth on a
year-over-year basis. Volume gains were reported in all geographies,
led by Asia Pacific (up 8 percent) and North America (up 6 percent).
Volume grew 5 percent in emerging regions, led by Greater China (up 10
percent).
-
EBITDA(2) was $2.4 billion on an operating basis(3),
or $5 billion on a reported basis. Excluding the impact of
divestitures, operating EBITDA expanded more than $100 million due to
growth in key end markets such as transportation, packaging and
construction, which more than offset a decline in equity earnings.
-
Operating EBITDA margin(4) grew 406 basis points versus the
year-ago period to 20.9 percent, reflecting continued disciplined
price and volume management. This represents the highest quarterly
result since the first quarter of 2005. Gains were reported across all
operating segments, led by Consumer Solutions and Performance
Plastics, each of which delivered operating EBITDA margins of greater
than 28 percent.
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The Company announced the closing of the split-off of Dow Chlorine
Products in the quarter, with a tax-efficient consideration of greater
than $4.8 billion on an after-tax basis and a taxable equivalent in
excess of $7 billion, contributing to a reported tax rate of 12.5
percent – in line with the Company’s prior guidance. The transaction
was a significant driver in the reduction of net debt to capitalization(5)
to 24.8 percent from 37.3 percent in the year-ago period, and net debt
to operating EBITDA of 0.9x versus 1.5x in the same quarter last year.
-
Dow returned $2.7 billion to shareholders through paid dividends and
share repurchases in the quarter, with $1.5 billion related to equity
redemption from the Dow Chlorine Products transaction.
-
Ongoing portfolio management milestones in the quarter included: the
signing of a definitive agreement with DuPont to combine through a
merger of equals transaction with a resultant merge and spin structure
that has the clear intention to subsequently create three leading,
independent publicly owned companies; the signing of a definitive
agreement to restructure Dow Corning ownership; and the sale of the
Company’s direct ownership interest in MEGlobal to EQUATE.
Comment
Andrew N. Liveris, Dow’s chairman and chief executive officer, stated:
“Dow continues to deliver, with this last quarter being the thirteenth
in a row of operating EPS and operating EBITDA margin increases – and,
excluding the impact from divestitures, realized once again a
significant expansion in operating EBITDA – due to disciplined and
focused execution in a chronically volatile macroeconomic environment.
We delivered $7.5 billion in cash flow from operations, an increase of
$1 billion versus 2014, and returned $4.6 billion to our owners through
paid dividends and share repurchases. Our exceptional financial
performance demonstrated the strength and resiliency of our core
businesses, which have been built to generate earnings and cash flow by
capturing demand in key end markets and geographies. The benefits of our
integrated portfolio, global reach and technology solutions can clearly
be seen in our performance, and we continue to deliver on our
commitments.
“During the quarter, we also successfully started up our PDH facility on
the U.S. Gulf Coast; produced and shipped our first polyethylene product
at our Sadara joint venture in Saudi Arabia; announced the
transformative new merger with DuPont; commenced the restructuring of
our Dow Corning and Kuwait joint ventures; and completed the divestiture
of Dow Chlorine Products – all implemented while we delivered our
productivity gains and our bottom line results. This once again firmly
demonstrates that Dow has the right strategy and the right portfolio,
and has and will continue to deliver under all market conditions.”
2015 Full-Year Highlights
-
Dow reported full-year earnings per share of $6.15, or operating
earnings per share of $3.47. This compares with earnings per share of
$2.87 in the prior year, or $3.11 on an operating basis – an increase
of 12 percent.
-
Sales were $48.8 billion, down 16 percent versus the prior year, or 15
percent excluding the impact of divestitures and acquisitions, as
price was impacted by a 45 percent decline in average crude oil prices
as well as currency headwinds.
-
EBITDA rose to $9.6 billion on an operating basis, representing an
all-time record, or $13.3 billion on a reported basis. Operating
EBITDA rose 3 percent compared to the prior year with increases in
Performance Plastics (up $380 million) and Consumer Solutions (up $59
million).
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The Company expanded operating EBITDA margin more than 360 basis
points to 19.7 percent, the highest level in more than a decade, with
increases reported in all operating segments. Margin expansion was led
by Performance Plastics, Performance Materials & Chemicals and
Consumer Solutions on increased demand, disciplined price and volume
management, innovation and productivity improvements.
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Dow delivered $7.5 billion of cash flow from operations in the year.
Excluding the K-Dow arbitration award in 2013, this represents a third
consecutive year of record cash flow. Dow’s cash flow generation
enabled the Company to issue another dividend increase, reaching a
historic high. In total, Dow returned $4.6 billion to shareholders
through paid dividends and share repurchases(6) in 2015.
-
Dow reported operating return on capital(7) of 12.1 percent
– an increase of 130 basis points versus the prior year, or return on
capital of 19.6 percent on a reported basis, marking three consecutive
years of expansion on an operating basis – further demonstrating Dow’s
disciplined approach to capital stewardship.
-
Ongoing portfolio management in the year included: the split-off of
Dow Chlorine Products; the divestiture of ANGUS Chemical Company; the
divestiture of AgroFresh, Dow’s post-harvest specialty chemical
business; the sale of the Company’s direct ownership interest in
MEGlobal to EQUATE; and the signing of a definitive agreement to
restructure ownership of the Dow Corning Corporation’s Silicones
business.
-
Since 2013, when Dow completed its strategic review, the Company’s
operational and financial performance has: generated nearly $22
billion in cash flow from operations; improved operating ROC by 450
basis points; enabled nearly $12 billion in returns to shareholders
through share repurchases and paid dividends; facilitated investments
in strategic growth projects on the U.S. Gulf Coast and Saudi Arabia;
and reduced net debt from $16.7 billion to $8.6 billion. Furthermore,
divestitures completed in that same period, have delivered more than
$13.5(8) billion in pre-tax value.
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Three Months Ended
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Dec. 31,
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Dec. 31,
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In millions, except per share amounts
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2015
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2014
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Net Sales
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$11,462
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$14,384
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Adjusted Sales(9)
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$11,351
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$13,411
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Net Income Available for Common Stockholders
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$3,527
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$734
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Net Income Available for Common Stockholders,
excluding Certain Items
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$1,057
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$992
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Earnings per Common Share
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$2.94
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$0.63
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Operating Earnings Per Share(10)
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$0.93
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$0.85
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Twelve Months Ended
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Dec 31,
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Dec 31,
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In millions, except per share amounts
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2015
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2014
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Net Sales
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$48,778
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$58,167
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Adjusted Sales
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$48,543
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$56,892
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Net Income Available for Common Stockholders
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$7,345
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$3,432
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Net Income Available for Common Stockholders,
excluding Certain Items
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$4,054
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$3,709
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Earnings per Common Share
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$6.15
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$2.87
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Operating Earnings Per Share
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$3.47
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$3.11
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Review of Fourth Quarter Results
The Dow Chemical Company (NYSE: DOW) reported earnings per share of
$2.94, or operating earnings per share of $0.93. This compares with
earnings of $0.63 per share in the year-ago period, or earnings of $0.85
per share on an operating basis.
Sales were $11.5 billion, down 20 percent versus the year-ago period, or
15 percent excluding the impact of divestitures and acquisitions, due to
local price declines, of which the largest contributors were
Hydrocarbons and Energy, and currency.
Volume, excluding the impact of divestitures and acquisitions, rose 4
percent, representing the ninth consecutive quarter of growth on a
year-over-year basis. Volume gains were reported in all geographies, led
by Asia Pacific (up 8 percent) and North America (up 6 percent). Volume
grew 5 percent in emerging regions, led by Greater China (up 10 percent).
The Company reported EBITDA of $2.4 billion on an operating basis, or
$5 billion on a reported basis. Excluding the impact of
divestitures, operating EBITDA expanded more than $100 million due to
growth in key end markets such as transportation, packaging and
construction, which more than offset a decline in equity earnings.
Research and Development (R&D) and Selling, General and Administrative
(SG&A) expenses together decreased $90 million compared to the year-ago
period, driven by divestitures, productivity actions, as well as Dow’s
focused approach.
Certain Items in the quarter primarily reflected a $1.96 gain from the
split-off of Dow Chlorine Products, a $0.52 gain related to the sale of
Dow’s direct ownership interest in MEGlobal to EQUATE, as well as an
$0.11 charge for asset impairments and related costs.
Dow returned $2.7 billion to shareholders through paid dividends and
share repurchases in the quarter, with $1.5 billion related to equity
redemption from the Dow Chlorine Products transaction.
The Company announced the closing of the split-off of Dow Chlorine
Products in the quarter, with a tax-efficient consideration of greater
than $4.8 billion on an after-tax basis and a taxable equivalent in
excess of $7 billion, contributing to a reported tax rate of 12.5
percent – in line with the Company’s prior guidance. The transaction was
a significant driver in the reduction of net debt to capitalization to
24.8 percent from 37.3 percent in the year-ago period, and net debt to
operating EBITDA of 0.9x versus 1.5x in the same quarter last year.
Ongoing portfolio management milestones in the quarter included: the
signing of a definitive agreement with DuPont to combine through a
merger of equals transaction, with a resultant merge and spin structure
that has the clear intention to subsequently create three leading,
independent publicly owned companies; the signing of a definitive
agreement to restructure Dow Corning ownership; and the sale of the
Company’s direct ownership interest in MEGlobal to EQUATE.
Agricultural Sciences
Agricultural Sciences reported fourth quarter sales of $1.6 billion,
down from $1.9 billion in the year-ago period. Sales were impacted by
continued lower crop commodity prices across all geographic areas, high
channel inventories and significant currency headwinds.
Crop Protection reported decreased sales as herbicides faced price
pressures, lower demand and currency headwinds. Full-year demand
remained strong for new product technologies (up 6 percent versus 2014).
Despite significant price and currency headwinds, Seeds reported
double-digit volume growth in Latin America.
Operating EBITDA for the segment was $220 million, essentially flat
compared to $222 million in the year-ago period. One-time gains from the
sale of non-strategic product lines, coupled with reduced R&D and SG&A
costs enabled by self-help actions, were offset by pricing headwinds and
the divesture of the AgroFresh post-harvest specialty chemical business.
Equity losses for the segment were $17 million. This compares with
equity earnings of $1 million in the same quarter last year.
Consumer Solutions
Consumer Solutions reported fourth quarter sales of $1.05 billion, down
from $1.12 billion in the year-ago period. Higher volume demand for
differentiated solutions in the automotive, pharmaceutical, personal
care and semiconductor market sectors was more than offset by price
pressures and currency headwinds.
Dow Automotive Systems reported volume gains on above-market demand
growth for Dow’s light-weighting technologies in the transportation
market sector in North America, Europe, Middle East, Africa and India
(EMEAI) and Asia Pacific. Consumer Care reported volume declines as
strength in the pharmaceutical and personal care market sectors were
offset primarily by lower demand in the home care market sector and the
Institute, West Virginia, CELLOSIZETM plant closure. Dow
Electronic Materials reported flat volume, as strong demand for
semiconductor and growth technologies offset weakness in interconnect
and the rotation away from display film technologies.
Operating EBITDA for the segment was an all-time quarterly record of
$296 million, up from $243 million in the year-ago period, reflecting
continued strong demand in the automotive and semiconductor market
sectors as well as margin expansion and cost reduction initiatives.
Equity earnings for the segment were $38 million, or $30 million on an
operating basis. This compares to equity earnings of $196 million, which
included Dow Corning Corporation’s adjustment of its breast implant
liability, or $41 million on an operating basis, in the same quarter
last year.
Infrastructure Solutions
Infrastructure Solutions reported fourth quarter sales of $1.7 billion,
down from $2.0 billion in the year-ago period, as price pressures from
lower raw material costs and currency headwinds more than offset volume
gains in nearly all businesses.
Dow Building & Construction reported volume growth due to solid demand
in the construction chemicals market sector. Dow Coating Materials
reported volume increases led by strong demand in the industrial market
sector. Energy & Water Solutions reported volume declines in North
America energy exploration and fracturing sales, more than offsetting
double-digit demand increases for reverse osmosis technologies.
Performance Monomers reported volume growth led by double-digit
increases in EMEAI.
Operating EBITDA for the segment was $235 million, down from
$244 million in the year-ago period, reflecting continued weakness in
Performance Monomers from acrylic acid supply/demand dynamics. This
weakness more than offset volume gains and margin management
improvements in Dow Building & Construction and continued market demand
for reverse osmosis technologies in Energy & Water Solutions.
Equity earnings for the segment were $67 million, or $55 million on an
operating basis. This compares to a loss of $178 million in the same
quarter last year which included Dow Corning Corporation’s adjustment of
its breast implant liability and an asset abandonment charge, or a gain
of $70 million on an operating basis.
Performance Materials & Chemicals
Performance Materials & Chemicals reported fourth quarter sales of $2.4
billion, down from $3.9 billion in the year-ago period, reflecting the
impact of the split-off of Dow Chlorine Products, the ANGUS Chemical
Company divestiture and significant price and currency headwinds.
Polyurethanes reported volume increases driven by double-digit demand
growth for polyurethane system solutions. Industrial Solutions reported
volume declines as growth for ethylene-glycol sales was more than offset
by weakness in the energy market sector and a change in a long-term
supply arrangement. Chlor-Alkali and Vinyl volumes decreased due to the
impact of divestitures.
Operating EBITDA for the segment was $423 million, down from
$636 million in the year-ago period, reflecting the impact of
divestitures, lower equity earnings and lower pricing.
Equity losses for the segment were $6 million, down from equity earnings
of $54 million in the same quarter last year, on lower monoethylene
glycol (MEG) prices (MEGlobal/EQUATE) and increases in Sadara spending
ahead of unit start-ups.
Performance Plastics
Performance Plastics reported fourth quarter sales of $4.6 billion, down
from $5.5 billion in the year-ago period. Sales were lower as
double-digit volume growth was more than offset by price pressures from
lower input costs and by-product sales, in addition to currency
headwinds.
Excluding acquisitions and divestitures, the Performance Plastics
segment reported volume increases across all businesses. Dow Packaging
and Specialty Plastics realized volume growth on continued demand for
packaging products, in most geographic areas: EMEAI, Asia Pacific and
Latin America. Higher asset reliability enabled the business to set a
new polyethylene sales volume record in the quarter. Dow Elastomers
reported volume gains led by double-digit growth in North America on
continued customer demand for Dow products in the transportation and
infrastructure market sectors. Dow Electrical and Telecommunications
reported volume gains on strengthened demand for telecommunication
products. The Hydrocarbons and Energy businesses reported volume gains
with double-digit growth in North America and EMEAI, resulting primarily
from new sales contracts.
Operating EBITDA for the segment was a fourth quarter record of $1.3
billion, up from $1.2 billion in the year-ago period, driven by steady
demand in all businesses and EBITDA margin expansion in most geographic
areas.
Equity earnings for the segment were $46 million, down from $57 million
in the same quarter last year.
Review of Results for 2015
Dow reported full-year earnings per share of $6.15, or operating
earnings per share of $3.47. This compares with earnings per share of
$2.87 in the prior year, or $3.11 on an operating basis – an increase of
12 percent.
For the full year, sales were $48.8 billion, down 16 percent versus the
prior year, or 15 percent excluding the impact of divestitures and
acquisitions, as price was impacted by a 45 percent decline in average
crude oil prices as well as currency headwinds.
Volume, excluding the impact of divestitures and acquisitions, grew in
all geographies, led by Asia Pacific (up 4 percent) and EMEAI (up 3
percent). On the same basis, emerging geographies rose 4 percent,
highlighted by 10 percent growth in Greater China.
EBITDA rose to $9.6 billion on an operating basis, representing an
all-time record, or $13.3 billion on a reported basis. Operating EBITDA
rose 3 percent compared to the prior year with increases in Performance
Plastics (up $380 million) and Consumer Solutions (up $59 million).
The Company expanded operating EBITDA margin more than 360 basis points
to 19.7 percent, the highest level in more than a decade, with increases
reported in all operating segments. Margin expansion was led by
Performance Plastics, Performance Materials and Chemicals and Consumer
Solutions on increased demand, disciplined price and volume management,
innovation and productivity improvements.
Dow delivered $7.5 billion of cash flow from operations in the year.
Excluding the K-Dow arbitration award in 2013, this represents a third
consecutive year of record cash flow. Dow’s cash flow generation enabled
the Company to issue another dividend increase, reaching a historic
high. In total, Dow returned $4.6 billion to shareholders through paid
dividends and share repurchases in 2015.
Dow reported operating return on capital of 12.1 percent – an increase
of 130 basis points versus the prior year, or return on capital of 19.6
percent on a reported basis, marking three consecutive years of
expansion on an operating basis – further demonstrating Dow’s
disciplined approach to capital stewardship.
The Company reported a decline in R&D and SG&A expenses of $184 million
– down 4 percent, due to divestitures and ongoing productivity actions.
Full-year equity earnings declined $161 million due to pricing headwinds
for polyethylene and MEG as well as the step acquisition of Univation
Technologies, LLC.
Ongoing portfolio management in the year included: the split-off of Dow
Chlorine Products; the divestiture of ANGUS Chemical Company; the
divestiture of AgroFresh, Dow’s post-harvest specialty chemical
business; the sale of the Company’s direct ownership interest in
MEGlobal to EQUATE; and the signing of a definitive agreement to
restructure ownership of the Dow Corning Corporation’s Silicones
business.
Since 2013, when Dow completed its strategic review, the Company’s
operational and financial performance has: generated nearly $22 billion
in cash flow from operations; improved operating ROC by 450 basis
points; enabled nearly $12 billion in returns to shareholders through
share repurchases and paid dividends; facilitated investments in
strategic growth projects on the U.S. Gulf Coast and Saudi Arabia; and
reduced net debt from $16.7 billion to $8.6 billion. Furthermore,
divestitures completed in that same period, have delivered more than
$13.5 billion in pre-tax value.
Certain Items in the year included gains related to the split-off of Dow
Chlorine Products, the sale of the Company’s direct ownership interest
in MEGlobal, the step acquisition of Univation Technologies, LLC and
other business divestitures. On the same basis, Certain Item losses
included costs associated with 2015 restructuring charges, asset
impairments, joint venture actions and costs associated with portfolio
and productivity actions.
Outlook
Commenting on the Company’s outlook, Liveris said:
“Looking ahead, 2016 is primed to be another significant year for Dow.
We are very focused on continuing to deliver against our operational
commitments and portfolio priorities.
“Our teams are moving swiftly to deliver the DowDuPont merger benefits
to our shareholders. The same teams that delivered the Dow Chlorine
Products transaction ahead of plan, as well as all of the other
portfolio moves we implemented these last five or so years, have
mobilized with three clear priorities: close the merger in the second
half of 2016; rapidly deliver the synergies after closing; and
accelerate the release of value through the intended market-focused
spin-offs.
“We will also realize strong synergies and benefits from the Dow Corning
Silicones business, and continue to ramp up our many strategic
initiatives, with differentiated technology and cost-advantaged
expansions such as those on the U.S. Gulf Coast and in Saudi Arabia
coming on line to serve targeted consumer markets across the globe.
“The global economy continues to be volatile with consistent demand
being driven by the consumer, especially in the U.S. and increasingly
from China. We believe low energy prices are a net benefit and will help
overcome negative investment sentiment in other sectors. We have the
portfolio that serves these consumer-driven markets, and our company
remains committed to flawless operational and commercial execution.”
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)
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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 operating earnings per share
to “Earnings per common share – diluted.”
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(2)
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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.
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(3)
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Operating EBITDA is defined as EBITDA excluding the impact of
“Certain Items.” Operating EBITDA for the fourth quarter of 2014
excludes Operating EBITDA for divested businesses including ANGUS
Chemical Company, the Sodium Borohydride business, the AgroFresh
business and Dow Chlorine Products.
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(4)
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Operating EBITDA margin is defined as EBITDA excluding the impact of
“Certain Items” as a percentage of reported sales.
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(5)
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Net debt equals total debt (“Notes payable” plus “Long-term debt due
within one year” plus “Long-Term Debt”) minus “Cash and cash
equivalents.”
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(6)
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Includes $1.5 billion in non-cash share repurchases related to the
Dow Chlorine Products transaction.
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(7)
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“Operating 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 Non-controlling 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
Noncontrolling Interest plus Non-redeemable Noncontrolling Interests.
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(8)
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Assumes a 37% tax rate.
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(9)
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“Adjusted Sales” is “Net Sales” excluding prior period sales of
recent divestitures and current period sales for recent acquisitions.
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(10)
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Earnings per share excluding the impact of 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 material, polymer,
chemical and biological science 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 2015, Dow
had annual sales of nearly $49 billion and employed approximately
49,500 people worldwide. The Company's more than 6,000 product families
are manufactured at 179 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 Dow’s operations,
markets, products, services, prices and other factors as discussed in
filings with the Securities and Exchange Commission (“SEC”). These risks
and uncertainties include, but are not limited to, economic,
competitive, legal, governmental and technological factors. Accordingly,
there is no assurance that Dow’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.
Cautionary Notes on Forward Looking
Statements
This communication contains “forward-looking statements” within the
meaning of the federal securities laws, including Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. In this context, forward-looking
statements often address expected future business and financial
performance and financial condition, and often contain words such as
“expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,”
“will,” “would,” “target,” similar expressions, and variations or
negatives of these words. Forward-looking statements by their nature
address matters that are, to different degrees, uncertain, such as
statements about the consummation of the proposed transaction and the
anticipated benefits thereof. These and other forward-looking
statements, including the failure to consummate the proposed transaction
or to make or take any filing or other action required to consummate
such transaction on a timely matter or at all, are not guarantees of
future results and are subject to risks, uncertainties and assumptions
that could cause actual results to differ materially from those
expressed in any forward-looking statements. Important risk factors that
may cause such a difference include, but are not limited to, (i) the
completion of the proposed transaction on anticipated terms and timing,
including obtaining shareholder and regulatory approvals, anticipated
tax treatment, unforeseen liabilities, future capital expenditures,
revenues, expenses, earnings, synergies, economic performance,
indebtedness, financial condition, losses, future prospects, business
and management strategies for the management, expansion and growth of
the new combined company’s operations and other conditions to the
completion of the merger, (ii) the ability of Dow and DuPont to
integrate the business successfully and to achieve anticipated
synergies, risks and costs and pursuit and/or implementation of the
potential separation, including timing anticipated, any changes to the
configuration of businesses included in the potential separation if
implemented, (iii) potential litigation relating to the proposed
transaction that could be instituted against Dow, DuPont or their
respective directors, (iv) the risk that disruptions from the proposed
transaction will harm Dow’s or DuPont’s business, including current
plans and operations, (v) the ability of Dow or DuPont to retain and
hire key personnel, (vi) potential adverse reactions or changes to
business relationships resulting from the announcement or completion of
the merger, (vii) uncertainty as to the long-term value of Diamond-Orion
HoldCo common stock, (viii) continued availability of capital and
financing and rating agency actions, (ix) legislative, regulatory and
economic developments and (x) unpredictability and severity of
catastrophic events, including, but not limited to, acts of terrorism or
outbreak of war or hostilities, as well as management’s response to any
of the aforementioned factors. These risks, as well as other risks
associated with the proposed merger, will be more fully discussed in the
joint proxy statement/prospectus that will be included in the
registration statement on Form S-4 that will be filed with the SEC in
connection with the proposed merger. While the list of factors presented
here is, and the list of factors to be presented in the registration
statement on Form S-4 are, considered representative, no such list
should be considered to be a complete statement of all potential risks
and uncertainties. Unlisted factors may present significant additional
obstacles to the realization of forward looking statements. Consequences
of material differences in results as compared with those anticipated in
the forward-looking statements could include, among other things,
business disruption, operational problems, financial loss, legal
liability to third parties and similar risks, any of which could have a
material adverse effect on Dow’s or DuPont’s consolidated financial
condition, results of operations, credit rating or liquidity. Neither
Dow nor DuPont assumes any obligation to publicly provide revisions or
updates to any forward looking statements, whether as a result of new
information, future developments or otherwise, should circumstances
change, except as otherwise required by securities and other applicable
laws.
Important Information About the Transaction
and Where to Find It
In connection with the proposed transaction, The Dow Chemical Company
(“Dow”) and E. I. du Pont de Nemours and Company (“DuPont”) will cause
Diamond-Orion HoldCo, Inc. (“Diamond-Orion HoldCo”), to file with the
Securities and Exchange Commission (“SEC”) a registration statement on
Form S-4 that will include a joint proxy statement of Dow and DuPont and
that also will constitute a prospectus of Diamond-Orion HoldCo. Dow,
DuPont and Diamond-Orion HoldCo may also file other documents with the
SEC regarding the proposed transaction. This document is not a
substitute for the joint proxy statement/prospectus or registration
statement or any other document which Dow, DuPont or Diamond-Orion
HoldCo may file with the SEC. INVESTORS AND SECURITY HOLDERS OF DOW AND
DUPONT ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY
STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR
WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND
RELATED MATTERS. Investors and security holders may obtain free copies
of the registration statement and the joint proxy statement/prospectus
(when available) and other documents filed with the SEC by Dow, DuPont
and Diamond-Orion HoldCo through the web site maintained by the SEC at www.sec.gov
or by contacting the investor relations department of Dow or DuPont at
the following:
Dow
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DuPont
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2030 Dow Center
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974 Centre Road
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Midland, MI 48674
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|
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Wilmington, DE 19805
|
Attention: Investor Relations
|
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|
Attention: Investor Relations
|
+1 989-636-1463
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+1 302-774-4994
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|
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Participants in the Solicitation
Dow, DuPont, Diamond-Orion HoldCo and their respective directors and
executive officers may be deemed to be participants in the solicitation
of proxies in respect of the proposed transaction. Information
regarding Dow’s directors and executive officers, including a
description of their direct interests, by security holdings or
otherwise, is contained in Dow’s Form 10-K for the year ended December
31, 2014 and its proxy statement filed on March 27, 2015, which are
filed with the SEC. Information regarding DuPont’s directors and
executive officers, including a description of their direct interests,
by security holdings or otherwise, is contained in DuPont’s Form 10-K
for the year ended December 31, 2014 and its proxy statement filed on
March 23, 2015, which are filed with the SEC. A more complete
description will be available in the registration statement on Form S-4
and the joint proxy statement/prospectus.
No Offer or Solicitation
This communication is not intended to and shall not constitute an
offer to sell or the solicitation of an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote of approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
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Financial Statements (Note A)
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The Dow Chemical Company and Subsidiaries
|
Consolidated Statements of Income
|
|
|
|
|
|
|
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Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
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Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions, except per share amounts (Unaudited)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net Sales
|
|
$
|
11,462
|
|
|
$
|
14,384
|
|
|
$
|
48,778
|
|
|
$
|
58,167
|
|
Cost of sales
|
|
8,806
|
|
|
11,611
|
|
|
37,836
|
|
|
47,464
|
|
Research and development expenses
|
|
404
|
|
|
428
|
|
|
1,598
|
|
|
1,647
|
|
Selling, general and administrative expenses
|
|
757
|
|
|
823
|
|
|
2,971
|
|
|
3,106
|
|
Amortization of intangibles
|
|
103
|
|
|
106
|
|
|
419
|
|
|
436
|
|
Goodwill and other intangible asset impairment losses (Note B)
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
Restructuring charges (credits) (Note C)
|
|
40
|
|
|
(3
|
)
|
|
415
|
|
|
(3
|
)
|
Asbestos-related charge (Note D)
|
|
—
|
|
|
78
|
|
|
—
|
|
|
78
|
|
Equity in earnings of nonconsolidated affiliates (Note E)
|
|
99
|
|
|
128
|
|
|
674
|
|
|
835
|
|
Sundry income (expense) - net (Note F)
|
|
2,912
|
|
|
(58
|
)
|
|
4,592
|
|
|
(27
|
)
|
Interest income
|
|
25
|
|
|
19
|
|
|
71
|
|
|
51
|
|
Interest expense and amortization of debt discount
|
|
240
|
|
|
262
|
|
|
946
|
|
|
983
|
|
Income Before Income Taxes
|
|
4,148
|
|
|
1,118
|
|
|
9,930
|
|
|
5,265
|
|
Provision for income taxes
|
|
517
|
|
|
279
|
|
|
2,147
|
|
|
1,426
|
|
Net Income
|
|
3,631
|
|
|
839
|
|
|
7,783
|
|
|
3,839
|
|
Net income attributable to noncontrolling interests
|
|
19
|
|
|
20
|
|
|
98
|
|
|
67
|
|
Net Income Attributable to The Dow Chemical Company
|
|
3,612
|
|
|
819
|
|
|
7,685
|
|
|
3,772
|
|
Preferred stock dividends
|
|
85
|
|
|
85
|
|
|
340
|
|
|
340
|
|
Net Income Available for The Dow Chemical Company Common Stockholders
|
|
$
|
3,527
|
|
|
$
|
734
|
|
|
$
|
7,345
|
|
|
$
|
3,432
|
|
|
|
|
|
|
|
|
|
|
Per Common Share Data:
|
|
|
|
|
|
|
|
|
Earnings per common share - basic
|
|
$
|
3.17
|
|
|
$
|
0.64
|
|
|
$
|
6.45
|
|
|
$
|
2.91
|
|
Earnings per common share - diluted (Note G)
|
|
$
|
2.94
|
|
|
$
|
0.63
|
|
|
$
|
6.15
|
|
|
$
|
2.87
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of common stock
|
|
$
|
0.46
|
|
|
$
|
0.42
|
|
|
$
|
1.72
|
|
|
$
|
1.53
|
|
Weighted-average common shares outstanding - basic
|
|
1,105.4
|
|
|
1,146.9
|
|
|
1,130.1
|
|
|
1,170.9
|
|
Weighted-average common shares outstanding - diluted (Note G)
|
|
1,218.9
|
|
|
1,160.9
|
|
|
1,241.4
|
|
|
1,187.0
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
446
|
|
|
$
|
544
|
|
|
$
|
1,909
|
|
|
$
|
2,136
|
|
Capital Expenditures
|
|
$
|
886
|
|
|
$
|
1,106
|
|
|
$
|
3,703
|
|
|
$
|
3,572
|
|
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,
2014. 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: On April 29, 2015, Dow's Board of Directors approved
actions to further streamline the organization and optimize the
Company’s footprint as a result of the separation of a significant
portion of Dow’s chlorine value chain. These actions, which will further
accelerate Dow’s value growth and productivity targets, will result in a
reduction of approximately 1,750 positions across a number of businesses
and functions and adjustments to the Company's asset footprint to
enhance competitiveness. As a result, the Company recorded pretax
restructuring charges of $375 million in the second quarter of 2015,
including asset write-downs and write-offs, severance and costs
associated with exit and disposal activities. In the fourth quarter of
2015, the Company recorded additional pretax restructuring charges of
$40 million, primarily related to severance costs for
approximately 450 additional positions.
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 2015, the Company recognized
a loss of $36 million related to actions taken by the Company's joint
ventures including: a $20 million credit related to Dow Corning
Corporation's ("Dow Corning") adjustment of its implant liability, a
$29 million charge related to AgroFresh Solutions' fair value step-up of
its inventories and start-up costs, and a $27 million charge related to
Sadara's write-off of design engineering work for an Epoxy plant. In the
fourth quarter of 2014, the Company recognized a loss of $93 million
related to actions taken by Dow Corning including a $407 million gain
related to the adjustment of its implant liability and a loss of
$500 million related to the abandonment of a polycrystalline silicon
manufacturing facility in Clarksville, Tennessee.
Note F: In the fourth quarter of 2015, the Company recognized
a pretax gain of $2,233 million (after-tax gain of $2,215 million) on
the split-off of the chlorine value chain; a $723 million pretax gain
related to the sale of MEGlobal; an $11 million pretax gain for post
closing and other adjustments related to 2015 business divestitures; a
pretax charge of $98 million related to the December 2015 devaluation of
the Argentine Peso; a pretax charge of $53 million related to the
impairment of an equity method investment; a pretax loss of $8 million
on the early extinguishment of debt; and, a pretax charge of $15 million
related to portfolio and productivity actions, primarily financial,
legal and professional advisory fees, including costs associated with
the planned all-stock merger of equals with E. I. du Pont de Nemours and
Company, costs associated with the planned ownership restructure of Dow
Corning, costs associated with the separation of the chlorine value
chain, implementation costs associated with the Company's 2015
Restructuring program and other productivity actions.
In the third quarter of 2015, the Company recognized a pretax gain of
$621 million related to the divestiture of the AgroFresh business and a
pretax charge of $35 million for costs associated with portfolio and
productivity actions; in the second quarter of 2015, the Company
recognized a pretax gain of $349 million (after-tax gain of $351
million) related to the step acquisition of Univation Technologies, LLC,
and a pretax charge of $43 million related to costs associated with
portfolio and productivity actions; and, in the first quarter of 2015,
the Company recognized a pretax gain of $670 million related to the
divestiture of ANGUS Chemical Company ("ANGUS"), a pretax gain of
$18 million (after-tax loss of $9 million) related to the divestiture of
the Sodium Borohydride business and a pretax charge of $26 million for
costs associated with portfolio and productivity actions.
In the fourth quarter of 2014, the Company recognized a pretax charge
of $19 million for portfolio and productivity actions; 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.
Note G: "Earnings per common share - diluted" for the three-
and twelve-month periods ended December 31, 2015, assumes the conversion
of the Company's Cumulative Convertible Perpetual Preferred Stock,
Series A into potential shares of the Company's common stock due to the
net income reported for the three- and twelve-month periods, which
includes the after-tax gain on the split-off of the chlorine value
chain, after-tax gain on the sale of the Company's interest in MEGlobal,
after-tax gain on the divestitures of AgroFresh and ANGUS and the
after-tax gain on the Univation Technologies, LLC step acquisition. 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 "Earning per
common share - diluted" for the three- and twelve-month periods ended
December 31, 2015. See Supplemental Information for further details.
|
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2015
|
|
2014
|
Assets
|
Current Assets
|
|
|
|
|
Cash and cash equivalents (variable interest entities restricted -
2015: $158; 2014: $190)
|
|
$
|
8,577
|
|
|
$
|
5,654
|
|
Accounts and notes receivable:
|
|
|
|
|
Trade (net of allowance for doubtful receivables - 2015: $94; 2014:
$110)
|
|
4,078
|
|
|
4,685
|
|
Other
|
|
3,768
|
|
|
4,687
|
|
Inventories
|
|
6,871
|
|
|
8,101
|
|
Deferred income tax assets - current
|
|
827
|
|
|
812
|
|
Other current assets
|
|
354
|
|
|
316
|
|
Total current assets
|
|
24,475
|
|
|
24,255
|
|
Investments
|
|
|
|
|
Investment in nonconsolidated affiliates
|
|
3,958
|
|
|
4,201
|
|
Other investments (investments carried at fair value - 2015: $1,866;
2014: $2,009)
|
|
2,923
|
|
|
2,439
|
|
Noncurrent receivables
|
|
765
|
|
|
620
|
|
Total investments
|
|
7,646
|
|
|
7,260
|
|
Property
|
|
|
|
|
Property
|
|
50,802
|
|
|
55,230
|
|
Less accumulated depreciation
|
|
32,948
|
|
|
37,179
|
|
Net property (variable interest entities restricted - 2015: $1,717;
2014: $2,726)
|
|
17,854
|
|
|
18,051
|
|
Other Assets
|
|
|
|
|
Goodwill
|
|
12,154
|
|
|
12,632
|
|
Other intangible assets (net of accumulated amortization - 2015:
$3,770; 2014: $3,737)
|
|
3,617
|
|
|
3,768
|
|
Deferred income tax assets - noncurrent
|
|
1,694
|
|
|
2,135
|
|
Asbestos-related insurance receivables - noncurrent
|
|
51
|
|
|
62
|
|
Deferred charges and other assets
|
|
535
|
|
|
524
|
|
Total other assets
|
|
18,051
|
|
|
19,121
|
|
Total Assets
|
|
$
|
68,026
|
|
|
$
|
68,687
|
|
Liabilities and Equity
|
Current Liabilities
|
|
|
|
|
Notes payable
|
|
$
|
454
|
|
|
$
|
551
|
|
Long-term debt due within one year
|
|
541
|
|
|
382
|
|
Accounts payable:
|
|
|
|
|
Trade
|
|
3,577
|
|
|
4,481
|
|
Other
|
|
2,287
|
|
|
2,299
|
|
Income taxes payable
|
|
452
|
|
|
361
|
|
Deferred income tax liabilities - current
|
|
100
|
|
|
105
|
|
Dividends payable
|
|
592
|
|
|
563
|
|
Accrued and other current liabilities
|
|
3,212
|
|
|
2,839
|
|
Total current liabilities
|
|
11,215
|
|
|
11,581
|
|
Long-Term Debt (variable interest entities nonrecourse - 2015: $487;
2014: $1,216)
|
|
16,215
|
|
|
18,741
|
|
Other Noncurrent Liabilities
|
|
|
|
|
Deferred income tax liabilities - noncurrent
|
|
575
|
|
|
622
|
|
Pension and other postretirement benefits - noncurrent
|
|
9,119
|
|
|
10,459
|
|
Asbestos-related liabilities - noncurrent
|
|
387
|
|
|
438
|
|
Other noncurrent obligations
|
|
4,332
|
|
|
3,290
|
|
Total other noncurrent liabilities
|
|
14,413
|
|
|
14,809
|
|
Redeemable Noncontrolling Interest
|
|
—
|
|
|
202
|
|
Stockholders’ Equity
|
|
|
|
|
Preferred stock, series A
|
|
4,000
|
|
|
4,000
|
|
Common stock
|
|
3,107
|
|
|
3,107
|
|
Additional paid-in capital
|
|
4,936
|
|
|
4,846
|
|
Retained earnings
|
|
28,425
|
|
|
23,045
|
|
Accumulated other comprehensive loss
|
|
(8,667
|
)
|
|
(8,017
|
)
|
Unearned ESOP shares
|
|
(272
|
)
|
|
(325
|
)
|
Treasury stock at cost
|
|
(6,155
|
)
|
|
(4,233
|
)
|
The Dow Chemical Company’s stockholders’ equity
|
|
25,374
|
|
|
22,423
|
|
Non-redeemable noncontrolling interests
|
|
809
|
|
|
931
|
|
Total equity
|
|
26,183
|
|
|
23,354
|
|
Total Liabilities and Equity
|
|
$
|
68,026
|
|
|
$
|
68,687
|
|
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)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Sales by operating segment
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
1,603
|
|
|
$
|
1,856
|
|
|
$
|
6,381
|
|
|
$
|
7,290
|
|
Consumer Solutions
|
|
1,052
|
|
|
1,124
|
|
|
4,379
|
|
|
4,639
|
|
Infrastructure Solutions
|
|
1,705
|
|
|
1,959
|
|
|
7,394
|
|
|
8,429
|
|
Performance Materials & Chemicals
|
|
2,381
|
|
|
3,912
|
|
|
11,973
|
|
|
15,114
|
|
Performance Plastics
|
|
4,617
|
|
|
5,465
|
|
|
18,357
|
|
|
22,386
|
|
Corporate
|
|
104
|
|
|
68
|
|
|
294
|
|
|
309
|
|
Total
|
|
$
|
11,462
|
|
|
$
|
14,384
|
|
|
$
|
48,778
|
|
|
$
|
58,167
|
|
EBITDA (1) by operating segment
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
186
|
|
|
$
|
222
|
|
|
$
|
1,432
|
|
|
$
|
962
|
|
Consumer Solutions
|
|
304
|
|
|
325
|
|
|
1,048
|
|
|
1,130
|
|
Infrastructure Solutions
|
|
161
|
|
|
(104
|
)
|
|
1,021
|
|
|
817
|
|
Performance Materials & Chemicals
|
|
3,144
|
|
|
636
|
|
|
5,479
|
|
|
2,193
|
|
Performance Plastics
|
|
1,562
|
|
|
1,194
|
|
|
5,399
|
|
|
4,422
|
|
Corporate
|
|
(394
|
)
|
|
(220
|
)
|
|
(1,053
|
)
|
|
(580
|
)
|
Total
|
|
$
|
4,963
|
|
|
$
|
2,053
|
|
|
$
|
13,326
|
|
|
$
|
8,944
|
|
Certain items increasing (decreasing) EBITDA by operating segment (2)
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
(34
|
)
|
|
$
|
—
|
|
|
$
|
573
|
|
|
$
|
—
|
|
Consumer Solutions
|
|
8
|
|
|
82
|
|
|
(59
|
)
|
|
82
|
|
Infrastructure Solutions
|
|
(74
|
)
|
|
(348
|
)
|
|
(101
|
)
|
|
(348
|
)
|
Performance Materials & Chemicals
|
|
2,721
|
|
|
—
|
|
|
3,409
|
|
|
—
|
|
Performance Plastics
|
|
260
|
|
|
—
|
|
|
597
|
|
|
—
|
|
Corporate
|
|
(308
|
)
|
|
(97
|
)
|
|
(689
|
)
|
|
(127
|
)
|
Total
|
|
$
|
2,573
|
|
|
$
|
(363
|
)
|
|
$
|
3,730
|
|
|
$
|
(393
|
)
|
EBITDA excluding certain items by operating segment
|
|
|
|
|
|
|
|
|
Agricultural Sciences
|
|
$
|
220
|
|
|
$
|
222
|
|
|
$
|
859
|
|
|
$
|
962
|
|
Consumer Solutions
|
|
296
|
|
|
243
|
|
|
1,107
|
|
|
1,048
|
|
Infrastructure Solutions
|
|
235
|
|
|
244
|
|
|
1,122
|
|
|
1,165
|
|
Performance Materials & Chemicals
|
|
423
|
|
|
636
|
|
|
2,070
|
|
|
2,193
|
|
Performance Plastics
|
|
1,302
|
|
|
1,194
|
|
|
4,802
|
|
|
4,422
|
|
Corporate
|
|
(86
|
)
|
|
(123
|
)
|
|
(364
|
)
|
|
(453
|
)
|
Total
|
|
$
|
2,390
|
|
|
$
|
2,416
|
|
|
$
|
9,596
|
|
|
$
|
9,337
|
|
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)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Equity in earnings (losses) of nonconsolidated affiliates by
operating segment (included in EBITDA)
|
Agricultural Sciences
|
|
$
|
(17
|
)
|
|
$
|
1
|
|
|
$
|
(15
|
)
|
|
$
|
4
|
|
Consumer Solutions
|
|
38
|
|
|
196
|
|
|
91
|
|
|
281
|
|
Infrastructure Solutions
|
|
67
|
|
|
(178
|
)
|
|
203
|
|
|
(6
|
)
|
Performance Materials & Chemicals
|
|
(6
|
)
|
|
54
|
|
|
225
|
|
|
322
|
|
Performance Plastics
|
|
46
|
|
|
57
|
|
|
220
|
|
|
257
|
|
Corporate
|
|
(29
|
)
|
|
(2
|
)
|
|
(50
|
)
|
|
(23
|
)
|
Total
|
|
$
|
99
|
|
|
$
|
128
|
|
|
$
|
674
|
|
|
$
|
835
|
|
(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)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
EBITDA
|
|
$
|
4,963
|
|
|
$
|
2,053
|
|
|
$
|
13,326
|
|
|
$
|
8,944
|
- Depreciation and amortization
|
|
600
|
|
|
692
|
|
|
2,521
|
|
|
2,747
|
+ Interest income
|
|
25
|
|
|
19
|
|
|
71
|
|
|
51
|
- Interest expense and amortization of debt discount
|
|
240
|
|
|
262
|
|
|
946
|
|
|
983
|
Income Before Income Taxes
|
|
$
|
4,148
|
|
|
$
|
1,118
|
|
|
$
|
9,930
|
|
|
$
|
5,265
|
- Provision for income taxes
|
|
517
|
|
|
279
|
|
|
2,147
|
|
|
1,426
|
- Net income attributable to noncontrolling interests
|
|
19
|
|
|
20
|
|
|
98
|
|
|
67
|
- Preferred stock dividends
|
|
85
|
|
|
85
|
|
|
340
|
|
|
340
|
Net Income Available for The Dow Chemical Company Common Stockholders
|
|
$
|
3,527
|
|
|
$
|
734
|
|
|
$
|
7,345
|
|
|
$
|
3,432
|
(2)
|
|
See Supplemental Information for a description of certain items
affecting results in 2015 and 2014.
|
|
|
|
|
|
Sales by Geographic Area
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions (Unaudited)
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
North America
|
|
$
|
4,215
|
|
|
$
|
5,200
|
|
|
$
|
18,396
|
|
|
$
|
21,422
|
Europe, Middle East, Africa and India
|
|
3,420
|
|
|
4,574
|
|
|
15,291
|
|
|
19,671
|
Asia Pacific
|
|
2,017
|
|
|
2,342
|
|
|
8,308
|
|
|
9,135
|
Latin America
|
|
1,810
|
|
|
2,268
|
|
|
6,783
|
|
|
7,939
|
Total
|
|
$
|
11,462
|
|
|
$
|
14,384
|
|
|
$
|
48,778
|
|
|
$
|
58,167
|
|
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Sales Volume and Price by Operating Segment and Geographic Area
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2015
|
Percentage change from prior year
|
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
Agricultural Sciences
|
|
(4
|
)%
|
|
(9
|
)%
|
|
(13
|
)%
|
|
(4
|
)%
|
|
(8
|
)%
|
|
(12
|
)%
|
Consumer Solutions
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
Infrastructure Solutions
|
|
3
|
|
|
(16
|
)
|
|
(13
|
)
|
|
2
|
|
|
(14
|
)
|
|
(12
|
)
|
Performance Materials & Chemicals
|
|
(22
|
)
|
|
(17
|
)
|
|
(39
|
)
|
|
(6
|
)
|
|
(15
|
)
|
|
(21
|
)
|
Performance Plastics
|
|
10
|
|
|
(26
|
)
|
|
(16
|
)
|
|
5
|
|
|
(23
|
)
|
|
(18
|
)
|
Total
|
|
(2
|
)%
|
|
(18
|
)%
|
|
(20
|
)%
|
|
1
|
%
|
|
(17
|
)%
|
|
(16
|
)%
|
North America
|
|
—
|
%
|
|
(19
|
)%
|
|
(19
|
)%
|
|
—
|
%
|
|
(14
|
)%
|
|
(14
|
)%
|
Europe, Middle East, Africa and India
|
|
(6
|
)
|
|
(19
|
)
|
|
(25
|
)
|
|
—
|
|
|
(22
|
)
|
|
(22
|
)
|
Asia Pacific
|
|
1
|
|
|
(15
|
)
|
|
(14
|
)
|
|
3
|
|
|
(12
|
)
|
|
(9
|
)
|
Latin America
|
|
(2
|
)
|
|
(18
|
)
|
|
(20
|
)
|
|
—
|
|
|
(15
|
)
|
|
(15
|
)
|
Developed geographies
|
|
(3
|
)%
|
|
(19
|
)%
|
|
(22
|
)%
|
|
(1
|
)%
|
|
(18
|
)%
|
|
(19
|
)%
|
Emerging geographies (1)
|
|
—
|
|
|
(17
|
)
|
|
(17
|
)
|
|
3
|
|
|
(14
|
)
|
|
(11
|
)
|
|
|
|
|
|
Sales Volume and Price by Operating Segment and Geographic Area
|
Excluding Acquisitions and Divestitures (2)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2015
|
Percentage change from prior year
|
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
Agricultural Sciences
|
|
(1
|
)%
|
|
(9
|
)%
|
|
(10
|
)%
|
|
(3
|
)%
|
|
(8
|
)%
|
|
(11
|
)%
|
Consumer Solutions
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
Infrastructure Solutions
|
|
3
|
|
|
(16
|
)
|
|
(13
|
)
|
|
2
|
|
|
(14
|
)
|
|
(12
|
)
|
Performance Materials & Chemicals
|
|
(3
|
)
|
|
(21
|
)
|
|
(24
|
)
|
|
1
|
|
|
(16
|
)
|
|
(15
|
)
|
Performance Plastics
|
|
11
|
|
|
(26
|
)
|
|
(15
|
)
|
|
5
|
|
|
(23
|
)
|
|
(18
|
)
|
Total
|
|
4
|
%
|
|
(19
|
)%
|
|
(15
|
)%
|
|
2
|
%
|
|
(17
|
)%
|
|
(15
|
)%
|
North America
|
|
6
|
%
|
|
(21
|
)%
|
|
(15
|
)%
|
|
2
|
%
|
|
(15
|
)%
|
|
(13
|
)%
|
Europe, Middle East, Africa and India
|
|
3
|
|
|
(21
|
)
|
|
(18
|
)
|
|
3
|
|
|
(23
|
)
|
|
(20
|
)
|
Asia Pacific
|
|
8
|
|
|
(16
|
)
|
|
(8
|
)
|
|
4
|
|
|
(12
|
)
|
|
(8
|
)
|
Latin America
|
|
1
|
|
|
(19
|
)
|
|
(18
|
)
|
|
1
|
|
|
(15
|
)
|
|
(14
|
)
|
Developed geographies
|
|
4
|
%
|
|
(21
|
)%
|
|
(17
|
)%
|
|
1
|
%
|
|
(18
|
)%
|
|
(17
|
)%
|
Emerging geographies (1)
|
|
5
|
|
|
(18
|
)
|
|
(13
|
)
|
|
4
|
|
|
(14
|
)
|
|
(10
|
)
|
|
|
|
|
|
Sales Volume and Price by Operating Segment and Geographic Area,
|
Excluding Acquisitions and Divestitures (2),
Hydrocarbons and Energy
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
December 31, 2015
|
|
December 31, 2015
|
Percentage change from prior year
|
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
Agricultural Sciences
|
|
(1
|
)%
|
|
(9
|
)%
|
|
(10
|
)%
|
|
(3
|
)%
|
|
(8
|
)%
|
|
(11
|
)%
|
Consumer Solutions
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
|
1
|
|
|
(7
|
)
|
|
(6
|
)
|
Infrastructure Solutions
|
|
3
|
|
|
(16
|
)
|
|
(13
|
)
|
|
2
|
|
|
(14
|
)
|
|
(12
|
)
|
Performance Materials & Chemicals
|
|
(3
|
)
|
|
(21
|
)
|
|
(24
|
)
|
|
1
|
|
|
(16
|
)
|
|
(15
|
)
|
Performance Plastics
|
|
5
|
|
|
(18
|
)
|
|
(13
|
)
|
|
6
|
|
|
(16
|
)
|
|
(10
|
)
|
Total
|
|
2
|
%
|
|
(16
|
)%
|
|
(14
|
)%
|
|
2
|
%
|
|
(14
|
)%
|
|
(12
|
)%
|
North America
|
|
(1
|
)%
|
|
(15
|
)%
|
|
(16
|
)%
|
|
—
|
%
|
|
(11
|
)%
|
|
(11
|
)%
|
Europe, Middle East, Africa and India
|
|
2
|
|
|
(16
|
)
|
|
(14
|
)
|
|
5
|
|
|
(19
|
)
|
|
(14
|
)
|
Asia Pacific
|
|
6
|
|
|
(15
|
)
|
|
(9
|
)
|
|
5
|
|
|
(12
|
)
|
|
(7
|
)
|
Latin America
|
|
—
|
|
|
(18
|
)
|
|
(18
|
)
|
|
1
|
|
|
(15
|
)
|
|
(14
|
)
|
Developed geographies
|
|
—
|
%
|
|
(15
|
)%
|
|
(15
|
)%
|
|
—
|
%
|
|
(13
|
)%
|
|
(13
|
)%
|
Emerging geographies (1)
|
|
4
|
|
|
(18
|
)
|
|
(14
|
)
|
|
5
|
|
|
(15
|
)
|
|
(10
|
)
|
(1)
|
|
Emerging geographies includes Eastern Europe, Middle East, Africa,
India, Latin America and Asia Pacific excluding Australia, Japan and
New Zealand.
|
(2)
|
|
Excludes prior period sales of recent divestitures including the
chlorine value chain, divested on October 5, 2015 (primarily
Performance Materials & Chemicals and Performance Plastics), the
AgroFresh business, divested on July 31, 2015 (Agricultural
Sciences), ANGUS Chemical Company, divested on February 2, 2015
(Performance Materials & Chemicals) and the global Sodium
Borohydride business, divested on January 30, 2015 (Performance
Materials & Chemicals). Also excludes current period sales of recent
acquisitions including Univation Technologies, LLC, acquired on May
5, 2015 (Performance Plastics) and Cooperativa Central de Pesquisa
Agrícola, acquired on February 1, 2015 (Agricultural Sciences).
|
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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, 2015 and December 31, 2014:
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|
|
|
|
|
|
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Certain Items Impacting Results
|
|
Pretax Impact (1)
|
|
Net Income (2)
|
|
EPS - Diluted (3) (4)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
In millions, except per share amounts (Unaudited)
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
Adjusted to exclude certain items (non-GAAP measures)
|
|
|
|
|
|
$
|
1,057
|
|
|
$
|
992
|
|
|
$
|
0.93
|
|
|
$
|
0.85
|
|
Certain items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments and related costs
|
|
$
|
(144
|
)
|
|
$
|
(73
|
)
|
|
(123
|
)
|
|
(47
|
)
|
|
(0.11
|
)
|
|
(0.04
|
)
|
Warranty accrual adjustment of exited business
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(0.05
|
)
|
2015 Restructuring charges
|
|
(40
|
)
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
(0.03
|
)
|
|
—
|
|
Asbestos-related charge
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(0.04
|
)
|
Joint venture actions
|
|
(36
|
)
|
|
(93
|
)
|
|
(26
|
)
|
|
(87
|
)
|
|
(0.02
|
)
|
|
(0.08
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)
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Gain on split-off of chlorine value chain
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|
2,233
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|
|
—
|
|
|
2,215
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|
|
—
|
|
|
1.96
|
|
|
—
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Gain on sale of MEGlobal
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|
723
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
0.52
|
|
|
—
|
|
Gain on 2015 business divestitures
|
|
11
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Costs associated with portfolio and productivity actions
|
|
(68
|
)
|
|
(19
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)
|
|
(61
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)
|
|
(12
|
)
|
|
(0.05
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)
|
|
(0.01
|
)
|
Impact of Argentine peso devaluation
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|
(98
|
)
|
|
—
|
|
|
(106
|
)
|
|
—
|
|
|
(0.09
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)
|
|
—
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Loss on early extinguishment of debt
|
|
(8
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)
|
|
—
|
|
|
(5
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)
|
|
—
|
|
|
—
|
|
|
—
|
|
Total certain items
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|
$
|
2,573
|
|
|
$
|
(363
|
)
|
|
$
|
2,470
|
|
|
$
|
(258
|
)
|
|
$
|
2.19
|
|
|
$
|
(0.22
|
)
|
Dilutive effect of assumed preferred stock conversion into
shares of common stock
|
|
|
|
|
|
|
|
|
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$
|
(0.18
|
)
|
|
N/A
|
|
Reported (GAAP amounts) (5) (6)
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|
|
|
|
|
$
|
3,527
|
|
|
$
|
734
|
|
|
$
|
2.94
|
|
|
$
|
0.63
|
|
(1)
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Impact on "Income Before Income Taxes."
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(2)
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"Net Income Available for The Dow Chemical Company Common
Stockholders."
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(3)
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"Earnings per common share - diluted."
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(4)
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For the three-month period ended December 31, 2015, 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 the earnings per share
impact of certain items because the effect of including them would
have been antidilutive.
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(5)
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For the three-month period ended December 31, 2015, 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).
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(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 three-month period ended December 31, 2015, as it
excludes preferred dividends of $85 million.
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The following table summarizes the impact of certain items recorded in
the twelve-month periods ended December 31, 2015 and December 31, 2014:
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|
|
|
|
|
|
Certain Items Impacting Results
|
|
Pretax Impact (1)
|
|
Net Income (2)
|
|
EPS - Diluted (3) (4)
|
|
|
Twelve Months Ended
|
|
Twelve Months Ended
|
|
Twelve Months Ended
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In millions, except per share amounts (Unaudited)
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|
Dec 31, 2015
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
|
Dec 31, 2015
|
|
Dec 31, 2014
|
Adjusted to exclude certain items (non-GAAP measures)
|
|
|
|
|
|
$
|
4,054
|
|
|
$
|
3,709
|
|
|
$
|
3.47
|
|
|
$
|
3.11
|
|
Certain items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairments and related costs
|
|
$
|
(144
|
)
|
|
$
|
(73
|
)
|
|
(123
|
)
|
|
(47
|
)
|
|
(0.11
|
)
|
|
(0.04
|
)
|
Warranty accrual adjustment of exited business
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
(0.05
|
)
|
2015 Restructuring charges
|
|
(415
|
)
|
|
—
|
|
|
(274
|
)
|
|
—
|
|
|
(0.24
|
)
|
|
—
|
|
Asbestos-related charge
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(49
|
)
|
|
—
|
|
|
(0.04
|
)
|
Joint venture actions
|
|
(36
|
)
|
|
(93
|
)
|
|
(26
|
)
|
|
(87
|
)
|
|
(0.02
|
)
|
|
(0.08
|
)
|
Gain on split-off of chlorine value chain
|
|
2,233
|
|
|
—
|
|
|
2,215
|
|
|
—
|
|
|
1.96
|
|
|
—
|
|
Gain on sale of MEGlobal
|
|
723
|
|
|
—
|
|
|
589
|
|
|
—
|
|
|
0.52
|
|
|
—
|
|
Gain on 2015 business divestitures
|
|
1,320
|
|
|
—
|
|
|
823
|
|
|
—
|
|
|
0.71
|
|
|
—
|
|
Gain on Univation step acquisition
|
|
349
|
|
|
—
|
|
|
351
|
|
|
—
|
|
|
0.30
|
|
|
—
|
|
Costs associated with portfolio and productivity actions
|
|
(194
|
)
|
|
(49
|
)
|
|
(153
|
)
|
|
(31
|
)
|
|
(0.13
|
)
|
|
(0.03
|
)
|
Impact of Argentine peso devaluation
|
|
(98
|
)
|
|
—
|
|
|
(106
|
)
|
|
—
|
|
|
(0.09
|
)
|
|
—
|
|
Loss on early extinguishment of debt
|
|
(8
|
)
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
Total certain items
|
|
$
|
3,730
|
|
|
$
|
(393
|
)
|
|
$
|
3,291
|
|
|
$
|
(277
|
)
|
|
$
|
2.90
|
|
|
$
|
(0.24
|
)
|
Dilutive effect of assumed preferred stock conversion into
shares of common stock
|
|
|
|
|
|
|
|
|
|
$
|
(0.22
|
)
|
|
N/A
|
|
Reported (GAAP amounts) (5) (6)
|
|
|
|
|
|
$
|
7,345
|
|
|
$
|
3,432
|
|
|
$
|
6.15
|
|
|
$
|
2.87
|
|
(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, 2015, 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, 2015, 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)
|
|
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, 2015, as it
excludes preferred dividends of $340 million.
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|
|
|
The following table presents diluted share counts for the three- and
twelve-month periods ended December 31, 2015 and December 31, 2014,
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:
|
|
|
|
|
|
Common Shares - Diluted
|
|
Three Months Ended
|
|
Twelve Months Ended
|
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
|
Dec 31,
|
In millions
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Share count - diluted, excluding preferred stock conversion to
common shares
|
|
1,122.1
|
|
|
1,160.9
|
|
|
1,144.6
|
|
|
1,187.0
|
Potential common shares from assumed conversion of preferred stock,
included in reported GAAP EPS calculation
|
|
96.8
|
|
|
N/A
|
|
|
96.8
|
|
|
N/A
|
Share count - diluted, including assumed preferred stock conversion
to common shares
|
|
1,218.9
|
|
|
N/A
|
|
|
1,241.4
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
Results in the fourth quarter of 2015 were impacted by the following
items:
-
Pretax charges of $144 million for asset impairments and related
costs, including the shutdown of manufacturing assets and facilities
in the Dow Building & Construction business, Energy & Water Solutions
business and Dow Packaging and Specialty Plastics business; the
abandonment of certain capital projects in the Dow Building &
Construction and Dow Coating Materials businesses; and, the impairment
of an equity method investment aligned with the Performance Monomers
business. The charges were included in "Cost of sales" ($91 million)
and "Sundry income (expense) - net" ($53 million) in the consolidated
statements of income and reflected in Infrastructure Solutions ($87
million) and Performance Plastics ($57 million).
-
Pretax charges of $40 million for adjustments to the 2015
Restructuring charge, primarily related to severance costs. The impact
is included in "Restructuring charges (credits)" in the consolidated
statements of income and reflected in Agricultural Sciences (charge of
$2 million), Infrastructure Solutions (gain of $1 million) and
Corporate (charge of $39 million).
-
A loss of $36 million related to actions taken by the Company's joint
ventures including: a $20 million credit related to Dow Corning's
adjustment of its implant liability, a $29 million charge related to
AgroFresh Solutions' fair value step-up of its inventories and
start-up costs, and a $27 million charge related to Sadara's write-off
of design engineering work for an Epoxy plant. The charge was included
in "Equity in earnings of nonconsolidated affiliates" and reflected in
Agricultural Sciences (loss of $29 million), Consumer Solutions (gain
of $8 million), Infrastructure Solutions (gain of $12 million) and
Corporate (loss of $27 million).
-
A $2,233 million pretax gain on the October 5, 2015, split-off of the
chlorine value chain to Olin Corporation. The gain was included in
"Sundry income (expense) - net" in the consolidated statements of
income and reflected in Performance Materials & Chemicals (gain of
$1,984 million), Performance Plastics (gain of $317 million) and
Corporate (loss of $68 million).
-
A $723 million pretax gain related to the sale of the Company's equity
interest in MEGlobal to EQUATE Petrochemical Company K.S.C. The gain
was included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Performance Materials &
Chemicals.
-
Pretax gain of $11 million for post-closing and other adjustments
related to 2015 business divestitures, including ANGUS Chemical
Company, the Sodium Borohydride business and the AgroFresh business.
The gain was included in "Sundry income (expense) - net" in the
consolidated statements of income and reflected in Agricultural
Sciences (loss of $3 million) and Performance Materials & Chemicals
(gain of $14 million).
-
Pretax charges of $68 million for nonrecurring transaction costs
associated with portfolio and productivity actions, primarily
financial, legal and professional advisory fees, including costs
associated with the planned all-stock merger of equals with E. I. du
Pont de Nemours and Company, costs associated with the planned
ownership restructure of Dow Corning, costs associated with the
separation of the chlorine value chain, implementation costs
associated with the Company's 2015 Restructuring program and other
productivity actions (collectively "Costs associated with portfolio
and productivity actions"). The charges were included in "Cost of
sales" ($18 million), "Selling, general and administrative expenses"
($35 million) and "Sundry income (expense) - net" ($15 million) in the
consolidated statements of income and reflected in Corporate.
-
Pretax loss of $98 million related to the December 2015 devaluation of
the Argentine Peso, included in "Sundry income (expense) - net" and
reflected in Corporate.
-
Pretax loss of $8 million on the early extinguishment of debt,
included in "Sundry income (expense) - net" in the consolidated
statements of income and reflected in Corporate.
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 "Goodwill 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 loss of $93 million related to Dow Corning including a gain of $407
million related to the adjustment of its implant liability and a $500
million loss related to the 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 Consumer Solutions
(gain of $155 million) and Infrastructure Solutions (loss of
$248 million).
-
Pretax charges of $19 million for costs associated with portfolio and
productivity actions. 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 2015,
results for the year ended December 31, 2015 were impacted by the
following items:
-
Pretax restructuring charges of $375 million. On April 29, 2015, Dow's
Board of Directors approved actions to further streamline the
organization and optimize the Company's footprint as a result of the
pending separation of a significant portion of Dow's chlorine value
chain. These actions, which will further accelerate Dow's value growth
and productivity targets, will result in a reduction of approximately
1,750 positions across a number of businesses and functions and
adjustments to the Company's asset footprint to enhance
competitiveness. As a result of these actions, the Company recorded
pretax restructuring charges of $375 million in the second quarter of
2015 consisting of costs associated with exit or disposal activities
of $10 million, severance costs of $196 million and asset write-downs
and write-offs of $169 million. The impact of these charges is shown
as "Restructuring charges" in the consolidated statements of income
and reflected in the Company's segment results as follows:
Agricultural Sciences ($14 million), Consumer Solutions ($67 million),
Infrastructure Solutions ($27 million), Performance Plastics ($12
million) and Corporate ($255 million).
-
Pretax gain of $1,309 million related to 2015 business divestitures,
including the February 2, 2015 divestiture of ANGUS Chemical Company
(gain of $670 million), the July 31, 2015 divestiture of the AgroFresh
business (gain of $621 million) and the January 30, 2015 divestiture
of the Sodium Borohydride business (pretax gain of $18 million;
after-tax loss of $9 million). The gain was included in "Sundry income
(expense) - net" in the consolidated statements of income and
reflected in Agricultural Sciences ($621 million) and Performance
Materials & Chemicals ($688 million).
-
Pretax gain of $349 million (after-tax gain of $351 million) related
to the step acquisition of Univation Technologies, LLC, previously a
50:50 joint venture. The gain, which is included in Performance
Plastics, included a $361 million pretax gain on the step acquisition
(after-tax gain of $359 million), included in "Sundry income (expense)
- net" in the consolidated statements of income, and a pretax loss of
$12 million (after-tax loss of $8 million) for a one-time increase in
"Cost of sales" related to the fair value step-up of inventories
assumed in the step acquisition.
-
Pretax charges of $126 million for costs associated with portfolio and
productivity actions. The charges were included in "Cost of sales" ($6
million), "Selling, general and administrative expenses" ($16 million)
and "Sundry income (expense) - net" ($104 million) in the consolidated
statements of income and reflected in Corporate.
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 costs associated with portfolio and
productivity actions. The charges were included in "Sundry income
(expense) - net" in the consolidated statements of income and
reflected in Corporate.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160202005777/en/ Copyright Business Wire 2016
Source: Business Wire
(February 2, 2016 - 6:45 AM EST)
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