(d)
|
Exhibits.
|
SIGNATURE
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
THE DOW CHEMICAL COMPANY
|
||
Registrant
|
Date:
|
April 28, 2011
|
/s/ RONALD C. EDMONDS
|
||
Ronald C. Edmonds
|
||
Vice President and Controller
|
||
EXHIBIT INDEX
|
|
Exhibit No.
|
Description
|
|
Press release issued by The Dow Chemical Company on April 28, 2011 announcing results for the first quarter of 2011.
|
Exhibit 99.1 |
April 28, 2011 |
·
|
Earnings per share were $0.82 (or $0.54 on a reported basis). This compares with earnings per share of $0.43 (or $0.41 on a reported basis) in the year-ago period.
|
·
|
EBITDA rose more than $600 million to $2.4 billion, the second highest quarter in the Company’s history. Health and Agricultural Sciences reached a new EBITDA record, while Performance Products and Chemicals and Energy each posted increases of greater than 50 percent, and Coatings and Infrastructure rose more than 30 percent.
|
·
|
At the Company level, EBITDA margin expanded 300 basis points. This represents the eighth consecutive quarter of year-over-year margin expansion.
|
·
|
Margins expanded in Chemicals and Energy and Plastics as the Company benefited from U.S. Gulf Coast feedstock and energy fundamentals. Performance Products and Coatings and Infrastructure also drove margin gains in the quarter.
|
·
|
Sales rose 20 percent to $14.7 billion versus the year-ago period, with double-digit increases in all operating segments and all geographic areas. Health and Agricultural Sciences reported record sales of $1.6 billion in the quarter.
|
·
|
Volume increased 8 percent versus the same quarter last year, with gains across all geographic areas and all operating segments. Double-digit growth was reported in Health and Agricultural Sciences (14 percent) and Electronic and Specialty Materials (11 percent).
|
·
|
Price was up 12 percent and rose in all operating segments, more than offsetting a $700 million increase in purchased feedstock and energy costs. Double-digit price gains were achieved in all geographic areas and in Performance Products (16 percent), Chemicals and Energy and Plastics (each 14 percent), Coatings and Infrastructure (13 percent) and Performance Systems (10 percent).
|
·
|
Equity earnings were $298 million, with Dow Corning, MEGlobal and the Company’s joint ventures in Kuwait being the largest contributors.
|
·
|
The Company retired $2.5 billion of gross debt in the quarter, accretive to shareholders by reducing interest expense nearly $200 million on an annual basis going forward.
|
(1) | Within the text of this release: |
--All sales, price and volume comparisons are presented excluding divestitures, unless otherwise noted. | |
--All references to earnings per share, EBITDA(2) and EBITDA margin(2) are presented excluding certain items, (3) unless otherwise specified. | |
(2) | EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA margin is EBITDA as a percentage of reported sales. A reconciliation of EBITDA to "Income Before Income Taxes" is provided following the Operating Segments table. |
(3) | See Supplemental Information at the end of the release for a description of these items. |
Comment
|
Three Months Ended
|
||||||||
In millions, except per share amounts
|
Mar 31,
2011
|
Mar 31,
2010
|
||||||
Net Sales
|
$ | 14,733 | $ | 13,417 | ||||
Net Sales, excluding Divestitures
|
$ | 14,733 | $ | 12,229 | ||||
Net Income Available for Common Stockholders
|
$ | 625 | $ | 466 | ||||
Net Income Available for Common Stockholders, excluding Certain Items
|
$ | 952 | $ | 491 | ||||
Earnings per Common Share – diluted
|
$ | 0.54 | $ | 0.41 | ||||
Earnings per Common Share – diluted, excluding Certain Items
|
$ | 0.82 | $ | 0.43 |
Outlook
|
Financial Statements (Note A)
|
||||||||
The Dow Chemical Company and Subsidiaries
|
||||||||
Consolidated Statements of Income
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
March 31,
|
|||||||
In millions, except per share amounts (Unaudited)
|
2011
|
2010
|
||||||
Net Sales
|
$ | 14,733 | $ | 13,417 | ||||
Cost of sales
|
12,117 | 11,541 | ||||||
Research and development expenses
|
400 | 407 | ||||||
Selling, general and administrative expenses
|
700 | 662 | ||||||
Amortization of intangibles
|
123 | 128 | ||||||
Restructuring charges (Note B)
|
- | 16 | ||||||
Acquisition and integration related expenses (Note C)
|
31 | 26 | ||||||
Equity in earnings of nonconsolidated affiliates
|
298 | 304 | ||||||
Sundry income (expense) - net (Note D)
|
(449 | ) | 83 | |||||
Interest income
|
7 | 7 | ||||||
Interest expense and amortization of debt discount
|
377 | 376 | ||||||
Income Before Income Taxes
|
841 | 655 | ||||||
Provision for income taxes
|
120 | 103 | ||||||
Net Income
|
721 | 552 | ||||||
Net income attributable to noncontrolling interests
|
11 | 1 | ||||||
Net Income Attributable to The Dow Chemical Company
|
710 | 551 | ||||||
Preferred stock dividends
|
85 | 85 | ||||||
Net Income Available for The Dow Chemical Company Common Stockholders
|
$ | 625 | $ | 466 | ||||
Per Common Share Data:
|
||||||||
Earnings per common share - basic
|
$ | 0.55 | $ | 0.42 | ||||
Earnings per common share - diluted
|
$ | 0.54 | $ | 0.41 | ||||
Common stock dividends declared per share of common stock
|
$ | 0.15 | $ | 0.15 | ||||
Weighted-average common shares outstanding - basic
|
1,139.5 | 1,117.5 | ||||||
Weighted-average common shares outstanding - diluted
|
1,161.2 | 1,137.9 | ||||||
Depreciation
|
$ | 559 | $ | 591 | ||||
Capital Expenditures
|
$ | 405 | $ | 294 |
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. The restructuring plan included the shutdown of a number of facilities and a global workforce reduction. In the first quarter of 2010, the Company recorded additional asset impairments of $16 million related to the 2009 restructuring activities.
|
|||||||
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 first quarter of 2010, integration costs totaled $26 million.
|
|||||||
Note D: In the first quarter of 2011, the Company recognized a pretax loss of $472 million on the early extinguishment of debt.
|
The Dow Chemical Company and Subsidiaries | ||||||||
Consolidated Balance Sheets | ||||||||
March 31,
|
Dec. 31,
|
|||||||
In millions (Unaudited)
|
2011
|
2010
|
||||||
Assets
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents (variable interest entities restricted - 2011: $199; 2010: $145)
|
$ | 3,562 | $ | 7,039 | ||||
Accounts and notes receivable:
|
||||||||
Trade (net of allowance for doubtful receivables - 2011: $138; 2010: $128)
|
5,413 | 4,616 | ||||||
Other
|
4,940 | 4,428 | ||||||
Inventories
|
8,132 | 7,087 | ||||||
Deferred income tax assets - current
|
557 | 611 | ||||||
Other current assets
|
379 | 349 | ||||||
Total current assets
|
22,983 | 24,130 | ||||||
Investments
|
||||||||
Investment in nonconsolidated affiliates
|
3,299 | 3,453 | ||||||
Other investments (investments carried at fair value - 2011: $2,031; 2010: $2,064)
|
2,490 | 2,542 | ||||||
Noncurrent receivables
|
318 | 388 | ||||||
Total investments
|
6,107 | 6,383 | ||||||
Property
|
||||||||
Property
|
52,825 | 51,648 | ||||||
Less accumulated depreciation
|
35,040 | 33,980 | ||||||
Net property (variable interest entities restricted - 2011: $1,505; 2010: $1,388)
|
17,785 | 17,668 | ||||||
Other Assets
|
||||||||
Goodwill
|
13,048 | 12,967 | ||||||
Other intangible assets (net of accumulated amortization - 2011: $1,971; 2010: $1,805)
|
5,453 | 5,530 | ||||||
Deferred income tax assets - noncurrent
|
2,186 | 2,079 | ||||||
Asbestos-related insurance receivables - noncurrent
|
217 | 220 | ||||||
Deferred charges and other assets
|
663 | 611 | ||||||
Total other assets
|
21,567 | 21,407 | ||||||
Total Assets
|
$ | 68,442 | $ | 69,588 | ||||
Liabilities and Equity
|
||||||||
Current Liabilities
|
||||||||
Notes payable
|
$ | 709 | $ | 1,467 | ||||
Long-term debt due within one year
|
1,607 | 1,755 | ||||||
Accounts payable:
|
||||||||
Trade
|
4,836 | 4,356 | ||||||
Other
|
2,263 | 2,249 | ||||||
Income taxes payable
|
432 | 349 | ||||||
Deferred income tax liabilities - current
|
97 | 105 | ||||||
Dividends payable
|
259 | 257 | ||||||
Accrued and other current liabilities
|
2,781 | 3,358 | ||||||
Total current liabilities
|
12,984 | 13,896 | ||||||
Long-Term Debt
|
19,078 | 20,605 | ||||||
Other Noncurrent Liabilities
|
||||||||
Deferred income tax liabilities - noncurrent
|
1,284 | 1,295 | ||||||
Pension and other postretirement benefits - noncurrent
|
7,526 | 7,492 | ||||||
Asbestos-related liabilities - noncurrent
|
655 | 663 | ||||||
Other noncurrent obligations
|
3,078 | 2,995 | ||||||
Total other noncurrent liabilities
|
12,543 | 12,445 | ||||||
Stockholders' Equity
|
||||||||
Preferred stock, series A
|
4,000 | 4,000 | ||||||
Common stock
|
2,939 | 2,931 | ||||||
Additional paid-in capital
|
2,243 | 2,286 | ||||||
Retained earnings
|
18,187 | 17,736 | ||||||
Accumulated other comprehensive loss
|
(3,881 | ) | (4,399 | ) | ||||
Unearned ESOP shares
|
(467 | ) | (476 | ) | ||||
Treasury stock at cost
|
- | (239 | ) | |||||
The Dow Chemical Company's stockholders' equity
|
23,021 | 21,839 | ||||||
Noncontrolling interests
|
816 | 803 | ||||||
Total equity
|
23,837 | 22,642 | ||||||
Total Liabilities and Equity
|
$ | 68,442 | $ | 69,588 | ||||
See Notes to the Consolidated Financial Statements.
|
The Dow Chemical Company and Subsidiaries
|
||||||||
Operating Segments
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
March 31,
|
|||||||
In millions (Unaudited)
|
2011
|
2010
|
||||||
Sales by operating segment
|
||||||||
Electronic and Specialty Materials
|
$ | 1,346 | $ | 1,179 | ||||
Coatings and Infrastructure
|
1,398 | 1,285 | ||||||
Health and Agricultural Sciences
|
1,606 | 1,369 | ||||||
Performance Systems
|
1,667 | 1,675 | ||||||
Performance Products
|
2,903 | 2,789 | ||||||
Plastics
|
2,998 | 3,022 | ||||||
Chemicals and Energy
|
970 | 839 | ||||||
Hydrocarbons
|
1,752 | 1,165 | ||||||
Corporate
|
93 | 94 | ||||||
Total
|
$ | 14,733 | $ | 13,417 | ||||
EBITDA (1) by operating segment
|
||||||||
Electronic and Specialty Materials
|
$ | 344 | $ | 360 | ||||
Coatings and Infrastructure
|
188 | 138 | ||||||
Health and Agricultural Sciences
|
406 | 384 | ||||||
Performance Systems
|
207 | 205 | ||||||
Performance Products
|
456 | 288 | ||||||
Plastics
|
809 | 718 | ||||||
Chemicals and Energy
|
291 | 120 | ||||||
Hydrocarbons
|
- | - | ||||||
Corporate
|
(759 | ) | (432 | ) | ||||
Total
|
$ | 1,942 | $ | 1,781 | ||||
Certain items reducing EBITDA by operating segment (2)
|
||||||||
Electronic and Specialty Materials
|
$ | - | $ | (8 | ) | |||
Coatings and Infrastructure
|
- | (5 | ) | |||||
Health and Agricultural Sciences
|
- | - | ||||||
Performance Systems
|
- | - | ||||||
Performance Products
|
- | (3 | ) | |||||
Plastics
|
- | - | ||||||
Chemicals and Energy
|
- | - | ||||||
Hydrocarbons
|
- | - | ||||||
Corporate
|
(503 | ) | (26 | ) | ||||
Total
|
$ | (503 | ) | $ | (42 | ) | ||
Equity in earnings (losses) of nonconsolidated affiliates by operating segment (included in EBITDA)
|
||||||||
Electronic and Specialty Materials
|
$ | 91 | $ | 113 | ||||
Coatings and Infrastructure
|
- | 1 | ||||||
Health and Agricultural Sciences
|
3 | 2 | ||||||
Performance Systems
|
(4 | ) | - | |||||
Performance Products
|
(6 | ) | 7 | |||||
Plastics
|
68 | 65 | ||||||
Chemicals and Energy
|
144 | 98 | ||||||
Hydrocarbons
|
11 | 24 | ||||||
Corporate
|
(9 | ) | (6 | ) | ||||
Total
|
$ | 298 | $ | 304 |
Sales by Geographic Area
|
||||||||
Three Months Ended
|
||||||||
March 31,
|
March 31,
|
|||||||
In millions (Unaudited)
|
2011
|
2010
|
||||||
North America
|
$ | 5,284 | $ | 4,889 | ||||
Europe, Middle East and Africa
|
5,358 | 4,747 | ||||||
Asia Pacific
|
2,485 | 2,369 | ||||||
Latin America
|
1,606 | 1,412 | ||||||
Total
|
$ | 14,733 | $ | 13,417 |
Sales Volume and Price by Operating Segment and Geographic Area
|
|||||||
Three Months Ended
|
|||||||
March 31, 2011
|
|||||||
Percentage change from prior year
|
Volume
|
Price
|
Total
|
||||
Electronic and Specialty Materials
|
11%
|
3%
|
14%
|
||||
Coatings and Infrastructure
|
(3)%
|
12%
|
9%
|
||||
Health and Agricultural Sciences
|
14%
|
3%
|
17%
|
||||
Performance Systems
|
(9)%
|
9%
|
-
|
||||
Performance Products
|
(10)%
|
14%
|
4%
|
||||
Plastics
|
(12)%
|
11%
|
(1)%
|
||||
Chemicals and Energy
|
2%
|
14%
|
16%
|
||||
Hydrocarbons
|
30%
|
20%
|
50%
|
||||
Total
|
(1)%
|
11%
|
10%
|
||||
North America
|
(2)%
|
10%
|
8%
|
||||
Europe, Middle East and Africa
|
-
|
13%
|
13%
|
||||
Asia Pacific
|
(4)%
|
9%
|
5%
|
||||
Latin America
|
1%
|
13%
|
14%
|
||||
Total
|
(1)%
|
11%
|
10%
|
||||
Sales Volume and Price by Operating Segment and Geographic Area
|
|||||||
Excluding Divestitures (3)
|
|||||||
Three Months Ended
|
|||||||
March 31, 2011
|
|||||||
Percentage change from prior year
|
Volume
|
Price
|
Total
|
||||
Electronic and Specialty Materials
|
11%
|
3%
|
14%
|
||||
Coatings and Infrastructure
|
3%
|
13%
|
16%
|
||||
Health and Agricultural Sciences
|
14%
|
3%
|
17%
|
||||
Performance Systems
|
6%
|
10%
|
16%
|
||||
Performance Products
|
2%
|
16%
|
18%
|
||||
Plastics
|
5%
|
14%
|
19%
|
||||
Chemicals and Energy
|
2%
|
14%
|
16%
|
||||
Hydrocarbons
|
34%
|
21%
|
55%
|
||||
Total
|
8%
|
12%
|
20%
|
||||
North America
|
3%
|
10%
|
13%
|
||||
Europe, Middle East and Africa
|
15%
|
15%
|
30%
|
||||
Asia Pacific
|
8%
|
10%
|
18%
|
||||
Latin America
|
7%
|
14%
|
21%
|
||||
Total
|
8%
|
12%
|
20%
|
(1 | ) |
The Company uses EBITDA (which Dow defines as earnings 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; items that principally apply to the Company as a whole are assigned to Corporate. A reconciliation of EBITDA to "Income Before Income Taxes" is provided below:
|
||||||||
Three Months Ended
|
||||||||||
March 31,
|
March 31,
|
|||||||||
2011 | 2010 | |||||||||
EBITDA
|
$ | 1,942 | $ | 1,781 | ||||||
- Depreciation and amortization
|
731 | 757 | ||||||||
+ Interest income
|
7 | 7 | ||||||||
- Interest expense and amortization of debt discount
|
377 | 376 | ||||||||
Income Before Income Taxes
|
$ | 841 | $ | 655 | ||||||
(2 | ) |
See Supplemental Information for a description of certain items affecting results in 2011 and 2010.
|
||||||||
(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.
|
·
|
Pretax charges totaling $31 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” and reflected in Corporate.
|
·
|
Pretax loss of $472 million on the early extinguishment of debt included in “Sundry income (expense) – net” and reflected in Corporate.
|
·
|
Pretax adjustments of $16 million to the 2009 restructuring charge related to additional asset impairments, approximately half of which was related to a consolidated joint venture. The charges are shown as “Restructuring charges” in the consolidated statements of income and reflected in Electronic and Specialty Materials ($8 million), Coatings and Infrastructure ($5 million) and Performance Products ($3 million).
|
·
|
Pretax charges totaling $26 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” and reflected in Corporate.
|
Certain Items Impacting Results
|
Pretax
Impact (1)
|
Impact on
Net Income (2)
|
Impact on
EPS (3)
|
|||||||||||||||||||||
Three Months Ended
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||||||||
In millions, except per share amounts
|
March 31,
2011
|
March 31,
2010
|
March 31,
2011
|
March 31,
2010
|
March 31,
2011
|
March 31,
2010
|
||||||||||||||||||
Restructuring charges
|
- | $ | (16 | ) | - | $ | (8 | ) | - | $ | (0.01 | ) | ||||||||||||
Acquisition-related integration costs
|
$ | (31 | ) | (26 | ) | $ | (20 | ) | (17 | ) | $ | (0.02 | ) | (0.01 | ) | |||||||||
Loss on early extinguishment of debt
|
(472 | ) | - | (307 | ) | - | (0.26 | ) | - | |||||||||||||||
Total
|
$ | (503 | ) | $ | (42 | ) | $ | (327 | ) | $ | (25 | ) | $ | (0.28 | ) | $ | (0.02 | ) |
(1)
|
Impact on “Income Before Income Taxes”
|
(2)
|
Impact on “Net Income Available for The Dow Chemical Company Common Stockholders”
|
(3)
|
Impact on “Earnings per common share – diluted”
|