Delaware (State or other jurisdiction of incorporation) | 1-3433 (Commission file number) | 38-1285128 (IRS Employer Identification No.) |
2030 DOW CENTER, MIDLAND, MICHIGAN 48674 | ||
(Address of principal executive offices) (Zip Code) | ||
Registrant's telephone number, including area code: 989-636-1000 | ||
Not applicable (Former name or former address, if changed since last report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
/s/ RONALD C. EDMONDS |
Ronald C. Edmonds |
Vice President and Controller |
EXHIBIT INDEX | |
Exhibit No. | Description |
99.1 | Press release issued by The Dow Chemical Company on April 23, 2014, announcing results for the first quarter of 2014. |
• | The Company reported earnings of $0.79 per share. This compares with earnings of $0.46 per share in the same quarter last year, or adjusted earnings(1) of $0.69 per share - a 14 percent increase versus the year-ago period. |
• | Sales were $14.5 billion, up 1 percent versus the same quarter last year. Performance Plastics drove sales gains, up 6 percent on an adjusted basis(2) due to higher prices. Higher volumes in Coatings and Infrastructure Solutions outpaced the market, resulting in a 5 percent increase in sales for the segment. |
• | Emerging geographies grew sales 3 percent on an adjusted basis, led by volume growth in Greater China (up 7 percent). Price gains in North America were offset by volume declines, reflecting weather- and transportation-related impacts in the quarter. Sales in Western Europe increased slightly due to volume growth of 2 percent. |
• | EBITDA(3) was $2.4 billion, compared with $2.2 billion or $2.3 billion on an adjusted basis(4) in the year-ago period. Increases were reported in most operating segments, led by gains in Performance Plastics, Agricultural Sciences, and Coatings and Infrastructure Solutions. |
• | Adjusted EBITDA margin(5) expanded more than 60 basis points to 16.6 percent on a year-over-year basis, with increases reported in all operating segments except Feedstocks and Energy. Margins expanded despite a more than $300 million increase in purchased feedstocks and energy, due to continued emphasis on productivity and cost-control actions. |
• | Cash flow from operations increased nearly 30 percent versus the year-ago period, reflecting the Company’s productivity actions to increase working capital efficiency and to reduce costs. |
• | Dow continued to drive shareholder remuneration actions, returning $1.7 billion to shareholders in the quarter through declared dividends and share repurchases. |
(1) | “Adjusted earnings per share” is defined as earnings per share excluding the impact of “Certain Items.” See Supplemental Information at the end of the release for a description of these items, as well as a reconciliation of adjusted earnings per share to “Earnings per common share - diluted.” |
(2) | “Adjusted sales” is defined as “Net Sales” excluding sales related to prior-period divestitures. |
(3) | “EBITDA” is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" is provided following the Operating Segments table. |
(4) | Adjusted EBITDA is defined as EBITDA excluding the impact of “Certain Items.” |
(5) | Adjusted EBITDA margin is defined as EBITDA excluding the impact of Certain Items as a percentage of reported sales. |
Three Months Ended | ||
In millions, except per share amounts | Mar 31, 2014 | Mar 31, 2013 |
Net Sales | $14,461 | $14,383 |
Adjusted Sales | $14,461 | $14,286 |
Net Income Available for Common Stockholders | $964 | $550 |
Net Income Available for Common Stockholders, Excluding Certain Items | $964 | $819 |
Earnings per Common Share - Diluted | $0.79 | $0.46 |
Adjusted Earnings per Share | $0.79 | $0.69 |
Three Months Ended | |||||||
In millions, except per share amounts (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | |||||
Net Sales | $ | 14,461 | $ | 14,383 | |||
Cost of sales | 11,733 | 11,707 | |||||
Research and development expenses | 391 | 435 | |||||
Selling, general and administrative expenses | 779 | 772 | |||||
Amortization of intangibles | 114 | 115 | |||||
Equity in earnings of nonconsolidated affiliates | 251 | 230 | |||||
Sundry income (expense) - net (Note B) | 29 | (32 | ) | ||||
Interest income | 13 | 8 | |||||
Interest expense and amortization of debt discount | 246 | 296 | |||||
Income Before Income Taxes | 1,491 | 1,264 | |||||
Provision for income taxes (Note C) | 425 | 604 | |||||
Net Income | 1,066 | 660 | |||||
Net income attributable to noncontrolling interests | 17 | 25 | |||||
Net Income Attributable to The Dow Chemical Company | 1,049 | 635 | |||||
Preferred stock dividends | 85 | 85 | |||||
Net Income Available for The Dow Chemical Company Common Stockholders | $ | 964 | $ | 550 | |||
Per Common Share Data: | |||||||
Earnings per common share - basic | $ | 0.80 | $ | 0.46 | |||
Earnings per common share - diluted | $ | 0.79 | $ | 0.46 | |||
Common stock dividends declared per share of common stock | $ | 0.37 | $ | 0.32 | |||
Weighted-average common shares outstanding - basic | 1,190.6 | 1,181.1 | |||||
Weighted-average common shares outstanding - diluted | 1,207.7 | 1,187.6 | |||||
Depreciation | $ | 517 | $ | 505 | |||
Capital Expenditures | $ | 672 | $ | 346 |
In millions (Unaudited) | Mar 31, 2014 | Dec 31, 2013 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents (variable interest entities restricted - 2014: $184; 2013: $147) | $ | 4,385 | $ | 5,940 | |||
Accounts and notes receivable: | |||||||
Trade (net of allowance for doubtful receivables - 2014: $134; 2013: $148) | 5,524 | 4,935 | |||||
Other | 4,927 | 4,712 | |||||
Inventories | 9,102 | 8,303 | |||||
Deferred income tax assets - current | 762 | 743 | |||||
Other current assets | 362 | 344 | |||||
Total current assets | 25,062 | 24,977 | |||||
Investments | |||||||
Investment in nonconsolidated affiliates | 4,142 | 4,501 | |||||
Other investments (investments carried at fair value - 2014: $2,080; 2013: $2,056) | 2,549 | 2,541 | |||||
Noncurrent receivables | 403 | 365 | |||||
Total investments | 7,094 | 7,407 | |||||
Property | |||||||
Property | 55,385 | 55,114 | |||||
Less accumulated depreciation | 37,812 | 37,660 | |||||
Net property (variable interest entities restricted - 2014: $2,699; 2013: $2,646) | 17,573 | 17,454 | |||||
Other Assets | |||||||
Goodwill | 12,797 | 12,798 | |||||
Other intangible assets (net of accumulated amortization - 2014: $3,397; 2013: $3,270) | 4,224 | 4,314 | |||||
Deferred income tax assets - noncurrent | 1,873 | 1,964 | |||||
Asbestos-related insurance receivables - noncurrent | 78 | 86 | |||||
Deferred charges and other assets | 532 | 501 | |||||
Total other assets | 19,504 | 19,663 | |||||
Total Assets | $ | 69,233 | $ | 69,501 | |||
Liabilities and Equity | |||||||
Current Liabilities | |||||||
Notes payable | $ | 526 | $ | 443 | |||
Long-term debt due within one year | 351 | 697 | |||||
Accounts payable: | |||||||
Trade | 4,971 | 4,590 | |||||
Other | 2,411 | 2,290 | |||||
Income taxes payable | 660 | 435 | |||||
Deferred income tax liabilities - current | 98 | 133 | |||||
Dividends payable | 524 | 467 | |||||
Accrued and other current liabilities | 2,685 | 2,916 | |||||
Total current liabilities | 12,226 | 11,971 | |||||
Long-Term Debt (variable interest entities nonrecourse - 2014: $1,388; 2013: $1,360) | 16,936 | 16,820 | |||||
Other Noncurrent Liabilities | |||||||
Deferred income tax liabilities - noncurrent | 691 | 718 | |||||
Pension and other postretirement benefits - noncurrent | 7,920 | 8,176 | |||||
Asbestos-related liabilities - noncurrent | 400 | 434 | |||||
Other noncurrent obligations | 3,154 | 3,302 | |||||
Total other noncurrent liabilities | 12,165 | 12,630 | |||||
Redeemable Noncontrolling Interest | 183 | 156 | |||||
Stockholders’ Equity | |||||||
Preferred stock, series A | 4,000 | 4,000 | |||||
Common stock | 3,092 | 3,054 | |||||
Additional paid-in capital | 4,407 | 3,928 | |||||
Retained earnings | 21,929 | 21,407 | |||||
Accumulated other comprehensive loss | (4,824 | ) | (4,827 | ) | |||
Unearned ESOP shares | (349 | ) | (357 | ) | |||
Treasury stock at cost | (1,514 | ) | (307 | ) | |||
The Dow Chemical Company’s stockholders’ equity | 26,741 | 26,898 | |||||
Noncontrolling interests | 982 | 1,026 | |||||
Total equity | 27,723 | 27,924 | |||||
Total Liabilities and Equity | $ | 69,233 | $ | 69,501 |
Three Months Ended | |||||||
In millions (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | |||||
Sales by operating segment | |||||||
Electronic and Functional Materials | $ | 1,133 | $ | 1,141 | |||
Coatings and Infrastructure Solutions | 1,749 | 1,667 | |||||
Agricultural Sciences | 2,119 | 2,103 | |||||
Performance Materials | 3,291 | 3,328 | |||||
Performance Plastics | 3,613 | 3,498 | |||||
Feedstocks and Energy | 2,458 | 2,556 | |||||
Corporate | 98 | 90 | |||||
Total | $ | 14,461 | $ | 14,383 | |||
EBITDA (1) by operating segment | |||||||
Electronic and Functional Materials | $ | 290 | $ | 273 | |||
Coatings and Infrastructure Solutions | 224 | 186 | |||||
Agricultural Sciences | 529 | 484 | |||||
Performance Materials | 440 | 440 | |||||
Performance Plastics | 1,000 | 952 | |||||
Feedstocks and Energy | 173 | 240 | |||||
Corporate | (260 | ) | (355 | ) | |||
Total | $ | 2,396 | $ | 2,220 | |||
Certain items decreasing EBITDA by operating segment (2) | |||||||
Electronic and Functional Materials | $ | — | $ | — | |||
Coatings and Infrastructure Solutions | — | — | |||||
Agricultural Sciences | — | — | |||||
Performance Materials | — | — | |||||
Performance Plastics | — | — | |||||
Feedstocks and Energy | — | — | |||||
Corporate | — | (72 | ) | ||||
Total | $ | — | $ | (72 | ) | ||
EBITDA excluding certain items by operating segment | |||||||
Electronic and Functional Materials | $ | 290 | $ | 273 | |||
Coatings and Infrastructure Solutions | 224 | 186 | |||||
Agricultural Sciences | 529 | 484 | |||||
Performance Materials | 440 | 440 | |||||
Performance Plastics | 1,000 | 952 | |||||
Feedstocks and Energy | 173 | 240 | |||||
Corporate | (260 | ) | (283 | ) | |||
Total | $ | 2,396 | $ | 2,292 |
Three Months Ended | |||||||
In millions (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | |||||
Equity in earnings (losses) of nonconsolidated affiliates by operating segment (included in EBITDA) | |||||||
Electronic and Functional Materials | $ | 31 | $ | 17 | |||
Coatings and Infrastructure Solutions | 71 | 26 | |||||
Agricultural Sciences | — | 2 | |||||
Performance Materials | (24 | ) | (23 | ) | |||
Performance Plastics | 61 | 57 | |||||
Feedstocks and Energy | 121 | 159 | |||||
Corporate | (9 | ) | (8 | ) | |||
Total | $ | 251 | $ | 230 |
(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 | ||||||
In millions (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | |||||
EBITDA | $ | 2,396 | $ | 2,220 | |||
- Depreciation and amortization | 672 | 668 | |||||
+ Interest income | 13 | 8 | |||||
- Interest expense and amortization of debt discount | 246 | 296 | |||||
Income Before Income Taxes | $ | 1,491 | $ | 1,264 | |||
- Provision for income taxes | 425 | 604 | |||||
- Net income attributable to noncontrolling interests | 17 | 25 | |||||
- Preferred stock dividends | 85 | 85 | |||||
Net Income Available for The Dow Chemical Company Common Stockholders | $ | 964 | $ | 550 |
(2) | See Supplemental Information for a description of certain items affecting results in 2014 and 2013. |
Three Months Ended | |||||||
In millions (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | |||||
North America | $ | 5,363 | $ | 5,383 | |||
Europe, Middle East and Africa | 4,969 | 4,915 | |||||
Asia Pacific | 2,433 | 2,368 | |||||
Latin America | 1,696 | 1,717 | |||||
Total | $ | 14,461 | $ | 14,383 |
Three Months Ended | ||||||||
Mar 31, 2014 | ||||||||
Percentage change from prior year | Volume | Price | Total | |||||
Electronic and Functional Materials | — | % | (1 | )% | (1 | )% | ||
Coatings and Infrastructure Solutions | 6 | (1 | ) | 5 | ||||
Agricultural Sciences | 2 | (1 | ) | 1 | ||||
Performance Materials | (1 | ) | — | (1 | ) | |||
Performance Plastics | (1 | ) | 4 | 3 | ||||
Feedstocks and Energy | — | (4 | ) | (4 | ) | |||
Total | 1 | % | — | % | 1 | % | ||
North America | (3 | )% | 3 | % | — | % | ||
Europe, Middle East and Africa | 2 | (1 | ) | 1 | ||||
Asia Pacific | 4 | (1 | ) | 3 | ||||
Latin America | 1 | (2 | ) | (1 | ) | |||
Total | 1 | % | — | % | 1 | % | ||
Developed geographies | (1 | )% | 1 | % | — | % | ||
Emerging geographies (3) | 3 | — | 3 | |||||
Total | 1 | % | — | % | 1 | % |
Three Months Ended | ||||||||
Mar 31, 2014 | ||||||||
Percentage change from prior year | Volume | Price | Total | |||||
Electronic and Functional Materials | — | % | (1 | )% | (1 | )% | ||
Coatings and Infrastructure Solutions | 6 | (1 | ) | 5 | ||||
Agricultural Sciences | 2 | (1 | ) | 1 | ||||
Performance Materials | (1 | ) | — | (1 | ) | |||
Performance Plastics | 1 | 5 | 6 | |||||
Feedstocks and Energy | — | (4 | ) | (4 | ) | |||
Total | 1 | % | — | % | 1 | % | ||
North America | (3 | )% | 3 | % | — | % | ||
Europe, Middle East and Africa | 2 | (1 | ) | 1 | ||||
Asia Pacific | 8 | (1 | ) | 7 | ||||
Latin America | 1 | (2 | ) | (1 | ) | |||
Total | 1 | % | — | % | 1 | % | ||
Developed geographies | — | % | — | % | — | % | ||
Emerging geographies (3) | 4 | (1 | ) | 3 | ||||
Total | 1 | % | — | % | 1 | % |
(3) | Emerging geographies includes Eastern Europe, Middle East, Africa, Latin America and Asia Pacific excluding Australia, Japan and New Zealand. |
(4) | Excludes sales related to Nippon Unicar Company Limited, divested on July 1, 2013, and sales of the Polypropylene Licensing and Catalysts business, divested on December 2, 2013. |
Certain Items Impacting Results | Pretax Impact (1) | Net Income (2) | EPS - Diluted (3) | ||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
In millions, except per share amounts (Unaudited) | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2014 | Mar 31, 2013 | Mar 31, 2014 | Mar 31, 2013 | |||||||||||||||||
Adjusted to exclude certain items (non-GAAP measures) | $ | 964 | $ | 819 | $ | 0.79 | $ | 0.69 | |||||||||||||||
Certain items: | |||||||||||||||||||||||
Restructuring plan implementation costs | $ | — | $ | (12 | ) | — | (8 | ) | — | (0.01 | ) | ||||||||||||
Loss on early extinguishment of debt | — | (60 | ) | — | (38 | ) | — | (0.03 | ) | ||||||||||||||
Uncertain tax position adjustments | — | — | — | (223 | ) | — | (0.19 | ) | |||||||||||||||
Total certain items | $ | — | $ | (72 | ) | $ | — | $ | (269 | ) | $ | — | $ | (0.23 | ) | ||||||||
Reported GAAP Amounts | $ | 964 | $ | 550 | $ | 0.79 | $ | 0.46 |
(1) | Impact on "Income Before Income Taxes" |
(2) | "Net Income Available for The Dow Chemical Company Common Stockholders" |
(3) | "Earnings per common share - diluted" |
• | Pretax charges of $12 million for implementation costs related to the Company's restructuring programs. The charges were included in "Cost of sales" ($11 million) and "Selling, general and administrative expenses" ($1 million) in the consolidated statements of income and reflected in Corporate. |
• | Pretax loss of $60 million on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | A tax charge of $223 million related to court rulings on two separate matters that resulted in the adjustment of uncertain tax positions. |