-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LMvd/biZimGB7qEfbXtGtnykf/dM2jSkam/nrvxGs66vWnEJjy9VoyCb0qeW8LTh x9+TDAXce1wFpo4E9LiaXw== 0000912057-01-510638.txt : 20010427 0000912057-01-510638.hdr.sgml : 20010427 ACCESSION NUMBER: 0000912057-01-510638 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010426 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20010426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOW CHEMICAL CO /DE/ CENTRAL INDEX KEY: 0000029915 STANDARD INDUSTRIAL CLASSIFICATION: CHEMICALS & ALLIED PRODUCTS [2800] IRS NUMBER: 381285128 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-03433 FILM NUMBER: 1611539 BUSINESS ADDRESS: STREET 1: 2030 DOW CENTER CITY: MIDLAND STATE: MI ZIP: 48674-2030 BUSINESS PHONE: 5176361000 MAIL ADDRESS: STREET 1: 2030 DOW CENTER CITY: MIDLAND STATE: MI ZIP: 48674-2030 8-K 1 a2046811z8-k.txt 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): APRIL 26, 2001 THE DOW CHEMICAL COMPANY (Exact name of registrant as specified in its charter) DELAWARE 1-3433 38-1285128 (State or other jurisdiction of (Commission file number) (I.R.S. Employer incorporation or organization) 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, former address and former fiscal year, if changed since last report) Item 5. Other Events. On February 6, 2001, The Dow Chemical Company completed its merger with Union Carbide Corporation, which was accounted for as a pooling of interests. For a business combination to qualify for pooling of interests accounting, the Securities and Exchange Commission's Accounting Series Release (ASR) No. 135 requires that no affiliate of either company in the combination sell or in any other way reduce its risk relative to any common shares received in the combination until such time as the financial results covering at least thirty days of post-merger combined operations have been published. Accordingly, attached herewith as Exhibit 99.1, is a press release issued by The Dow Chemical Company on April 26, 2001, announcing results for the first quarter of 2001, which include more than thirty days of post-merger combined operations. This filing is intended to terminate the restrictions set forth by ASR No. 135. Item 7. Financial Statements and Exhibits. (c) Exhibits. 99.1 Press release issued by The Dow Chemical Company on April 26, 2001, announcing results for the first quarter of 2001. - -------------------------------------------------------------------------------- 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 thereunto duly authorized. THE DOW CHEMICAL COMPANY Registrant Date: April 26, 2001 /S/ Frank H. Brod ----------------------------- Frank H. Brod Vice President and Controller - -------------------------------------------------------------------------------- EXHIBIT INDEX Exhibit No. Description 99.1 Press release issued by The Dow Chemical Company on April 26, 2001, announcing results for the first quarter of 2001. - -------------------------------------------------------------------------------- 2 EX-99.1 2 a2046811zex-99_1.txt EXHIBIT 99.1 PRESS RELEASE EXHIBIT 99.1 April 26, 2001 DOW REPORTS FIRST QUARTER RESULTS INCLUDES $1.4 BILLION SPECIAL CHARGE FOR MERGER-RELATED COSTS - -------------------------------------------------------------------------------- FIRST QUARTER OF 2001 HIGHLIGHTS o Dow reported a loss of $0.76 cents per share, which included a special charge of $1.4 billion (pretax), or $1.02 per share, for costs and restructuring related to Dow's recent merger with Union Carbide. o Record first quarter sales of $7.4 billion were up 2 percent from a year ago, on gains in both volume and price. o EBIT was $502 million, excluding the special charge related to the merger, reflecting the impact of continuing high energy and feedstock costs that rose nearly $600 million from a year ago. - --------------------------------------------------------------------------------
3 Months Ended (IN MILLIONS, EXCEPT FOR PER SHARE AMOUNTS) March 31 - --------------------------------------------------------------------------------------------- 2001 2000 ------------ ----------- Net Sales $ 7,386 $ 7,269 Earnings Before Interest, Income Taxes and Minority Interests (EBIT) (882) 902 Earnings Per Common Share $ (0.76) $ 0.57 Excluding Special Charge for Merger-Related Costs*: EBIT 502 902 Earnings Per Common Share $ 0.26 $ 0.57 - ---------------------------------------------------------------------------- ----------- * See Note B to the Financial Statements.
The Dow Chemical Company today reported record first quarter sales of $7.4 billion, up 2 percent from a year ago. The company recorded a loss of $0.76 per share, which included a special charge of $1.4 billion (pretax), or $1.02 per share, for costs related to Dow's recent merger with Union Carbide. The charge included transaction costs, employee severance and the write-down of duplicate assets and facilities. Earnings also were affected by an $0.18 per share gain on the sale of stock in Schlumberger Ltd., an oil field services company. This gain, as well as the special charge for merger-related costs, was recorded in UNALLOCATED AND OTHER. Earnings of $0.04 per share were reclassified as a transition adjustment gain due to an accounting change related to derivative instruments and hedging activities (SFAS No. 133). Excluding the merger-related special charge, Dow reported earnings before interest, income taxes and minority interests (EBIT) of $502 million. This reflected the impact of nearly $600 million in higher energy and feedstock costs that was only partially offset by hedging gains and a rise in price of less than $80 million. 3 "This has been one of the most challenging quarters for the North American chemical industry and also for Dow," said J. Pedro Reinhard, executive vice president and chief financial officer. "We are dealing with a unique situation brought on not just by persistently high oil prices, but also by an unprecedented environment of high and volatile natural gas prices in North America," he said. "Those issues, combined with current supply/demand balances in certain sectors, have impacted our first quarter earnings." Reinhard noted several proactive steps Dow is taking to manage through these conditions. "We have renewed our disciplined focus on costs and capital expenditures," he said. "We have announced and implemented several pricing initiatives and, in response to the natural gas prices, we have temporarily reduced production in some of our North American facilities where Dow would not have recovered its cash costs." "Beyond these actions, Dow's key priorities are to capture the cost synergies of its merger with Union Carbide and to accelerate the most significant Six Sigma projects with a focus on cost savings," Reinhard said. "The current economic and business environment has toughened our resolve to deliver long-term shareholder value." Results from Union Carbide operations were reflected in Dow's earnings for the full quarter - though the merger was completed in February - because the transaction was accounted for as a pooling of interests. Volume and price each rose 1 percent from the same quarter last year. Dow's balanced geographic mix allowed it to benefit from volume growth in both Europe and Latin America, compensating for slowing demand in North America, particularly in the automotive and electronics industries. Price increases in North America more than offset price declines in Europe, Asia Pacific and Latin America. In Performance Plastics and Performance Chemicals, combined EBIT was $317 million, compared with $468 million for the same quarter last year. Performance Plastics recorded a 2 percent rise in volume while both segments posted 3 percent gains in price. The higher prices are bringing some relief from the cumulative negative impact of hydrocarbon feedstock and energy costs that have squeezed margins for the past year. Volume in Performance Chemicals declined and was impacted by the divestiture of certain businesses required for the regulatory approval of the Union Carbide merger. Agricultural Products EBIT declined from a year ago, reflecting adverse conditions worldwide in the agricultural industry and the effect of discontinued applications of certain products. In the combined Chemicals and Plastics segments, EBIT declined to $26 million, primarily due to the impact of high energy and feedstock costs. In Chemicals sales, a 3 percent rise in price was more than offset by a 7 percent decline in volume. In Plastics, volume rose 3 percent, while price decreased 4 percent. According to Reinhard, "Based on current feedstock and energy prices, the slower growth environment around the world and our expectation of some improvement in pricing, along with the realization of cost synergies from the Union Carbide merger, Dow anticipates improved earnings in the second quarter." Dow estimates earnings of between $0.35 to $0.45 per share. 4 UPCOMING INVESTOR MEETINGS AND LIVE WEBCASTS: o Dow will host a live audio Webcast of its first quarter earnings conference call with investors to discuss its results and business outlook at 10 a.m. EDT today on WWW.DOW.COM. o Dow has scheduled an investor meeting for Tuesday, May 1, to report on the integration of its merger with Union Carbide and provide updated projections for cost synergies. The meeting will begin at 8:00 a.m. EDT and will be Webcast live on WWW.DOW.COM. o Dow plans a live audio Webcast of its Annual Meeting of Stockholders on Thursday, May 10, at 2 p.m. EDT on WWW.DOW.COM. ABOUT DOW Dow is a leading science and technology company that provides innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of approximately $30 billion, Dow serves customers in more than 170 countries and a wide range of markets that are vital to human progress, including food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its approximately 50,000 employees seek to balance economic, environmental and social responsibilities. Note: The forward-looking statements contained in this document involve risks and uncertainties that may affect the company's operations, markets, products, services, prices and other factors as discussed in filings with the Securities and Exchange Commission. These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the company's expectations will be realized. The company assumes no obligation to provide revisions to any forward-looking statements should circumstances change. 5 THE DOW CHEMICAL COMPANY - 1Q01 EARNINGS FINANCIAL STATEMENTS (Note A) THE DOW CHEMICAL COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MAR. 31, MAR. 31, In millions except for per share amounts (Unaudited) 2001 2000 - ---------------------------------------------------------------------------------------------------------------------------------- Net Sales $7,386 $7,269 - ---------------------------------------------------------------------------------------------------------------------------------- Cost of sales 6,456 5,842 Research and development expenses 272 270 Selling, general and administrative expenses 452 474 Amortization of intangibles 33 41 Merger-related expenses and restructuring (Note B) 1,384 - Insurance and finance company operations, pretax income 11 29 Equity in earnings of nonconsolidated affiliates 35 130 Sundry income - net 283 101 - ---------------------------------------------------------------------------------------------------------------------------------- Earnings (Loss) before Interest, Income Taxes and Minority Interests (882) 902 - ---------------------------------------------------------------------------------------------------------------------------------- Interest income 24 45 Interest expense and amortization of debt discount 182 155 - ---------------------------------------------------------------------------------------------------------------------------------- Income (Loss) before Income Taxes and Minority Interests (1,040) 792 - ---------------------------------------------------------------------------------------------------------------------------------- Provision for income taxes (340) 262 Minority interests' share in income 17 18 - ---------------------------------------------------------------------------------------------------------------------------------- Income (Loss) before Cumulative Effect of Change in Accounting Principle (717) 512 - ---------------------------------------------------------------------------------------------------------------------------------- Cumulative effect of change in accounting principle (Note C) 32 - - ---------------------------------------------------------------------------------------------------------------------------------- Net Income (Loss) Available for Common Stockholders ($685) $512 - ---------------------------------------------------------------------------------------------------------------------------------- Share Data Earnings (Loss) before cumulative effect of change in accounting principle per common share - basic ($0.80) $0.58 Earnings (Loss) per common share - basic ($0.76) $0.58 Earnings (Loss) before cumulative effect of change in accounting principle per common share - diluted ($0.80) $0.57 Earnings (Loss) per common share - diluted ($0.76) $0.57 Common stock dividends declared per share of Dow common stock $0.29 $0.29 Weighted-average common shares outstanding - basic 898.1 889.6 Weighted-average common shares outstanding - diluted 898.1 903.8 - ---------------------------------------------------------------------------------------------------------------------------------- Depreciation $388 $368 - ---------------------------------------------------------------------------------------------------------------------------------- Capital Expenditures $273 $439 - ----------------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS: NOTE A: ON FEBRUARY 6, 2001, A WHOLLY OWNED SUBSIDIARY OF THE DOW CHEMICAL COMPANY ("DOW" OR "COMPANY") MERGED WITH UNION CARBIDE CORPORATION ("UNION CARBIDE") AND, AS A RESULT, UNION CARBIDE BECAME A WHOLLY OWNED SUBSIDIARY OF THE COMPANY. THE MERGER WAS ACCOUNTED FOR AS A POOLING OF INTERESTS. ACCORDINGLY, THE CONSOLIDATED FINANCIAL STATEMENTS HAVE BEEN PREPARED TO GIVE RETROACTIVE EFFECT TO THE MERGER AND INCLUDE THE COMBINED ACCOUNTS OF DOW AND UNION CARBIDE FOR ALL PERIODS PRESENTED. THE UNAUDITED INTERIM FINANCIAL STATEMENTS REFLECT ALL ADJUSTMENTS (CONSISTING OF NORMAL RECURRING ACCRUALS) WHICH, IN THE OPINION OF MANAGEMENT, ARE CONSIDERED NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS FOR THE PERIODS COVERED. CERTAIN RECLASSIFICATIONS OF PRIOR YEAR AMOUNTS HAVE BEEN MADE TO CONFORM TO CURRENT YEAR PRESENTATION. THESE STATEMENTS SHOULD BE READ IN CONJUNCTION WITH THE SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED IN A FORM 8-K FILED BY THE COMPANY ON APRIL 4, 2001 FOR THE YEAR ENDED DECEMBER 31, 2000. NOTE B: IN THE FIRST QUARTER OF 2001, PRETAX COSTS OF $1,384 MILLION WERE RECORDED FOR MERGER-RELATED EXPENSES AND RESTRUCTURING. THESE COSTS INCLUDED TRANSACTION COSTS, EMPLOYEE SEVERANCE, AND THE WRITE-DOWN OF DUPLICATE ASSETS AND FACILITIES. NOTE C: ON JANUARY 1, 2001, THE COMPANY RECORDED A CUMULATIVE TRANSITION ADJUSTMENT GAIN OF $32 MILLION (NET OF RELATED INCOME TAX OF $19 MILLION), UPON ADOPTION OF SFAS NO. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES." 6 THE DOW CHEMICAL COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
MAR. 31, DEC. 31, In millions (Unaudited) 2001 2000 - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS - ---------------------------------------------------------------------------------------------------------------------------------- Current Assets Cash and cash equivalents $244 $278 Marketable securities and interest-bearing deposits 246 163 Accounts and notes receivable: Trade (net of allowance for doubtful receivables - 2001: $121; 2000: $103) 3,594 3,655 Other 2,603 2,764 Inventories: Finished and work in process 3,618 3,396 Materials and supplies 759 817 Deferred income tax assets - current 687 250 ----------------------------------------------------------------------------------------------------------------------------- Total current assets 11,751 11,323 - ---------------------------------------------------------------------------------------------------------------------------------- Investments Investment in nonconsolidated affiliates 1,954 2,096 Other investments 1,819 2,528 Noncurrent receivables 676 674 ----------------------------------------------------------------------------------------------------------------------------- Total investments 4,449 5,298 - ---------------------------------------------------------------------------------------------------------------------------------- Property Property 34,475 34,852 Less accumulated depreciation 21,495 21,141 ----------------------------------------------------------------------------------------------------------------------------- Net property 12,980 13,711 - ---------------------------------------------------------------------------------------------------------------------------------- Other Assets Goodwill (net of accumulated amortization - 2001: $491; 2000: $459) 2,226 1,928 Deferred income tax assets - noncurrent 2,092 1,968 Deferred charges and other assets 1,932 1,763 ----------------------------------------------------------------------------------------------------------------------------- Total other assets 6,250 5,659 - ---------------------------------------------------------------------------------------------------------------------------------- Total Assets $35,430 $35,991 - ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY - ---------------------------------------------------------------------------------------------------------------------------------- Current Liabilities Notes payable $3,086 $2,519 Long-term debt due within one year 307 318 Accounts payable: Trade 2,540 2,975 Other 1,203 1,594 Income taxes payable 285 258 Deferred income tax liabilities - current 7 35 Dividends payable 152 217 Accrued and other current liabilities 2,182 2,257 ----------------------------------------------------------------------------------------------------------------------------- Total current liabilities 9,762 10,173 - ---------------------------------------------------------------------------------------------------------------------------------- Long-Term Debt 7,139 6,613 - ---------------------------------------------------------------------------------------------------------------------------------- Other Noncurrent Liabilities Deferred income tax liabilities - noncurrent 1,384 1,165 Pension and other postretirement benefits - noncurrent 2,408 2,238 Other noncurrent obligations 3,241 3,012 ----------------------------------------------------------------------------------------------------------------------------- Total other noncurrent liabilities 7,033 6,415 - ---------------------------------------------------------------------------------------------------------------------------------- Minority Interest in Subsidiaries 416 450 - ---------------------------------------------------------------------------------------------------------------------------------- Preferred Securities of Subsidiary 500 500 - ---------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity Common stock 2,453 2,453 Additional paid-in capital 42 - Unearned ESOP shares (103) (103) Retained earnings 11,729 12,675 Accumulated other comprehensive loss (926) (560) Treasury stock at cost (2,615) (2,625) ----------------------------------------------------------------------------------------------------------------------------- Net stockholders' equity 10,580 11,840 - ---------------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $35,430 $35,991 - ---------------------------------------------------------------------------------------------------------------------------------- SEE NOTES TO FINANCIAL STATEMENTS.
7
OPERATING SEGMENTS AND GEOGRAPHIC AREAS THE DOW CHEMICAL COMPANY AND SUBSIDIARIES - ----------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED MAR. 31, MAR. 31, In millions (Unaudited) 2001 2000 - ---------------------------------------------------------------------------------------------------------------------------------- Operating segment sales Performance Plastics $1,921 $1,827 Performance Chemicals 1,310 1,338 Agricultural Products 605 633 Plastics 1,769 1,779 Chemicals 996 1,038 Hydrocarbons and Energy 709 571 Unallocated and Other 76 83 - ---------------------------------------------------------------------------------------------------------------------------------- Total $7,386 $7,269 - ---------------------------------------------------------------------------------------------------------------------------------- Operating segment EBIT Performance Plastics $217 $316 Performance Chemicals 100 152 Agricultural Products 43 90 Plastics 33 260 Chemicals (7) 143 Hydrocarbons and Energy 11 18 Unallocated and Other (1,279) (77) - ---------------------------------------------------------------------------------------------------------------------------------- Total ($882) $902 ================================================================================================================================== Geographic area sales United States $3,205 $3,137 Europe 2,370 2,264 Rest of World 1,811 1,868 - ---------------------------------------------------------------------------------------------------------------------------------- Total $7,386 $7,269 ==================================================================================================================================
SALES VOLUME AND PRICE BY OPERATING SEGMENT AND GEOGRAPHIC AREA - ---------------------------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED MAR. 31, 2001 Percentage change from prior year VOLUME PRICE TOTAL - ---------------------------------------------------------------------------------------------------------------------------------- Operating segments Performance Plastics 2 % 3 % 5 % Performance Chemicals (5)% 3 % (2)% Agricultural Products 2 % (6)% (4)% Plastics 3 % (4)% (1)% Chemicals (7)% 3 % (4)% Hydrocarbons and Energy 14 % 10 % 24 % - ---------------------------------------------------------------------------------------------------------------------------------- Total 1 % 1 % 2 % ================================================================================================================================== Geographic areas United States (2)% 4 % 2 % Europe 7 % (2)% 5 % Rest of World (2)% (1)% (3)% - ---------------------------------------------------------------------------------------------------------------------------------- Total 1 % 1% 2 % ==================================================================================================================================
END OF DOW CHEMICAL 1Q01 EARNINGS RELEASE 8 -----END PRIVACY-ENHANCED MESSAGE-----