UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period
ended
MARCH
31,
2009
Commission
File Number: 1-3433
THE
DOW CHEMICAL COMPANY
(Exact
name of registrant as specified in its charter)
|
|
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
38-1285128
(I.R.S.
Employer Identification No.)
|
2030
DOW CENTER, MIDLAND, MICHIGAN 48674
(Address
of principal executive offices) (Zip Code)
989-636-1000
(Registrant's
telephone number, including area code)
|
|
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90
days. þ
Yes o
No
|
|
Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files). o
Yes o No
|
|
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
|
|
Large
accelerated filer þ
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company o
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange
Act). o
Yes þ
No
|
|
Class
Common
Stock, par value $2.50 per share
|
Outstanding at March 31, 2009
925,833,122
shares
|
The
Dow Chemical Company
QUARTERLY
REPORT ON FORM 10-Q
For
the quarterly period ended March 31, 2009
|
PAGE
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PART
I – FINANCIAL INFORMATION
|
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Item
1.
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3
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3
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4
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5
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6
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7
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8
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Item
2.
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36
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36
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36
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43
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46
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Item
3.
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49
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Item
4.
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50
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PART
II – OTHER INFORMATION
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Item
1.
|
51
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Item
1A.
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51
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Item
2.
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54
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Item
6.
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54
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56
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57
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PART
I - FINANCIAL INFORMATION
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|||||||||
Item 1. Financial Statements.
|
|||||||||
The Dow Chemical Company and Subsidiaries | |||||||||
Consolidated Statements of Income | |||||||||
Three
Months Ended
|
|||||||||
March
31,
|
March
31,
|
||||||||
In
millions, except per share
amounts (Unaudited)
|
2009
|
2008
|
|||||||
Net
Sales
|
$ | 9,087 | $ | 14,824 | |||||
Cost
of sales
|
8,165 | 12,908 | |||||||
Research
and development expenses
|
292 | 331 | |||||||
Selling,
general and administrative expenses
|
444 | 498 | |||||||
Amortization
of intangibles
|
22 | 22 | |||||||
Restructuring
charges
|
19 | - | |||||||
Acquisition-related
expenses
|
48 | - | |||||||
Equity
in earnings of nonconsolidated affiliates
|
65 | 274 | |||||||
Sundry
income (expense) - net
|
(3 | ) | 46 | ||||||
Interest
income
|
12 | 24 | |||||||
Interest
expense and amortization of debt discount
|
154 | 145 | |||||||
Income
before Income Taxes
|
17 | 1,264 | |||||||
Provision
(Credit) for income taxes
|
(18 | ) | 299 | ||||||
Net
Income
|
35 | 965 | |||||||
Net
income attributable to noncontrolling interests
|
11 | 24 | |||||||
Net
Income Attributable to The Dow Chemical Company
|
$ | 24 | $ | 941 | |||||
Share
Data
|
|||||||||
Earnings
per common share - basic
|
$ | 0.03 | $ | 1.00 | |||||
Earnings
per common share - diluted
|
$ | 0.03 | $ | 0.99 | |||||
Common
stock dividends declared per share of common stock
|
$ | 0.15 | $ | 0.42 | |||||
Weighted-average
common shares outstanding - basic
|
925.4 | 942.1 | |||||||
Weighted-average
common shares outstanding - diluted
|
932.0 | 951.6 | |||||||
Depreciation
|
$ | 455 | $ | 495 | |||||
Capital
Expenditures
|
$ | 234 | $ | 359 | |||||
See
Notes to the Consolidated Financial Statements.
|
The
Dow Chemical Company and Subsidiaries
|
||||||||
Consolidated Balance Sheets | ||||||||
March
31,
|
Dec. 31, | |||||||
In
millions (Unaudited)
|
2009
|
2008
|
||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
and cash equivalents
|
$ | 2,956 | $ | 2,800 | ||||
Accounts
and notes receivable:
|
||||||||
Trade
(net of allowance for doubtful receivables - 2009: $141; 2008:
$124)
|
3,819 | 3,782 | ||||||
Other
|
2,714 | 3,074 | ||||||
Inventories
|
5,916 | 6,036 | ||||||
Deferred
income tax assets - current
|
201 | 368 | ||||||
Total
current assets
|
15,606 | 16,060 | ||||||
Investments
|
||||||||
Investment
in nonconsolidated affiliates
|
2,627 | 3,204 | ||||||
Other
investments
|
2,165 | 2,245 | ||||||
Noncurrent
receivables
|
336 | 276 | ||||||
Total
investments
|
5,128 | 5,725 | ||||||
Property
|
||||||||
Property
|
47,370 | 48,391 | ||||||
Less
accumulated depreciation
|
33,547 | 34,097 | ||||||
Net
property
|
13,823 | 14,294 | ||||||
Other
Assets
|
||||||||
Goodwill
|
3,392 | 3,394 | ||||||
Other
intangible assets (net of accumulated amortization - 2009: $853; 2008:
$825)
|
813 | 829 | ||||||
Deferred
income tax assets - noncurrent
|
3,865 | 3,900 | ||||||
Asbestos-related
insurance receivables - noncurrent
|
657 | 658 | ||||||
Deferred
charges and other assets
|
875 | 614 | ||||||
Total
other assets
|
9,602 | 9,395 | ||||||
Total
Assets
|
$ | 44,159 | $ | 45,474 | ||||
Liabilities
and Equity
|
||||||||
Current
Liabilities
|
||||||||
Notes
payable
|
$ | 844 | $ | 2,360 | ||||
Long-term
debt due within one year
|
1,223 | 1,454 | ||||||
Accounts
payable:
|
||||||||
Trade
|
2,885 | 3,306 | ||||||
Other
|
1,972 | 2,227 | ||||||
Income
taxes payable
|
305 | 637 | ||||||
Deferred
income tax liabilities - current
|
64 | 88 | ||||||
Dividends
payable
|
141 | 411 | ||||||
Accrued
and other current liabilities
|
2,318 | 2,625 | ||||||
Total
current liabilities
|
9,752 | 13,108 | ||||||
Long-Term
Debt
|
10,897 | 8,042 | ||||||
Other
Noncurrent Liabilities
|
||||||||
Deferred
income tax liabilities - noncurrent
|
613 | 746 | ||||||
Pension
and other postretirement benefits - noncurrent
|
5,420 | 5,466 | ||||||
Asbestos-related
liabilities - noncurrent
|
800 | 824 | ||||||
Other
noncurrent obligations
|
2,998 | 3,208 | ||||||
Total
other noncurrent liabilities
|
9,831 | 10,244 | ||||||
Preferred
Securities of Subsidiaries
|
500 | 500 | ||||||
Stockholders'
Equity
|
||||||||
Common
stock
|
2,453 | 2,453 | ||||||
Additional
paid-in capital
|
825 | 872 | ||||||
Retained
earnings
|
16,896 | 17,013 | ||||||
Accumulated
other comprehensive loss
|
(4,674 | ) | (4,389 | ) | ||||
Treasury
stock at cost
|
(2,384 | ) | (2,438 | ) | ||||
The
Dow Chemical Company's stockholders' equity
|
13,116 | 13,511 | ||||||
Noncontrolling
interests
|
63 | 69 | ||||||
Total
equity
|
13,179 | 13,580 | ||||||
Total
Liabilities and Equity
|
$ | 44,159 | $ | 45,474 | ||||
See
Notes to the Consolidated Financial Statements.
|
The
Dow Chemical Company and Subsidiaries
|
||||||||
Three
Months Ended
|
||||||||
March
31,
|
March
31,
|
|||||||
In
millions (Unaudited)
|
2009
|
2008
|
||||||
Operating
Activities
|
||||||||
Net
Income
|
$ | 35 | $ | 965 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
508 | 574 | ||||||
Provision
(Credit) for deferred income tax
|
(83 | ) | 64 | |||||
Earnings
of nonconsolidated affiliates less than dividends received
|
496 | 45 | ||||||
Pension
contributions
|
(51 | ) | (43 | ) | ||||
Net
loss (gain) on sale of consolidated companies
|
10 | (18 | ) | |||||
Net
loss (gain) on sales of investments
|
2 | (18 | ) | |||||
Net
gain on sales of property and businesses
|
(10 | ) | (25 | ) | ||||
Other
net loss
|
- | 1 | ||||||
Restructuring
charges
|
19 | - | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
and notes receivable
|
(23 | ) | (689 | ) | ||||
Inventories
|
120 | (786 | ) | |||||
Accounts
payable
|
(614 | ) | 326 | |||||
Other
assets and liabilities
|
(486 | ) | 51 | |||||
Cash
provided by (used in) operating activities
|
(77 | ) | 447 | |||||
Investing
Activities
|
||||||||
Capital
expenditures
|
(234 | ) | (359 | ) | ||||
Proceeds
from sales of property, businesses and consolidated
companies
|
33 | 88 | ||||||
Acquisitions
of businesses
|
(5 | ) | - | |||||
Purchase
of previously leased assets
|
- | (10 | ) | |||||
Investments
in consolidated companies
|
(7 | ) | (31 | ) | ||||
Investments
in nonconsolidated affiliates
|
(17 | ) | (27 | ) | ||||
Distributions
from nonconsolidated affiliates
|
3 | 2 | ||||||
Purchases
of investments
|
(108 | ) | (285 | ) | ||||
Proceeds
from sales and maturities of investments
|
159 | 332 | ||||||
Cash
used in investing activities
|
(176 | ) | (290 | ) | ||||
Financing
Activities
|
||||||||
Changes
in short-term notes payable
|
(1,564 | ) | 559 | |||||
Proceeds
from revolving credit facility
|
3,000 | - | ||||||
Payments
on long-term debt
|
(367 | ) | (57 | ) | ||||
Proceeds
from issuance of long-term debt
|
74 | 5 | ||||||
Purchases
of treasury stock
|
(5 | ) | (411 | ) | ||||
Proceeds
from sales of common stock
|
- | 21 | ||||||
Payment
of deferred financing costs
|
(265 | ) | - | |||||
Distributions
to noncontrolling interests
|
(23 | ) | (22 | ) | ||||
Dividends
paid to stockholders
|
(388 | ) | (395 | ) | ||||
Cash
provided by (used in) financing activities
|
462 | (300 | ) | |||||
Effect
of Exchange Rate Changes on Cash
|
(53 | ) | 80 | |||||
Summary
|
||||||||
Increase
(Decrease) in cash and cash equivalents
|
156 | (63 | ) | |||||
Cash
and cash equivalents at beginning of year
|
2,800 | 1,736 | ||||||
Cash
and cash equivalents at end of period
|
$ | 2,956 | $ | 1,673 | ||||
See
Notes to the Consolidated Financial Statements.
|
The
Dow Chemical Company and Subsidiaries
|
||||||||
Three Months Ended
|
||||||||
March
31,
|
March
31,
|
|||||||
In
millions (Unaudited)
|
2009
|
2008
|
||||||
Common
Stock
|
||||||||
Balance
at beginning of year and end of period
|
$ | 2,453 | $ | 2,453 | ||||
Additional
Paid-in Capital
|
||||||||
Balance
at beginning of year
|
872 | 902 | ||||||
Stock-based
compensation
|
(47 | ) | 45 | |||||
Balance
at end of period
|
825 | 947 | ||||||
Retained
Earnings
|
||||||||
Balance
at beginning of year
|
17,013 | 18,004 | ||||||
Net
income attributable to The Dow Chemical Company
|
24 | 941 | ||||||
Dividends
declared on common stock (Per share: $0.15 in 2009, $0.42 in
2008)
|
(139 | ) | (391 | ) | ||||
Other
|
(2 | ) | (12 | ) | ||||
Balance
at end of period
|
16,896 | 18,542 | ||||||
Accumulated
Other Comprehensive Income (Loss), Net of Tax
|
||||||||
Unrealized
Gains (Losses) on Investments at beginning of year
|
(111 | ) | 71 | |||||
Unrealized
losses
|
(24 | ) | (29 | ) | ||||
Balance
at end of period
|
(135 | ) | 42 | |||||
Cumulative
Translation Adjustments at beginning of year
|
221 | 723 | ||||||
Translation
adjustments
|
(384 | ) | 573 | |||||
Balance
at end of period
|
(163 | ) | 1,296 | |||||
Pension
and Other Postretirement Benefit Plans at beginning of
year
|
(4,251 | ) | (989 | ) | ||||
Adjustments
to pension and other postretirement benefit plans
|
5 | 14 | ||||||
Pension
and Other Postretirement Benefit Plans at end of period
|
(4,246 | ) | (975 | ) | ||||
Accumulated
Derivative Gain (Loss) at beginning of year
|
(248 | ) | 25 | |||||
Net
hedging results
|
(61 | ) | 22 | |||||
Reclassification
to earnings
|
179 | 5 | ||||||
Balance
at end of period
|
(130 | ) | 52 | |||||
Total
accumulated other comprehensive income (loss)
|
(4,674 | ) | 415 | |||||
Treasury
Stock
|
||||||||
Balance
at beginning of year
|
(2,438 | ) | (1,800 | ) | ||||
Purchases
|
(5 | ) | (411 | ) | ||||
Issuance
to employees and employee plans
|
59 | 33 | ||||||
Balance
at end of period
|
(2,384 | ) | (2,178 | ) | ||||
The
Dow Chemical Company's Stockholders' Equity
|
13,116 | 20,179 | ||||||
Noncontrolling
Interests
|
||||||||
Balance
at beginning of year
|
69 | 414 | ||||||
Net
income attributable to noncontrolling interests
|
11 | 24 | ||||||
Other
|
(17 | ) | (8 | ) | ||||
Balance
at end of period
|
63 | 430 | ||||||
Total
Equity
|
$ | 13,179 | $ | 20,609 | ||||
See
Notes to the Consolidated Financial Statements.
|
The
Dow Chemical Company and Subsidiaries
|
||||||||
Three Months Ended
|
||||||||
March
31,
|
March
31,
|
|||||||
In
millions (Unaudited)
|
2009
|
2008
|
||||||
Net
Income
|
$ | 35 | $ | 965 | ||||
Other
Comprehensive Income (Loss), Net of Tax
|
||||||||
Net
unrealized losses on investments
|
(24 | ) | (29 | ) | ||||
Translation
adjustments
|
(384 | ) | 573 | |||||
Adjustments
to pension and other postretirement benefit plans
|
5 | 14 | ||||||
Net
gains on cash flow hedging derivative instruments
|
118 | 27 | ||||||
Total
other comprehensive income (loss)
|
(285 | ) | 585 | |||||
Comprehensive
Income (Loss)
|
(250 | ) | 1,550 | |||||
Comprehensive
income attributable to noncontrolling interests, net of
tax
|
11 | 24 | ||||||
Comprehensive
Income (Loss) Attributable to The Dow Chemical Company
|
$ | (261 | ) | $ | 1,526 | |||
See
Notes to the Consolidated Financial Statements.
|
The Dow Chemical Company and
Subsidiaries
|
||
PART I – FINANCIAL
INFORMATION, Item 1. Financial Statements.
|
||
(Unaudited) |
·
|
The
Consolidated Statements of Income now present “Net Income,” which includes
“Net income attributable to noncontrolling interests” and “Net Income
Attributable to The Dow Chemical Company.” “Net Income Attributable to The
Dow Chemical Company” is equivalent to the previously reported “Net Income
Available for Common Stockholders.” No change was required to the
presentation of earnings per share.
|
·
|
The
Consolidated Balance Sheets now present “Noncontrolling interests” as a
component of “Total equity.” “Noncontrolling interests” is equivalent to
the previously reported “Minority Interest in Subsidiaries.” “The Dow
Chemical Company’s stockholders’ equity” is equivalent to the previously
reported “Net stockholders’ equity.”
|
·
|
The
Consolidated Statements of Comprehensive Income now present “Comprehensive
Income,” which includes “Comprehensive income attributable to
noncontrolling interests” and “Comprehensive Income Attributable to The
Dow Chemical Company.” “Comprehensive Income Attributable to The Dow
Chemical Company” is equivalent to the previously reported “Comprehensive
Income.”
|
·
|
The
Consolidated Statements of Cash Flows now begin with “Net Income” instead
of “Net Income Available for Common Stockholders.”
|
·
|
Interim
Consolidated Statements of Equity have been added to fulfill the
disclosure requirements of SFAS
No. 160.
|
2009
Activities Related to 2008 Restructuring
In
millions
|
Costs
associated
with
Exit or
Disposal
Activities
|
Severance
Costs
|
Total
|
|||||||||
Reserve
balance at December 31, 2008
|
$ | 128 | $ | 319 | $ | 447 | ||||||
Adjustment
to reserve
|
- | 19 | 19 | |||||||||
Cash
payments
|
- | (123 | ) | (123 | ) | |||||||
Foreign
currency impact
|
- | (5 | ) | (5 | ) | |||||||
Reserve
balance at March 31, 2009
|
$ | 128 | $ | 210 | $ | 338 |
2009
Activities Related to 2007 Restructuring
In
millions
|
Costs
associated
with
Exit or
Disposal
Activities
|
Severance
Costs
|
Total
|
|||||||||
Reserve
balance at December 31, 2008
|
$ | 93 | $ | 37 | $ | 130 | ||||||
Cash
payments
|
(18 | ) | (12 | ) | (30 | ) | ||||||
Foreign
currency impact
|
1 | (1 | ) | - | ||||||||
Reserve
balance at March 31, 2009
|
$ | 76 | $ | 24 | $ | 100 |
2009
Activities Related to 2006 Restructuring
In
millions
|
Costs
associated
with
Exit or
Disposal
Activities
|
Severance
Costs
|
Total
|
|||||||||
Reserve
balance at December 31, 2008
|
$ | 92 | $ | 14 | $ | 106 | ||||||
Cash
payments
|
(3 | ) | (4 | ) | (7 | ) | ||||||
Foreign
currency impact
|
(1 | ) | - | (1 | ) | |||||||
Reserve
balance at March 31, 2009
|
$ | 88 | $ | 10 | $ | 98 |
Inventories
In
millions
|
March
31,
2009
|
Dec.
31,
2008
|
||||||
Finished
goods
|
$ | 3,239 | $ | 3,351 | ||||
Work
in process
|
1,215 | 1,217 | ||||||
Raw
materials
|
823 | 830 | ||||||
Supplies
|
639 | 638 | ||||||
Total
inventories
|
$ | 5,916 | $ | 6,036 |
Goodwill
In
millions
|
Performance
Plastics
|
Performance
Chemicals
|
Agricultural
Sciences
|
Basic
Plastics
|
Hydrocarbons
and
Energy
|
Total
|
||||||||||||||||||
Balance
at December 31, 2008
|
$ | 874 | $ | 1,001 | $ | 1,391 | $ | 65 | $ | 63 | $ | 3,394 | ||||||||||||
Adjustment
to goodwill related to the 2008 acquisition of Dairyland Seed Co.,
Inc.
|
- | - | (2 | ) | - | - | (2 | ) | ||||||||||||||||
Balance
at March 31, 2009
|
$ | 874 | $ | 1,001 | $ | 1,389 | $ | 65 | $ | 63 | $ | 3,392 |
Other
Intangible Assets
|
At
March 31, 2009
|
At
December 31, 2008
|
||||||||||||||||||||||
In
millions
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
Gross
Carrying
Amount
|
Accumulated
Amortization
|
Net
|
||||||||||||||||||
Intangible
assets with finite lives:
|
||||||||||||||||||||||||
Licenses
and intellectual property
|
$ | 309 | $ | (197 | ) | $ | 112 | $ | 316 | $ | (192 | ) | $ | 124 | ||||||||||
Patents
|
139 | (101 | ) | 38 | 139 | (100 | ) | 39 | ||||||||||||||||
Software
|
719 | (373 | ) | 346 | 700 | (363 | ) | 337 | ||||||||||||||||
Trademarks
|
174 | (63 | ) | 111 | 169 | (61 | ) | 108 | ||||||||||||||||
Other
|
325 | (119 | ) | 206 | 330 | (109 | ) | 221 | ||||||||||||||||
Total
|
$ | 1,666 | $ | (853 | ) | $ | 813 | $ | 1,654 | $ | (825 | ) | $ | 829 |
Amortization
Expense
|
Three Months Ended
|
|
In
millions
|
March
31,
2009
|
March
31,
2008
|
Other
intangible assets, excluding software
|
$22
|
$22
|
Software,
included in “Cost of sales”
|
$14
|
$11
|
Estimated
Amortization Expense
In
millions
|
|
2009
|
$140
|
2010
|
$143
|
2011
|
$132
|
2012
|
$114
|
2013
|
$93
|
2014
|
$85
|
Fair
Value of Derivative Instruments In millions |
Balance
Sheet Classification
|
March
31,
2009
|
Dec.
31,
2008
|
||||||
Asset
Derivatives
|
|||||||||
Derivatives
designated as hedges:
|
|||||||||
Foreign
currency
|
Accounts
and notes receivable – Other
|
$ | 44 | $ | 77 | ||||
Commodities
|
Accounts
and notes receivable – Other
|
79 | 68 | ||||||
Total
derivatives designated as hedges
|
$ | 123 | $ | 145 | |||||
Derivatives
not designated as hedges:
|
|||||||||
Foreign
currency
|
Accounts
and notes receivable – Other
|
$ | 114 | $ | 235 | ||||
Commodities
|
Accounts
and notes receivable – Other
|
37 | 63 | ||||||
Total
derivatives not designated as hedges
|
$ | 151 | $ | 298 | |||||
Total
asset derivatives
|
$ | 274 | $ | 443 | |||||
Liability
Derivatives
|
|||||||||
Derivatives
designated as hedges:
|
|||||||||
Foreign
currency
|
Accounts
payable – Other
|
$ | 47 | $ | 69 | ||||
Commodities
|
Accounts
payable – Other
|
171 | 262 | ||||||
Commodities
|
Other
noncurrent obligations
|
- | 22 | ||||||
Total
derivatives designated as hedges
|
$ | 218 | $ | 353 | |||||
Derivatives
not designated as hedges:
|
|||||||||
Foreign
currency
|
Accounts
payable – Other
|
$ | 156 | $ | 284 | ||||
Commodities
|
Accounts
payable – Other
|
36 | 61 | ||||||
Total
derivatives not designated as hedges
|
$ | 192 | $ | 345 | |||||
Total
liability derivatives
|
$ | 410 | $ | 698 |
Effect
of Derivative Instruments for the three months ended March 31,
2009
In
millions
|
Change in
Unrealized
Gain (Loss)
in AOCI (1,2)
|
Income
Statement Classification
|
Gain (Loss) Reclassified
from AOCI to
Income (3)
|
Additional Loss Recognized in
Income (3,4)
|
||||||||||||
Derivatives
designated as hedges:
|
||||||||||||||||
Cash
flow:
|
||||||||||||||||
Interest
rates
|
- |
Cost
of sales
|
$ | (3 | ) | - | ||||||||||
Commodities
|
$ | (5 | ) |
Cost
of sales
|
(187 | ) | $ | (1 | ) | |||||||
Foreign
currency
|
(10 | ) |
Cost
of sales
|
11 | - | |||||||||||
Net
foreign investment:
|
||||||||||||||||
Foreign
currency
|
(3 | ) | n/a |
|
- | - | ||||||||||
Total
derivatives designated as hedges
|
$ | (18 | ) | $ | (179 | ) | $ | (1 | ) | |||||||
Derivatives
not designated as hedges:
|
||||||||||||||||
Foreign
currency (5)
|
- |
Sundry
income – net
|
- | $ | (94 | ) | ||||||||||
Commodities
|
- |
Cost
of sales
|
- | (1 | ) | |||||||||||
Total
derivatives not designated as hedges
|
- | - | $ | (95 | ) | |||||||||||
Total
derivatives
|
$ | (18 | ) | $ | (179 | ) | $ | (96 | ) |
(1)
|
Accumulated
other comprehensive income (loss)
(“AOCI”)
|
(2)
|
Net
unrealized gains/losses from hedges related to interest rates and
commodities are included in “Accumulated Derivative Gain (Loss) – Net
hedging results” in the consolidated statements of equity; net unrealized
gains/losses from hedges related to foreign currency (net of tax) are
included in “Cumulative Translation Adjustments – Translation adjustments”
in the consolidated statements of
equity.
|
(3)
|
Pretax
amounts.
|
(4)
|
Amounts
impacting income not related to AOCI reclassification; also includes
immaterial amounts of hedge
ineffectiveness.
|
(5)
|
Foreign
currency derivatives not designated as hedges under SFAS No. 133 are
offset by foreign exchange gains of $93 million resulting from the
underlying exposures of foreign currency denominated assets and
liabilities per SFAS No. 52, “Foreign Currency
Translation.”
|
Basis
of Fair Value Measurements at March 31, 2009
In
millions
|
Quoted
Prices
in
Active
Markets
for Identical Items
(Level
1)
|
Significant
Other
Observable
Inputs
(Level
2)
|
Counterparty
and Cash Collateral
Netting (1)
|
Total
|
||||||||||||
Assets
at fair value:
|
||||||||||||||||
Equity
securities (2)
|
$ | 321 | $ | 21 | - | $ | 342 | |||||||||
Debt
securities (2)
|
- | 1,430 | - | 1,430 | ||||||||||||
Derivatives
relating to: (3)
|
||||||||||||||||
Foreign
currency
|
- | 158 | $ | (84 | ) | 74 | ||||||||||
Commodities
|
- | 116 | (67 | ) | 49 | |||||||||||
Total
assets at fair value
|
$ | 321 | $ | 1,725 | $ | (151 | ) | $ | 1,895 | |||||||
Liabilities
at fair value:
|
||||||||||||||||
Derivatives
relating to: (3)
|
||||||||||||||||
Foreign
currency
|
- | $ | 203 | $ | (84 | ) | $ | 119 | ||||||||
Commodities
|
- | 207 | (67 | ) | 140 | |||||||||||
Total
liabilities at fair value
|
- | $ | 410 | $ | (151 | ) | $ | 259 |
(1)
|
Cash
collateral is classified as “Accounts and notes receivable – Other” in the
consolidated balance sheets. Amounts represent the effect of legally
enforceable master netting arrangements between the Company and its
counterparties and the payable or receivable for cash collateral held or
placed with the same counterparty.
|
(2)
|
The
Company’s investments in equity and debt securities are classified as
available-for-sale, and are included in “Other investments” in the
consolidated balance sheets.
|
(3)
|
See
Note G for the classification of derivatives in the consolidated
balance sheets.
|
Receivables
for Costs Submitted to Insurance Carriers
|
||||||||
In
millions
|
March
31,
2009
|
Dec.
31,
2008
|
||||||
Receivables
for defense costs
|
$ | 26 | $ | 28 | ||||
Receivables
for resolution costs
|
245 | 244 | ||||||
Total
|
$ | 271 | $ | 272 |
Fixed
and Determinable Portion of Take-or-Pay and
Throughput
Obligations at December 31, 2008
In
millions
|
||||
2009
|
$ | 2,023 | ||
2010
|
1,708 | |||
2011
|
1,798 | |||
2012
|
1,392 | |||
2013
|
895 | |||
2014
and beyond
|
5,969 | |||
Total
|
$ | 13,785 |
Guarantees
at March 31, 2009
In
millions
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
||||||
Guarantees
|
2014
|
$ | 452 | $ | 16 | ||||
Residual
value guarantees
|
2015
|
974 | 5 | ||||||
Total
guarantees
|
$ | 1,426 | $ | 21 |
Guarantees
at December 31, 2008
In
millions
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
||||||
Guarantees
|
2014
|
$ | 330 | $ | 23 | ||||
Residual
value guarantees
|
2015
|
985 | 4 | ||||||
Total
guarantees
|
$ | 1,315 | $ | 27 |
Annual
Installments on Long-Term Debt
for
Next Five Years
In
millions
|
|
2009
|
$1,148
|
2010
|
$1,027
|
2011
|
$4,472
|
2012
|
$1,008
|
2013
|
$611
|
2014
|
$135
|
Net
Periodic Benefit Cost for All Significant Plans
|
Three
Months Ended
|
|||||||
In
millions
|
March
31,
2009
|
March
31,
2008
|
||||||
Defined
Benefit Pension Plans:
|
||||||||
Service
cost
|
$ | 58 | $ | 67 | ||||
Interest
cost
|
238 | 241 | ||||||
Expected
return on plan assets
|
(288 | ) | (310 | ) | ||||
Amortization
of prior service cost
|
8 | 8 | ||||||
Amortization
of net loss
|
26 | 11 | ||||||
Net
periodic benefit cost
|
$ | 42 | $ | 17 | ||||
Other
Postretirement Benefits:
|
||||||||
Service
cost
|
$ | 4 | $ | 4 | ||||
Interest
cost
|
29 | 30 | ||||||
Expected
return on plan assets
|
(4 | ) | (7 | ) | ||||
Amortization
of prior service credit
|
(1 | ) | (1 | ) | ||||
Net
periodic benefit cost
|
$ | 28 | $ | 26 |
|
·
|
11.4 million
stock options with a weighted-average exercise price of $9.53 per
share and a weighted-average fair value of $2.60 per
share.
|
|
·
|
5.2 million
shares of deferred stock with a weighted-average fair value of
$9.50 per share.
|
|
·
|
53,600
shares of restricted stock with a weighted-average fair value of
$6.47 per share.
|
Total
Unrecognized Compensation Cost at March 31, 2009
|
||
In
millions
|
Unrecognized
Compensation
Cost
|
Weighted-average
Recognition
Period
|
ESPP
purchase rights
|
$8
|
6.5
months
|
Unvested
stock options
|
$54
|
0.76
year
|
Deferred
stock awards
|
$117
|
1.01
years
|
Performance
deferred stock awards
|
$8
|
0.58
year
|
Earnings
Per Share Calculations
|
Three
Months Ended
March
31, 2009
|
Three
Months Ended
March
31, 2008
|
||
In
millions, except per share amounts
|
Basic
|
Diluted
|
Basic
|
Diluted
|
Net
Income Attributable to The Dow Chemical Company
|
$24
|
$24
|
$941
|
$941
|
Weighted-average
common shares outstanding
|
925.4
|
925.4
|
942.1
|
942.1
|
Add
dilutive effect of stock options and awards
|
-
|
6.6
|
-
|
9.5
|
Weighted-average
common shares for EPS calculations
|
925.4
|
932.0
|
942.1
|
951.6
|
Earnings
per common share
|
$0.03
|
$0.03
|
$1.00
|
$0.99
|
Stock
options and deferred stock awards excluded from EPS calculations (1)
|
|
65.8
|
|
34.0
|
(1)
|
Outstanding
options to purchase shares of common stock and deferred stock awards that
were not included in the calculation of diluted earnings per share because
the effect of including them would have been
anti-dilutive.
|
|
·
|
Products: BETAFOAM™ NVH
and structural foams; BETAMATE™ structural adhesives; BETASEAL™ glass
bonding systems; DOW™ polyethylene resins; IMPAXX™ energy management foam;
INSPIRE™ performance
polymers; INTEGRAL™ adhesive films; ISONATE™ pure and modified methylene
diphenyl diisocyanate (MDI) products; MAGNUM™ ABS resins; PELLETHANE™
thermoplastic polyurethane elastomers; Premium brake fluids and
lubricants; PULSE™ engineering resins; SPECFLEX™ semi-flexible
polyurethane foam systems; VORACTIV™ polyether and copolymer
polyols
|
|
·
|
Products: FROTH-PAK™
polyurethane spray foam; GREAT STUFF™ polyurethane foam sealant;
INSTA-STIK™ roof insulation adhesive; SARAN™ vapor retarder film and tape;
STYROFOAM™ brand insulation products (including XPS and polyisocyanurate
rigid foam sheathing products); THERMAX™ brand insulation; TILE BOND™ roof
tile adhesive; WEATHERMATE™ weather barrier solutions (housewraps, sill
pans, flashings and tapes)
|
|
Dow Epoxy is a leading
global producer of epoxy resins, intermediates and specialty resins and
epoxy systems for a wide range of industries and applications such as
coatings, electrical laminates, civil engineering, wind energy, adhesives
and composites. With plants strategically located across four continents,
the business is focused on providing customers around the world with
differentiated solution-based epoxy products and innovative technologies
and services.
|
|
·
|
Products: AIRSTONE™
epoxy systems; D.E.H.™ epoxy curing agents or hardeners; D.E.N.™ epoxy
novolac resins; D.E.R.™ epoxy resins (liquids, solids and solutions);
Epoxy resin waterborne emulsions and dispersions; Epoxy intermediates
(acetone, allyl chloride, bisphenol A, epichlorohydrin, and phenol);
FORTEGRA™ epoxy tougheners; Glycidyl methacrylate (GMA); UCAR™ solution
vinyl resins
|
|
·
|
Products: ECHELON™
polyurethane prepolymer; ENFORCER™ and ENHANCER™ for polyurethane carpet
and turf backing; HYPOL™ prepolymers; ISONATE™ MDI; MONOTHANE™ single
component polyurethane elastomers; PAPI™ polymeric MDI; Propylene glycol;
Propylene oxide; RENUVA™ Renewable Resource Technology; SPECFLEX™ copolymer
polyols; TRAFFIDECK™ and VERDISEAL™ waterproofing systems; VORACOR™ and
VORALAST™ polyurethane systems and VORALAST™ R renewable content
system; VORALUX™ and VORAMER™ MR series; VORANATE™ isocyanate; VORANOL™
VORACTIV™ polyether and copolymer polyols; VORASTAR™ polyurethane systems;
XITRACK™ polyurethane rail ballast stabilization
systems
|
|
·
|
Products: AFFINITY™
polyolefin plastomers (POPs); AMPLIFY™ functional
polymers; CALIBRE™ polycarbonate resins; DOW XLA™ elastic fiber; EMERGE™
advanced resins; ENGAGE™ polyolefin elastomers; FLEXOMER™ very low density
polyethylene (VLDPE) resins; INTEGRAL™ adhesive films; ISOPLAST™
engineering thermoplastic polyurethane resins; MAGNUM™ ABS resins; NORDEL™
hydrocarbon rubber; PELLETHANE™ thermoplastic polyurethane elastomers;
PRIMACOR™ copolymers; PROCITE™ window envelope films; PULSE™ engineering
resins; REDI-LINK™ polyethylene-based wire & cable insulation
compounds; SARAN™ PVDC resin and SARAN™ PVDC film; SARANEX™ barrier films;
SI-LINK™ polyethylene-based low voltage insulation compounds; TRENCHCOAT™
protective films; TYRIL™ SAN resins; TYRIN™ chlorinated polyethylene;
UNIGARD™ HP high-performance flame-retardant compounds; UNIGARD™ RE
reduced emissions flame-retardant compounds; UNIPURGE™ purging compound;
VERSIFY™ plastomers and elastomers
|
|
·
|
Products: LP OXO™ SELECTOR™
technology and NORMAX™ catalysts; METEOR™ EO/EG process technology and
catalysts; PTA process technology; UNIPOL™ PP process technology and SHAC™
and SHAC™ ADT catalyst systems
|
|
·
|
Products and Services:
Acrolein derivatives; Basic nitroparaffins and nitroparaffin-based
specialty chemicals; CANGUARD™ BIT preservatives; CELLOSIZE™ hydroxyethyl
cellulose; Chiral compounds and biocatalysts; CLEAR+STABLE™ carboxymethyl
cellulose; CYCLOTENE™ advanced electronics resins; DOW™
electrodeionization; DOW™ latex powders; DOW™ ultrafiltration; DOWEX™ ion
exchange resins; DOWICIDE™ antimicrobial bactericides and fungicides;
FILMTEC™ elements; FORTEFIBER™ soluble dietary fiber; Hydrocarbon resins;
Industrial biocides; METHOCEL™ cellulose ethers; POLYOX™ water-soluble
resins; Quaternaries; Reverse osmosis, electrodeionization and
ultrafiltration modules; SATINFX™ delivery system; SATISFIT™ Weight Care
Technology; SILK™ semiconductor dielectric resins; SOLTERRA™ boost; UCARE™
polymers; WALOCEL™ cellulose polymers; WALSRODER™
nitrocellulose
|
|
·
|
Products: EVOCAR™ vinyl
acetate ethylene; FOUNDATIONS™ latex; NEOCAR™ branched vinyl ester
latexes; Styrene-acrylic latex; Styrene-butadiene latex; UCAR™
all-acrylic, styrene-acrylic and vinyl-acrylic latexes; UCAR™ POLYPHOBE™
rheology modifiers; UCARHIDE™
opacifier
|
|
·
|
Products: Acrylic
acid/Acrylic esters; AMBITROL™ and NORKOOL™ industrial coolants; Butyl
CARBITOL™ and Butyl CELLOSOLVE™ solvents; CARBOWAX™ and CARBOWAX™ SENTRY™
polyethylene glycols and methoxypolyethylene glycols; DOW™ polypropylene
glycols; DOWANOL™ glycol ethers; DOWCAL™, DOWFROST™ and DOWTHERM™ heat
transfer fluids; DOWFAX™, TERGITOL™ and TRITON™ surfactants; Dow
Haltermann Custom Processing and Haltermann Products; Ethanolamines;
Ethyleneamines; SAFE-TAINER™ closed-loop delivery system; SYNALOX™
lubricants; UCAR™ deicing fluids; UCARSOL™ formulated solvents; UCON™
fluids and VERSENE™ chelating
agents
|
|
·
|
Products: AGROMEN™
seeds; BRODBECK™ seed; CLINCHER™ herbicide; DAIRYLAND™ seed; DELEGATE™
insecticide; DITHANE™ fungicide; EXZACT™ precision traits; FORTRESS™
fungicide; GARLON™ herbicide; GLYPHOMAX™ herbicide; GRANITE™ herbicide;
HERCULEX™ I, HERCULEX™ RW and HERCULEX™ XTRA insect protection;
KEYSTONE™ herbicides; LAREDO™
|
|
·
|
Products: ASPUN™ fiber
grade resins; ATTANE™ ultra low density polyethylene (ULDPE) resins;
CONTINUUM™ bimodal polyethylene resins; DOW™ high density polyethylene
(HDPE) resins; DOW™ low density polyethylene (LDPE) resins; DOWLEX™
polyethylene resins; ELITE™ enhanced polyethylene (EPE) resins; TUFLIN™
linear low density polyethylene (LLDPE) resins; UNIVAL™ HDPE
resins
|
|
·
|
Products: DOW™
homopolymer polypropylene resins; DOW™ impact copolymer polypropylene
resins; DOW™ random copolymer polypropylene resins; INSPIRE™ performance
polymers
|
|
·
|
Products: STYRON A-TECH™
and C-TECH™ advanced technology polystyrene resins and a full line of
STYRON™ general purpose polystyrene resins; STYRON™ high-impact
polystyrene resins
|
|
·
|
Products: Acids;
Alcohols; Aldehydes; Caustic soda; Chlorine; Chloroform; COMBOTHERM™
blended deicer; DOWFLAKE™ calcium chloride; DOWPER™ dry cleaning solvent;
Esters; Ethylene dichloride (EDC); LIQUIDOW™ liquid calcium chloride;
MAXICHECK™ procedure for testing the strength of reagents; MAXISTAB™
stabilizers for chlorinated solvents; Methyl chloride; Methylene chloride;
Monochloroacetic acid (MCAA); Oxo products; PELADOW™ calcium chloride
pellets;
|
|
·
|
Products: Ethylene
glycol (EG); Ethylene oxide (EO)
|
|
·
|
Products: Benzene;
Butadiene; Butylene; Cumene; Ethylene; Propylene; Styrene; Power, steam
and other utilities
|
Operating
Segments
|
Three
Months Ended
|
|||||||
In
millions
|
March
31,
2009
|
March
31,
2008
|
||||||
Sales
by operating segment
|
||||||||
Performance
Plastics
|
$ | 2,435 | $ | 3,963 | ||||
Performance
Chemicals
|
1,517 | 2,323 | ||||||
Agricultural
Sciences
|
1,446 | 1,314 | ||||||
Basic
Plastics
|
1,847 | 3,492 | ||||||
Basic
Chemicals
|
801 | 1,559 | ||||||
Hydrocarbons
and Energy
|
988 | 2,165 | ||||||
Unallocated
and Other
|
53 | 8 | ||||||
Total
|
$ | 9,087 | $ | 14,824 | ||||
EBIT
(1) by operating
segment
|
||||||||
Performance
Plastics
|
$ | 30 | $ | 329 | ||||
Performance
Chemicals
|
115 | 271 | ||||||
Agricultural
Sciences
|
338 | 331 | ||||||
Basic
Plastics
|
4 | 427 | ||||||
Basic
Chemicals
|
(92 | ) | 159 | |||||
Hydrocarbons
and Energy
|
- | - | ||||||
Unallocated
and Other
|
(236 | ) | (132 | ) | ||||
Total
|
$ | 159 | $ | 1,385 | ||||
Equity
in earnings (losses) of nonconsolidated affiliates by operating segment
(included in EBIT)
|
||||||||
Performance
Plastics
|
$ | 2 | $ | 18 | ||||
Performance
Chemicals
|
11 | 95 | ||||||
Agricultural
Sciences
|
1 | 1 | ||||||
Basic
Plastics
|
13 | 42 | ||||||
Basic
Chemicals
|
40 | 97 | ||||||
Hydrocarbons
and Energy
|
(2 | ) | 22 | |||||
Unallocated
and Other
|
- | (1 | ) | |||||
Total
|
$ | 65 | $ | 274 |
(1)
|
The
Company uses EBIT (which Dow defines as earnings before interest, income
taxes and noncontrolling interests) as its measure of profit/loss for
segment reporting purposes. EBIT by operating segment includes all
operating items relating to the businesses; items that principally apply
to the Company as a whole are assigned to Unallocated and Other. A
reconciliation of EBIT to “Net Income Attributable to The Dow Chemical
Company” is provided
below:
|
Three
Months Ended
|
||||||||
In
millions
|
March
31,
2009
|
March
31,
2008
|
||||||
EBIT
|
$ | 159 | $ | 1,385 | ||||
+
Interest income
|
12 | 24 | ||||||
- Interest
expense and amortization of debt discount
|
154 | 145 | ||||||
- Provision
(credit) for income taxes
|
(18 | ) | 299 | |||||
- Net
income attributable to noncontrolling interests
|
11 | 24 | ||||||
Net
Income Attributable to The Dow Chemical Company
|
$ | 24 | $ | 941 |
Geographic
Areas
|
Three
Months Ended
|
|||||||
In
millions
|
March
31,
2009
|
March
31,
2008
|
||||||
Sales
by geographic area
|
||||||||
United
States
|
$ | 2,964 | $ | 4,658 | ||||
Europe
|
3,289 | 5,858 | ||||||
Rest
of World
|
2,834 | 4,308 | ||||||
Total
|
$ | 9,087 | $ | 14,824 |
Pro
Forma Results
|
Three
Months Ended
|
|
In
millions
|
March
31,
2009
|
March
31,
2008
|
Net
Sales
|
$10,331
|
$16,640
|
Net
Income (Loss)
|
$(273)
|
$893
|
Net
Income (Loss) Available to The Dow Chemical Company Common
Stockholders
|
$(461)
|
$672
|
Assets
Acquired and Liabilities Assumed
In
millions
|
At
April 1, 2009
|
|||
Purchase
Price
|
$ | 15,681 | ||
Fair
Value of Assets Acquired
|
||||
Current
assets
|
$ | 2,912 | ||
Property
|
3,810 | |||
Other
intangible assets
|
4,545 | |||
Other
assets
|
1,153 | |||
Net
salt assets
|
1,570 | |||
Total
Assets Acquired
|
$ | 13,990 | ||
Fair
Value of Liabilities and Noncontrolling Interests Assumed
|
||||
Current
liabilities
|
$ | 1,190 | ||
Long-term
debt
|
2,624 | |||
Accrued
and other liabilities and noncontrolling interests
|
686 | |||
Pension
benefits
|
914 | |||
Deferred
tax liabilities - noncurrent
|
2,067 | |||
Total
Liabilities and Noncontrolling Interests Assumed
|
$ | 7,481 | ||
Goodwill
|
$ | 9,172 |
The Dow Chemical Company and
Subsidiaries
|
Analysis
of Financial Condition and Results of
Operations.
|
·
|
The
Company reported sales in the first quarter of 2009 of $9.1 billion,
down 39 percent from $14.8 billion in the first quarter of 2008.
Prices were down 20 percent and volume was down 19 percent,
reflecting deflation in feedstock and energy costs and worsening economic
conditions.
|
·
|
Purchased
feedstock and energy costs, which account for almost half of Dow’s total
costs, decreased 49 percent or $3.1 billion compared with the
first quarter of 2008.
|
·
|
Operating
expenses declined during the first quarter of 2009 as a result of
management’s cost cutting initiatives and actions taken related to the
2008 restructuring plan.
|
·
|
Equity
earnings were $65 million in the first quarter of 2009, down
significantly from the first quarter of 2008, and up compared with the
fourth quarter of 2008.
|
·
|
Capital
spending was $234 million in the first quarter of 2009, on track with
the full-year pre-acquisition target of $1.1 billion; debt as a
percent of total capitalization was 48.7 percent, up
3 percentage points from year-end 2008.
|
·
|
On
April 1, 2009, the Company completed the $15.7 billion
acquisition of Rohm and Haas Company, financed by $7 billion of
preferred equity securities and $9.2 billion of
debt.
|
Selected
Financial Data
|
Three
Months Ended
|
|
In
millions, except per share amounts
|
March
31,
2009
|
March
31,
2008
|
Net
sales
|
$9,087
|
$14,824
|
Cost
of sales
|
$8,165
|
$12,908
|
Percent
of net sales
|
89.9%
|
87.1%
|
Research
and development, and selling, general and administrative
expenses
|
$736
|
$829
|
Percent
of net sales
|
8.1%
|
5.6%
|
Net
Income Attributable to The Dow Chemical Company
|
$24
|
$941
|
Earnings
per common share – basic
|
$0.03
|
$1.00
|
Earnings
per common share – diluted
|
$0.03
|
$0.99
|
Operating
rate percentage
|
68%
|
86%
|
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,
2009
|
March
31,
2008
|
March
31,
2009
|
March.
31,
2008
|
March
31,
2009
|
March.
31,
2008
|
||||||||||||||||||
Restructuring
charges
|
$ | (19 | ) | - | $ | (17 | ) | - | $ | (0.02 | ) | - | ||||||||||||
Acquisition-related
expenses
|
(48 | ) | - | (41 | ) | - | (0.04 | ) | - | |||||||||||||||
Dow
Corning restructuring
|
(29 | ) | - | (27 | ) | - | (0.03 | ) | - | |||||||||||||||
Total
|
$ | (96 | ) | - | $ | (85 | ) | - | $ | (0.09 | ) | - |
(1)
|
Impact
on “Income before Income Taxes”
|
(2)
|
Impact
on “Net Income Attributable to The Dow Chemical
Company”
|
(3)
|
Impact
on “Earnings per common share –
diluted”
|
|
·
|
results
of insurance company operations,
|
|
·
|
gains
and losses on sales of financial assets,
|
|
·
|
stock-based
compensation expense and severance costs,
|
|
·
|
changes
in the allowance for doubtful receivables,
|
|
·
|
expenses
related to New Ventures,
|
|
·
|
asbestos-related
defense and resolution costs,
|
|
·
|
foreign
exchange hedging results, and
|
|
·
|
certain
overhead and other cost recovery variances not allocated to the operating
segments.
|
Sales
Volume and Price by Operating Segment and Geographic Area
|
||||||||||||
Three
Months Ended
March
31, 2009
|
||||||||||||
Percentage
change from prior year
|
Volume
|
Price
|
Total
|
|||||||||
Operating
segments
|
||||||||||||
Performance
Plastics
|
(28 | )% | (11 | )% | (39 | )% | ||||||
Performance
Chemicals
|
(28 | ) | (7 | ) | (35 | ) | ||||||
Agricultural
Sciences
|
10 | - | 10 | |||||||||
Basic
Plastics
|
(12 | ) | (35 | ) | (47 | ) | ||||||
Basic
Chemicals
|
(28 | ) | (21 | ) | (49 | ) | ||||||
Hydrocarbons
and Energy
|
(13 | ) | (41 | ) | (54 | ) | ||||||
Total
|
(19 | )% | (20 | )% | (39 | )% | ||||||
Geographic
area sales
|
||||||||||||
United
States
|
(20 | )% | (16 | )% | (36 | )% | ||||||
Europe
|
(18 | ) | (26 | ) | (44 | ) | ||||||
Rest
of World
|
(17 | ) | (17 | ) | (34 | ) | ||||||
Total
|
(19 | )% | (20 | )% | (39 | )% |
Cash
Flow Summary
|
Three
Months Ended
|
|||||||
In
millions
|
March
31,
2009
|
March
31,
2008
|
||||||
Cash
provided by (used in):
|
||||||||
Operating
activities
|
$ | (77 | ) | $ | 447 | |||
Investing
activities
|
(176 | ) | (290 | ) | ||||
Financing
activities
|
462 | (300 | ) | |||||
Effect
of exchange rate changes on cash
|
(53 | ) | 80 | |||||
Net
change in cash and cash equivalents
|
$ | 156 | $ | (63 | ) |
Working
Capital
In
millions
|
March
31,
2009
|
Dec.
31,
2008
|
||||||
Current
assets
|
$ | 15,606 | $ | 16,060 | ||||
Current
liabilities
|
9,752 | 13,108 | ||||||
Working
capital
|
$ | 5,854 | $ | 2,952 | ||||
Current
ratio
|
1.60:1
|
1.23:1
|
||||||
Days-sales-outstanding-in-receivables
|
42 | 42 | ||||||
Days-sales-in-inventory
|
71 | 58 |
Total
Debt
In
millions
|
March
31,
2009
|
Dec.
31,
2008
|
||||||
Notes
payable
|
$ | 844 | $ | 2,360 | ||||
Long-term
debt due within one year
|
1,223 | 1,454 | ||||||
Long-term
debt
|
10,897 | 8,042 | ||||||
Total
debt
|
$ | 12,964 | $ | 11,856 | ||||
Debt
as a percent of total capitalization
|
48.7 | % | 45.7 | % |
Contractual
Obligations at March 31, 2009
|
Payments
Due by Year
|
||||||
In
millions
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
and beyond
|
Total
|
Long-term
debt – current and noncurrent (1)
|
$1,148
|
$1,027
|
$4,472
|
$1,008
|
$611
|
$3,854
|
$12,120
|
Expected
cash requirements for interest (1)
|
$548
|
$514
|
$452
|
$350
|
$289
|
$3,989
|
$6,142
|
(1)
|
Updated
to reflect additional debt issued in the first quarter of 2009 (see Note J
to the Consolidated Financial
Statements).
|
Contractual
Obligations at December 31, 2008
|
Payments
Due by Year
|
||||||
In
millions
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
and beyond
|
Total
|
Long-term
debt – current and noncurrent
|
$1,454
|
$1,060
|
$1,523
|
$1,004
|
$601
|
$3,854
|
$9,496
|
Expected
cash requirements for interest
|
$552
|
$501
|
$438
|
$356
|
$298
|
$4,096
|
$6,241
|
2009
|
2008
|
|||||||
Claims
unresolved at January 1
|
75,706 | 90,322 | ||||||
Claims
filed
|
2,295 | 2,716 | ||||||
Claims
settled, dismissed or otherwise resolved
|
(3,199 | ) | (2,854 | ) | ||||
Claims
unresolved at March 31
|
74,802 | 90,184 | ||||||
Claimants
with claims against both UCC and Amchem
|
24,126 | 28,893 | ||||||
Individual
claimants at March 31
|
50,676 | 61,291 |
Defense
and Resolution Costs
|
Three
Months Ended
|
Aggregate
Costs
|
||
In
millions
|
March
31,
2009
|
March
31,
2008
|
to
Date as of
March
31, 2009
|
|
Defense
costs
|
$11
|
$14
|
$636
|
|
Resolution
costs
|
$24
|
$42
|
$1,410
|
Receivables
for Costs Submitted to Insurance Carriers
|
||||||||
In
millions
|
March
31, 2009
|
Dec.
31, 2008
|
||||||
Receivables
for defense costs
|
$ | 26 | $ | 28 | ||||
Receivables
for resolution costs
|
245 | 244 | ||||||
Total
|
$ | 271 | $ | 272 |
The Dow Chemical Company and
Subsidiaries
|
PART I – FINANCIAL
INFORMATION
|
Total Daily
VAR
|
|
Dec. 31, 2008
|
|
In
millions
|
At
March 31, 2009
|
Year-end
|
2008
Average
|
Foreign
exchange
|
$3
|
$1
|
$3
|
Interest
rate
|
$152
|
$161
|
$105
|
Equity
exposures, net of hedges
|
$22
|
$24
|
$16
|
Commodities
|
$5
|
$6
|
$13
|
Composite
|
$153
|
$158
|
$112
|
The Dow Chemical Company and
Subsidiaries
|
PART II – OTHER
INFORMATION
|
Issuer
Purchases of Equity Securities
|
Total
number of
shares
purchased as
part
of the Company’s
publicly
announced
share
repurchase
program
|
Approximate
dollar
value
of shares that
may
yet be purchased
under
the Company’s
publicly
announced
share
repurchase
program
|
||
Period
|
Total number
of shares
purchased (1)
|
Average
price
paid
per
share
|
||
January
2009
|
-
|
-
|
-
|
-
|
February
2009
|
477,588
|
$9.78
|
-
|
-
|
March
2009
|
543
|
$6.73
|
-
|
-
|
First
quarter 2009
|
478,131
|
$9.78
|
-
|
-
|
(1)
|
Represents
shares received from employees and non-employee directors to pay taxes
owed to the Company as a result of the exercise of stock options or the
delivery of deferred stock.
|
The Dow Chemical Company and
Subsidiaries
|
Trademark
Listing
|
|
The following
trademarks or service marks of The Dow Chemical Company and certain
affiliated companies of Dow appear in this
report: AFFINITY, AIRSTONE, AMBITROL, AMPLIFY, ASPUN,
ATTANE, BETAFOAM, BETAMATE, BETASEAL, CALIBRE, CANGUARD, CARBITOL,
CARBOWAX, CELLOSIZE, CELLOSOLVE, CLEAR+STABLE, COMBOTHERM, CONTINUUM,
CYCLOTENE, D.E.H., D.E.N., D.E.R., DOW, DOW XLA, DOWANOL, DOWCAL, DOWEX,
DOWFAX, DOWFLAKE, DOWFROST, DOWICIDE, DOWLEX, DOWPER, DOWTHERM, ECHELON,
ELITE, EMERGE, ENFORCER, ENGAGE, ENHANCER, EVOCAR, FILMTEC, FLEXOMER,
FORTEFIBER, FORTEGRA, FOUNDATIONS, FROTH-PAK, GREAT STUFF, HYPOL, IMPAXX,
INSPIRE, INSTA-STIK, INTEGRAL, ISONATE, ISOPLAST, LIQUIDOW, LP OXO,
MAGNUM, MAXICHECK, MAXISTAB, METEOR, METHOCEL, MONOTHANE, NEOCAR, NORDEL,
NORKOOL, NORMAX, PAPI, PELADOW, PELLETHANE, POLYOX, POLYPHOBE, PRIMACOR,
PROCITE, PULSE, REDI-LINK, RENUVA, SAFE-TAINER, SARAN, SARANEX, SATINFX,
SATISFIT, SELECTOR, SENTRY, SHAC, SI-LINK, SILK, SOLTERRA, SPECFLEX,
STYROFOAM, STYRON, STYRON A-TECH, STYRON C-TECH, SYNALOX, TERGITOL,
THERMAX, TILE BOND, TRAFFIDECK, TRENCHCOAT, TRITON, TUFLIN, TYRIL, TYRIN,
UCAR, UCARE, UCARHIDE, UCARSOL, UCON, UNIGARD, UNIPOL, UNIPURGE, UNIVAL,
VERDISEAL, VERSENE, VERSIFY, VORACOR, VORACTIV, VORALAST, VORALUX,
VORAMER, VORANATE, VORANOL, VORASTAR, WALOCEL, WALSRODER, WEATHERMATE,
XITRACK
|
|
The following
trademarks or service marks of Dow AgroSciences LLC and certain affiliated
companies of Dow AgroSciences LLC appear in this
report: AGROMEN, BRODBECK, CLINCHER, DAIRYLAND,
DELEGATE, DITHANE, EXZACT, FORTRESS, GARLON, GLYPHOMAX, GRANITE, HERCULEX,
KEYSTONE, LAREDO, LONTREL, LORSBAN, MILESTONE, MUSTANG, MYCOGEN, NEXERA,
PHYTOGEN, PROFUME, RENZE, SENTRICON, SIMPLICITY, STARANE, TELONE, TORDON,
TRACER NATURALYTE, TRIUMPH, VIKANE,
WIDESTRIKE
|
The Dow Chemical Company and
Subsidiaries
|
The Dow Chemical Company and
Subsidiaries
|
EXHIBIT
NO.
|
DESCRIPTION
|
|
2(d)
|
Stock
Purchase Agreement, dated as of April 1, 2009, between Rohm and Haas
Company and K+S Aktiengesellschaft, incorporated by reference to
Exhibit 2.1 to The Dow Chemical Company Current Report on
Form 8-K filed on April 7,
2009.
|
|
3(i)(a)
|
Certificate
of Designations for the Cumulative Convertible Perpetual Preferred Stock,
Series A, as filed with the Secretary of State, State of Delaware on
March 31, 2009, incorporated by reference to Exhibit 3.1 to The
Dow Chemical Company Current Report on Form 8-K filed on
April 1, 2009.
|
|
3(i)(b)
|
Certificate
of Designations for the Cumulative Perpetual Preferred Stock,
Series B, as filed with the Secretary of State, State of Delaware on
March 31, 2009, incorporated by reference to Exhibit 3.2 to The
Dow Chemical Company Current Report on Form 8-K filed on
April 1, 2009.
|
|
3(i)(c)
|
Certificate
of Designations for the Cumulative Convertible Perpetual Preferred Stock,
Series C, as filed with the Secretary of State, State of Delaware on
March 31, 2009, incorporated by reference to Exhibit 3.3 to The
Dow Chemical Company Current Report on Form 8-K filed on
April 1, 2009.
|
|
A
copy of The Dow Chemical Company 1979 Award and Option Plan, as amended
and restated on May 13, 1983.
|
|
A
copy of a resolution adopted by the Board of Directors of The Dow Chemical
Company on April 12, 1984 amending The Dow Chemical Company 1979
Award and Option Plan.
|
|
A
copy of a resolution adopted by the Board of Directors of The Dow Chemical
Company on April 18, 1985 amending The Dow Chemical Company 1979
Award and Option Plan.
|
A
copy of a resolution adopted by the Executive Committee of the Board of
Directors of The Dow Chemical Company on October 30, 1987 amending
The Dow Chemical Company 1979 Award and Option
Plan.
|
|
A
copy of The Dow Chemical Company Dividend Unit
Plan.
|
|
A
copy of The Dow Chemical Company 1994 Non-Employee Directors’ Stock
Plan.
|
10(mm)(i)
|
First
Amendment to the Term Loan Agreement, dated as of March 4, 2009,
among The Dow Chemical Company, the lenders party to the Term Loan
Agreement dated as of September 8, 2008, Citibank, N.A., as
administrative agent, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley Senior Funding, Inc., as co-syndication
agents, incorporated by reference to Exhibit 10.1 to The Dow Chemical
Company Current Report on Form 8-K filed on March 6,
2009.
|
|
10(pp)
|
Securities
Issuance Letter, dated March 4, 2009, among The Dow Chemical Company,
Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Morgan Stanley Senior Funding, Inc., incorporated
by reference to Exhibit 10.2 to The Dow Chemical Company Current
Report on Form 8-K filed on March 6,
2009.
|
|
10(qq)
|
Commitment
to Close, dated March 9, 2009, among The Dow Chemical Company, Ramses
Acquisition Corp. and Rohm and Haas Company, incorporated by reference to
Exhibit 10.1 to The Dow Chemical Company Current Report on
Form 8-K filed on March 12,
2009.
|
|
10(rr)
|
Investment
Agreement, dated March 9, 2009, among The Dow Chemical Company,
Paulson & Co. Inc. and the Haas Family Trusts, incorporated by
reference to Exhibit 10.2 to The Dow Chemical Company Current Report
on Form 8-K filed on March 12,
2009.
|
|
10(ss)
|
Letter
Agreement, dated March 9, 2009, among The Dow Chemical Company,
Ramses Acquisition Corp. and the Haas Family Trusts, incorporated by
reference to Exhibit 10.3 to The Dow Chemical Company Current Report
on Form 8-K filed on March 12,
2009.
|
|
10(tt)
|
Letter
Agreement, dated March 9, 2009, among The Dow Chemical Company,
Ramses Acquisition Corp. and Paulson & Co. Inc., incorporated by
reference to Exhibit 10.4 to The Dow Chemical Company Current Report
on Form 8-K filed on March 12,
2009.
|
|
Computation
of Ratio of Earnings to Fixed
charges.
|
|
Analysis,
Research & Planning Corporation’s
Consent.
|
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
|
99.1
|
Replacement
Capital Covenant, dated April 1, 2009, relating to the Cumulative
Perpetual Preferred Stock, Series B, incorporated by reference to
Exhibit 99.2 to The Dow Chemical Company Current Report on
Form 8-K filed on April 1,
2009.
|
|
99.2
|
Replacement
Capital Covenant, dated April 1, 2009, relating to the Cumulative
Convertible Perpetual Preferred Stock, Series C, incorporated by
reference to Exhibit 99.3 to The Dow Chemical Company Current Report
on Form 8-K filed on April 1,
2009.
|
|
99.3
|
Guarantee
relating to the 5.60% Notes of Rohm and Haas Company, incorporated by
reference to Exhibit 99.4 to The Dow Chemical Company Current Report
on Form 8-K filed on April 1,
2009.
|
|
99.4
|
Guarantee
relating to the 6.00% Notes of Rohm and Haas Company, incorporated by
reference to Exhibit 99.5 to The Dow Chemical Company Current Report
on Form 8-K filed on April 1,
2009.
|
|
99.5
|
Guarantee
relating to the 9.80% Debentures of Rohm and Haas Company, incorporated by
reference to Exhibit 99.6 to The Dow Chemical Company Current Report
on Form 8-K filed on April 1,
2009.
|