10-K 1 dow201410k.htm 10-K DOW 2014 10K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 2014
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission file number:   1-3433
THE DOW CHEMICAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware
 
38-1285128
State or other jurisdiction of
incorporation or organization
 
(I.R.S. 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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Name of each exchange on which registered
Common Stock, par value $2.50 per share
 
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
þ  Yes    ¨  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨  Yes    þ  No
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    ¨  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).                    þ  Yes    ¨  No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.                                                                     ¨
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 ¨ Non-accelerated filer ¨ Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes      þ No
The aggregate market value of voting common stock held by non-affiliates as of June 30, 2014 (based upon the closing price of $51.46 per common share as quoted on the New York Stock Exchange), was approximately $61.4 billion. For purposes of this computation, it is assumed that the shares of voting stock held by Directors and Officers would be deemed to be stock held by affiliates. Non-affiliated common stock outstanding at June 30, 2014 was 1,194,093,171 shares.
Total common stock outstanding at January 31, 2015 was 1,157,695,055 shares.
DOCUMENTS INCORPORATED BY REFERENCE

Part III: Proxy Statement for the Annual Meeting of Stockholders to be held on May 14, 2015.



The Dow Chemical Company
ANNUAL REPORT ON FORM 10-K
For the fiscal year ended December 31, 2014
TABLE OF CONTENTS
 
 
PAGE
 
 
 
 
 
 
 
Business.
 
 
 
Risk Factors.
 
 
 
Unresolved Staff Comments.
 
 
 
Properties.
 
 
 
Legal Proceedings.
 
 
 
Mine Safety Disclosures.
 
 
 
 
 
 
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
 
 
Selected Financial Data.
 
 
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
 
 
Quantitative and Qualitative Disclosures About Market Risk.
 
 
 
Financial Statements and Supplementary Data.
 
 
 
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
 
 
 
Controls and Procedures.
 
 
 
Other Information.
 
 
 
 
 
 
 
Directors, Executive Officers and Corporate Governance.
 
 
 
Executive Compensation.
 
 
 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
 
 
Certain Relationships and Related Transactions, and Director Independence.
 
 
 
Principal Accounting Fees and Services.
 
 
 
 
 
 
 
Exhibits, Financial Statement Schedules.
 
 
 

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The Dow Chemical Company and Subsidiaries
 

FORWARD-LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report including, without limitation, the following sections: “Item 1. Business,” “Management's Discussion and Analysis,” and “Risk Factors.” These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “should,” “strategy,” “will,” “would,” “will be,” “will continue,” “will likely result” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” (Part I, Item 1A of this Form 10-K). The Dow Chemical Company undertakes no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.



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The Dow Chemical Company and Subsidiaries
 
 
PART I, Item 1. Business.
 

THE COMPANY

The Dow Chemical Company was incorporated in 1947 under Delaware law and is the successor to a Michigan corporation, of the same name, organized in 1897. The Company's principal executive offices are located at 2030 Dow Center, Midland, Michigan 48674. Throughout this Annual Report on Form 10-K, except as otherwise indicated by the context, the terms “Company” or “Dow” as used herein mean The Dow Chemical Company and its consolidated subsidiaries.

Available Information
The Company's annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge through the Investor Relations section of the Company's website (www.dow.com/investors), as soon as reasonably practicable after the reports are electronically filed or furnished with the U.S. Securities and Exchange Commission (“SEC”). The SEC maintains a website that contains these reports as well as proxy statements and other information regarding issuers that file electronically. The SEC's website is at www.sec.gov. The Company's website and its content are not deemed incorporated by reference into this report.

General
Dow combines the power of science and technology to passionately innovate what is essential to human progress. The Company is driving innovations that extract value from the intersection of chemical, physical and biological sciences to help address many of the world's most challenging problems such as the need for clean water, clean energy generation and conservation, and increasing agricultural productivity. Dow's integrated, market-driven, industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high growth sectors such as packaging, electronics, water, coatings and agricultural. In 2014, Dow had annual sales of more than $58 billion and employed approximately 53,000 people worldwide. The Company's more than 6,000 products are manufactured at 201 sites in 35 countries across the globe. The Company conducts its worldwide operations through global businesses, which are reported in five operating segments: Agricultural Sciences, Consumer Solutions, Infrastructure Solutions, Performance Materials & Chemicals and Performance Plastics.

Strategy
Dow’s strategy is to invest in a market-driven portfolio of advantaged and technology-enabled businesses that create value for our shareholders and customers.


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BUSINESS SEGMENTS AND PRODUCTS

AGRICULTURAL SCIENCES
The Agricultural Sciences segment is a global leader in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. The business invents, develops, manufactures and markets products for use in agricultural, industrial and commercial pest management, and food service. The segment has broad global reach with sales in 135 countries and research and development ("R&D") and manufacturing facilities located in all geographic areas. Growth is achieved through the development of innovative new products and technologies, successful segmentation of market offerings with leading brands, diverse channels to market, competitive cost positions, strategic bolt-on acquisitions, and commercial and R&D collaborations. The Company is committed to the development of innovative new crop protection and biological products and technologies.

Details on Agricultural Sciences' 2014 sales, by business and geographic area, are as follows:
Products
Key product lines, including crop application, are listed below:

 
Crop Application
Key Product Lines
Canola
Cereals
Corn
Cotton
Range and Pasture
Rice
Soybeans
Sunflower
Trees, Fruits and Vegetables
Others
Insecticides
x
x
x
x
 
x
x
x
x
x
Fungicides
 
x
 
 
 
x
x
 
x
x
Herbicides
x
x
x
x
x
x
x
x
x
x
Seeds
x
x
x
x
x
 
x
x
 
x
Other
 
 
x
 
 
 
 
 
x
x

The Company's ability to produce seeds can be materially impacted by weather conditions, local political conditions and the availability of reliable contract growers.


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Agricultural Sciences is focused on delivering results through technology leadership. Major brands and technologies, by key product line, are listed below:

Key Product Lines
Brands and Technologies
Insecticides
ISOCLAST™; LORSBAN™; RADIANT™; SENTRICON™; TELONE™; TRACER™
Fungicides
DITHANE™
Herbicides
BROADWAY™; CLINCHER™; DURANGO™; FENCER™; GARLON™; LONTREL™; MILESTONE™; PANZER™; PRIMUS™; SPIDER™; STARANE™; SURESTART™; TORDON™
Seeds
AGROMEN™(1); BRODBECK™; DAIRYLAND SEED™; Grand Valley Hybrids; HYLAND™; MYCOGEN™; NEXERA™; Omega-9 Healthier Oils; PFISTER™; PHYTOGEN™; POWERCORE™ Insect Trait Technology(2); PRAIRIE BRAND SEEDS™; REFUGE ADVANCED® powered by SmartStax®(2); SmartStax® Insect Trait Technology(2); TRIUMPH™
Other
HARVISTA™ Technology; N-SERVE™ Nitrogen Stabilizer; RIPELOCK™ Quality Systems
(1)
AGROMEN trademark used under license from Agromen Sementes Agricolas Ltda.
(2)
Smartstax® and POWERCORE™ multi-event technology developed by Dow AgroSciences LLC and Monsanto. Smartstax®, the Smartstax® logo, POWERCORE™ and the POWERCORE™ logo are trademarks of Monsanto Technology, LLC.

U.S. federal regulatory approvals have been obtained for the commercialization of ENLIST™ Corn and Soybeans including the U.S. Environmental Protection Agency's registration of ENLIST DUO™, the companion herbicide for use with ENLIST™ Corn and Soybeans, in six key states. Regulatory approvals in certain other countries are still pending.

Patents, Trademarks and Licenses
Agricultural Sciences has significant technology-driven growth, led by plant biotechnology traits and crop protection products that utilize proprietary formulations. As a result, the Company uses patents, trademarks, licenses and registrations to protect its investment in germplasm, traits and proprietary chemistries and formulations. The Company also licenses plant biotechnology traits from third parties and engages in research collaborations with global industry, academia and governments. The Company does not regard the Agricultural Sciences segment as being materially dependent on any single or group of related patents, trademarks, licenses or registrations.

Competition
Agricultural Sciences competes with producers of crop protection chemicals and agricultural biotechnology in the United States and abroad. The Company competes on the basis of technology and trait leadership, price, quality and cost competitiveness. Key competitors include BASF, Bayer, E. I. DuPont de Nemours, Monsanto and Syngenta, as well as generic and regional seed companies.

Distribution
Agricultural Sciences has a diverse worldwide network which markets and distributes the Company's brands to customers globally. This network consists of the Company's sales and marketing organization partnering with distributors, independent retailers and growers, cooperatives and agents throughout the world.

Seasonality
Agricultural Sciences sales and EBITDA are strongest in the first half of the year, aligning with the planting and growing season in the northern hemisphere, where approximately 60 percent of the segment's annual sales are generated. Inventory tends to be at peak levels in the first quarter, in advance of the northern hemisphere planting and growing season. Accounts receivable tends to be highest at the end of the second quarter, consistent with the peak sales period in the northern hemisphere.


CONSUMER SOLUTIONS
The Consumer Solutions segment consists of three global businesses: Consumer Care, Dow Automotive Systems and Dow Electronic Materials. These global businesses develop and market customized materials using advanced technology and unique chemistries for specialty applications - including semiconductors and organic light-emitting diodes, adhesives and foams used by the transportation industry, and cellulosics for innovative pharmaceutical formulations and food solutions. These businesses serve the needs of market segments as diverse as: automotive; electronics and entertainment; healthcare and medical; and, personal and home care goods. The segment's commitment to continuous innovation and rapid new product development enables it to maximize opportunities in emerging geographies and high-growth industries.


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Details on Consumer Solutions' 2014 sales, by business and geographic area, are as follows:


Consumer Care
The Consumer Care portfolio of businesses delivers technologies for the consumer at the intersection of physics, biology and chemistry, connecting the businesses to the human element. Developing performance-enhancing solutions that enable customers to differentiate their products in the global pharmaceutical, food, home and personal care markets, Consumer Care provides the expertise that makes end-use products better so consumers feel better.

Consumer Care's principal businesses each serve one or more key market segments, as noted below:

Business
Market Segments
Technologies
Dow Home, Institutional & Personal Care Solutions
Personal care, home care and specialty applications with key focus on hair care, skin care, sun care, cleansing, oral care, as well as, fabric, dish, floor and hard surface applications
From polymers and emollients to chelants and dispersants, Dow offers the key enabling technologies that differentiate customers’ products while maintaining a strong commitment to offering more sustainable options. Other notable technologies include opacifiers, rheology modifiers, surfactants and solvents
Dow Pharma and Food Solutions
Pharmaceutical, food and nutrition
Cellulosic and other technologies used to help bring new classes of pharmaceutical solutions to the market and enable healthier foods (gluten-free, reduced oil/fat content). Other notable technologies include solubility enhancers, reagents, granulation and binders, as well as coatings and controlled release
SAFECHEM
A service business responsible for the sustainable and innovative use of solvents
Offers cleaning solutions, equipment and services for metal and dry cleaning applications. Provides close-loop SAFE-TAINER™ System delivery systems to ensure emission free use of cleaning agents

Dow Automotive Systems
Dow Automotive Systems is a leading global provider of collaborative solutions and advanced materials for original equipment manufacturers, tier suppliers, aftermarket customers and commercial transportation manufacturers. Dow Automotive Systems’ leading technologies, materials engineering, testing and service support are complemented by a robust line of structural, elastic and rubber-to-substrate adhesives; composite materials technologies; polyurethane foams and acoustical management systems; and films and fluids.



7


Dow Automotive Systems’ principal businesses offer the following technologies and serve the following market segments:

Business
Market Segments
Technologies
Adhesives
Elastic, structural and specialty adhesives to enhance vehicle durability and performance
Innovative and differentiated adhesive technologies to meet customer specifications for durability and crash performance
Performance Solutions
Performance plastics, fluids and polyurethane foam solutions for comfort and acoustic management
Technologies that differentiate customers’ products with improved performance characteristics

Dow Electronic Materials
Dow Electronic Materials is a leading global supplier of enabling materials for a broad range of consumer electronics including smartphones, tablets, television monitors and personal computers, as well as electronic devices and systems used in a variety of industries. The business produces materials for chemical mechanical planarization ("CMP"); materials used in the production of electronic displays, including films, filters and organic light-emitting diodes ("OLEDs"); metalorganic precursors for light-emitting diodes ("LEDs"); products and technologies that drive leading-edge semiconductor design; materials used in the fabrication of printed circuit boards; and integrated metallization processes for metal finishing and decorative applications.

Dow Electronic Materials is comprised of four principal businesses, each serving one or more key market segments, as noted below:

Business
Market Segments
Technologies
Semiconductor Technologies
Integrated circuit fabrication for memory and logic
CMP consumables, photolithography materials
Interconnect Technologies
Printed circuit board, electronic and industrial finishing
Interconnect metallization and imaging process chemistries
Display Technologies
Display materials
Display films and filters, OLED materials
Growth Technologies
New and emerging technologies
Advanced chip packaging materials, metalorganic precursors, optical and ceramic materials

Competition
The Consumer Solutions segment experiences competition in each business within the segment. The competitors include many large, multinational chemical firms as well as a number of regional and local competitors. The segment's products have unique performance characteristics that are required by customers who demand a high-level of customer service and technical expertise from the Company's sales force and scientists; therefore, Dow is well positioned to withstand competitive threats. Key competitors include Ashland, BASF, Bayer, JSR Micro and Shin-Etsu Chemical.

Joint Ventures
The Consumer Solutions segment includes a portion of the Company's share of the results of Dow Corning Corporation, a joint venture that manufactures silicone and silicone products, which is owned 50 percent by the Company.



8


INFRASTRUCTURE SOLUTIONS
The Infrastructure Solutions segment is comprised of an industry-leading portfolio of businesses utilizing advanced technology to deliver products such as architectural and industrial coating applications, building insulation, adhesives, microbial protection for the oil and gas industry, and water technologies. With unmatched R&D capabilities, a broad range of chemistries, extensive geographic reach and strong channels to market, this segment is well positioned to capitalize on market trends. The segment has broad geographic reach with sales in 145 countries and R&D and manufacturing facilities located in key geographic areas.

Details on Infrastructure Solutions' 2014 sales, by business and geographic area, are as follows:


Dow Building & Construction
Dow Building & Construction is comprised of two businesses - Dow Building Solutions and Dow Construction Chemicals. Leveraging more than 60 years of building science experience and deep application expertise, Dow creates high-performance solutions designed to help make residential and commercial buildings more comfortable, last longer, save energy and reduce emissions. The business group offers extensive lines of industry-leading durable insulation solutions and functional ingredients that provide improved thermal performance, air sealing, weatherization and fire retardancy for construction products.
 
Dow Coating Materials
The Dow Coating Materials business manufactures and delivers solutions that leverage high quality, technologically advanced product offerings for architectural paint and coatings, as well as industrial coatings applications, including paper, leather, concrete, wood, automotive, maintenance and protective industries. Dow Coating Materials introduced the industry's first waterborne technology in 1953 and has since led the industry's conversion away from solvent borne technology to allow for lower volatile organic compounds and an improved sustainability profile while pushing performance boundaries.

Energy & Water Solutions
Energy & Water Solutions is comprised of four businesses - Dow Microbial Control; Dow Oil, Gas & Mining; Dow Solar; and Dow Water and Process Solutions. Dow Microbial Control provides technology used to predict, diagnose and sustainably solve the planet’s most difficult microbial challenges while Dow Oil, Gas & Mining is helping to provide energy to the world by supplying smart, innovative and customized solutions to enable the tapping of both conventional and unconventional sources. Providing building-integrated photovoltaics, Dow Solar enables energy solutions in the infrastructure market sector. Also aligned to the infrastructure market sector is Dow Water and Process Solutions, a leading provider of purification and separation technologies including reverse osmosis membranes and ion exchange resins to help customers with a broad array of separation and purification needs such as reusing waste water streams, making fresh drinking water from sea water, creating a closed loop water system for oil field operations, and removing impurities in dairy processing.

Performance Monomers
The Performance Monomers business produces specialty monomer products that are sold externally as well as consumed internally as building blocks used in downstream polymer businesses. The business' products are used in several applications, including cleaning materials, personal care products, paints, coatings and inks.


9


Products
Infrastructure Solutions' businesses each serve one or more key market segments, as noted below:

Business
Applications/Market Segments
Major Products
Dow Building & Construction
Rigid and spray foam insulation; weatherization and air sealing; caulks and sealants; elastomeric roof coatings; exterior insulation finishing systems; roof tiles and siding; industrial non-wovens; cement-based tile adhesives; plasters and renders; tape joint compounds; and concrete additives
AQUASET™ acrylic thermosetting resins, DOW™ latex powders, FROTH-PAK™ foam insulation and sealants, GREAT STUFF™ insulating foam sealants and adhesives, RHOPLEX™ and PRIMAL™ acrylic polymer emulsions, STYROFOAM™ brand insulation products, WALOCEL™ cellulose ethers, XENERGY™ high performance insulation, LIQUID ARMOR™ flashing and sealant
Dow Coating Materials
Acrylic binders; architectural paint and coatings; dispersants; rheology modifiers; surfactants for both architectural and industrial applications
ACRYSOL™ Rheology Modifiers, AVANSE™ acrylic binders, EVOQUE™ Pre-Composite Polymer, FORMASHIELD™ acrylic binder, RHOPLEX™ acrylic resin, TAMOL™ Dispersants
Energy & Water Solutions
Helping customers in exploration, production, transmission, refining and gas processing to optimize supply, improve efficiencies and manage emissions. Providing expertise and localized solutions for microbial control for well souring, industrial cooling water, fabric odor elimination, in-can preservation and dry film protection. Providing advanced, cost effective separation and purification technology for water treatment and filtration, pharmaceutical, food and beverage, and chemical processing
Demulsifiers, drilling and completion fluids, heat transfer fluids, perchloroethylene, rheology modifiers, scale inhibitors, shale inhibitors, specialty amine solvents, surfactants, water clarifiers, DOW ADSORBSIA™ selective media, DOW EDI™ modules, DOWEX™ and AMBERJET™ ion exchange resins, DOWEX™ OPTIPORE™ polymeric adsorbent resins, DOW FILMTEC™ reverse osmosis and nanofiltration elements, TEQUATIC™ PLUS fine particle filter, AMBERLYST™ polymeric catalysts, AQUCAR™, BIOBAN™, SILVADUR™ antimicrobial, DOW POWERHOUSE™ Solar Shingles
Performance Monomers
Super absorbents, water treatment, flocculants and detergents, acrylic sheets, coatings, inks and paints, molding compounds, impact modifiers, processing aids, electronic displays, adhesives, textiles, automotive and architectural safety glass 
Acrylates, methacrylates, vinyl acetate monomers, acrolein derivatives, high-quality impact modifiers, processing aids, foam cell promoters and weatherable acrylic capstock compounds for thermoplastic and thermosetting materials

Competition
Competitors of the Infrastructure Solutions segment include many large multinational chemical firms as well as a number of regional and local competitors. The segment's products have unique performance characteristics that are required by customers who demand a high level of customer service and expertise from our sales force and scientists; therefore, Dow is well positioned to withstand competitive threats. Key competitors include Arkema, Ashland, BASF, Elementis, Hydranautics, Lanxess, Lonza, Owens-Corning and Shin-Etsu Chemical.

Joint Ventures
The Infrastructure Solutions segment includes a portion of the Company's share of the results of Dow Corning Corporation, a joint venture that manufactures silicone and silicone products, which is owned 50 percent by the Company.


PERFORMANCE MATERIALS & CHEMICALS
The Performance Materials & Chemicals segment is comprised of five technology-driven, customer-centric global businesses that are advantaged through integration and driven by innovative technology and solutions: Chlor-Alkali and Vinyl, Chlorinated Organics, Epoxy, Industrial Solutions and Polyurethanes. Products produced by this segment are back-integrated into feedstocks, supporting a low-cost manufacturing base and consistent, reliable supply. The Performance Materials & Chemicals segment is positioned for growth through diverse markets and product offerings. The segment has broad geographic reach with sales in nearly 150 countries and manufacturing facilities located in all geographic areas. Performance Materials & Chemicals has a diverse product line that serves customers in a large number of industries including appliance, construction and industrial.


10


Details on Performance Materials & Chemicals' 2014 sales, by business and geographic area, are as follows:

Chlor-Alkali and Vinyl
The Chlor-Alkali and Vinyl business provides cost-advantaged chlorine and caustic soda supply and integration for Dow’s performance businesses, including Chlorinated Organics, Crop Protection, Epoxy and Polyurethanes. Approximately 90 percent of the chlorine produced internally by Dow is consumed within the Performance Materials & Chemicals segment. Chlor-Alkali and Vinyl also includes the marketing of caustic soda, a valuable co-product of the chlor-alkali manufacturing process, and ethylene dichloride and vinyl chloride monomer, essential for the production of polyvinyl chloride.

Chlorinated Organics
The Chlorinated Organics business is a recognized leader in supplying chlorinated organic products and solutions for safe and sustainable uses, such as intermediates or feedstocks to produce electronics, agricultural products and fluoropolymers and non-ozone depleting refrigerants.

Epoxy
The Epoxy business is a global supplier of epoxy resins, curing agents, intermediates and systems which serve a diverse array of industries and market sectors, including electrical laminates, civil engineering, composites, industrial coatings, infrastructure and consumer goods. 

Industrial Solutions
The Industrial Solutions business enables manufacturing of the world’s goods and services with additive solutions that minimize friction and heat in mechanical processes, manage the oil and water interface, deliver active ingredients for maximum effectiveness, facilitate dissolvability and provide the foundational building blocks for the development of chemical technologies. The business supports industrial manufacturers associated with virtually all end-markets, notably electronics, agricultural chemicals, engine/heavy equipment, coatings, adhesives and inks, and detergents and cleaners. Industrial Solutions is also the world’s largest producer of purified ethylene oxide. Approximately 80 percent of the ethylene oxide produced by Dow is consumed within the Performance Materials & Chemicals segment.

Polyurethanes
Polyurethanes is comprised of four businesses: Isocyanates, Polyols, Polyurethane Systems and Propylene Oxide/Propylene Glycol ("PO/PG"). The Polyurethanes business is the world’s largest producer of propylene oxide and propylene glycol as well a leading producer of polyether polyols and aromatic isocyanates that serve energy efficiency, consumer comfort and industrial market sectors. Propylene oxide is produced using the chlorohydrins process as well as by hydrogen peroxide to propylene oxide manufacturing technology(1). Performance Materials & Chemicals businesses consume approximately 90 percent of the propylene oxide produced or procured by Dow.

Competition
Competition for the Performance Materials & Chemicals segment varies based on the business. Key competitors include large, international chemical companies as well as chemical divisions of major national and international oil companies. Performance Materials & Chemicals back-integration into feedstocks supports a low-cost manufacturing base and consistent, reliable product supply. Dow is a full-service supplier with a global technical service network located close to the customer, which allows the Company to fuel growth in specialty applications and collaborate with customers to invent unique chemistries and tailored solutions. In addition to its competitive cost position, reliable supply and superior customer service, the Company also

(1)
Hydrogen peroxide to propylene oxide manufacturing technology is utilized by MTP HPPO Manufacturing Company Limited, a Thailand-based consolidated variable interest entity ultimately owned 50 percent by the Company and 50 percent by SCG Chemicals Co. Ltd.; and BASF DOW HPPO Production B.V.B.A., a Belgium-based joint venture ultimately owned 100 percent by HPPO Holding & Finance C.V., which is owned 50 percent by the Company and 50 percent by BASF.

11


competes worldwide on the basis of quality, technology and price. Key competitors include Axiall, BASF, Bayer, Hexion, Huntsman and Olin.

Distribution
The Performance Materials & Chemicals segment markets its products primarily through the Company's sales force and also utilizes distributors worldwide.

Joint Ventures
Principal joint ventures that impact the Performance Materials & Chemicals segment are listed below:

Aligned 100 percent with Performance Materials & Chemicals:
MEGlobal - headquartered in Dubai, United Arab Emirates and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins; owned 50 percent by the Company.

Performance Materials & Chemicals includes a portion of the results of:
EQUATE Petrochemicals Company K.S.C. - a Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol; owned 42.5 percent by the Company.
The Kuwait Olefins Company K.S.C. - a Kuwait-based company that manufactures ethylene and ethylene glycol; owned 42.5 percent by the Company.
Map Ta Phut Olefins Company Limited - effective ownership is 32.77 percent of which the Company directly owns 20.27 percent (aligned with Performance Materials & Chemicals) and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited (both part of The SCG-Dow Group and aligned with Performance Plastics). This Thailand-based company manufactures propylene and ethylene.
Sadara Chemical Company - a development-stage Saudi Arabian company that will manufacture chlorine, ethylene and propylene for internal consumption and will produce and sell high-value added chemical products and performance plastics; owned 35 percent by the Company.


PERFORMANCE PLASTICS
The Performance Plastics segment is the world’s leading plastics franchise, and is a market-oriented portfolio composed of five global businesses: Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons. The segment is advantaged through its low cost position into key feedstocks and broad geographic reach, with sales in more than 110 countries and manufacturing facilities located in all geographic areas. It also benefits from Dow’s R&D expertise to deliver leading-edge technology that provides a competitive benefit to customers in key strategic markets.

Details on Performance Plastics' 2014 sales, by business and geographic area, are as follows:


Dow Elastomers, Dow Electrical and Telecommunications, and Dow Packaging and Specialty Plastics serve high-growth, high-value sectors where Dow's world-class technology and rich innovation pipeline creates competitive advantages for customers and the entire value chain. Together, these three global businesses have complimentary market reach, asset capabilities and technology platforms that provide the Company with immediate and long-term growth synergies. Market growth is expected to be driven by major shifts in population demographics, improving socioeconomic status in emerging geographies, consumer and brand owner demand for increased consumer convenience, efforts to reduce food waste, growth in telecommunications networks, specifically broadband and LTE networks, and global development of electrical transmission and distribution infrastructure and renewable energy applications. Market segments served by these businesses include adhesives, construction,

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food and specialty packaging, footwear, industrial and consumer packaging, hygiene and medical, infrastructure, pipe, telecommunications and transportation.

The Energy business is one of the world’s largest industrial energy producers. This business produces or procures the energy used by Dow, sells energy to customers located on Dow manufacturing sites and also engages in opportunistic merchant sales driven by market conditions. Because of its unparalleled scale, purchasing power and global reach, the Energy business offers Dow tremendous knowledge of world energy markets and the agility to respond to sudden changes in conditions.

The Hydrocarbons business is one of the largest global producers of ethylene, an internal feedstock that is consumed primarily within Performance Plastics. The Hydrocarbons business is also a large purchaser and producer of propylene. The Company strategically locates its polyethylene production facilities near its ethylene production facilities to optimize integration benefits and drive low costs. Dow's global scale, operational discipline and feedstock flexibility creates a cost-advantaged foundation for the Company's downstream, market-driven businesses. In North America, shale gas opportunities - and the resulting increased supplies of natural gas and natural gas liquids (“NGLs”) - remain a key, cost-competitive position for the Company's ethane- and propane-based production. The Company's U.S. and European ethylene production facilities allow Dow to use different feedstocks in response to price conditions. Meanwhile, the Company's planned U.S. Gulf Coast investments will strengthen ethylene and propylene integration and establish a platform for growth of Dow's downstream businesses.

Products
Major applications/market segments and products are listed below by business:

Business
Applications/Market Segments
Major Products
Dow Elastomers
Adhesives, footwear, housewares, infrastructure, sports recreation, toys and infant products, transportation
Elastomers, polyolefin plastomers, ethylene propylene diene monomer elastomers ("EPDMs")
Dow Electrical and Telecommunications
Building and construction, electrical transmission and distribution infrastructure, telecommunications infrastructure
Wire and cable insulation, semiconductive and jacketing compound solutions, bio-based plasticizers
Dow Packaging and Specialty Plastics
Adhesives, food and specialty packaging, hygiene and medical, industrial and consumer packaging, photovoltaic
Acrylics, polyethylene, low-density polyethylene, linear low-density polyethylene, high-density polyethylene, polyolefin emulsions, polyolefin plastomers
Energy
Principally for use in Dow’s global operations
Power, steam and other utilities
Hydrocarbons
Purchaser of feedstocks; production of cost competitive monomers utilized by Dow’s derivative businesses
Ethylene, propylene, benzene, butadiene, cumene, octene, aromatics co-products, crude C4

Advantaged feedstock positions in the United States, Canada, Argentina and the Middle East

Competition
Competition for the Performance Plastics segment includes chemical divisions of major national and international oil companies, which provide competition in the United States and abroad. Dow competes worldwide on the basis of product quality, product supply, technology, price and customer service. Performance Plastics will continue to benefit from an advantaged feedstock position, including favorable shale gas dynamics in the United States, which will further strengthen the Company's low-cost position and enhance global cost competitiveness. Key competitors include Borealis, ExxonMobil, INEOS, LyondellBasell, Mitsui and SABIC.

Joint Ventures
Joint ventures play an integral role within the Performance Plastics segment by dampening earnings cyclicality and improving earnings growth. Principal joint ventures impacting Performance Plastics are listed below:

Aligned 100 percent with Performance Plastics:
The Kuwait Styrene Company K.S.C. - a Kuwait-based company that manufactures styrene monomer; owned 42.5 percent by the Company.
The SCG-Dow Group consists of Siam Polyethylene Company Limited; Siam Polystyrene Company Limited; Siam Styrene Monomer Co., Ltd.; and Siam Synthetic Latex Company Limited. These Thailand-based companies manufacture polyethylene, polystyrene, styrene and latex; owned 50 percent by the Company.

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Univation Technologies, LLC - a United States-based company that develops, markets and licenses the UNIPOL™ Polyethylene Process Technology and related catalysts, including metallocene catalysts; owned 50 percent by the Company.

Performance Plastics includes a portion of the results of:
EQUATE Petrochemicals Company K.S.C. - a Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol; owned 42.5 percent by the Company.
The Kuwait Olefins Company K.S.C. - a Kuwait-based company that manufactures ethylene and ethylene glycol; owned 42.5 percent by the Company.
Map Ta Phut Olefins Company Limited - effective ownership is 32.77 percent of which the Company directly owns 20.27 percent (aligned with Performance Materials & Chemicals) and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited (both part of The SCG-Dow Group and aligned with Performance Plastics). This Thailand-based company manufactures propylene and ethylene.
Sadara Chemical Company - a development-stage Saudi Arabian company that will manufacture chlorine, ethylene and propylene for internal consumption and will produce and sell high-value added chemical products and performance plastics; owned 35 percent by the Company.

Divestitures
On December 2, 2013, the Company sold its Polypropylene Licensing and Catalysts business to W. R. Grace & Co. This business was reported in the Performance Plastics segment through the date of divestiture.

Future Investments
The Company announced a number of investments in the U.S. Gulf Coast to take advantage of increasing supplies of low-cost natural gas and NGLs derived from shale gas. As a result of these investments, the Company’s exposure to purchased ethylene and propylene is expected to decline, offset by increased exposure to ethane and propane based feedstocks. The Company announced investments in a new on-purpose propylene production facility (expected to start-up in mid-2015) and a new, world-scale ethylene production facility (expected start-up in the first half of 2017), both located in Freeport, Texas. As a result of these U.S. Gulf Coast investments, Dow’s ethylene production capabilities are expected to increase by as much as 20 percent.

The Company announced the location of four new Performance Plastics production facilities to be built on the U.S. Gulf Coast, which include an ELITE™ Polymer production facility in Freeport, Texas; a Low Density Polyethylene (LDPE) production facility in Plaquemine, Louisiana; a NORDEL™ Metallocene EPDM production facility in Plaquemine, Louisiana; and a High Melt Index (HMI) AFFINITY™ Polymer production facility in Freeport, Texas. Leveraging a low cost ethylene supply from advantaged feedstock positions from U.S. shale gas, these production facilities will support expected profitable growth of the Company's high value Performance Plastics franchise.


CORPORATE
Corporate includes certain enterprise and governance activities (including insurance operations, geographic management, risk management such as foreign currency hedging activities, audit fees, donations, Company branding initiatives, etc.); the results of Ventures (including business incubation platforms, non-business aligned joint ventures, and venture capital); environmental operations; gains and losses on the sales of financial assets; severance costs; non-business aligned litigation expenses (including asbestos-related defense costs and reserve adjustments); and, foreign exchange results.


INDUSTRY SEGMENTS AND GEOGRAPHIC AREA RESULTS
See Note 25 to the Consolidated Financial Statements for information regarding sales, EBITDA and total assets by segment as well as sales and total assets by geographic area.


SIGNIFICANT CUSTOMERS AND PRODUCTS
All products and services are marketed primarily through the Company’s sales force, although in some instances more emphasis is placed on sales through distributors. No significant portion of any operating segment's sales is dependent upon a single customer. No single product accounted for more than five percent of the Company’s consolidated net sales in 2014.



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RAW MATERIALS
The Company operates in an integrated manufacturing environment. Basic raw materials are processed through many stages to produce a number of products that are sold as finished goods at various points in those processes. The two major raw material streams that feed the integrated production of the Company’s finished goods are chlorine-based and hydrocarbon-based raw materials.

Salt, natural brine and electricity are the base raw materials used in the production of chlor-alkali products and derivatives. The Company owns salt deposits in Louisiana and Texas; Alberta, Canada; Brazil; and Germany. The Company also produces a portion of its electricity needs in Louisiana and Texas; Alberta, Canada; and Germany.

The Company purchases hydrocarbon raw materials including ethane, propane, butane, naphtha and condensate as feedstocks. These raw materials are used in the production of both saleable products and energy. The Company also purchases certain monomers, primarily ethylene and propylene, to supplement internal production. The Company purchases natural gas, primarily to generate electricity, and purchases electric power to supplement internal generation. Expenditures for hydrocarbon feedstocks and energy accounted for 38 percent of the Company’s production costs and operating expenses for the year ended December 31, 2014. The Company purchases these raw materials on both short- and long-term contracts.

The Company had adequate supplies of raw materials during 2014, and expects to continue to have adequate supplies of raw materials in 2015. Significant raw materials, by operating segment, are listed below:

Significant Raw Materials
Performance Materials & Chemicals
 
Raw Material
Agricultural Sciences
Consumer Solutions
Infrastructure Solutions
Performance Plastics
Acrylonitrile
 
 
x
x
x
Ammonia
 
 
x
x
x
Aniline
 
 
 
x
 
Benzene
 
 
 
x
x
Butadiene
 
 
x
 
x
Butanol (1)
 
 
x
 
 
Butene
 
 
 
x
x
Carbon Black
 
x
 
x
x
Carbon Monoxide
 
 
 
x
x
Chlorine (2)
x
x
x
x
 
Condensate
 
 
 
 
x
Cumene
 
 
 
x
 
Electric Power
 
 
 
x
x
Ethane
 
 
 
 
x
Ethanol
x
x
x
x
x
Ethylene (1)
 
 
x
x
x
Formaldehyde
 
x
x
x
 
Hexene
 
 
 
 
x
Hydrogen Peroxide (3)
 
 
 
x
 
Liquified Petroleum Gases
 
 
 
 
x
Methanol
x
 
x
x
x
Naphtha
 
 
 
 
x
Natural Brine
 
 
 
x
 
Natural Gas
 
 
 
 
x
Octene
 
 
 
 
x
Phenol
 
 
 
x
 
Polystyrene
 
 
x
 
x
Propane
 
x
 
 
x
Propylene (1)
 
x
x
x
x
Pygas
 
 
 
 
x
Salt
 
 
 
x
 
Styrene
 
x
x
x
 
Wood Pulp
 
x
 
 
 
(1)    Produced by the Company and procured from external sources for internal consumption.
(2)    Produced by the Company for internal consumption.
(3)    Primarily produced and procured by a consolidated variable interest entity.


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RESEARCH AND DEVELOPMENT
The Company is engaged in a continuous program of basic and applied research to develop new products and processes, to improve and refine existing products and processes, and to develop new applications for existing products. Research and development expenses were $1,647 million in 2014, $1,747 million in 2013 and $1,708 million in 2012. At December 31, 2014, the Company employed approximately 6,200 people in various research and development activities.


PATENTS, LICENSES AND TRADEMARKS
The Company continually applies for and obtains U.S. and foreign patents and has a substantial number of pending patent applications throughout the world. At December 31, 2014, the Company owned 4,210 active U.S. patents and 17,311 active foreign patents as follows:
 
Patents Owned at December 31, 2014
  
 
United States

 
Foreign

Agricultural Sciences
 
855

 
3,485

Consumer Solutions
 
1,070

 
3,167

Infrastructure Solutions
 
859

 
4,764

Performance Materials & Chemicals
 
490

 
2,328

Performance Plastics
 
807

 
3,276

Corporate
 
129

 
291

Total
 
4,210

 
17,311


 
Remaining Life of Patents Owned at December 31, 2014
  
 
United States

 
Foreign

Within 5 years
 
937

 
2,962

6 to 10 years
 
1,000

 
4,786

11 to 15 years
 
1,199

 
7,031

16 to 20 years
 
1,074

 
2,532

Total
 
4,210

 
17,311

 
Dow’s primary purpose in obtaining patents is to protect the results of its research for use in operations and licensing. Dow is also party to a substantial number of patent licenses and other technology agreements. The Company had revenue related to patent and technology royalties totaling $388 million in 2014, $327 million in 2013 and $448 million in 2012. The Company incurred royalties to others of $170 million in 2014, $198 million in 2013 and $185 million in 2012. Dow also has a substantial number of trademarks and trademark registrations in the United States and in other countries, including the “Dow in Diamond” trademark. Although the Company considers that its patents, licenses and trademarks in the aggregate constitute a valuable asset, it does not regard its business as being materially dependent on any single or group of related patents, licenses or trademarks.



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PRINCIPAL PARTLY OWNED COMPANIES
Dow’s principal nonconsolidated affiliates at December 31, 2014, including direct or indirect ownership interest for each, are listed below:

Principal Nonconsolidated Affiliate
 
Ownership Interest
 
Business Description
Dow Corning Corporation
 
50.00%
 
A U.S. company that manufactures silicone and silicone products
EQUATE Petrochemical Company K.S.C. (1)
 
42.50%
 
A Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol
The Kuwait Olefins Company K.S.C. (1)
 
42.50%
 
A Kuwait-based company that manufactures ethylene and ethylene glycol
The Kuwait Styrene Company K.S.C. (1)
 
42.50%
 
A Kuwait-based company that manufactures styrene monomer
Map Ta Phut Olefins Company Limited (2)
 
32.77%
 
A Thailand-based company that manufactures propylene and ethylene
MEGlobal (1)
 
50.00%
 
A company, headquartered in Dubai, United Arab Emirates, that manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins
Sadara Chemical Company
 
35.00%
 
A development-stage Saudi Arabian company that will manufacture chlorine, ethylene and propylene for internal consumption and will produce and sell high-value added chemical products and performance plastics
The SCG-Dow Group:
 
 
 
 
Siam Polyethylene Company Limited
 
50.00%
 
A Thailand-based company that manufactures polyethylene
Siam Polystyrene Company Limited
 
50.00%
 
A Thailand-based company that manufactures polystyrene
Siam Styrene Monomer Co., Ltd.
 
50.00%
 
A Thailand-based company that manufactures styrene
Siam Synthetic Latex Company Limited
 
50.00%
 
A Thailand-based company that manufactures latex
Univation Technologies, LLC (3)
 
50.00%
 
A United States-based company that develops, markets and licenses the UNIPOL™ polyethylene process technology and sells related catalysts, including metallocene catalysts
(1)
In the fourth quarter of 2014, the Company announced it will reconfigure and reduce its equity base in EQUATE Petrochemical Company K.S.C., The Kuwait Olefins Company K.S.C., The Kuwait Styrene Company K.S.C. and MEGlobal through a divestment of a portion of the Company’s interests. Dow expects such transaction(s) to be completed by mid-2016.
(2)
The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited.
(3)
On October 2, 2014, the Company reached a definitive agreement with ExxonMobil Chemical Company to acquire the remaining 50 percent ownership interest in Univation Technologies, LLC ("Univation"), which will result in Univation becoming a wholly owned subsidiary of Dow. The transaction is expected to close in the first half of 2015, pending regulatory approvals.
See Note 8 to the Consolidated Financial Statements for additional information regarding nonconsolidated affiliates.


FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
In 2014, the Company derived 67 percent of its sales and had 41 percent of its property investment outside the United States. While the Company’s international operations may be subject to a number of additional risks, such as changes in currency exchange rates and geopolitical risks in emerging geographies, the Company does not regard its foreign operations, on the whole, as carrying any greater risk than its operations in the United States. Information on sales and long-lived assets by geographic area for each of the last three years appears in Note 25 to the Consolidated Financial Statements, and discussions of the Company’s risk management program for foreign exchange and interest rate risk management appear in Part I, Item 1A. Risk Factors; Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk; and Note 10 to the Consolidated Financial Statements.


PROTECTION OF THE ENVIRONMENT
Matters pertaining to the environment are discussed in Part I, Item 1A. Risk Factors; Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; and Notes 1 and 14 to the Consolidated Financial Statements. In addition, detailed information on Dow's performance regarding environmental matters and goals can be found online on Dow's Sustainability webpage at www.dow.com. The Company's website and its content are not deemed incorporated by reference into this report.

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EMPLOYEES
As of December 31, 2014, the Company employed approximately 53,000 people on a full-time basis, with approximately 50 percent located in North America, 25 percent located in Europe, Middle East, Africa and India, and 25 percent located in other locations.


OTHER ACTIVITIES
Dow engages in the property and casualty insurance and reinsurance business primarily through its Liana Limited subsidiaries.


EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below is information related to the Company’s executive officers as of February 13, 2015.

Name - Age
Present Position with Registrant
Year Elected to be an Officer
Other Business Experience since January 1, 2010
Ronald C. Edmonds, 57
Vice President and Controller
2009
Vice President and Controller 2009 to date.
James R. Fitterling, 53
Vice Chairman, Business Operations
2010
Vice President Corporate Development 2009 to August 2010. Dow Executive Vice President and President, Plastics and Hydrocarbons August 2010 to September 2011. Executive Vice President and President, Feedstocks & Energy and Corporate Development September 2011 to September 2012. Executive Vice President, Feedstocks, Performance Plastics, Asia and Latin America September 2012 to December 2013. Executive Vice President, Feedstocks, Performance Plastics and Supply Chain December 2013 to October 2014. Present position held since October 2014.
Heinz Haller, 59
Executive Vice President and President of Dow Europe, Middle East, Africa and India
2006
Executive Vice President, Performance Systems May 2009 to August 2010. Executive Vice President and Chief Commercial Officer August 2010 to September 2012. Present position held since September 2012.
Joe E. Harlan, 55
Chief Commercial Officer and Vice Chairman, Market Businesses
2011
Executive Vice President of Consumer & Office Business, 3M Company 2009 to August 2011. Executive Vice President, Performance Materials September 2011 to September 2012. Executive Vice President, Chemicals, Energy and Performance Materials September 2012 to October 2014. Present position held since October 2014.
Peter Holicki, 54
Corporate Vice President, Manufacturing and Engineering, and Environment, Health & Safety Operations
2014
Global Manufacturing Vice President, Hydrocarbons May 2009 to October 2012. Vice President for Manufacturing and Engineering Europe, Middle East and Africa May 2009 to October 2012. Vice President of Operations for Europe, Middle East and Africa and the Ethylene Envelope October 2012 to December 2013. Emergency Services and Security Expertise September 2014 to present. Present position held since 2014.
Charles J. Kalil, 63
General Counsel and Executive Vice President
2004
General Counsel 2004 to date. Executive Vice President 2008 to date. Corporate Secretary 2005 to January 2015.
Andrew N. Liveris, 60
President, Chief Executive Officer and Chairman of the Board
2003
President and Chief Executive Officer 2004 to date and Chairman 2006 to date.
Fernando Ruiz, 59
Corporate Vice President and Treasurer
2001
Corporate Vice President and Treasurer 2001 to date.
Johanna Söderström, 43
Corporate Vice President, Human Resources and Aviation
2015
HR Director, Europe, Middle East and Africa July 2009 to January 2011. Global HR Director, Performance Materials Division January 2011 to October 2012. Vice President, HR Center of Expertise October 2012 to January 2015. Present position held since January 2015.
A. N. Sreeram, 47
Corporate Vice President, Research & Development
2013
Vice President, Research & Development, Dow Advanced Materials 2009 to October 2013. Present position held since October 2013.
Howard I. Ungerleider, 46
Chief Financial Officer and Executive Vice President
2011
Vice President, Investor Relations 2008 to March 2011. Senior Vice President and President, Performance Plastics March 2011 to September 2012. Executive Vice President, Advanced Materials September 2012 to October 2014. Present position held since October 2014.


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The Dow Chemical Company and Subsidiaries
PART I, Item 1A. Risk Factors.
RISK FACTORS

The factors described below represent the Company's principal risks.

Global Economic Conditions: The Company operates in a global, competitive environment which gives rise to operating and market risk exposure.
The Company sells its broad range of products and services in a competitive, global environment, and competes worldwide for sales on the basis of product quality, price, technology and customer service. Increased levels of competition could result in lower prices or lower sales volume, which could have a negative impact on the Company's results of operations.

Economic conditions around the world, and in certain industries in which the Company does business also impact sales prices and volume. As a result, market uncertainty or an economic downturn in the geographic areas or industries in which Dow sells its products could reduce demand for these products and result in decreased sales volume, which could have a negative impact on Dow's results of operations.

In addition, volatility and disruption of financial markets could limit customers' ability to obtain adequate financing to maintain operations, which could result in a decrease in sales volume and have a negative impact on Dow's results of operations. The Company's global business operations also give rise to market risk exposure related to changes in foreign exchange rates, interest rates, commodity prices and other market factors such as equity prices. To manage such risks, Dow enters into hedging transactions pursuant to established guidelines and policies. If Dow fails to effectively manage such risks, it could have a negative impact on the Company's results of operations.

Financial Commitments and Credit Markets: Market conditions could reduce the Company's flexibility to respond to changing business conditions or fund capital needs.
Adverse economic conditions could reduce the Company's flexibility to respond to changing business and economic conditions or to fund capital expenditures or working capital needs. The economic environment could result in a contraction in the availability of credit in the marketplace and reduce sources of liquidity for the Company. This could result in higher borrowing costs.
Raw Materials: Availability of purchased feedstocks and energy, and the volatility of these costs, impact Dow’s operating costs and add variability to earnings.
Purchased feedstock and energy costs account for a substantial portion of the Company’s total production costs and operating expenses. The Company purchases hydrocarbon raw materials including ethane, propane, butane, naphtha and condensate as feedstocks. The Company also purchases certain monomers, primarily ethylene and propylene, to supplement internal production, as well as other raw materials. The Company purchases natural gas, primarily to generate electricity, and purchases electric power to supplement internal generation.

Feedstock and energy costs generally follow price trends in crude oil and natural gas, which are sometimes volatile. While the Company uses its feedstock flexibility and financial and physical hedging programs to help mitigate feedstock cost increases, the Company is not always able to immediately raise selling prices. Ultimately, the ability to pass on underlying cost increases is dependent on market conditions. Conversely, when feedstock and energy costs decline, selling prices generally decline as well. As a result, volatility in these costs could impact the Company’s results of operations.

The Company has a number of investments in the U.S. Gulf Coast to take advantage of increasing supplies of low-cost natural gas and natural gas liquids ("NGLs") from shale gas including the restart of an ethylene production facility in Louisiana, which was completed in December 2012; a new on-purpose propylene facility in Freeport, Texas, with start-up expected in mid-2015; and a new, world-scale ethylene production facility in Freeport, Texas, with start-up expected in the first half of 2017. As a result of these investments, the Company’s exposure to purchased ethylene and propylene is expected to decline, offset by increased exposure to ethane and propane feedstocks.

While the Company expects abundant and cost-advantaged supplies of NGLs in the United States to persist for the foreseeable future, if NGLs were to become significantly less advantaged than crude oil-based feedstocks, it could have a negative impact on the Company’s results of operations and future investments.


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Also, if the Company’s key suppliers of feedstocks and energy are unable to provide the raw materials required for production, it could have a negative impact on the Company's results of operations.

Supply/Demand Balance: Earnings generated by the Company's chemical and plastic products vary based in part on the balance of supply relative to demand within the industry.
The balance of supply relative to demand within the industry may be significantly impacted by the addition of new capacity, especially for basic commodities where capacity is generally added in large increments as world-scale facilities are built. This may disrupt industry balances and result in downward pressure on prices due to the increase in supply, which could negatively impact the Company's results of operations.

Litigation: The Company is party to a number of claims and lawsuits arising out of the normal course of business with respect to commercial matters including product liability, governmental regulation and other actions.
Certain of the claims and lawsuits facing the Company purport to be class actions and seek damages in very large amounts. All such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide Corporation (“Union Carbide”) and certain urethane matters, described below, it is the opinion of the Company's management that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on the Company's consolidated financial statements.

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. At December 31, 2014, Union Carbide's asbestos-related liability for pending and future claims was $513 million ($501 million at December 31, 2013) and its receivable for insurance recoveries related to the asbestos liability was $10 million ($25 million at December 31, 2013). At December 31, 2014, Union Carbide also had receivables of $69 million ($66 million at December 31, 2013) for insurance recoveries for defense and resolution costs. It is the opinion of the Company's management that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-related claims, including future defense costs, could have a material impact on the Company's results of operations and cash flows for a particular period and on the consolidated financial position of the Company.

The Company, among others, was named as a defendant in multiple civil class action lawsuits alleging a conspiracy to fix the price of various urethane chemical products, namely polyurethane chemicals, including methylene diphenyl diisocyanate, toluene diisocyanate, polyether polyols and system house products. These lawsuits were consolidated or have been tolled. In January 2013, the class action lawsuit went to trial in the U.S. District Court for the District of Kansas ("District Court") with the Company as the sole remaining defendant. On February 20, 2013, the jury in the matter returned a damages verdict of approximately $400 million against the Company, which ultimately was trebled by the District Court under applicable antitrust laws - less offsets from other settling defendants - resulting in a judgment entered in July 2013 in the amount of $1.06 billion. The Company appealed this judgment to the U.S. Tenth Circuit Court of Appeals ("Court of Appeals"). On September 29, 2014, the Court of Appeals issued an opinion affirming the District Court judgment. On October 14, 2014, the Company filed a petition for Rehearing or Rehearing En Banc (collectively the "Rehearing Petition") with the Court of Appeals. The Court of Appeals denied Dow’s Rehearing Petition on November 7, 2014. The Company will file a petition for writ of certiorari ("Writ Petition") with the U.S. Supreme Court in March 2015, seeking judicial review by the U.S. Supreme Court and requesting that the Supreme Court ultimately correct fundamental errors in the Circuit Court opinion. While it is unknowable whether or not the U.S. Supreme Court will accept the Writ Petition for review, there are several compelling reasons why the U.S. Supreme Court should grant the petition for writ of certiorari, and if the petition for writ of certiorari is accepted, the Company believes it is likely that the District Court judgment would be vacated. The Company has concluded it is not probable that a loss will occur and, therefore, a liability has not been recorded with respect to these matters. While the Company believes it is not probable a loss will occur, the existence of the jury verdict, the Court of Appeals' opinion, and subsequent denial of Dow’s Rehearing Petition indicate that it is reasonably possible that a loss could occur.

Environmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the Company's financial results. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.
The Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. At December 31, 2014, the Company had accrued obligations of $706 million ($722 million at December 31, 2013) for probable environmental remediation and restoration costs, including $78 million ($73 million at December 31, 2013) for the remediation of Superfund sites. This is management's best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two and a half times that amount. Costs and capital expenditures relating to environmental,

20


health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt the Company's operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities.

Chemical Safety: Increased concerns regarding the safe use of chemicals in commerce and their potential impact on the environment have resulted in more restrictive regulations from local, state and federal governments and could lead to new regulations.
Concerns regarding the safe use of chemicals in commerce and their potential impact on health and the environment reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These concerns could manifest themselves in stockholder proposals, preferred purchasing and continued pressure for more stringent regulatory intervention. These concerns could also influence public perceptions, the viability of the Company's products, the Company's reputation and the cost to comply with regulations. In addition, terrorist attacks and natural disasters have increased concerns about the security and safety of chemical production and distribution. These concerns could have a negative impact on the Company's results of operations.

Local, state and federal governments continue to propose new regulations related to the security of chemical plant locations and the transportation of hazardous chemicals, which could result in higher operating costs.

Operational Event: A significant operational event could negatively impact the Company's results of operations.
As a diversified chemical manufacturing company, the Company's operations, the transportation of products, cyber attacks, or severe weather conditions and other natural phenomena (such as drought, hurricanes, earthquakes, tsunamis, floods, etc.) could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors or the public at large, which could have a negative impact on the Company's results of operations.

Major hurricanes have caused significant disruption in Dow's operations on the U.S. Gulf Coast, logistics across the region, and the supply of certain raw materials, which had an adverse impact on volume and cost for some of Dow's products. Due to the Company's substantial presence on the U.S. Gulf Coast, similar severe weather conditions or other natural phenomena in the future could negatively affect Dow's results of operations.

Cyber Vulnerability: The risk of loss of the Company’s intellectual property, trade secrets or other sensitive business information or disruption of operations could negatively impact the Company’s financial results.
Cyber attacks or security breaches could compromise confidential, business critical information, cause a disruption in the Company’s operations or harm the Company's reputation. The Company has attractive information assets, including intellectual property, trade secrets and other sensitive, business critical information. While the Company has a comprehensive cyber security program that is continuously reviewed, maintained and upgraded, a significant cyber attack could result in the loss of critical business information and/or could negatively impact operations, which could have a negative impact on the Company’s financial results.

Company Strategy: Implementing certain elements of the Company's strategy could negatively impact the Company's financial results.
The Company currently has manufacturing operations, sales and marketing activities, joint ventures, as well as proposed and existing projects of varying size in emerging geographies. Activities in these geographies are accompanied by uncertainty and risks including: navigating different government regulatory environments; relationships with new, local partners; project funding commitments and guarantees; expropriation, military actions, war, terrorism and political instability; sabotage; uninsurable risks; suppliers not performing as expected resulting in increased risk of extended project timelines; and determining raw material supply and other details regarding product movement. If the manufacturing operations, sales and marketing activities, and/or implementation of these projects is not successful, it could adversely affect the Company's financial condition, cash flows and results of operations.

The Company has also announced a number of portfolio management actions, including the potential divestiture of global businesses and potential reduction of the Company's equity interest in certain joint ventures. If the execution or implementation of these transactions is not successful, it could adversely impact the Company's financial condition, cash flows and results of operations.

Goodwill: An impairment of goodwill could negatively impact the Company's financial results.
At least annually, the Company assesses goodwill for impairment. If an initial qualitative assessment identifies that it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value, additional quantitative testing is performed. The Company may also elect to skip the qualitative testing and proceed directly to quantitative testing. If the

21


quantitative testing indicates that goodwill is impaired, the carrying value of goodwill is written down to fair value with a charge against earnings. Since the Company utilizes a discounted cash flow methodology to calculate the fair value of its reporting units, continued weak demand for a specific product line or business could result in an impairment. Accordingly, any determination requiring the write-off of a significant portion of goodwill could negatively impact the Company's results of operations.

Pension and Other Postretirement Benefits: Increased obligations and expenses related to the Company's defined benefit pension plans and other postretirement benefit plans could negatively affect Dow's financial condition and results of operations.
The Company has defined benefit pension plans and other postretirement benefit plans (the “plans”) in the United States and a number of other countries. The assets of the Company's funded plans are primarily invested in fixed income and equity securities of U.S. and foreign issuers. Changes in the market value of plan assets, investment returns, discount rates, mortality rates, regulations and the rate of increase in compensation levels may affect the funded status of the Company's plans and could cause volatility in the net periodic benefit cost, future funding requirements of the plans and the funded status of the plans. A significant increase in the Company's obligations or future funding requirements could have a negative impact on the Company's results of operations and cash flows for a particular period and on the Company's financial condition.



22



The Dow Chemical Company and Subsidiaries
PART I, Item 1B. Unresolved Staff Comments.
UNRESOLVED STAFF COMMENTS
None.



23



The Dow Chemical Company and Subsidiaries
PART I, Item 2. Properties.
PROPERTIES
The Company operates 201 manufacturing sites in 35 countries. Properties of Dow include facilities which, in the opinion of management, are suitable and adequate for the manufacture and distribution of Dow’s products. During 2014, the Company’s production facilities and plants operated at 85 percent of capacity. The Company’s major production sites, including consolidated variable interest entities, are as follows:

Location
Agricultural
Sciences
Consumer Solutions
Infrastructure Solutions
Performance
Materials & Chemicals
Performance Plastics
Bahia Blanca, Argentina
 
 
 
 
x
Candeias, Brazil
 
 
 
x
 
Canada:
 
 
 
 
 
Fort Saskatchewan, Alberta
 
 
 
 
x
Joffre, Alberta
 
 
 
 
x
Germany:
 
 
 
 
 
Boehlen
 
 
x
x
x
Bomlitz
 
x
x
 
 
Leuna
 
 
 
 
x
Schkopau
 
x
x
x
x
Stade
x
x
x
x
x
Terneuzen, The Netherlands
 
x
x
x
x
Tarragona, Spain
 
 
 
x
x
Map Ta Phut, Thailand
 
 
x
x
x
United States:
 
 
 
 
 
Louisville, Kentucky
 
 
x
 
 
Hahnville (St. Charles), Louisiana
 
 
x
x
x
Plaquemine, Louisiana
 
x
x
x
x
Midland, Michigan
x
x
x
x
x
Deer Park, Texas
 
 
x
x
 
Freeport, Texas
x
x
x
x
x
Seadrift, Texas
 
x
x
x
x
Texas City, Texas
 
 
x
x
 
Including the major production sites, the Company has plants and holdings in the following geographic areas:

Asia Pacific:
40 manufacturing locations in 11 countries.
Canada:
  6 manufacturing locations in 3 provinces.
Europe, Middle East, Africa and India:
54 manufacturing locations in 18 countries.
Latin America:
28 manufacturing locations in 4 countries.
United States:
73 manufacturing locations in 25 states.
All of Dow’s plants are owned or leased, subject to certain easements of other persons which, in the opinion of management, do not substantially interfere with the continued use of such properties or materially affect their value.
A summary of properties, classified by type, is provided in Note 7 to the Consolidated Financial Statements. Additional information regarding leased properties can be found in Note 18 to the Consolidated Financial Statements.




24



The Dow Chemical Company and Subsidiaries
PART I, Item 3. Legal Proceedings.
LEGAL PROCEEDINGS

Asbestos-Related Matters of Union Carbide Corporation
Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc.

It is the opinion of Dow’s management that it is reasonably possible that the cost of Union Carbide disposing of its asbestos-related claims, including future defense costs, could have a material impact on the Company’s results of operations and cash flows for a particular period and on the consolidated financial position of the Company.

For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 14 to the Consolidated Financial Statements.

Environmental Matters
The Company received an Administrative Complaint dated May 23, 2013 from the Texas Council of Environmental Quality ("TCEQ") alleging violations of various environmental requirements regulating air emissions from operations at its Freeport, Texas, manufacturing facility. The TCEQ sought a fine in excess of $100,000 for a number of independent violations of air permits and regulations. This Administrative Complaint was combined with other alleged violations of environmental requirements at the Freeport, Texas, manufacturing facility, including allegations of violations related to the operation of the Company’s wastewater treatment plant. The combined Administrative Complaint was settled on October 8, 2014 with the Company agreeing to pay a total of $67,060, half of which provided funding for a Supplemental Environmental Project entitled Houston-Galveston AERCO’s Clean Cities/Clean Vehicles.

Dow AgroSciences LLC ("DAS"), a wholly owned subsidiary of the Company, received two separate notices from the U.S. Environmental Protection Agency ("EPA"), the first dated April 16, 2014 and the second dated May 27, 2014, seeking civil penalties for alleged violations by supplemental distributors of certain DAS products of various requirements under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) regulating production and labeling of pesticides. In each matter, the EPA is seeking to collect a civil penalty from DAS, as the primary registrant, in excess of $100,000. DAS resolved the first matter with the EPA in December 2014 and agreed to pay a $137,280 civil penalty as part of the settlement. Discussions between DAS and the applicable EPA Regional Office handling the second matter remain ongoing.

Dow Benelux B.V. ("Dow Benelux"), a Netherlands-based wholly owned subsidiary of the Company, received a summons dated July 20, 2012 from the Public Prosecutor in The Netherlands to appear before the criminal section of the District Court in Breda, The Netherlands (which venue was subsequently changed to the District Court of Middelburg) (the "Court"). The allegations contained in the summons relate to seven process safety incidents and environmental spills that occurred between 2005 and 2008 at Dow Benelux's Terneuzen manufacturing facility. The Public Prosecutor alleges that each of the incidents constitutes a violation of certain Netherlands safety procedures and environmental regulations, notably Section 5 of the Major Accidents Decree 1999 and/or Section 18.18 of the Environmental Act. In addition, five of the incidents allegedly also constitute a violation of Section 173a of the Dutch Criminal Code. The trial in the first instance on this matter was held from January 14, 2014 through February 7, 2014. On March 24, 2014, the Court issued a guilty verdict and imposed a Euro 1.8 million fine against Dow Benelux. The Court's judgment is subject to an appeal with the Court of Appeal in Den Bosch, and Dow Benelux has filed a notice of appeal. A new and independent trial will be held by the Court of Appeal. No date has been set for this new trial.







25


Derivative Litigation
On March 6, 2013, Jeffrey Kaufman ("Kaufman"), purportedly in the name of and on behalf of the Company, commenced an action in the United States District Court for the District of Delaware (the "Court") against the Company and certain officers and directors of the Company (the "Defendants") alleging, among other things, that between 2007-2012, Defendants violated federal securities and state law surrounding equity awards and disclosures involving the 1988 Award and Option Plan and the 2012 Stock Incentive Plan ("2012 Plan") (collectively, the "Plans") with respect to the tax-deductible nature of certain awards under the Plans. The relief sought in this litigation includes the recovery of certain equity awards and injunctive relief, as well as attorneys' fees. The Company first moved to dismiss the complaint on May 14, 2013 and, in response to the subsequent filing by Kaufman of an amended complaint, the Company filed an amended motion to dismiss on August 30, 2013. On September 30, 2014, the Court entered an order in favor of the Defendants dismissing the complaint in its entirety. On November 18, 2014, the Court granted Plaintiff’s motion for reargument on one count, alleging that the 2012 proxy failed to include the approximate number of persons eligible to receive awards under the 2012 Plan. The Company believes the lawsuit to be without merit, has filed an answer on the remaining count, and will continue to vigorously defend the lawsuit.



26



The Dow Chemical Company and Subsidiaries
PART I, Item 4. Mine Safety Disclosures.
MINE SAFETY DISCLOSURES

Not applicable.


27



The Dow Chemical Company and Subsidiaries
PART II, Item 5. Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The principal market for the Company’s common stock is the New York Stock Exchange, traded under the symbol “DOW.”

Quarterly market and dividend information can be found in Quarterly Statistics at the end of Part II, Item 8. Financial Statements and Supplementary Data.

At December 31, 2014, there were 65,500 registered common stockholders. The Company estimates that there were an additional 653,636 stockholders whose shares were held in nominee names at December 31, 2014. At January 31, 2015, there were 65,319 registered common stockholders.

On November 12, 2014, the Board of Directors declared a quarterly dividend of $0.42 per share, payable January 30, 2015, to stockholders of record on December 31, 2014. On February 12, 2015, the Board of Directors announced the declaration of a quarterly dividend of $0.42 per share, payable April 30, 2015, to stockholders of record on March 31, 2015. Since 1912, the Company has maintained or increased the amount of the quarterly dividend, adjusted for stock splits, with the exception of February 12, 2009. During this 103-year period, Dow has increased the amount of the quarterly dividend 51 times (approximately 12 percent of the time), reduced the dividend once and maintained the amount of the quarterly dividend approximately 88 percent of the time.

See Part III, Item 11. Executive Compensation for information relating to the Company’s equity compensation plans.

Issuer Purchases of Equity Securities
The following table provides information regarding purchases of the Company’s common stock by the Company during the three months ended December 31, 2014:

Issuer Purchases of Equity Securities
 
Average price paid per share

 
Total number of shares purchased as part of the Company's publicly announced share repurchase program (1)

 
Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (1) (In millions)

Period
 
Total number of shares purchased

October 2014
 
6,210,326

 
$
47.06

 
6,210,326

 
$
801

November 2014
 
9,814,627

 
$
48.90

 
9,814,627

 
$
5,321

December 2014
 
6,506,047

 
$
49.37

 
6,506,047

 
$
5,000

Fourth quarter 2014
 
22,531,000

 
$
48.53

 
22,531,000

 
$
5,000

(1)
On February 13, 2013, the Board of Directors approved a share buy-back program, authorizing up to $1.5 billion to be spent on the repurchase of the Company’s common stock. Purchases under this program began in May 2013. On January 29, 2014, the Board of Directors announced an expansion of the Company's share buy-back authorization, authorizing an additional amount not to exceed $3 billion. On November 12, 2014, the Board of Directors announced a new $5 billion tranche to its share buy-back program, with the repurchase of the Company's common stock timed to proceeds received from portfolio management actions and increases in operating cash flows. As a result of these actions, the total authorized amount of the share repurchase program is $9.5 billion.



28



The Dow Chemical Company and Subsidiaries
PART II, Item 6. Selected Financial Data.

SELECTED FINANCIAL DATA

In millions, except as noted (Unaudited)
2014

2013

2012

2011

2010

Summary of Operations
 
 
 
 
 
Net sales
$
58,167

$
57,080

$
56,786

$
59,985

$
53,674

Net income
$
3,839

$
4,816

$
1,100

$
2,784

$
2,321

Per share of common stock (in dollars):
 
 
 
 
 
Net income per common share - basic
$
2.91

$
3.72

$
0.71

$
2.06

$
1.75

Net income per common share - diluted
$
2.87

$
3.68

$
0.70

$
2.05

$
1.72

Cash dividends declared per share of common stock
$
1.53

$
1.28

$
1.21

$
0.90

$
0.60

Book value per share of common stock
$
19.71

$
22.59

$
17.73

$
19.28

$
19.23

Year-end Financial Position
 
 
 
 
 
Total assets
$
68,796

$
69,501

$
69,605

$
69,224

$
69,588

Long-term debt
$
18,838

$
16,820

$
19,919

$
18,310

$
20,605

Financial Ratios
 
 
 
 
 
Research and development expenses as percent of net sales
2.8
%
3.1
%
3.0
%
2.7
%
3.1
%
Income before income taxes as percent of net sales
9.1
%
11.9
%
2.9
%
6.0
%
5.2
%
Return on stockholders’ equity
18.6
%
19.4
%
5.0
%
13.1
%
11.0
%
Debt as a percent of total capitalization
45.6
%
39.0
%
48.8
%
48.0
%
51.3
%
                     


29


 
The Dow Chemical Company and Subsidiaries
 
 
PART II, Item 7. Management’s Discussion and
 
(Unaudited)
Analysis of Financial Condition and Results of Operations.
 



ABOUT DOW
Dow combines the power of science and technology to passionately innovate what is essential to human progress. The Company is driving innovations that extract value from the intersection of chemical, physical and biological sciences to help address many of the world's most challenging problems such as the need for clean water, clean energy generation and conservation, and increasing agricultural productivity. Dow's integrated, market-driven, industry-leading portfolio of specialty chemical, advanced materials, agrosciences and plastics businesses delivers a broad range of technology-based products and solutions to customers in approximately 180 countries and in high growth sectors such as packaging, electronics, water, coatings and agricultural. In 2014, Dow had annual sales of more than $58 billion and employed approximately 53,000 people worldwide. The Company's more than 6,000 products are manufactured at 201 sites in 35 countries across the globe. The Company conducts its worldwide operations through global businesses, which are reported in five operating segments: Agricultural Sciences, Consumer Solutions, Infrastructure Solutions, Performance Materials & Chemicals and Performance Plastics.

In 2014, 37 percent of the Company’s sales were to customers in North America; 34 percent were in Europe, Middle East, Africa and India ("EMEAI")(1); while the remaining 29 percent were to customers in Asia Pacific and Latin America.












(1)
Sales to customers in the Indian subcontinent, previously reported with Asia Pacific, are now aligned with Europe, Middle East, Africa and India; prior period sales have been adjusted to reflect this realignment.


30


2014 OVERVIEW
Dow had a strong year in 2014 as financial discipline, increasing demand and execution against strategic initiatives created value for shareholders. The Company is driving proactive portfolio management and productivity actions, efficiently managing capital and investing for long-term growth. 

Net sales for 2014 were $58.2 billion, up 2 percent from $57.1 billion in 2013, with volume up 2 percent and price flat. Sales increased in all operating segments. Excluding the impact of recent divestitures(1), sales increased in all geographic areas.
Volume increased 2 percent in 2014 compared with 2013, with gains in all operating segments, except Performance Plastics which remained flat, with notable increases in Agricultural Sciences and Consumer Solutions (both up 3 percent). Excluding the impact of recent divestitures, Performance Plastics volume was up 1 percent. Volume increased in all geographic areas, led by EMEAI (up 4 percent).

Price was flat in 2014 compared with 2013, as increased selling prices were offset by the unfavorable impact of currency. Price increases in Performance Plastics (up 2 percent) were offset by price declines in Agricultural Sciences and Consumer Solutions (both down 1 percent). Infrastructure Solutions and Performance Materials & Chemicals price remained flat. Price increased in North America (up 2 percent) and Latin America (up 1 percent), which was offset by a decline in EMEAI (down 1 percent). Price in Asia Pacific remained flat.

In 2014, the Company recognized a pretax charge of $50 million related to the impairment of intangible assets in the Dow Electronic Materials business, part of Consumer Solutions.

In 2014, the Company recorded a pretax charge of $78 million related to an increase in the asbestos-related liability for pending and future claims, reflected in Corporate.
 
Dow's earnings from nonconsolidated affiliates totaled $835 million, down from $1,034 million in 2013. In 2014, equity earnings decreased primarily due to lower earnings at EQUATE Petrochemical Company K.S.C. ("EQUATE"), The Kuwait Styrene Company K.S.C. ("TKSC") and MEGlobal and increased losses at Sadara Chemical Company ("Sadara"), which were partially offset by increased earnings at Dow Corning Corporation ("Dow Corning"). Equity earnings were also impacted by a $407 million gain related to Dow Corning's adjustment of its implant liability and a loss of $500 million related to Dow Corning's abandonment of a polycrystalline silicon plant expansion.

The Company delivered $6.5 billion of cash flows from operating activities in 2014 and ended the year with $5.7 billion of cash and cash equivalents. Interest expense and amortization of debt discount declined $118 million from 2013, reflecting the impact of the Company's 2013 deleveraging activities and lower debt financing costs.
 
On September 16, 2014, the Company issued $2 billion of debt with 10-, 20- and 30-year maturities at low coupons.

On January 29, 2014, the Board of Directors announced an expansion of the Company's share buy-back authorization, authorizing an additional amount not to exceed $3 billion to be spent on the repurchase of the Company's common stock over a period of time. As a result of this action, the share buy-back authorization increased to $4.5 billion. On November 12, 2014, the Board of Directors announced a new $5 billion tranche to its share buy-back program, with the repurchase of the Company's common stock timed to proceeds received from portfolio management actions and increases in operating cash flows. As a result of this action, the total authorized amount of the share repurchase program is $9.5 billion. During 2014, the Company repurchased $4.2 billion of common stock under the share buy-back program.

On January 29, 2014, the Board of Directors announced the declaration of a quarterly dividend of $0.37 per share, a 15 percent increase in the quarterly dividend. On November 12, 2014, the Board of Directors declared a 14 percent increase in the Company's dividend, from $0.37 per share to $0.42 per share. These actions demonstrate the Company's commitment to consistently and increasingly reward shareholders.






(1)
Excludes sales of the Polypropylene Licensing and Catalysts business, divested on December 2, 2013 and sales related to Nippon Unicar Company Limited, divested on July 1, 2013.


31


Other notable events and highlights from 2014 include:

In the first quarter of 2014, the Company's joint venture membrane chlor-alkali manufacturing facility with Mitsui & Co., Ltd., Dow-Mitsui Chlor-Alkali LLC, successfully initiated full-scale, commercial production. The new facility has a nameplate capacity of approximately 800 kilotons per annum (KTA) of chlorine. This new, world-scale manufacturing facility will replace 800 KTA of older capacity at Dow's Freeport site. The joint venture is a variable interest entity and is included in Dow's consolidated financial statements.

During the week of April 20, 2014, the Company's Plaquemine, Louisiana, manufacturing site experienced two separate process incidents that resulted in the disruption of ethylene production at the Company's LA-2 and LA-3 ethylene production facilities. The LA-3 facility resumed production of ethylene on May 8, 2014 and the LA-2 facility resumed production of ethylene on May 16, 2014.

On May 2, 2014, Idemitsu Kosan Co., Ltd. and Mitsui & Co., Ltd. of Tokyo, Japan, announced their decision to not move forward with a proposed joint venture to construct a linear alpha olefins facility on the U.S. Gulf Coast. Accordingly, the Company terminated its initial agreement for a long-term ethylene off-take arrangement with the proposed joint venture. The Company is evaluating several high-return, alternative uses for the ethylene that was included in this arrangement. Further, Dow will continue to access its existing supply network of linear alpha olefins.

On June 30, 2014, the Company started construction of its world-scale ethylene production facility at Texas Operations in Freeport, Texas. The facility will have a nameplate capacity of approximately 1,500 KTA and will support market growth and expansions in Dow's industry-leading Performance Plastics franchise. The facility is expected to start up in the first half of 2017.

On July 22, 2014, the Company's Fort Saskatchewan manufacturing site in Alberta, Canada, experienced an unplanned outage of its ethylene production facility. On July 29, 2014, the facility resumed ethylene production at a significantly reduced rate. The facility returned to normal operations in September.

On September 17, 2014, the U.S. Department of Agriculture issued deregulation decisions for Dow AgroSciences LLC’s ENLIST™ Corn and Soybean events. On October 15, 2014, the Company announced it received registration from the U.S. Environmental Protection Agency for ENLIST DUO™, the companion herbicide for use with ENLIST™ Corn and Soybeans, in six key states.

On September 24, 2014, the Company announced it commenced construction of the world's first, large-scale, cadmium-free quantum dot manufacturing facility at Dow's Cheonan, South Korea, manufacturing site. Production at the new facility is expected in the first half of 2015.

On October 2, 2014, the Company announced it signed a definitive agreement with ExxonMobil Chemical Company for an ownership restructure of Univation Technologies, LLC ("Univation"), which will result in Univation becoming a wholly owned subsidiary of Dow. The transaction is expected to close in the first half of 2015, pending regulatory approvals.

On October 2, 2014, the Company announced the AgroFresh business is being marketed for divestment, in line with the Company's plans to divest non-strategic businesses and assets.

On November 12, 2014, the Company announced new reportable segments which reflect Dow's strategy to be low-cost and fully integrated across key value chains.

On November 12, 2014, the Company announced it signed a definitive agreement to sell ANGUS Chemical Company to Golden Gate Capital for $1.215 billion. The transaction closed on February 2, 2015.

On November 12, 2014, the Company announced it will reconfigure and reduce its equity base in EQUATE, The Kuwait Olefins Company K.S.C. ("TKOC"), TKSC and MEGlobal through a divestment of a portion of the Company’s interests. Dow expects such transaction(s) to be completed by mid-2016.

On November 12, 2014, the Company announced its new divestiture target of $7 billion to $8.5 billion, to be completed by mid-2016.

32


On November 21, 2014, Dow announced it will add four new independent directors to its Board with three of the appointments effective January 1, 2015 and the fourth appointment effective in May 2015. All four independent directors will be included in the Company's nominations for elections at the 2015 Annual Meeting of Stockholders.

On December 5, 2014, the Company announced it signed a definitive agreement to sell its global Sodium Borohydride business to Vertellus Specialty Materials LLC. The transaction closed on January 30, 2015.

Dow was named by Chief Executive Magazine as one of the top 10 best companies for leaders - the third consecutive year the Company has made the final top 40 ranking.

Dow Packaging and Specialty Plastics launched Pack Studios Shanghai, the second of four regional innovation centers that are designed to help customers turn packaging ideas into innovative solutions.

Dow's BETAMATE™ 1630 Structural Adhesives, TEQUATIC™ PLUS Fine Particle Filter, NEPTUNE™ Subsea Insulation System, Garnet 2.0/TERAFORCE™ Resin Coated Sand Technology and Dow AgroSciences' TRANSFORM® WG Insecticide and CLOSER™ SC Insecticide with ISOCLAST™ Active were honored by R&D Magazine as part of its R&D 100 Awards.

Dow was named one of the top 50 innovation companies in the United States by CNBC.

Dow's BETAMATE™ 1630 Structural Adhesives was named Dow's third "Breakthrough to World Challenges," meeting a milestone set by the Company as part of its 2015 Sustainability Goals.

Dow was named to the Dow Jones Sustainability World Index - the 14th time the Company has received this recognition since the index was launched and tying for the longest-standing representation in the chemical category since the list's inception.

Rio 2016 named Dow the Official Carbon Partner of the next Olympic Games, with the goal of creating climate benefits to mitigate direct greenhouse gas emissions from the organization and hosting of the Games.

On September 8, 2014, William H. Weideman, Chief Financial Officer and Executive Vice President; and David E. Kepler, Executive Vice President, Chief Sustainability Officer and Chief Information Officer announced their intention to retire from Dow, which was effective January 2, 2015.

The Board of Directors elected Howard I. Ungerleider Chief Financial Officer, effective October 1, 2014.

James R. Fitterling was named Vice Chairman, Business Operations, and Joe E. Harlan was named Chief Commercial Officer and Vice Chairman, Market Businesses, effective October 1, 2014.

On December 12, 2014, the Company announced that Gregory Freiwald, Chief Human Resources Officer, Aviation and Corporate Affairs, had elected to retire from the Company at the end of March 2015. The Company also announced that Johanna Söderström was named Corporate Vice President of Human Resources and Aviation.

Dow’s results of operations and financial condition for the year ended December 31, 2014 are described in further detail in the following discussion and analysis.


RESULTS OF OPERATIONS
Net Sales
Net sales for 2014 were $58.2 billion, up 2 percent from $57.1 billion in 2013, with volume up 2 percent and price flat. Volume increased in all operating segments, except Performance Plastics which remained flat, with notable increases in Agricultural Sciences and Consumer Solutions (both up 3 percent). Excluding the impact of recent divestitures, Performance Plastics volume was up 1 percent. Volume increased in all geographic areas, led by EMEAI (up 4 percent). Price was flat as increased selling prices were offset by the unfavorable impact of currency. Price increases in Performance Plastics (up 2 percent) were offset by price declines in Agricultural Sciences and Consumer Solutions (both down 1 percent). Infrastructure Solutions and Performance Materials & Chemicals price remained flat. Price increased in North America (up 2 percent) and Latin America (up 1 percent), which was offset by a decline in EMEAI (down 1 percent). Price in Asia Pacific remained flat.


33


Net sales for 2013 were $57.1 billion, up 1 percent from $56.8 billion in 2012, with price up 1 percent and volume flat. Price increases in Agricultural Sciences, Performance Materials & Chemicals and Performance Plastics (each up 1 percent) more than offset price declines in Consumer Solutions (down 2 percent) and Infrastructure Solutions (down 1 percent). Price increased in North America and Latin America (both up 2 percent), which more than offset a decline in Asia Pacific (down 2 percent). Price in EMEAI remained flat. Volume was mixed by operating segment with increases in Agricultural Sciences (up 11 percent), Infrastructure Solutions (up 4 percent) and Consumer Solutions (up 3 percent) offset by volume declines in Performance Plastics (down 4 percent) and Performance Materials & Chemicals (down 2 percent). Excluding the impact of recent divestitures, Performance Plastics volume was down 3 percent. Volume increased in Latin America (up 8 percent), Asia Pacific (up 3 percent) and North America (up 1 percent), which was offset by a decline in EMEAI (down 4 percent).

Sales in the United States accounted for 33 percent of total sales in 2014, 33 percent of total sales in 2013 and 32 percent of total sales in 2012. See the Sales Volume and Price tables at the beginning of the section titled “Segment Results” for details regarding the change in sales by operating segment and geographic area. In addition, sales and other information by operating segment and geographic area are provided in Note 25 to the Consolidated Financial Statements.

Gross Margin
Gross margin was $10.7 billion in 2014, $9.5 billion in 2013 and $9.0 billion in 2012. Gross margin in 2014 was positively impacted by increased sales volume, a $392 million decrease in purchased feedstock and energy costs, lower other raw material costs and increased operating rates. Gross margin in 2014 was reduced by a $100 million warranty accrual adjustment related to an exited business (reflected in Infrastructure Solutions) and by $23 million for asset impairments related to the Dow Electronic Materials business (reflected in Consumer Solutions). See Notes 11 and 14 to the Consolidated Financial Statements for additional information regarding these items.

Gross margin was $9.5 billion in 2013 and $9.0 billion in 2012. Gross margin in 2013 was positively impacted by higher selling prices, lower maintenance turnaround costs, and lower expenses resulting from the 2012 Restructuring activities which more than offset a $319 million increase in purchased feedstock and energy costs and increased performance-based compensation costs. Gross margin in 2013 was reduced by $181 million for asset impairments and related costs, including the shutdown of manufacturing facilities in the Chlor-Alkali and Vinyl business, Energy & Water Solutions business, Polyurethanes business, Performance Monomers business, Epoxy business and Corporate. The asset impairments and related costs were reflected in the following segments: Infrastructure Solutions ($95 million), Performance Materials & Chemicals ($70 million) and Corporate ($16 million). Gross margin in 2013 was also reduced by $40 million in implementation costs related to the Company's 2012 Restructuring programs (reflected in Corporate). See Note 11 to the Consolidated Financial Statements for additional information regarding these asset impairments.

Gross margin in 2012 was flat compared with the prior year as a decline in selling prices and decreased volume was offset by a $2.5 billion decrease in purchased feedstock and energy costs and the favorable impact of currency on costs. Gross margin was also positively impacted by the recovery of previously expensed product liability claims, pursuant to an Insurance Allocation Agreement with Dow Corning.

Operating Rate
Dow's global plant operating rate was 85 percent of capacity in 2014, compared with 81 percent in 2013 and 2012. Operating rates improved in 2014 primarily due to increased demand and actions taken by management to increase asset utilization. Operating rates remained flat in 2013 compared with the prior year.

Personnel Count
Personnel count was 53,216 at December 31, 2014, up from 52,731 at December 31, 2013. Headcount increased in 2014 as hiring to support the Company's growth initiatives more than offset declines due to the Company's 2012 Restructuring programs. Personnel count at December 31, 2013, decreased from 54,353 at December 31, 2012, due primarily to the 2012 Restructuring programs.

Research and Development Expenses
Research and development (“R&D”) expenses were $1,647 million in 2014, compared with $1,747 million in 2013 and $1,708 million in 2012. R&D expenses decreased 6 percent in 2014 primarily due to cost reduction initiatives, notably in Performance Materials & Chemicals. In 2013, R&D expense increased largely due to higher spending on strategic growth initiatives in Agricultural Sciences. In 2013, R&D expenses were also impacted by increased performance-based compensation costs and $2 million of implementation costs related to the Company's Restructuring programs (reflected in Corporate).


34


Selling, General and Administrative Expenses
Selling, general and administrative (“SG&A”) expenses were $3,106 million in 2014, compared with $3,024 million in 2013 and $2,861 million in 2012. In 2014, SG&A expenses increased 3 percent from 2013, due to increased spending on growth initiatives, primarily in Agricultural Sciences, and increased spending on Company branding initiatives. In 2013, SG&A expenses increased 6 percent from 2012, primarily due to increased performance-based compensation costs and increased spending on growth initiatives in Agricultural Sciences. In addition, SG&A expenses were impacted by $2 million of implementation costs related to the Company's Restructuring programs in 2013 and $21 million of Restructuring program implementation costs in 2012 (reflected in Corporate).
       
Production Costs and Operating Expenses
The following table illustrates the relative size of the primary components of total production costs and operating expenses of Dow. More information about each of these components can be found in other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Notes to the Consolidated Financial Statements.

Production Costs and Operating Expenses
Cost components as a percent of total
 
2014

 
2013

 
2012

Hydrocarbon feedstocks and energy
 
38
%
 
38
%
 
37
%
Salaries, wages and employee benefits
 
15

 
15

 
13

Maintenance
 
4

 
4

 
4

Depreciation
 
4

 
4

 
4

Restructuring charges
 

 

 
3

Supplies, services and other raw materials
 
39

 
39

 
39

Total
 
100
%
 
100
%
 
100
%

Amortization of Intangibles
Amortization of intangibles was $436 million in 2014, $461 million in 2013 and $478 million in 2012. In 2013, amortization of intangibles was impacted by a $3 million asset impairment charge (reflected in Corporate). See Notes 9 and 11 to the Consolidated Financial Statements for additional information on this impairment.

Goodwill and Other Intangible Asset Impairment Losses
In the fourth quarter of 2014, the Company recognized a pretax charge of $50 million related to the impairment of intangible assets in the Dow Electronic Materials business, which is included in "Goodwill and other intangible asset impairment losses" in the consolidated statements of income and reflected in Consumer Solutions. See Notes 9 and 11 to the Consolidated Financial Statements for additional information on this impairment.

The Company performs annual goodwill impairment tests during the fourth quarter of the year. In 2014, the Company performed qualitative testing for 9 of the 14 reporting units carrying goodwill and quantitative testing for the remaining five reporting units. As a result of this testing, no goodwill impairments were identified.

In 2013, the Company performed qualitative testing for 14 of the 19 reporting units carrying goodwill and quantitative testing for the remaining five reporting units. As a result of this testing, no goodwill impairments were identified.

During the fourth quarter of 2012, the Company performed qualitative testing for 11 of the 20 reporting units carrying goodwill. The qualitative assessment indicated that it was more likely than not that the fair value exceeded carrying value for those reporting units. The Company performed the first step of the quantitative testing for the remaining nine reporting units. The Company utilized a discounted cash flow methodology to calculate the fair value of the reporting units. Based on the fair value analysis, management concluded that fair value exceeded carrying value for all reporting units except the reporting unit previously known as Dow Formulated Systems. Management completed the second step of the quantitative test for Dow Formulated Systems which compared the implied fair value of the reporting unit's goodwill to the carrying value. As a result of this test, the Company recorded an impairment loss of $220 million in the fourth quarter of 2012, which is included in "Goodwill and other intangible asset impairment losses" in the consolidated statements of income and reflected in Performance Materials & Chemicals. The goodwill impairment loss represented the total amount of goodwill carried by the Dow Formulated Systems reporting unit. See Critical Accounting Policies in Other Matters in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 9 to the Consolidated Financial Statements for additional information regarding goodwill and the impairment tests conducted in each year.


35


Restructuring Charges (Credits)
On March 27, 2012, the Company's Board of Directors approved a restructuring plan ("1Q12 Restructuring"). The 1Q12 Restructuring plan included the shutdown of a number of facilities and a global workforce reduction. These actions were substantially completed at December 31, 2013. As a result of the 1Q12 Restructuring activities, the Company recorded pretax restructuring charges of $357 million in the first quarter of 2012 consisting of costs associated with exit and disposal activities of $150 million, severance costs of $113 million and asset write-downs and write-offs of $94 million. The impact of these charges is shown as "Restructuring charges (credits)" in the consolidated statements of income and reflected in the Company's segment results as follows: $41 million in Infrastructure Solutions, $203 million in Performance Materials & Chemicals and $113 million in Corporate. During the fourth quarter of 2012, the Company recorded a favorable adjustment to the 1Q12 Restructuring charge related to the impairment of long-lived assets and other assets of $4 million, impacting the Infrastructure Solutions segment.

On October 23, 2012, the Company's Board of Directors approved a second restructuring plan ("4Q12 Restructuring"). The restructuring plan included the shutdown of a number of facilities, an impairment charge related to the write-down of Dow Kokam LLC's ("Dow Kokam") long-lived assets and a global workforce reduction. These actions were substantially completed at December 31, 2014. As a result of the 4Q12 Restructuring activities, the Company recorded pretax restructuring charges of $990 million in the fourth quarter of 2012 consisting of costs associated with exit or disposal activities of $39 million, severance costs of $375 million and asset write-downs and write-offs of $576 million. The impact of these charges is shown as "Restructuring charges (credits)" in the consolidated statements of income and reflected in the Company's segments results as follows: $136 million in Consumer Solutions, $24 million in Infrastructure Solutions, $96 million in Performance Materials & Chemicals, $33 million in Performance Plastics and $701 million in Corporate.

During the fourth quarter of 2013, the Company recognized a pretax gain of $16 million for adjustments to asbestos abatement costs and contract cancellation fees related to the 1Q12 Restructuring plan and a $6 million pretax gain for adjustments to contract cancellation fees related to the 4Q12 Restructuring plan. These gains were included in "Restructuring charges (credits)" in the consolidated statements of income and reflected in Performance Materials & Chemicals ($15 million), Performance Plastics ($6 million) and Infrastructure Solutions ($1 million).

During the fourth quarter of 2014, the Company recognized a pretax gain of $3 million for adjustments to contract cancellation fees related to the 4Q12 Restructuring plan. The gain was included in "Restructuring charges (credits)" in the consolidated statements of income and reflected in Performance Materials & Chemicals. See Note 3 to the Consolidated Financial Statements for details on the 2012 Restructuring programs.

Asbestos-related Charge
The Company recorded a pretax charge of $78 million (reflected in Corporate) for an increase in the asbestos-related liability for pending and future claims (excluding defense and processing costs). Union Carbide Corporation, a wholly owned subsidiary of the Company, determined that an adjustment to the asbestos accrual was required due to an increase in mesothelioma claim activity compared with what had been previously forecasted. See Note 14 to the Consolidated Financial Statements for details on the asbestos-related charge.

Equity in Earnings of Nonconsolidated Affiliates
Dow’s share of the earnings of nonconsolidated affiliates in 2014 was $835 million, compared with $1,034 million in 2013 and $536 million in 2012. In 2014, equity earnings decreased primarily due to lower earnings at EQUATE, TKSC and MEGlobal and increased losses at Sadara which were partially offset by increased earnings at Dow Corning. In 2013, equity earnings increased compared with 2012 primarily due to increased earnings at Dow Corning, EQUATE, TKSC and MEGlobal as well as improved results from The SCG-Dow Group, Sadara and Map Ta Phut Olefins Company Limited. Equity earnings for 2013 also included a $10 million loss related to asset impairment charges at a formulated electrolytes manufacturing joint venture (reflected in Corporate). In 2012, equity earnings decreased primarily due to lower earnings at Dow Corning, MEGlobal and The SCG-Dow Group as well as equity losses from Sadara equal to the Company's share of development expenses. Equity earnings for 2012 also included a $73 million loss related to project development and other costs associated with the contribution of development costs to Sadara (reflected in Corporate).

During 2012, Dow Corning's sales of solar-grade polycrystalline silicon products declined, driven by depressed prices and declining sales volume that resulted from the July 2012 Chinese Ministry of Commerce ("MOFCOM") antidumping and countervailing duty investigations of U.S. and Korean-based solar-grade polycrystalline silicon products. In response to these market conditions, Dow Corning recorded an impairment charge in the fourth quarter of 2012 related to the abandonment of a partially constructed polycrystalline silicon plant expansion. The Company's share of this charge was $59 million. Dow Corning also delayed the start-up of another polycrystalline silicon plant expansion, pending market condition improvements.

36


Furthermore, Dow Corning initiated restructuring actions in the fourth quarter of 2012, including workforce reductions and asset impairments, of which Dow's share of the charge was approximately $30 million.

In January 2014, MOFCOM issued a final determination that China's solar-grade polycrystalline silicon industry suffered material damage because of dumping, which resulted in antidumping duties of 53.3 percent and countervailing duties of 2.1 percent on future imports from Dow Corning into China. During the fourth quarter of 2014, Dow Corning determined its polycrystalline silicon plant expansion in Clarksville, Tennessee, which was delayed in 2012, would not be economically viable and made the decision to permanently abandon the assets. This decision was made after review of sustained adverse market conditions and continued oversupply, the cost of operating the facility and the ongoing impact of tariffs on polycrystalline silicon imported into China. Dow's share of the charge related to this asset abandonment was $500 million (reflected in Infrastructure Solutions). As a result of the significant change in the use of this asset, Dow Corning assessed whether the carrying value of all remaining polycrystalline silicon assets might be impaired. Dow Corning's estimates of future undiscounted cash flows indicated the polycrystalline silicon asset group was recoverable.

In May 1995, Dow Corning filed for protection under Chapter 11 of the U.S Bankruptcy Code to address pending and claimed liabilities arising from breast implant product lawsuits. On June 1, 2004, Dow Corning's Joint Plan of Reorganization (the "Plan") became effective and Dow Corning emerged from bankruptcy. Under the Plan, Dow Corning established and agreed to fund a products liability settlement program (the "Settlement Facility"). The Plan contains a cap on the amount of payments required from Dow Corning to fund the Settlement Facility. During the fourth quarter of 2014, Dow Corning, with the assistance of a third-party advisor, developed an estimate of the future Implant Liability based on evidence that the actual funding required for the Settlement Facility is expected to be lower than the full funding cap set forth in the Plan. As a result, Dow Corning reduced its Implant Liability by approximately $1.3 billion. The revised Implant Liability reflects Dow Corning’s best estimate of its remaining obligations under the Plan. Dow’s share of the Implant Liability reduction was $407 million ($155 million reflected in Consumer Solutions and $252 million reflected in Infrastructure Solutions). See Note 8 to the Consolidated Financial Statements for additional information on nonconsolidated affiliates.

Sundry Income (Expense) - Net
Sundry income (expense) - net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, dividends from investments, and gains and losses on sales of investments and assets. Sundry income (expense) - net for 2014 was net expense of $27 million, compared with net income of $2,554 million in 2013 and net expense of $27 million in 2012.

In 2014, sundry income (expense) - net included a gain related to the termination of an off-take agreement and gains on asset sales which were more than offset by foreign currency exchange losses, venture capital investment losses and $49 million of transaction expenses related to the planned separation of the Company's chlorine value chain (reflected in Corporate).

In 2013, sundry income (expense) - net included a gain of $2.161 billion related to damages awarded to the Company in the K-Dow arbitration proceeding (reflected in Corporate), a $451 million gain on the sale of the Polypropylene Licensing and Catalysts business (reflected in Performance Plastics), an $87 million gain on the sale of a 7.5 percent ownership interest in Freeport LNG Development, L.P. (reflected in Performance Plastics), a $26 million gain on the sale of the Company's ownership interest in Dow Kokam (reflected in Corporate), gains on asset sales and equity method investments and a $326 million loss on the early extinguishment of debt (reflected in Corporate).

In 2012, sundry income (expense) - net included a $123 million loss on the early extinguishment of debt (reflected in Corporate), foreign currency exchange losses and non-income tax related expenses which were partially offset by gains related to small divestitures and asset sales and a gain related to post-closing adjustments on the sale of a contract manufacturing business (reflected in Performance Materials & Chemicals). See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations, and Note 16 to the Consolidated Financial Statements for additional information related to the early extinguishment of debt; Note 5 to the Consolidated Financial Statements for additional information concerning the Company's divestitures; and Note 14 to the Consolidated Financial Statements for additional information related to the K-Dow arbitration proceeding.
  
Net Interest Expense
Net interest expense (interest expense less capitalized interest and interest income) was $932 million in 2014, down from $1,060 million in 2013 and $1,228 million in 2012, reflecting the impact of the Company's 2013 deleveraging activities and lower debt financing costs. Interest income was $51 million in 2014 and $41 million in 2013 and 2012. Interest expense (net of capitalized interest) and amortization of debt discount totaled $983 million in 2014, $1,101 million in 2013 and $1,269 million in 2012. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 16 to the Consolidated Financial Statements for additional information related to debt financing activity.

37


Provision for Income Taxes
The provision for income taxes was $1,426 million in 2014, compared with $1,988 million in 2013 and $565 million in 2012. The Company's effective tax rate fluctuates based on, among other factors, where income is earned, reinvestment assertions regarding earned income and the level of income relative to tax credits available. For example, as the percentage of foreign sourced income increases, the Company's effective tax rate declines. The Company's tax rate is also influenced by the level of equity earnings, since most of the earnings from the Company's equity method investments are taxed at the joint venture level. The underlying factors affecting the Company's overall tax rate are summarized in Note 22 to the Consolidated Financial Statements.

The tax rate for 2014 was positively impacted by the geographic mix of earnings, with the most notable components being improved profitability in Europe and Asia Pacific. Equity earnings have remained strong, providing additional favorable impact on the tax rate. The tax rate was also favorably impacted by a reduction in the tax impact on remittances by foreign subsidiaries to the United States. The tax rate was negatively impacted by a continued increase in statutory income in Latin America due to local currency devaluations, and increases in valuation allowances, primarily in Asia Pacific. These factors resulted in an effective tax rate of 27.1 percent for 2014.

The tax rate for 2013 was favorably impacted by increased equity earnings; the K-Dow arbitration award, due to favorable tax treatment of certain components of the award; and changes in valuation allowances in the United States on state income tax attributes and capital loss carryforwards. The tax rate was unfavorably impacted by adjustments to uncertain tax positions related to court rulings on two separate tax matters and the establishment of valuation allowances outside the United States. Additionally, the tax rate was unfavorably impacted by an increase in statutory taxable income in Latin America, primarily due to local currency devaluation. These factors resulted in an effective tax rate of 29.2 percent for 2013.

The tax rate for 2012 was negatively impacted by a change in the geographic mix of earnings, notably a decrease in earnings in Europe and an increase in earnings in the United States, as well as reductions in equity earnings. Equity earnings were further impacted by asset impairment and restructuring charges at Dow Corning. Additionally, the Company's impairment of the Dow Formulated Systems reporting unit goodwill and the impairment of the long-lived assets of Dow Kokam received minimal tax relief. The tax rate was favorably impacted by a change in the permanent reinvestment assertions of certain affiliates in Europe and Asia Pacific; however, this was primarily offset by unfavorable adjustments to uncertain tax positions and valuation allowances. These factors resulted in an effective tax rate of 33.9 percent for 2012.

Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests was net income of $67 million in 2014, net income of $29 million in 2013 and net loss of $82 million in 2012. Net income (loss) attributable to noncontrolling interests increased in 2014 compared with 2013, primarily due to increased earnings at certain Performance Materials & Chemicals joint ventures and the 2013 divestiture of Dow Kokam. Net income (loss) attributable to noncontrolling interests increased in 2013 compared with 2012, primarily due to reduced losses at Dow Kokam, which was impacted by a significant restructuring charge related to the write-down of long-lived assets in the fourth quarter of 2012. On November 22, 2013, the Company sold its ownership interest in Dow Kokam. See Notes 3 and 5 to the Consolidated Financial Statements for details on the Dow Kokam impairment charge and divestiture. See Note 24 to the Consolidated Financial Statements for additional information concerning noncontrolling interests.

Preferred Stock Dividends
Preferred stock dividends of $340 million were recognized in 2014, 2013 and 2012. These dividends related to the Company's Cumulative Convertible Perpetual Preferred Stock, Series A. See Note 21 to the Consolidated Financial Statements for additional information.

Net Income Available for Common Stockholders
Net income available for common stockholders was $3,432 million ($2.87 per share) in 2014, compared with $4,447 million ($3.68 per share) in 2013 and $842 million ($0.70 per share) in 2012.

Certain Items Impacting Results
The Company's management believes that measures of income adjusted to exclude certain items ("non-GAAP" financial measures) provide relevant and meaningful information to investors about the ongoing operating results of the Company. Such financial measures are not recognized in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and should not be viewed as an alternative to U.S. GAAP financial measures of performance.


38


The following table summarizes the impact of certain items recorded in 2014, 2013 and 2012:
Certain Items Impacting Results
Pretax
Impact (1)
 
Impact on
Net Income (2)
 
Impact on
EPS (3) (4)
In millions, except per share amounts
2014

 
2013

 
2012

 
2014

 
2013

 
2012

 
2014

 
2013

 
2012

Adjusted to exclude certain items (non-GAAP measures)
 
 
 
 
 
 
$
3,709

 
$
2,981

 
$
2,249

 
$
3.11

 
$
2.48

 
$
1.90

Certain items:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of sales:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairments and related costs
$
(23
)
 
$
(181
)
 
$

 
(14
)
 
(124
)
 

 
(0.01
)
 
(0.10
)
 

Warranty accrual adjustment of exited business
(100
)
 

 

 
(63
)
 

 

 
(0.05
)
 

 

Restructuring plan implementation costs

 
(40
)
 
(1
)
 

 
(29
)
 
(1
)
 

 
(0.03
)
 

Research and development expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring plan implementation costs

 
(2
)
 

 

 
(1
)
 

 

 

 

Selling, general and administrative expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Restructuring plan implementation costs

 
(2
)
 
(21
)
 

 
(2
)
 
(13
)
 

 

 
(0.01
)
Amortization of intangibles:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset impairments and related costs

 
(3
)
 

 

 
(2
)
 

 

 

 

Goodwill and other intangible asset impairment losses
(50
)
 

 
(220
)
 
(33
)
 

 
(220
)
 
(0.03
)
 

 
(0.19
)
Restructuring (charges) credits (5)

 
22

 
(1,343
)
 

 
21

 
(951
)
 

 
0.02

 
(0.82
)
Asbestos-related charge
(78
)
 

 

 
(49
)
 

 

 
(0.04
)
 

 

Equity in earnings of nonconsolidated affiliates:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dow Corning implant liability adjustment
407

 

 

 
378

 

 

 
0.32

 

 

Dow Corning Clarksville site abandonment
(500
)
 

 

 
(465
)
 

 

 
(0.40
)
 

 

Dow Corning restructuring and asset abandonment

 

 
(89
)
 

 

 
(82
)
 

 

 
(0.07
)
Sadara development and other costs

 

 
(73
)
 

 

 
(70
)
 

 

 
(0.06
)
Asset impairments at a formulated electrolytes joint venture

 
(10
)
 

 

 
(6
)
 

 

 
(0.01
)
 

Sundry income (expense) - net:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gain from K-Dow settlement

 
2,161

 

 

 
1,647

 

 

 
1.37

 

Gain on sale of contract manufacturing business

 

 
8

 

 

 
8

 

 

 
0.01

Gain on sale of Polypropylene Licensing and Catalysts business

 
451

 

 

 
356

 

 

 
0.29

 

Gain on sale of a 7.5 percent interest in Freeport LNG Development, L.P.

 
87

 

 

 
69

 

 

 
0.06

 

Gain on sale of ownership interest in Dow Kokam

 
26

 

 

 
18

 

 

 
0.01

 

Loss on early extinguishment of debt

 
(326
)
 
(123
)
 

 
(205
)
 
(78
)
 

 
(0.17
)
 
(0.06
)
Chlorine value chain separation costs
(49
)
 

 

 
(31
)
 

 

 
(0.03
)
 

 

Provision for income taxes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncertain tax position adjustments

 

 

 

 
(276
)
 

 

 
(0.23
)
 

Total certain items
$
(393
)
 
$
2,183

 
$
(1,862
)
 
$
(277
)
 
$
1,466

 
$
(1,407
)
 
$
(0.24
)
 
$
1.21

 
$
(1.20
)
Dilutive effect of assumed preferred stock conversion into shares of common stock
 
 
 
 
 
 
 
 
 
 
 
 
$

 
$
(0.01
)
 
$

Reported U.S. GAAP Amounts (6) (7)
 
 
 
 
 
 
$
3,432

 
$
4,447

 
$
842

 
$
2.87

 
$
3.68

 
$
0.70

(1)
Impact on "Income Before Income Taxes."
(2)
Impact on "Net Income Available for The Dow Chemical Company Common Stockholders."
(3)
Impact on "Earnings per common share - diluted."
(4)
For the year ended December 31, 2013, conversion of the Company's Cumulative Convertible Perpetual Preferred Stock, Series A into shares of the Company's common stock was excluded from the calculation of "Diluted earnings per share adjusted to exclude certain items" as well as the earnings per share impact of certain items because the effect of including them would have been antidilutive.
(5)
"Restructuring (charges) credits" in 2012 include $304 million of asset impairments and severance costs related to Dow Kokam LLC which, at the time of the charge, was owned 63.6 percent by Dow. The Dow Kokam restructuring impact on "Net Income Available for The Dow Chemical Company Common Stockholders" was reduced by $7 million of tax credits and $108 million of net loss attributable to noncontrolling interests. The Company's share of the Dow Kokam charge, after tax and noncontrolling interests, was $189 million.
(6)
For the year ended December 31, 2013, an assumed conversion of the Company's Cumulative Convertible Perpetual Preferred Shares, Series A into shares of the Company's common stock was included in the calculation of diluted earnings per share (reported U.S. GAAP amount).
(7)
The Company used "Net Income Attributable to The Dow Chemical Company" when calculating diluted earnings per share (reported U.S. GAAP amount) for the twelve-month period ended December 31, 2013, as it excludes preferred dividends of $340 million.

39


SEGMENT RESULTS
Beginning in the fourth quarter of 2014, the Company changed its reportable segments as a result of changes in the Company's organization. Following are the new segments along with key changes:

AGRICULTURAL SCIENCES
No changes

CONSUMER SOLUTIONS
Previously part of the Electronic and Functional Materials segment and includes:
Consumer Care, formerly named Functional Materials, which consists of:
-
Dow Home, Institutional & Personal Care Solutions, previously part of the Dow Consumer and Industrial Solutions global business
-
Dow Pharma and Food Solutions
-
SAFECHEM, previously aligned with the Chlorinated Organics global business
Dow Automotive Systems, previously aligned with the Performance Materials segment
Dow Electronic Materials

INFRASTRUCTURE SOLUTIONS
Formerly named Coatings and Infrastructure Solutions and includes:
Dow Building & Construction
Dow Coating Materials
Energy & Water Solutions which consists of:
-
Dow Microbial Control, previously part of the Functional Materials global business
-
Dow Oil, Gas & Mining, formerly a global business aligned with the Performance Materials segment
-
Dow Solar, previously part of the Dow Building & Construction global business
-
Dow Water and Process Solutions, formerly a global business
Performance Monomers, includes Acrolein, previously part of the Functional Materials global business and Dow Plastics Additives, formerly a global business aligned with the Performance Materials segment

PERFORMANCE MATERIALS & CHEMICALS
Chlor-Alkali and Vinyl, previously part of the Feedstocks and Energy segment
Chlorinated Organics
Epoxy, includes Epoxy Coatings which was previously part of the Dow Coating Materials global business and Epoxy Systems, previously part of the Dow Formulated Systems global business
Industrial Solutions
-
Amines, formerly a global business; includes Organic Specialties and Quaternaries, previously part of the Functional Materials global business
-
Ethylene Oxide/Ethylene Glycol ("EO/EG"), formerly a global business aligned with the Feedstocks and Energy segment
-
Other Industrial Solutions, includes ANGUS Chemical and Sodium Borohydride, previously part of the Functional Materials global business
-
Oxygenated Solvents, formerly a global business
-
Polyglycols, Surfactants & Fluids, formerly a global business
Polyurethanes
-
Isocyanates
-
Polyols
-
Polyurethane Systems, previously part of the Dow Formulated Systems global business
-
Propylene Oxide/Propylene Glycol ("PO/PG"), formerly a global business

PERFORMANCE PLASTICS
Dow Elastomers
Dow Electrical and Telecommunications
Dow Packaging and Specialty Plastics
Energy, previously aligned with the Feedstocks and Energy segment
Hydrocarbons, previously aligned with the Feedstocks and Energy segment


40


In addition to the segment and business changes, the Company also changed the assignment of certain expenses previously aligned with the Corporate segment to better reflect operating segment results and profitability. All leveraged functional costs (i.e., information systems, finance, human resources, legal, supply chain, etc.) are now fully allocated to the segments. In addition, long-term performance-based compensation expense, including the Employee Stock Purchase Plan, stock options, deferred stock and performance deferred stock, are now allocated to the segments based primarily on employee alignment.

The reporting changes are retrospectively reflected in the following discussion of segment results for all periods presented.

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; items that principally apply to the Company as a whole are assigned to Corporate. Additional information regarding the Company's operating segments and a reconciliation of EBITDA to “Income Before Income Taxes” can be found in Note 25 to the Consolidated Financial Statements.

Due to the completion of several divestitures (see Note 5 to the Consolidated Financial Statements), the change in sales volume from 2013 to 2014, 2012 to 2013 and 2011 to 2012 excluding divestitures is also provided by operating segment, where applicable. Sales excluding divestitures exclude sales of the Polypropylene Licensing and Catalysts business, divested on December 2, 2013 (part of the Performance Plastics segment); sales related to Nippon Unicar Company Limited, divested on July 1, 2013 (part of the Performance Plastics segment); sales of the Polypropylene business, divested on September 30, 2011 (part of the Performance Plastics segment); and sales of Dow Haltermann, divested during 2011 (part of Performance Materials & Chemicals segment).



41


SALES VOLUME AND PRICE BY OPERATING SEGMENT AND GEOGRAPHIC AREA

Sales Volume and Price by Operating Segment and Geographic Area
 
 
2014
 
2013
 
2012
Percent change from prior year
 
Volume

 
Price

 
Total

 
Volume

 
Price

 
Total

 
Volume

 
Price

 
Total

Operating Segments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Sciences
 
3
 %
 
(1
)%
 
2
 %
 
11
 %
 
1
 %
 
12
 %
 
10
 %
 
3
 %
 
13
 %
Consumer Solutions
 
3

 
(1
)
 
2

 
3

 
(2
)
 
1

 
(4
)
 
(1
)
 
(5
)
Infrastructure Solutions
 
1

 

 
1

 
4

 
(1
)
 
3

 
1

 
(5
)
 
(4
)
Performance Materials & Chemicals
 
2

 

 
2

 
(2
)
 
1

 
(1
)
 
(2
)
 
(6
)
 
(8
)
Performance Plastics
 

 
2

 
2

 
(4
)
 
1

 
(3
)
 
(5
)
 
(3
)
 
(8
)
Total
 
2
 %
 
 %
 
2
 %
 
 %
 
1
 %
 
1
 %
 
(2
)%
 
(3
)%
 
(5
)%
Geographic Areas: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
2
 %
 
2
 %
 
4
 %
 
 %
 
2
 %
 
2
 %
 
(2
)%
 
(3
)%
 
(5
)%
Europe, Middle East, Africa and India
 
3

 
(1
)
 
2

 
(4
)
 

 
(4
)
 
(3
)
 
(5
)
 
(8
)
Rest of World
 
(1
)
 

 
(1
)
 
4

 

 
4

 

 
(3
)
 
(3
)
Total
 
2
 %
 
 %
 
2
 %
 
 %
 
1
 %
 
1
 %
 
(2
)%
 
(3
)%
 
(5
)%


Sales Volume and Price by Operating Segment and Geographic Area
Excluding Divestitures
(2)
 
 
2014
 
2013
 
2012
Percent change from prior year
 
Volume

 
Price

 
Total

 
Volume

 
Price

 
Total

 
Volume

 
Price

 
Total

Operating Segments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural Sciences
 
3
%
 
(1
)%
 
2
%
 
11
 %
 
1
 %
 
12
 %
 
10
 %
 
3
 %
 
13
 %
Consumer Solutions
 
3

 
(1
)
 
2

 
3

 
(2
)
 
1

 
(4
)
 
(1
)
 
(5
)
Infrastructure Solutions
 
1

 

 
1

 
4

 
(1
)
 
3

 
1

 
(5
)
 
(4
)
Performance Materials & Chemicals
 
2

 

 
2

 
(2
)
 
1

 
(1
)
 
(1
)
 
(6
)
 
(7
)
Performance Plastics
 
1

 
2

 
3

 
(3
)
 
1

 
(2
)
 
1

 
(3
)
 
(2
)
Total
 
2
%
 
 %
 
2
%
 
 %
 
1
 %
 
1
 %
 
1
 %
 
(4
)%
 
(3
)%
Geographic Areas: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
United States
 
2
%
 
2
 %
 
4
%
 
 %
 
2
 %
 
2
 %
 
 %
 
(2
)%
 
(2
)%
Europe, Middle East, Africa and India
 
4

 
(1
)
 
3

 
(4
)
 

 
(4
)
 
1

 
(5
)
 
(4
)
Rest of World
 

 

 

 
6

 

 
6

 
1

 
(3
)
 
(2
)
Total
 
2
%
 
 %
 
2
%
 
 %
 
1
 %
 
1
 %
 
1
 %
 
(4
)%
 
(3
)%
(1)
Sales to customers in the Indian subcontinent, previously reported with Rest of World, are now aligned with Europe, Middle East, Africa and India; prior period sales have been adjusted to reflect this realignment.
(2)
Excludes sales of the Polypropylene Licensing and Catalysts business, divested on December 2, 2013; sales related to Nippon Unicar Company Limited, divested on July 1, 2013; sales of the Polypropylene business, divested on September 30, 2011; and sales of Dow Haltermann, divested during 2011.


42


AGRICULTURAL SCIENCES
The Agricultural Sciences segment is a global leader in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils. The business invents, develops, manufactures and markets products for use in agricultural, industrial and commercial pest management, and food service. Agricultural Sciences consists of two businesses - Crop Protection and Seeds.

Agricultural Sciences
In millions
 
2014

 
2013

 
2012

Sales
 
$
7,290

 
$
7,137

 
$
6,382

Price change from comparative period
 
(1
)%
 
1
%
 
3
%
Volume change from comparative period
 
3
 %
 
11
%
 
10
%
Equity earnings
 
$
4

 
$
5

 
$
1

EBITDA
 
$
962

 
$
894