Delaware (State or other jurisdiction of incorporation) | 1-3433 (Commission file number) | 38-1285128 (IRS Employer Identification No.) |
2030 DOW CENTER, MIDLAND, MICHIGAN 48674 | ||
(Address of principal executive offices) (Zip Code) | ||
Registrant's telephone number, including area code: 989-636-1000 | ||
Not applicable (Former name or former address, if changed since last report) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
(d) | Exhibits. |
/s/ RONALD C. EDMONDS |
Ronald C. Edmonds |
Vice President and Controller |
EXHIBIT INDEX | |
Exhibit No. | Description |
99.1 | Press release issued by The Dow Chemical Company on January 29, 2015, announcing results for the fourth quarter of 2014. |
• | Dow reported earnings per share of $0.85 on an adjusted basis(1) or $0.63 on an as-reported basis. This compares with earnings of $0.65 per share on an adjusted basis in the year-ago period, or $0.79 per share on an as-reported basis. |
• | EBITDA rose 15 percent versus the prior year on an adjusted basis(2), reaching a fourth quarter record of $2.4 billion, or $2.1 billion on an as-reported basis(3). Adjusted EBITDA grew in every operating segment, led by Agricultural Sciences (up 40 percent), Performance Materials & Chemicals (up 18 percent) and Performance Plastics (up 6 percent). |
• | EBITDA margin expanded 218 basis points on an adjusted basis(4) versus the year-ago period, with increases across all operating segments, as the Company’s integration and targeted end-markets enabled continued price stability in a declining raw material environment. Margin expansion was driven primarily by Agricultural Sciences (up 300 basis points), Consumer Solutions (up 279 basis points) and Infrastructure Solutions (up 203 basis points), due primarily to increased demand for advantaged technologies in key end-markets. |
• | Sales were $14.4 billion, flat versus the same quarter last year, as volume increased in both developed geographies (up 4 percent) as well as emerging geographies (up 5 percent). Volume gains were offset by price declines driven primarily by Western Europe (down 14 percent), which included currency headwinds. |
• | Dow expanded volume in most segments - led by Agricultural Sciences (up 9 percent). Double-digit increases in Epoxy and Polyurethanes drove volume gains in Performance Materials & Chemicals (up 7 percent). Demand also rose in Performance Plastics (up 3 percent). |
• | Dow reported an operating rate of 86 percent for the quarter, up 4 percentage points versus the year-ago period - representing the fifth consecutive quarter of year-over-year operating rate increases. Gains were driven primarily by strong demand in Performance Plastics, coupled with ongoing productivity improvements in Performance Materials & Chemicals. |
• | Cash flow from operations was $2.8 billion for the quarter - an increase of more than $500 million versus the year-ago period - demonstrating the Company’s ongoing focus on working capital efficiency. |
• | Dow continued to drive shareholder remuneration actions, returning $1.6 billion to shareholders in the quarter through declared dividends and repurchases, and completing its $4.5 billion repurchase program in the period. This quarter, the Company announced a 14 percent dividend increase and expanded its share buyback program by an additional $5 billion. |
(1) | “Adjusted or operating earnings per share” is defined as earnings per share excluding the impact of “Certain Items.” See Supplemental Information at the end of the release for a description of these items, as well as a reconciliation of adjusted earnings per share to “Earnings per common share - diluted.” |
(2) | Adjusted EBITDA is defined as EBITDA excluding the impact of “Certain Items.” |
(3) | EBITDA is defined as earnings (i.e., “Net Income”) before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" is provided following the Operating Segments table. |
(4) | Adjusted EBITDA margin is defined as EBITDA excluding the impact of Certain Items as a percentage of reported sales. |
• | Dow reported full-year 2014 earnings of $3.11 per share on an adjusted basis, or as-reported earnings of $2.87 per share. This compares with adjusted earnings of $2.48 per share in the prior year - an increase of 25 percent - or $3.68 per share on an as-reported basis. |
• | Adjusted EBITDA rose $975 million versus the prior year, reaching a full-year record at $9.3 billion, or $8.9 billion on an as-reported basis. Adjusted EBITDA grew in all operating segments. The largest increase was achieved by Performance Plastics, which grew adjusted EBITDA more than $460 million, reflecting the Company’s differentiated product portfolio, diverse markets and global reach. Adjusted EBITDA also rose in Performance Materials & Chemicals - up $225 million - as a result of ongoing steps to enhance productivity. |
• | The Company expanded adjusted EBITDA margins 140 basis points, with increases reported in all operating segments. Margin expansion was led by Consumer Solutions (up 214 basis points), Performance Plastics (up 168 basis points), and Infrastructure Solutions (up 141 basis points) on increasing demand, productivity improvements and strategic end-market alignment. |
• | Sales were $58.2 billion, up 2 percent versus the prior year. Increases were reported in all geographic areas on an adjusted basis(5). Sales grew in North America, with revenue in the United States up 4 percent due to sales growth across all operating segments. Emerging geographic regions increased sales 4 percent and represented 35 percent of Dow’s total revenue mix. |
• | Dow accelerated portfolio management actions throughout the year, with $2 billion in proceeds expected from divestitures of non-strategic assets and businesses signed or completed in 2014. Since 2013, the Company has signed or completed transactions that are expected to generate $2.9 billion in proceeds - demonstrating progress against its previously stated target. |
• | The Company delivered $6.5 billion of cash flow from operations in 2014, demonstrating Dow’s continued focus on productivity. Excluding the K-Dow award, this reflects a more than $320 million increase versus 2013 - representing a second consecutive year of record cash flow. |
• | Dow reported adjusted return on capital(6) of 10.8 percent - an increase of 108 basis points versus the prior year. |
(5) | “Adjusted sales” is defined as Net Sales excluding sales related to prior-period divestitures. |
(6) | “Adjusted Return on Capital” is on a trailing twelve month basis and defined as Adjusted Net Operating Profit After Tax divided by Average Total Capital. “Adjusted Net Operating Profit After Tax” is defined as Adjusted Net Income plus Preferred Stock Dividends plus Net Income Attributable to Noncontrolling Interests plus gross interest expense less tax on gross interest expense. “Adjusted Net Income” is defined as Net Income excluding the impact of “Certain Items.” “Total Capital” is defined as Total Debt plus The Dow Chemical Company’s Stockholders’ Equity plus Redeemable Non-controlling Interest plus Non-redeemable Non-controlling Interests |
Three Months Ended | ||
In millions, except per share amounts | Dec. 31, 2014 | Dec. 31, 2013 |
Net Sales | $14,384 | $14,386 |
Adjusted Sales | $14,384 | $14,375 |
Net Income Available for Common Stockholders | $734 | $963 |
Net Income Available for Common Stockholders, excluding Certain Items | $992 | $793 |
Earnings per Common Share | $0.63 | $0.79 |
Adjusted Earnings Per Share | $0.85 | $0.65 |
Twelve Months Ended | ||
In millions, except per share amounts | Dec 31, 2014 | Dec 31, 2013 |
Net Sales | $58,167 | $57,080 |
Adjusted Sales | $58,167 | $56,861 |
Net Income Available for Common Stockholders | $3,432 | $4,447 |
Net Income Available for Common Stockholders, excluding Certain Items | $3,709 | $2,981 |
Earnings per Common Share | $2.87 | $3.68 |
Adjusted Earnings Per Share | $3.11 | $2.48 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
In millions, except per share amounts (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||
Net Sales | $ | 14,384 | $ | 14,386 | $ | 58,167 | $ | 57,080 | |||||||
Cost of sales | 11,611 | 12,068 | 47,464 | 47,594 | |||||||||||
Research and development expenses | 428 | 477 | 1,647 | 1,747 | |||||||||||
Selling, general and administrative expenses | 823 | 838 | 3,106 | 3,024 | |||||||||||
Amortization of intangibles | 106 | 117 | 436 | 461 | |||||||||||
Other intangible asset impairment losses (Note B) | 50 | — | 50 | — | |||||||||||
Restructuring credits (Note C) | (3 | ) | (22 | ) | (3 | ) | (22 | ) | |||||||
Asbestos-related charge (Note D) | 78 | — | 78 | — | |||||||||||
Equity in earnings of nonconsolidated affiliates (Note E) | 128 | 254 | 835 | 1,034 | |||||||||||
Sundry income (expense) - net (Note F) | (58 | ) | 474 | (27 | ) | 2,554 | |||||||||
Interest income | 19 | 12 | 51 | 41 | |||||||||||
Interest expense and amortization of debt discount | 262 | 262 | 983 | 1,101 | |||||||||||
Income Before Income Taxes | 1,118 | 1,386 | 5,265 | 6,804 | |||||||||||
Provision for income taxes (Note G) | 279 | 358 | 1,426 | 1,988 | |||||||||||
Net Income | 839 | 1,028 | 3,839 | 4,816 | |||||||||||
Net income (loss) attributable to noncontrolling interests | 20 | (20 | ) | 67 | 29 | ||||||||||
Net Income Attributable to The Dow Chemical Company | 819 | 1,048 | 3,772 | 4,787 | |||||||||||
Preferred stock dividends | 85 | 85 | 340 | 340 | |||||||||||
Net Income Available for The Dow Chemical Company Common Stockholders | $ | 734 | $ | 963 | $ | 3,432 | $ | 4,447 | |||||||
Per Common Share Data: | |||||||||||||||
Earnings per common share - basic | $ | 0.64 | $ | 0.80 | $ | 2.91 | $ | 3.72 | |||||||
Earnings per common share - diluted (Note H) | $ | 0.63 | $ | 0.79 | $ | 2.87 | $ | 3.68 | |||||||
Dividends declared per share of common stock | $ | 0.42 | $ | 0.32 | $ | 1.53 | $ | 1.28 | |||||||
Weighted-average common shares outstanding - basic | 1,146.9 | 1,190.1 | 1,170.9 | 1,186.2 | |||||||||||
Weighted-average common shares outstanding - diluted (Note H) | 1,160.9 | 1,201.1 | 1,187.0 | 1,290.4 | |||||||||||
Depreciation | $ | 544 | $ | 533 | $ | 2,136 | $ | 2,051 | |||||||
Capital Expenditures | $ | 1,106 | $ | 884 | $ | 3,572 | $ | 2,302 |
In millions (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | |||||
Assets | |||||||
Current Assets | |||||||
Cash and cash equivalents (variable interest entities restricted - 2014: $190; 2013: $147) | $ | 5,654 | $ | 5,940 | |||
Accounts and notes receivable: | |||||||
Trade (net of allowance for doubtful receivables - 2014: $110; 2013: $148) | 4,685 | 4,935 | |||||
Other | 4,687 | 4,712 | |||||
Inventories | 8,101 | 8,303 | |||||
Deferred income tax assets - current | 812 | 743 | |||||
Other current assets | 328 | 344 | |||||
Total current assets | 24,267 | 24,977 | |||||
Investments | |||||||
Investment in nonconsolidated affiliates | 4,201 | 4,501 | |||||
Other investments (investments carried at fair value - 2014: $2,009; 2013: $2,056) | 2,439 | 2,541 | |||||
Noncurrent receivables | 620 | 365 | |||||
Total investments | 7,260 | 7,407 | |||||
Property | |||||||
Property | 55,230 | 55,114 | |||||
Less accumulated depreciation | 37,179 | 37,660 | |||||
Net property (variable interest entities restricted - 2014: $2,726; 2013: $2,646) | 18,051 | 17,454 | |||||
Other Assets | |||||||
Goodwill | 12,632 | 12,798 | |||||
Other intangible assets (net of accumulated amortization - 2014: $3,737; 2013: $3,270) | 3,768 | 4,314 | |||||
Deferred income tax assets - noncurrent | 2,135 | 1,964 | |||||
Asbestos-related insurance receivables - noncurrent | 62 | 86 | |||||
Deferred charges and other assets | 621 | 501 | |||||
Total other assets | 19,218 | 19,663 | |||||
Total Assets | $ | 68,796 | $ | 69,501 | |||
Liabilities and Equity | |||||||
Current Liabilities | |||||||
Notes payable | $ | 551 | $ | 443 | |||
Long-term debt due within one year | 394 | 697 | |||||
Accounts payable: | |||||||
Trade | 4,481 | 4,590 | |||||
Other | 2,299 | 2,290 | |||||
Income taxes payable | 361 | 435 | |||||
Deferred income tax liabilities - current | 105 | 133 | |||||
Dividends payable | 563 | 467 | |||||
Accrued and other current liabilities | 2,839 | 2,916 | |||||
Total current liabilities | 11,593 | 11,971 | |||||
Long-Term Debt (variable interest entities nonrecourse - 2014: $1,229; 2013: $1,360) | 18,838 | 16,820 | |||||
Other Noncurrent Liabilities | |||||||
Deferred income tax liabilities - noncurrent | 622 | 718 | |||||
Pension and other postretirement benefits - noncurrent | 10,459 | 8,176 | |||||
Asbestos-related liabilities - noncurrent | 438 | 434 | |||||
Other noncurrent obligations | 3,290 | 3,302 | |||||
Total other noncurrent liabilities | 14,809 | 12,630 | |||||
Redeemable Noncontrolling Interest | 202 | 156 | |||||
Stockholders’ Equity | |||||||
Preferred stock, series A | 4,000 | 4,000 | |||||
Common stock | 3,107 | 3,054 | |||||
Additional paid-in capital | 4,846 | 3,928 | |||||
Retained earnings | 23,045 | 21,407 | |||||
Accumulated other comprehensive loss | (8,017 | ) | (4,827 | ) | |||
Unearned ESOP shares | (325 | ) | (357 | ) | |||
Treasury stock at cost | (4,233 | ) | (307 | ) | |||
The Dow Chemical Company’s stockholders’ equity | 22,423 | 26,898 | |||||
Non-redeemable noncontrolling interests | 931 | 1,026 | |||||
Total equity | 23,354 | 27,924 | |||||
Total Liabilities and Equity | $ | 68,796 | $ | 69,501 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
In millions (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||
Sales by operating segment | |||||||||||||||
Agricultural Sciences | $ | 1,856 | $ | 1,774 | $ | 7,290 | $ | 7,137 | |||||||
Consumer Solutions | 1,124 | 1,126 | 4,639 | 4,562 | |||||||||||
Infrastructure Solutions | 1,959 | 2,044 | 8,429 | 8,339 | |||||||||||
Performance Materials & Chemicals | 3,912 | 3,740 | 15,114 | 14,824 | |||||||||||
Performance Plastics | 5,465 | 5,632 | 22,386 | 21,910 | |||||||||||
Corporate | 68 | 70 | 309 | 308 | |||||||||||
Total | $ | 14,384 | $ | 14,386 | $ | 58,167 | $ | 57,080 | |||||||
EBITDA (1) by operating segment | |||||||||||||||
Agricultural Sciences | $ | 222 | $ | 159 | $ | 962 | $ | 894 | |||||||
Consumer Solutions | 325 | 212 | 1,130 | 933 | |||||||||||
Infrastructure Solutions | (104 | ) | 119 | 817 | 941 | ||||||||||
Performance Materials & Chemicals | 636 | 483 | 2,193 | 1,913 | |||||||||||
Performance Plastics | 1,194 | 1,672 | 4,422 | 4,503 | |||||||||||
Corporate | (220 | ) | (320 | ) | (580 | ) | 1,361 | ||||||||
Total | $ | 2,053 | $ | 2,325 | $ | 8,944 | $ | 10,545 | |||||||
Certain items increasing (decreasing) EBITDA by operating segment (2) | |||||||||||||||
Agricultural Sciences | $ | — | $ | — | $ | — | $ | — | |||||||
Consumer Solutions | 82 | — | 82 | — | |||||||||||
Infrastructure Solutions | (348 | ) | (94 | ) | (348 | ) | (94 | ) | |||||||
Performance Materials & Chemicals | — | (55 | ) | — | (55 | ) | |||||||||
Performance Plastics | — | 544 | — | 544 | |||||||||||
Corporate | (97 | ) | (172 | ) | (127 | ) | 1,788 | ||||||||
Total | $ | (363 | ) | $ | 223 | $ | (393 | ) | $ | 2,183 | |||||
EBITDA excluding certain items by operating segment | |||||||||||||||
Agricultural Sciences | $ | 222 | $ | 159 | $ | 962 | $ | 894 | |||||||
Consumer Solutions | 243 | 212 | 1,048 | 933 | |||||||||||
Infrastructure Solutions | 244 | 213 | 1,165 | 1,035 | |||||||||||
Performance Materials & Chemicals | 636 | 538 | 2,193 | 1,968 | |||||||||||
Performance Plastics | 1,194 | 1,128 | 4,422 | 3,959 | |||||||||||
Corporate | (123 | ) | (148 | ) | (453 | ) | (427 | ) | |||||||
Total | $ | 2,416 | $ | 2,102 | $ | 9,337 | $ | 8,362 |
Three Months Ended | Twelve Months Ended | ||||||||||||||
In millions (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||
Equity in earnings (losses) of nonconsolidated affiliates by operating segment (included in EBITDA) | |||||||||||||||
Agricultural Sciences | $ | 1 | $ | (2 | ) | $ | 4 | $ | 5 | ||||||
Consumer Solutions | 196 | 30 | 281 | 107 | |||||||||||
Infrastructure Solutions | (178 | ) | 40 | (6 | ) | 126 | |||||||||
Performance Materials & Chemicals | 54 | 124 | 322 | 480 | |||||||||||
Performance Plastics | 57 | 79 | 257 | 355 | |||||||||||
Corporate | (2 | ) | (17 | ) | (23 | ) | (39 | ) | |||||||
Total | $ | 128 | $ | 254 | $ | 835 | $ | 1,034 |
(1) | The Company uses EBITDA (which Dow defines as earnings (i.e., "Net Income") before interest, income taxes, depreciation and amortization) as its measure of profit/loss for segment reporting purposes. EBITDA by operating segment includes all operating items relating to the businesses, except depreciation and amortization; items that principally apply to the Company as a whole are assigned to Corporate. A reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" is provided below. |
Reconciliation of EBITDA to "Net Income Available for The Dow Chemical Company Common Stockholders" | Three Months Ended | Twelve Months Ended | |||||||||||||
In millions (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||
EBITDA | $ | 2,053 | $ | 2,325 | $ | 8,944 | $ | 10,545 | |||||||
- Depreciation and amortization | 692 | 689 | 2,747 | 2,681 | |||||||||||
+ Interest income | 19 | 12 | 51 | 41 | |||||||||||
- Interest expense and amortization of debt discount | 262 | 262 | 983 | 1,101 | |||||||||||
Income Before Income Taxes | $ | 1,118 | $ | 1,386 | $ | 5,265 | $ | 6,804 | |||||||
- Provision for income taxes | 279 | 358 | 1,426 | 1,988 | |||||||||||
- Net income (loss) attributable to noncontrolling interests | 20 | (20 | ) | 67 | 29 | ||||||||||
- Preferred stock dividends | 85 | 85 | 340 | 340 | |||||||||||
Net Income Available for The Dow Chemical Company Common Stockholders | $ | 734 | $ | 963 | $ | 3,432 | $ | 4,447 |
(2) | See Supplemental Information for a description of certain items affecting results in 2014 and 2013. |
Three Months Ended | Twelve Months Ended | ||||||||||||||
In millions (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||
North America | $ | 5,200 | $ | 5,108 | $ | 21,422 | $ | 20,849 | |||||||
Europe, Middle East, Africa and India | 4,574 | 4,692 | 19,671 | 19,208 | |||||||||||
Asia Pacific | 2,342 | 2,387 | 9,135 | 9,229 | |||||||||||
Latin America | 2,268 | 2,199 | 7,939 | 7,794 | |||||||||||
Total | $ | 14,384 | $ | 14,386 | $ | 58,167 | $ | 57,080 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, 2014 | December 31, 2014 | ||||||||||||||||
Percentage change from prior year | Volume | Price | Total | Volume | Price | Total | |||||||||||
Agricultural Sciences | 9 | % | (4 | )% | 5 | % | 3 | % | (1 | )% | 2 | % | |||||
Consumer Solutions | 3 | (3 | ) | — | 3 | (1 | ) | 2 | |||||||||
Infrastructure Solutions | (2 | ) | (2 | ) | (4 | ) | 1 | — | 1 | ||||||||
Performance Materials & Chemicals | 7 | (2 | ) | 5 | 2 | — | 2 | ||||||||||
Performance Plastics | 3 | (6 | ) | (3 | ) | — | 2 | 2 | |||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % | |||||
North America | 2 | % | — | % | 2 | % | 1 | % | 2 | % | 3 | % | |||||
Europe, Middle East, Africa and India | 9 | (11 | ) | (2 | ) | 3 | (1 | ) | 2 | ||||||||
Asia Pacific | — | (2 | ) | (2 | ) | (1 | ) | — | (1 | ) | |||||||
Latin America | 2 | 1 | 3 | 1 | 1 | 2 | |||||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % | |||||
Developed geographies | 4 | % | (6 | )% | (2 | )% | 1 | % | — | % | 1 | % | |||||
Emerging geographies (2) | 5 | (1 | ) | 4 | 2 | 1 | 3 | ||||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % |
Three Months Ended | Twelve Months Ended | ||||||||||||||||
December 31, 2014 | December 31, 2014 | ||||||||||||||||
Percentage change from prior year | Volume | Price | Total | Volume | Price | Total | |||||||||||
Agricultural Sciences | 9 | % | (4 | )% | 5 | % | 3 | % | (1 | )% | 2 | % | |||||
Consumer Solutions | 3 | (3 | ) | — | 3 | (1 | ) | 2 | |||||||||
Infrastructure Solutions | (2 | ) | (2 | ) | (4 | ) | 1 | — | 1 | ||||||||
Performance Materials & Chemicals | 7 | (2 | ) | 5 | 2 | — | 2 | ||||||||||
Performance Plastics | 3 | (6 | ) | (3 | ) | 1 | 2 | 3 | |||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % | |||||
North America | 2 | % | — | % | 2 | % | 1 | % | 2 | % | 3 | % | |||||
Europe, Middle East, Africa and India | 9 | (11 | ) | (2 | ) | 4 | (1 | ) | 3 | ||||||||
Asia Pacific | — | (2 | ) | (2 | ) | 1 | — | 1 | |||||||||
Latin America | 2 | 1 | 3 | 1 | 1 | 2 | |||||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % | |||||
Developed geographies | 4 | % | (6 | )% | (2 | )% | 1 | % | — | % | 1 | % | |||||
Emerging geographies (2) | 5 | (1 | ) | 4 | 3 | 1 | 4 | ||||||||||
Total | 4 | % | (4 | )% | — | % | 2 | % | — | % | 2 | % |
(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. |
(2) | Emerging geographies includes Eastern Europe, Middle East, Africa, India, Latin America and Asia Pacific excluding Australia, Japan and New Zealand. |
(3) | Excludes sales related to Nippon Unicar Company, Limited, divested on July 1, 2013, and sales of the Polypropylene Licensing and Catalysts business, divested on December 2, 2013. |
Certain Items Impacting Results | Pretax Impact (1) | Net Income (2) | EPS - Diluted (3) | ||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||||||||||||||
In millions, except per share amounts (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||||||||
Adjusted to exclude certain items (non-GAAP measures) | $ | 992 | $ | 793 | $ | 0.85 | $ | 0.65 | |||||||||||||||
Certain items: | |||||||||||||||||||||||
Asset impairments and related costs | $ | (73 | ) | $ | (194 | ) | (47 | ) | (132 | ) | (0.04 | ) | (0.11 | ) | |||||||||
Warranty accrual adjustment of exited business | (100 | ) | — | (63 | ) | — | (0.05 | ) | — | ||||||||||||||
Restructuring plan implementation costs | — | (13 | ) | — | (11 | ) | — | (0.01 | ) | ||||||||||||||
1Q12 Restructuring credits | — | 16 | — | 16 | — | 0.01 | |||||||||||||||||
4Q12 Restructuring credits | — | 6 | — | 5 | — | 0.01 | |||||||||||||||||
Asbestos-related charge | (78 | ) | — | (49 | ) | — | (0.04 | ) | — | ||||||||||||||
Gain on sale of Dow Polypropylene Licensing and Catalysts business | — | 451 | — | 356 | — | 0.29 | |||||||||||||||||
Gain on sale of a 7.5 percent ownership interest in Freeport LNG Development, L.P. | — | 87 | — | 69 | — | 0.06 | |||||||||||||||||
Gain on sale of ownership interest in Dow Kokam LLC | — | 26 | — | 18 | — | 0.01 | |||||||||||||||||
Dow Corning implant liability adjustment | 407 | — | 378 | — | 0.32 | — | |||||||||||||||||
Loss related to Dow Corning's Clarksville, Tennessee site abandonment | (500 | ) | — | (465 | ) | — | (0.40 | ) | — | ||||||||||||||
Chlorine value chain separation costs | (19 | ) | — | (12 | ) | — | (0.01 | ) | — | ||||||||||||||
Loss on early extinguishment of debt | — | (156 | ) | — | (98 | ) | — | (0.08 | ) | ||||||||||||||
Uncertain tax position adjustments | — | — | — | (53 | ) | — | (0.04 | ) | |||||||||||||||
Total certain items | $ | (363 | ) | $ | 223 | $ | (258 | ) | $ | 170 | $ | (0.22 | ) | $ | 0.14 | ||||||||
Reported (GAAP amounts) | $ | 734 | $ | 963 | $ | 0.63 | $ | 0.79 |
(1) | Impact on "Income Before Income Taxes." |
(2) | "Net Income Available for The Dow Chemical Company Common Stockholders." |
(3) | "Earnings per common share - diluted." |
Certain Items Impacting Results | Pretax Impact (1) | Net Income (2) | EPS - Diluted (3) (4) | ||||||||||||||||||||
Twelve Months Ended | Twelve Months Ended | Twelve Months Ended | |||||||||||||||||||||
In millions, except per share amounts (Unaudited) | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||||||||||||
Adjusted to exclude certain items (non-GAAP measures) | $ | 3,709 | $ | 2,981 | $ | 3.11 | $ | 2.48 | |||||||||||||||
Certain items: | |||||||||||||||||||||||
Asset impairments and related costs | $ | (73 | ) | $ | (194 | ) | (47 | ) | (132 | ) | (0.04 | ) | (0.11 | ) | |||||||||
Warranty accrual adjustment of exited business | (100 | ) | — | (63 | ) | — | (0.05 | ) | — | ||||||||||||||
Restructuring plan implementation costs | — | (44 | ) | — | (32 | ) | — | (0.03 | ) | ||||||||||||||
1Q12 Restructuring credits | — | 16 | — | 16 | — | 0.01 | |||||||||||||||||
4Q12 Restructuring credits | — | 6 | — | 5 | — | 0.01 | |||||||||||||||||
Asbestos-related charge | (78 | ) | — | (49 | ) | — | (0.04 | ) | — | ||||||||||||||
Gain from K-Dow arbitration | — | 2,161 | — | 1,647 | — | 1.37 | |||||||||||||||||
Gain on sale of Dow Polypropylene Licensing and Catalysts business | — | 451 | — | 356 | — | 0.29 | |||||||||||||||||
Gain on sale of 7.5 percent ownership in Freeport LNG Development, L.P. | — | 87 | — | 69 | — | 0.06 | |||||||||||||||||
Gain on sale of ownership interest in Dow Kokam LLC | — | 26 | — | 18 | — | 0.01 | |||||||||||||||||
Dow Corning implant liability adjustment | 407 | — | 378 | — | 0.32 | — | |||||||||||||||||
Loss related to Dow Corning's Clarksville, Tennessee site abandonment | (500 | ) | — | (465 | ) | — | (0.40 | ) | — | ||||||||||||||
Chlorine value chain separation costs | (49 | ) | — | (31 | ) | — | (0.03 | ) | — | ||||||||||||||
Loss on early extinguishment of debt | — | (326 | ) | — | (205 | ) | — | (0.17 | ) | ||||||||||||||
Adjustment of uncertain tax positions | — | — | — | (276 | ) | — | (0.23 | ) | |||||||||||||||
Total certain items | $ | (393 | ) | $ | 2,183 | $ | (277 | ) | $ | 1,466 | $ | (0.24 | ) | $ | 1.21 | ||||||||
Dilutive effect of assumed preferred stock conversion into shares of common stock | (0.01 | ) | |||||||||||||||||||||
Reported (GAAP amounts) (5) (6) | $ | 3,432 | $ | 4,447 | $ | 2.87 | $ | 3.68 |
(1) | Impact on "Income Before Income Taxes." |
(2) | "Net Income Available for The Dow Chemical Company Common Stockholders." |
(3) | "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 ("Preferred Stock") 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) | For the year ended December 31, 2013, an assumed conversion of the Company's Preferred Stock into shares of the Company's common stock was included in the calculation of diluted earnings per share (reported GAAP amount). |
(6) | The Company used "Net Income Attributable to The Dow Chemical Company" when calculating diluted earnings per share (reported GAAP amount) for the twelve-month period ended December 31, 2013, as it excludes preferred dividends of $340 million. |
Common Shares - Diluted | Three Months Ended | Twelve Months Ended | |||||||||
In millions | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2014 | Dec 31, 2013 | |||||||
Share count - diluted, excluding preferred stock conversion to common shares | 1,160.9 | 1,201.1 | 1,187.0 | 1,193.6 | |||||||
Potential common shares from assumed conversion of preferred stock, included in reported GAAP EPS calculation | N/A | N/A | N/A | 96.8 | |||||||
Share count - diluted, including assumed preferred stock conversion to common shares | N/A | N/A | N/A | 1,290.4 |
• | Pretax charges of $73 million for asset impairments related to the Dow Electronic Materials business. The charges were included in "Cost of sales" ($23 million) and "Other intangible asset impairment losses" ($50 million) in the consolidated statements of income and reflected in Consumer Solutions. |
• | Pretax charge of $100 million for a warranty accrual adjustment related to an exited business. The charge was included in "Cost of sales" in the consolidated statements of income and reflected in Infrastructure Solutions. |
• | Pretax charge of $78 million related to an increase in the asbestos-related liability for pending and future claims (excluding future defense and processing costs). The charge is shown as "Asbestos-related charge" in the consolidated statements of income and reflected in Corporate. |
• | A gain of $407 million related to Dow Corning Corporation's ("Dow Corning") adjustment of its implant liability. Dow Corning is a 50 percent owned joint venture of the Company. The gain was included in "Equity in earnings of nonconsolidated affiliates" in the consolidated statements of income and reflected in Consumer Solutions ($155 million) and Infrastructure Solutions ($252 million). |
• | A loss of $500 million related to Dow Corning's abandonment of a polycrystalline silicon manufacturing facility in Clarksville, Tennessee. The loss was included in "Equity in earnings of nonconsolidated affiliates" in the consolidated statements of income and reflected in Infrastructure Solutions. |
• | Pretax charges of $19 million for nonrecurring transaction costs associated with the planned separation of a significant portion of the Company's chlorine value chain, consisting primarily of financial and professional advisory fees and legal fees ("Chlorine value chain separation costs"). The charges were included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | Pretax charges of $194 million for asset impairments and related costs, including the shutdown of manufacturing facilities, in the Chlor-Alkali and Vinyl business, Energy & Water Solutions business, Performance Monomers business, Epoxy business, Polyurethanes business and Corporate. The charges were included in "Cost of sales" ($181 million), "Amortization of intangibles" ($3 million) and "Equity in earnings of nonconsolidated affiliates" ($10 million) in the consolidated statements of income and reflected in Infrastructure Solutions ($95 million), Performance Materials & Chemicals ($70 million) and Corporate ($29 million). |
• | Pretax charges of $13 million for implementation costs related to the Company's restructuring programs. The charges were included in "Cost of sales" ($10 million), "Research and development expenses" ($2 million) and "Selling, general and administrative expenses" ($1 million) in the consolidated statements of income and reflected in Corporate. |
• | Pretax gain of $16 million for adjustments to asbestos abatement costs and contract cancellation fees related to the 1Q12 Restructuring plan. The gain was included in "Restructuring credits" in the consolidated statements of income and reflected in Infrastructure Solutions ($1 million) and Performance Materials & Chemicals ($15 million). |
• | Pretax gain of $6 million for adjustments to contract cancellation fees related to the 4Q12 Restructuring plan. The gain was included in "Restructuring credits" in the consolidated statements of income and reflected in Performance Plastics. |
• | A $451 million pretax gain on the December 2, 2013 divestiture of the Dow Polypropylene Licensing and Catalysts business, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Performance Plastics. |
• | Pretax gain of $87 million on the sale of a 7.5 percent ownership interest in Freeport LNG Development, L.P., included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Performance Plastics. |
• | Pretax gain of $26 million on the sale of the Company's ownership interest in Dow Kokam LLC, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | Pretax loss of $156 million on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | A tax charge of $53 million for the accrual of additional penalties and interest related to court rulings on two separate matters that resulted in the adjustment of uncertain tax positions. |
• | Pretax charges of $30 million for chlorine value chain separation costs. The charges were included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | Pretax charges of $31 million for implementation costs related to the Company's restructuring programs. The charges were included in "Cost of sales" ($30 million) and "Selling, general and administrative expenses" ($1 million) in the consolidated statements of income and reflected in Corporate. |
• | Pretax loss of $170 million on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | Pretax gain of $2.161 billion related to damages awarded to the Company in the K-Dow arbitration proceeding. The gain was included in "Sundry income (expense) - net" in the consolidated statements of income and reflected in Corporate. |
• | A tax charge of $223 million related to court rulings on two separate matters that resulted in the adjustment of uncertain tax positions. |