Delaware
|
|
38-1285128
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
Large accelerated filer
|
|
þ
|
Accelerated filer
|
|
¨
|
|
Non-accelerated filer
|
|
¨
|
Smaller reporting company
|
|
¨
|
|
|
Outstanding at
|
Class
|
|
June 30, 2012
|
Common Stock, par value $2.50 per share
|
|
1,198,107,132 shares
|
|
|
PAGE
|
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Item 1.
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Item 2.
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||
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Item 3.
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Item 4.
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||
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Item 1.
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||
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Item 1A.
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||
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Item 2.
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||
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Item 4.
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||
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Item 6.
|
||
|
|
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|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions, except per share amounts (Unaudited)
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net Sales
|
$
|
14,513
|
|
|
$
|
16,046
|
|
|
$
|
29,232
|
|
|
$
|
30,779
|
|
Cost of sales
|
12,200
|
|
|
13,551
|
|
|
24,485
|
|
|
25,668
|
|
||||
Research and development expenses
|
406
|
|
|
411
|
|
|
811
|
|
|
811
|
|
||||
Selling, general and administrative expenses
|
674
|
|
|
695
|
|
|
1,381
|
|
|
1,395
|
|
||||
Amortization of intangibles
|
122
|
|
|
125
|
|
|
244
|
|
|
248
|
|
||||
Restructuring charges
|
—
|
|
|
—
|
|
|
357
|
|
|
—
|
|
||||
Acquisition-related integration expenses
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
||||
Equity in earnings of nonconsolidated affiliates
|
148
|
|
|
291
|
|
|
317
|
|
|
589
|
|
||||
Sundry income (expense) - net
|
27
|
|
|
80
|
|
|
44
|
|
|
(369
|
)
|
||||
Interest income
|
10
|
|
|
10
|
|
|
16
|
|
|
17
|
|
||||
Interest expense and amortization of debt discount
|
312
|
|
|
328
|
|
|
641
|
|
|
705
|
|
||||
Income Before Income Taxes
|
984
|
|
|
1,317
|
|
|
1,690
|
|
|
2,158
|
|
||||
Provision for income taxes
|
244
|
|
|
240
|
|
|
430
|
|
|
360
|
|
||||
Net Income
|
740
|
|
|
1,077
|
|
|
1,260
|
|
|
1,798
|
|
||||
Net income attributable to noncontrolling interests
|
6
|
|
|
10
|
|
|
29
|
|
|
21
|
|
||||
Net Income Attributable to The Dow Chemical Company
|
734
|
|
|
1,067
|
|
|
1,231
|
|
|
1,777
|
|
||||
Preferred stock dividends
|
85
|
|
|
85
|
|
|
170
|
|
|
170
|
|
||||
Net Income Available for The Dow Chemical Company Common Stockholders
|
$
|
649
|
|
|
$
|
982
|
|
|
$
|
1,061
|
|
|
$
|
1,607
|
|
|
|
|
|
|
|
|
|
||||||||
Per Common Share Data:
|
|
|
|
|
|
|
|
||||||||
Earnings per common share - basic
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.39
|
|
Earnings per common share - diluted
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Common stock dividends declared per share of common stock
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
0.57
|
|
|
$
|
0.40
|
|
Weighted-average common shares outstanding - basic
|
1,169.7
|
|
|
1,149.6
|
|
|
1,165.3
|
|
|
1,144.6
|
|
||||
Weighted-average common shares outstanding - diluted
|
1,176.6
|
|
|
1,160.9
|
|
|
1,172.7
|
|
|
1,156.2
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||
Depreciation
|
$
|
506
|
|
|
$
|
526
|
|
|
$
|
1,016
|
|
|
$
|
1,085
|
|
Capital Expenditures
|
$
|
581
|
|
|
$
|
564
|
|
|
$
|
983
|
|
|
$
|
969
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions (Unaudited)
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net Income
|
$
|
740
|
|
|
$
|
1,077
|
|
|
$
|
1,260
|
|
|
$
|
1,798
|
|
Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
|
|
||||||||
Net change in unrealized gains (losses) on investments
|
(25
|
)
|
|
(8
|
)
|
|
32
|
|
|
6
|
|
||||
Translation adjustments
|
(456
|
)
|
|
159
|
|
|
(174
|
)
|
|
600
|
|
||||
Adjustments to pension and other postretirement benefit plans
|
97
|
|
|
69
|
|
|
182
|
|
|
141
|
|
||||
Net gains (losses) on cash flow hedging derivative instruments
|
3
|
|
|
14
|
|
|
(11
|
)
|
|
5
|
|
||||
Other comprehensive income (loss)
|
(381
|
)
|
|
234
|
|
|
29
|
|
|
752
|
|
||||
Comprehensive Income
|
359
|
|
|
1,311
|
|
|
1,289
|
|
|
2,550
|
|
||||
Comprehensive income attributable to noncontrolling interests, net of tax
|
6
|
|
|
10
|
|
|
29
|
|
|
21
|
|
||||
Comprehensive Income Attributable to The Dow Chemical Company
|
$
|
353
|
|
|
$
|
1,301
|
|
|
$
|
1,260
|
|
|
$
|
2,529
|
|
In millions (Unaudited)
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Assets
|
|||||||
Current Assets
|
|
|
|
||||
Cash and cash equivalents (variable interest entities restricted - 2012: $174; 2011: $170)
|
$
|
4,128
|
|
|
$
|
5,444
|
|
Marketable securities and interest-bearing deposits
|
2
|
|
|
2
|
|
||
Accounts and notes receivable:
|
|
|
|
||||
Trade (net of allowance for doubtful receivables - 2012: $134; 2011: $121)
|
5,251
|
|
|
4,900
|
|
||
Other
|
4,636
|
|
|
4,726
|
|
||
Inventories
|
8,380
|
|
|
7,577
|
|
||
Deferred income tax assets - current
|
462
|
|
|
471
|
|
||
Other current assets
|
339
|
|
|
302
|
|
||
Total current assets
|
23,198
|
|
|
23,422
|
|
||
Investments
|
|
|
|
||||
Investment in nonconsolidated affiliates
|
3,190
|
|
|
3,405
|
|
||
Other investments (investments carried at fair value - 2012: $2,063; 2011: $2,008)
|
2,554
|
|
|
2,508
|
|
||
Noncurrent receivables
|
1,229
|
|
|
1,144
|
|
||
Total investments
|
6,973
|
|
|
7,057
|
|
||
Property
|
|
|
|
||||
Property
|
52,924
|
|
|
52,216
|
|
||
Less accumulated depreciation
|
35,571
|
|
|
34,917
|
|
||
Net property (variable interest entities restricted - 2012: $2,324; 2011: $2,169)
|
17,353
|
|
|
17,299
|
|
||
Other Assets
|
|
|
|
||||
Goodwill
|
12,896
|
|
|
12,930
|
|
||
Other intangible assets (net of accumulated amortization - 2012: $2,605; 2011: $2,349)
|
4,898
|
|
|
5,061
|
|
||
Deferred income tax assets - noncurrent
|
2,582
|
|
|
2,559
|
|
||
Asbestos-related insurance receivables - noncurrent
|
167
|
|
|
172
|
|
||
Deferred charges and other assets
|
775
|
|
|
724
|
|
||
Total other assets
|
21,318
|
|
|
21,446
|
|
||
Total Assets
|
$
|
68,842
|
|
|
$
|
69,224
|
|
Liabilities and Equity
|
|||||||
Current Liabilities
|
|
|
|
||||
Notes payable
|
$
|
473
|
|
|
$
|
541
|
|
Long-term debt due within one year
|
1,880
|
|
|
2,749
|
|
||
Accounts payable:
|
|
|
|
||||
Trade
|
4,586
|
|
|
4,778
|
|
||
Other
|
2,262
|
|
|
2,216
|
|
||
Income taxes payable
|
375
|
|
|
382
|
|
||
Deferred income tax liabilities - current
|
117
|
|
|
129
|
|
||
Dividends payable
|
462
|
|
|
376
|
|
||
Accrued and other current liabilities
|
2,474
|
|
|
2,463
|
|
||
Total current liabilities
|
12,629
|
|
|
13,634
|
|
||
Long-Term Debt (variable interest entities nonrecourse - 2012: $1,308; 2011: $1,138)
|
18,304
|
|
|
18,310
|
|
||
Other Noncurrent Liabilities
|
|
|
|
||||
Deferred income tax liabilities - noncurrent
|
1,009
|
|
|
1,091
|
|
||
Pension and other postretirement benefits - noncurrent
|
8,775
|
|
|
9,034
|
|
||
Asbestos-related liabilities - noncurrent
|
581
|
|
|
608
|
|
||
Other noncurrent obligations
|
3,173
|
|
|
3,109
|
|
||
Total other noncurrent liabilities
|
13,538
|
|
|
13,842
|
|
||
Redeemable Noncontrolling Interest
|
147
|
|
|
147
|
|
||
Stockholders’ Equity
|
|
|
|
||||
Preferred stock, series A
|
4,000
|
|
|
4,000
|
|
||
Common stock
|
2,996
|
|
|
2,961
|
|
||
Additional paid-in capital
|
3,018
|
|
|
2,663
|
|
||
Retained earnings
|
19,473
|
|
|
19,087
|
|
||
Accumulated other comprehensive loss
|
(5,967
|
)
|
|
(5,996
|
)
|
||
Unearned ESOP shares
|
(399
|
)
|
|
(434
|
)
|
||
The Dow Chemical Company’s stockholders’ equity
|
23,121
|
|
|
22,281
|
|
||
Noncontrolling interests
|
1,103
|
|
|
1,010
|
|
||
Total equity
|
24,224
|
|
|
23,291
|
|
||
Total Liabilities and Equity
|
$
|
68,842
|
|
|
$
|
69,224
|
|
|
Six Months Ended
|
||||||
In millions (Unaudited)
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||
Operating Activities
|
|
|
|
||||
Net Income
|
$
|
1,260
|
|
|
$
|
1,798
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,353
|
|
|
1,428
|
|
||
Credit for deferred income tax
|
(133
|
)
|
|
(99
|
)
|
||
Earnings of nonconsolidated affiliates less than dividends received
|
191
|
|
|
50
|
|
||
Pension contributions
|
(499
|
)
|
|
(282
|
)
|
||
Net gain on sales of investments
|
(6
|
)
|
|
(35
|
)
|
||
Net gain on sales of property, businesses and consolidated companies
|
(71
|
)
|
|
(6
|
)
|
||
Other net loss
|
32
|
|
|
—
|
|
||
Net gain on sale of ownership interest in nonconsolidated affiliates
|
—
|
|
|
(61
|
)
|
||
Restructuring charges
|
357
|
|
|
—
|
|
||
Loss on early extinguishment of debt
|
24
|
|
|
482
|
|
||
Excess tax benefits from share-based payment arrangements
|
(58
|
)
|
|
(14
|
)
|
||
Changes in assets and liabilities, net of effects of acquired and divested companies:
|
|
|
|
||||
Accounts and notes receivable
|
(2,143
|
)
|
|
(2,721
|
)
|
||
Proceeds from interests in trade accounts receivable conduits
|
1,972
|
|
|
1,224
|
|
||
Inventories
|
(790
|
)
|
|
(1,651
|
)
|
||
Accounts payable
|
(248
|
)
|
|
653
|
|
||
Other assets and liabilities
|
180
|
|
|
(146
|
)
|
||
Cash provided by operating activities
|
1,421
|
|
|
620
|
|
||
Investing Activities
|
|
|
|
||||
Capital expenditures
|
(983
|
)
|
|
(969
|
)
|
||
Construction of assets pending sale / leaseback
|
—
|
|
|
(113
|
)
|
||
Proceeds from sale / leaseback of assets
|
—
|
|
|
80
|
|
||
Proceeds from sales of property, businesses and consolidated companies
|
62
|
|
|
85
|
|
||
Acquisitions of businesses
|
—
|
|
|
(6
|
)
|
||
Investments in consolidated companies, net of cash acquired
|
(27
|
)
|
|
(120
|
)
|
||
Investments in and loans to nonconsolidated affiliates
|
(168
|
)
|
|
(45
|
)
|
||
Distributions from nonconsolidated affiliates
|
13
|
|
|
27
|
|
||
Proceeds from sale of ownership interests in nonconsolidated affiliates
|
—
|
|
|
81
|
|
||
Purchases of investments
|
(266
|
)
|
|
(427
|
)
|
||
Proceeds from sales and maturities of investments
|
254
|
|
|
503
|
|
||
Cash used in investing activities
|
(1,115
|
)
|
|
(904
|
)
|
||
Financing Activities
|
|
|
|
||||
Changes in short-term notes payable
|
(63
|
)
|
|
(557
|
)
|
||
Proceeds from issuance of long-term debt
|
446
|
|
|
946
|
|
||
Payments on long-term debt
|
(1,431
|
)
|
|
(4,738
|
)
|
||
Purchases of treasury stock
|
—
|
|
|
(19
|
)
|
||
Proceeds from issuance of common stock
|
190
|
|
|
171
|
|
||
Proceeds from sales of common stock
|
—
|
|
|
98
|
|
||
Excess tax benefits from share-based payment arrangements
|
58
|
|
|
14
|
|
||
Contribution from noncontrolling interests
|
—
|
|
|
20
|
|
||
Distributions to noncontrolling interests
|
(58
|
)
|
|
(22
|
)
|
||
Dividends paid to stockholders
|
(751
|
)
|
|
(512
|
)
|
||
Cash used in financing activities
|
(1,609
|
)
|
|
(4,599
|
)
|
||
Effect of Exchange Rate Changes on Cash
|
(13
|
)
|
|
64
|
|
||
Cash Assumed in Initial Consolidation of Variable Interest Entities
|
—
|
|
|
3
|
|
||
Summary
|
|
|
|
||||
Decrease in cash and cash equivalents
|
(1,316
|
)
|
|
(4,816
|
)
|
||
Cash and cash equivalents at beginning of year
|
5,444
|
|
|
7,039
|
|
||
Cash and cash equivalents at end of period
|
$
|
4,128
|
|
|
$
|
2,223
|
|
|
Six Months Ended
|
||||||
In millions (Unaudited)
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||
Preferred Stock
|
|
|
|
||||
Balance at beginning of year and end of period
|
$
|
4,000
|
|
|
$
|
4,000
|
|
Common Stock
|
|
|
|
||||
Balance at beginning of year
|
2,961
|
|
|
2,931
|
|
||
Common stock issued
|
35
|
|
|
22
|
|
||
Balance at end of period
|
2,996
|
|
|
2,953
|
|
||
Additional Paid-in Capital
|
|
|
|
||||
Balance at beginning of year
|
2,663
|
|
|
2,286
|
|
||
Common stock issued
|
155
|
|
|
149
|
|
||
Stock-based compensation and allocation of ESOP shares
|
200
|
|
|
15
|
|
||
Balance at end of period
|
3,018
|
|
|
2,450
|
|
||
Retained Earnings
|
|
|
|
||||
Balance at beginning of year
|
19,087
|
|
|
17,736
|
|
||
Net income available for The Dow Chemical Company common stockholders
|
1,061
|
|
|
1,607
|
|
||
Dividends declared on common stock (per share: $0.57 in 2012, $0.40 in 2011)
|
(667
|
)
|
|
(460
|
)
|
||
Other
|
(8
|
)
|
|
(6
|
)
|
||
Balance at end of period
|
19,473
|
|
|
18,877
|
|
||
Accumulated Other Comprehensive Loss
|
|
|
|
||||
Balance at beginning of year
|
(5,996
|
)
|
|
(4,399
|
)
|
||
Other comprehensive income
|
29
|
|
|
752
|
|
||
Balance at end of period
|
(5,967
|
)
|
|
(3,647
|
)
|
||
Unearned ESOP Shares
|
|
|
|
||||
Balance at beginning of year
|
(434
|
)
|
|
(476
|
)
|
||
Shares allocated to ESOP participants
|
35
|
|
|
28
|
|
||
Balance at end of period
|
(399
|
)
|
|
(448
|
)
|
||
Treasury Stock
|
|
|
|
||||
Balance at beginning of year
|
—
|
|
|
(239
|
)
|
||
Purchases
|
—
|
|
|
(19
|
)
|
||
Issuance to employees and employee plans
|
—
|
|
|
258
|
|
||
Balance at end of period
|
—
|
|
|
—
|
|
||
The Dow Chemical Company’s Stockholders’ Equity
|
23,121
|
|
|
24,185
|
|
||
Noncontrolling Interests
|
|
|
|
||||
Balance at beginning of year
|
1,010
|
|
|
803
|
|
||
Net income attributable to noncontrolling interests
|
29
|
|
|
21
|
|
||
Distributions to noncontrolling interests
|
(58
|
)
|
|
(22
|
)
|
||
Capital contributions (noncash capital contributions - 2012: $95; 2011: $0)
|
95
|
|
|
20
|
|
||
Consolidation of a variable interest entity
|
37
|
|
|
31
|
|
||
Other
|
(10
|
)
|
|
1
|
|
||
Balance at end of period
|
1,103
|
|
|
854
|
|
||
Total Equity
|
$
|
24,224
|
|
|
$
|
25,039
|
|
(Unaudited)
|
|
The Dow Chemical Company and Subsidiaries
PART I – FINANCIAL INFORMATION, Item 1. Financial Statements.
Notes to the Consolidated Financial Statements
|
Note
|
|
Page
|
A
|
||
B
|
||
C
|
||
D
|
||
E
|
||
F
|
||
G
|
||
H
|
||
I
|
||
J
|
||
K
|
||
L
|
||
M
|
||
N
|
||
O
|
||
P
|
||
Q
|
2012 Restructuring Charges by Operating Segment
In millions
|
Costs Associated with Exit or Disposal Activities
|
|
|
Severance Costs
|
|
|
Impairment of Long-Lived Assets and Other Assets
|
|
|
Total
|
|
||||
Electronic and Functional Materials
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
17
|
|
Coatings and Infrastructure Solutions
|
4
|
|
|
—
|
|
|
37
|
|
|
41
|
|
||||
Performance Materials
|
146
|
|
|
—
|
|
|
40
|
|
|
186
|
|
||||
Corporate
|
—
|
|
|
113
|
|
|
—
|
|
|
113
|
|
||||
Total
|
$
|
150
|
|
|
$
|
113
|
|
|
$
|
94
|
|
|
$
|
357
|
|
•
|
The Company evaluated its facilities that manufacture STYROFOAM™ brand insulation and as a result, the decision was made to shut down facilities in Balatonfuzfo, Hungary; Estarreja, Portugal; and Charleston, Illinois. In addition, a facility in Terneuzen, The Netherlands will be idled and impaired. Write-downs associated with these facilities of
$37 million
were recorded in the first quarter of 2012 against the Coatings and Infrastructure Solutions segment. The Netherlands facility was shut down at the end of the second quarter of 2012. The remaining facilities will be shut down by year-end 2012.
|
•
|
The decision was made to shut down and/or consolidate certain manufacturing assets in the Polyurethanes and Epoxy businesses in Texas and Germany. Write-downs associated with these assets of
$15 million
were recorded in the first quarter of 2012 against the Performance Materials segment. These assets are expected to be shut down by the end of the third quarter of 2012.
|
•
|
Certain capital projects were canceled resulting in the write-off of project spending of
$42 million
against the Performance Materials (
$25 million
) and Electronic and Functional Materials (
$17 million
) segments.
|
2012 Restructuring Activities
In millions
|
Costs Associated with Exit or Disposal Activities
|
|
|
Severance Costs
|
|
|
Impairment of Long-Lived Assets and Other Assets
|
|
|
Total
|
|
||||
Restructuring charges recognized in the first quarter of 2012
|
$
|
150
|
|
|
$
|
113
|
|
|
$
|
94
|
|
|
$
|
357
|
|
Charges against the reserve
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
(94
|
)
|
||||
Reserve balance at March 31, 2012
|
$
|
150
|
|
|
$
|
113
|
|
|
$
|
—
|
|
|
$
|
263
|
|
Cash payments
|
(41
|
)
|
|
(17
|
)
|
|
—
|
|
|
(58
|
)
|
||||
Noncash settlements
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||
Foreign currency impact
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Reserve balance at June 30, 2012
|
$
|
95
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
$
|
191
|
|
Inventories
In millions
|
Jun 30, 2012
|
|
|
Dec 31, 2011
|
|
||
Finished goods
|
$
|
4,672
|
|
|
$
|
4,327
|
|
Work in process
|
1,931
|
|
|
1,716
|
|
||
Raw materials
|
993
|
|
|
765
|
|
||
Supplies
|
784
|
|
|
769
|
|
||
Total inventories
|
$
|
8,380
|
|
|
$
|
7,577
|
|
Goodwill
|
Electronic
and
Functional
Materials
|
|
|
Coatings
and Infra-
structure
Solutions
|
|
|
Ag
Sciences
|
|
|
Perf
Materials
|
|
|
Perf
Plastics
|
|
|
Feedstocks
and Energy
|
|
|
Total
|
|
|||||||
In millions
|
|
|
|
|
|
|
|||||||||||||||||||||
Net goodwill at Dec 31, 2011
|
$
|
4,934
|
|
|
$
|
4,041
|
|
|
$
|
1,558
|
|
|
$
|
959
|
|
|
$
|
1,375
|
|
|
$
|
63
|
|
|
$
|
12,930
|
|
Goodwill related to 2012 acquisition of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Lightscape Materials, Inc.
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||||
Foreign currency impact
|
(11
|
)
|
|
(16
|
)
|
|
—
|
|
|
(1
|
)
|
|
(9
|
)
|
|
—
|
|
|
(37
|
)
|
|||||||
Net goodwill at Jun 30, 2012
|
$
|
4,926
|
|
|
$
|
4,025
|
|
|
$
|
1,558
|
|
|
$
|
958
|
|
|
$
|
1,366
|
|
|
$
|
63
|
|
|
$
|
12,896
|
|
Other Intangible Assets
|
At June 30, 2012
|
|
At December 31, 2011
|
||||||||||||||||||||
In millions
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
|
Gross
Carrying
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
|
|
||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Licenses and intellectual property
|
$
|
1,701
|
|
|
$
|
(670
|
)
|
|
$
|
1,031
|
|
|
$
|
1,693
|
|
|
$
|
(594
|
)
|
|
$
|
1,099
|
|
Patents
|
130
|
|
|
(98
|
)
|
|
32
|
|
|
119
|
|
|
(97
|
)
|
|
22
|
|
||||||
Software
|
1,094
|
|
|
(629
|
)
|
|
465
|
|
|
1,049
|
|
|
(596
|
)
|
|
453
|
|
||||||
Trademarks
|
691
|
|
|
(257
|
)
|
|
434
|
|
|
695
|
|
|
(224
|
)
|
|
471
|
|
||||||
Customer related
|
3,652
|
|
|
(837
|
)
|
|
2,815
|
|
|
3,652
|
|
|
(730
|
)
|
|
2,922
|
|
||||||
Other
|
157
|
|
|
(114
|
)
|
|
43
|
|
|
150
|
|
|
(108
|
)
|
|
42
|
|
||||||
Total other intangible assets, finite lives
|
$
|
7,425
|
|
|
$
|
(2,605
|
)
|
|
$
|
4,820
|
|
|
$
|
7,358
|
|
|
$
|
(2,349
|
)
|
|
$
|
5,009
|
|
IPR&D
(1)
, indefinite lives
|
78
|
|
|
—
|
|
|
78
|
|
|
52
|
|
|
—
|
|
|
52
|
|
||||||
Total other intangible assets
|
$
|
7,503
|
|
|
$
|
(2,605
|
)
|
|
$
|
4,898
|
|
|
$
|
7,410
|
|
|
$
|
(2,349
|
)
|
|
$
|
5,061
|
|
Amortization Expense
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Other intangible assets, excluding software
|
$
|
122
|
|
|
$
|
125
|
|
|
$
|
244
|
|
|
$
|
248
|
|
Software, included in “Cost of sales”
|
$
|
16
|
|
|
$
|
22
|
|
|
$
|
31
|
|
|
$
|
45
|
|
Investing Results
|
Six Months Ended
|
||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||
Proceeds from sales of available-for-sale securities
|
$
|
236
|
|
|
$
|
460
|
|
Gross realized gains
|
$
|
9
|
|
|
$
|
26
|
|
Gross realized losses
|
$
|
(5
|
)
|
|
$
|
(7
|
)
|
(1)
|
Unrealized losses of 12 months or more were
less than $1 million
.
|
Fair Value of Financial Instruments
|
|||||||||||||||||||||||||||||||
|
At June 30, 2012
|
|
At December 31, 2011
|
||||||||||||||||||||||||||||
In millions
|
Cost
|
|
|
Gain
|
|
|
Loss
|
|
|
Fair
Value
|
|
|
Cost
|
|
|
Gain
|
|
|
Loss
|
|
|
Fair
Value
|
|
||||||||
Marketable securities:
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government debt
(2)
|
$
|
520
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
582
|
|
|
$
|
556
|
|
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
618
|
|
Corporate bonds
|
700
|
|
|
78
|
|
|
(1
|
)
|
|
777
|
|
|
652
|
|
|
73
|
|
|
(2
|
)
|
|
723
|
|
||||||||
Total debt securities
|
$
|
1,220
|
|
|
$
|
140
|
|
|
$
|
(1
|
)
|
|
$
|
1,359
|
|
|
$
|
1,208
|
|
|
$
|
135
|
|
|
$
|
(2
|
)
|
|
$
|
1,341
|
|
Equity securities
|
647
|
|
|
84
|
|
|
(27
|
)
|
|
704
|
|
|
646
|
|
|
57
|
|
|
(36
|
)
|
|
667
|
|
||||||||
Total marketable securities
|
$
|
1,867
|
|
|
$
|
224
|
|
|
$
|
(28
|
)
|
|
$
|
2,063
|
|
|
$
|
1,854
|
|
|
$
|
192
|
|
|
$
|
(38
|
)
|
|
$
|
2,008
|
|
Long-term debt incl. debt due within one year
(3)
|
$
|
(20,184
|
)
|
|
$
|
39
|
|
|
$
|
(3,163
|
)
|
|
$
|
(23,308
|
)
|
|
$
|
(21,059
|
)
|
|
$
|
6
|
|
|
$
|
(2,736
|
)
|
|
$
|
(23,789
|
)
|
Derivatives relating to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rates
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodities
(4)
|
$
|
—
|
|
|
$
|
22
|
|
|
$
|
(11
|
)
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
16
|
|
|
$
|
(1
|
)
|
|
$
|
15
|
|
Foreign currency
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
(28
|
)
|
|
$
|
(5
|
)
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
(17
|
)
|
|
$
|
14
|
|
Commodity
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
|
Notional Volume Unit
|
Corn
|
3.2
|
|
|
0.6
|
|
|
million bushels
|
Crude Oil
|
0.6
|
|
|
0.2
|
|
|
million barrels
|
Ethane
|
2.6
|
|
|
1.6
|
|
|
million barrels
|
Naphtha
|
—
|
|
|
90.0
|
|
|
kilotons
|
Natural Gas
|
119.2
|
|
|
7.4
|
|
|
million million British thermal units
|
Ethane / Propane Mix
|
0.1
|
|
|
0.2
|
|
|
million barrels
|
Soybeans
|
1.8
|
|
|
0.3
|
|
|
million bushels
|
Commodity
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
|
Notional Volume Unit
|
Ethane
|
1.5
|
|
|
2.1
|
|
|
million barrels
|
Naphtha
|
45.0
|
|
|
82.5
|
|
|
kilotons
|
Natural Gas
|
1.0
|
|
|
4.6
|
|
|
million million British thermal units
|
Fair Value of Derivative Instruments
In millions
|
Balance Sheet Classification
|
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Asset Derivatives
|
|
|
|
|
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
||||
Interest rates
|
Other current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodities
|
Other current assets
|
|
11
|
|
|
5
|
|
||
Foreign currency
|
Accounts and notes receivable – Other
|
|
4
|
|
|
9
|
|
||
Total derivatives designated as hedges
|
|
|
$
|
15
|
|
|
$
|
14
|
|
Derivatives not designated as hedges:
|
|
|
|
|
|
||||
Interest rates
|
Other current assets
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodities
|
Other current assets
|
|
14
|
|
|
19
|
|
||
Foreign currency
|
Accounts and notes receivable – Other
|
|
37
|
|
|
66
|
|
||
Total derivatives not designated as hedges
|
|
|
$
|
51
|
|
|
$
|
85
|
|
Total asset derivatives
|
|
|
$
|
66
|
|
|
$
|
99
|
|
Liability Derivatives
|
|
|
|
|
|
||||
Derivatives designated as hedges:
|
|
|
|
|
|
||||
Interest rates
|
Accounts payable – Other
|
|
$
|
6
|
|
|
$
|
—
|
|
Commodities
|
Accounts payable – Other
|
|
33
|
|
|
11
|
|
||
Foreign currency
|
Accounts payable – Other
|
|
1
|
|
|
8
|
|
||
Total derivatives designated as hedges
|
|
|
$
|
40
|
|
|
$
|
19
|
|
Derivatives not designated as hedges:
|
|
|
|
|
|
||||
Interest rates
|
Accounts payable – Other
|
|
$
|
—
|
|
|
$
|
—
|
|
Commodities
|
Accounts payable – Other
|
|
11
|
|
|
9
|
|
||
Foreign currency
|
Accounts payable – Other
|
|
45
|
|
|
53
|
|
||
Total derivatives not designated as hedges
|
|
|
$
|
56
|
|
|
$
|
62
|
|
Total liability derivatives
|
|
|
$
|
96
|
|
|
$
|
81
|
|
Basis of Fair Value Measurements
on a Recurring Basis
at June 30, 2012
In millions
|
Quoted Prices
in Active
Markets for
Identical Items
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Counterparty
and Cash
Collateral
Netting
(1)
|
|
|
Total
|
|
|||||
Assets at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interests in trade accounts receivable conduits
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,220
|
|
|
$
|
—
|
|
|
$
|
1,220
|
|
Equity securities
(3)
|
671
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
704
|
|
|||||
Debt securities:
(3)
|
|
|
|
|
|
|
|
|
|
||||||||||
Government debt
(4)
|
—
|
|
|
582
|
|
|
—
|
|
|
—
|
|
|
582
|
|
|||||
Corporate bonds
|
—
|
|
|
777
|
|
|
—
|
|
|
—
|
|
|
777
|
|
|||||
Derivatives relating to:
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodities
|
11
|
|
|
14
|
|
|
—
|
|
|
(3
|
)
|
|
22
|
|
|||||
Foreign currency
|
—
|
|
|
41
|
|
|
—
|
|
|
(18
|
)
|
|
23
|
|
|||||
Total assets at fair value
|
$
|
682
|
|
|
$
|
1,447
|
|
|
$
|
1,220
|
|
|
$
|
(21
|
)
|
|
$
|
3,328
|
|
Liabilities at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(6)
|
$
|
—
|
|
|
$
|
23,308
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,308
|
|
Derivatives relating to:
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rates
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|||||
Commodities
|
27
|
|
|
17
|
|
|
—
|
|
|
(33
|
)
|
|
11
|
|
|||||
Foreign currency
|
—
|
|
|
46
|
|
|
—
|
|
|
(18
|
)
|
|
28
|
|
|||||
Total liabilities at fair value
|
$
|
27
|
|
|
$
|
23,377
|
|
|
$
|
—
|
|
|
$
|
(51
|
)
|
|
$
|
23,353
|
|
Basis of Fair Value Measurements
on a Recurring Basis
at December 31, 2011
In millions
|
Quoted Prices
in Active
Markets for
Identical Items
(Level 1)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
|
Counterparty
and Cash
Collateral
Netting
(1)
|
|
|
Total
|
|
|||||
Assets at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interests in trade accounts receivable conduits
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,141
|
|
|
$
|
—
|
|
|
$
|
1,141
|
|
Equity securities
(3)
|
634
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
667
|
|
|||||
Debt securities:
(3)
|
|
|
|
|
|
|
|
|
|
||||||||||
Government debt
(4)
|
—
|
|
|
618
|
|
|
—
|
|
|
—
|
|
|
618
|
|
|||||
Corporate bonds
|
—
|
|
|
723
|
|
|
—
|
|
|
—
|
|
|
723
|
|
|||||
Derivatives relating to:
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodities
|
10
|
|
|
14
|
|
|
—
|
|
|
(8
|
)
|
|
16
|
|
|||||
Foreign currency
|
—
|
|
|
75
|
|
|
—
|
|
|
(44
|
)
|
|
31
|
|
|||||
Total assets at fair value
|
$
|
644
|
|
|
$
|
1,463
|
|
|
$
|
1,141
|
|
|
$
|
(52
|
)
|
|
$
|
3,196
|
|
Liabilities at fair value:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(6)
|
$
|
—
|
|
|
$
|
23,789
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,789
|
|
Derivatives relating to:
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodities
|
13
|
|
|
7
|
|
|
—
|
|
|
(19
|
)
|
|
1
|
|
|||||
Foreign currency
|
—
|
|
|
61
|
|
|
—
|
|
|
(44
|
)
|
|
17
|
|
|||||
Total liabilities at fair value
|
$
|
13
|
|
|
$
|
23,857
|
|
|
$
|
—
|
|
|
$
|
(63
|
)
|
|
$
|
23,807
|
|
(1)
|
Cash collateral is classified as “Accounts and notes receivable – Other” in the consolidated balance sheets. Amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
|
(2)
|
Included in “Accounts and notes receivable – Other” in the consolidated balance sheets. See Note
J
for additional information on transfers of financial assets.
|
(3)
|
The Company’s investments in equity and debt securities are primarily classified as available-for-sale and are included in “Other investments” in the consolidated balance sheets.
|
(4)
|
U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.
|
(5)
|
See Note
G
for the classification of derivatives in the consolidated balance sheets.
|
(6)
|
See Note
G
for information on fair value adjustments to long-term debt, included at cost in the consolidated balance sheets.
|
Fair Value Measurements Using Level 3 Inputs
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Interests Held in Trade Receivable Conduits
(1)
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Balance at beginning of period
|
$
|
1,429
|
|
|
$
|
1,343
|
|
|
$
|
1,141
|
|
|
$
|
1,267
|
|
Gain (Loss) included in earnings
(2)
|
1
|
|
|
3
|
|
|
(2
|
)
|
|
(5
|
)
|
||||
Purchases
|
100
|
|
|
277
|
|
|
2,053
|
|
|
1,351
|
|
||||
Settlements
|
(310
|
)
|
|
(234
|
)
|
|
(1,972
|
)
|
|
(1,224
|
)
|
||||
Balance at June 30
|
$
|
1,220
|
|
|
$
|
1,389
|
|
|
$
|
1,220
|
|
|
$
|
1,389
|
|
(1)
|
Included in “Accounts and notes receivable – Other” in the consolidated balance sheets.
|
(2)
|
Included in “Selling, general and administrative expenses” in the consolidated statements of income.
|
Basis of Fair Value Measurements
on a Nonrecurring Basis
at June 30, 2012
|
|
Significant
Other Unobservable Inputs |
|
|
Total
Losses
|
|
||
In millions
|
|
(Level 3)
|
|
|
2012
|
|
||
Assets at fair value:
|
|
|
|
|
||||
Long-lived assets and other assets
|
|
$
|
—
|
|
|
$
|
(94
|
)
|
Receivables for Asbestos-Related Costs
In millions
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Receivables for defense costs – carriers with settlement agreements
|
$
|
19
|
|
|
$
|
20
|
|
Receivables for resolution costs – carriers with settlement agreements
|
154
|
|
|
158
|
|
||
Receivables for insurance recoveries – carriers without settlement agreements
|
40
|
|
|
40
|
|
||
Total
|
$
|
213
|
|
|
$
|
218
|
|
Fixed and Determinable Portion of Take-or-Pay and
Throughput Obligations at December 31, 2011
In millions
|
|||
2012
|
$
|
2,968
|
|
2013
|
2,964
|
|
|
2014
|
2,371
|
|
|
2015
|
1,693
|
|
|
2016
|
1,426
|
|
|
2017 and beyond
|
9,074
|
|
|
Total
|
$
|
20,496
|
|
Guarantees at June 30, 2012
In millions
|
Final
Expiration
|
|
Maximum Future
Payments
(1)
|
|
|
Recorded
Liability
|
|
||
Guarantees
|
2020
|
|
$
|
1,033
|
|
|
$
|
22
|
|
Residual value guarantees
(2)
|
2021
|
|
570
|
|
|
31
|
|
||
Total guarantees
|
|
|
$
|
1,603
|
|
|
$
|
53
|
|
(1)
|
The Company was indemnified by a third party for
$48 million
if required to perform under a
$95 million
guarantee.
|
(2)
|
Does not include the residual value guarantee related to the Company's variable interest in an owner trust that was consolidated in the first quarter of 2010; see Note L.
|
Guarantees at December 31, 2011
In millions
|
Final
Expiration
|
|
Maximum Future
Payments
(1)
|
|
|
Recorded
Liability
|
|
||
Guarantees
|
2020
|
|
$
|
587
|
|
|
$
|
21
|
|
Residual value guarantees
(2)
|
2021
|
|
526
|
|
|
24
|
|
||
Total guarantees
|
|
|
$
|
1,113
|
|
|
$
|
45
|
|
(1)
|
The Company was indemnified by a third party for
$50 million
if required to perform under a
$100 million
guarantee.
|
(2)
|
Does not include the residual value guarantee related to the Company's variable interest in an owner trust that was consolidated in the first quarter of 2010; see Note L.
|
Interests Held
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
In millions
|
|
||||||
Carrying value of interests held
|
$
|
1,220
|
|
|
$
|
1,141
|
|
Percentage of anticipated credit losses
|
1.06
|
%
|
|
1.22
|
%
|
||
Impact to carrying value - 10% adverse change
|
$
|
2
|
|
|
$
|
2
|
|
Impact to carrying value - 20% adverse change
|
$
|
5
|
|
|
$
|
4
|
|
Cash Proceeds
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sale of receivables
|
$
|
41
|
|
|
$
|
2
|
|
|
$
|
57
|
|
|
$
|
3
|
|
Collections reinvested in revolving receivables
|
$
|
7,200
|
|
|
$
|
7,349
|
|
|
$
|
13,057
|
|
|
$
|
13,777
|
|
Interests in conduits
(1)
|
$
|
310
|
|
|
$
|
234
|
|
|
$
|
1,972
|
|
|
$
|
1,224
|
|
(1)
|
Presented in "Operating Activities" in the consolidated statements of cash flows.
|
Trade Accounts Receivable Sold
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
In millions
|
|
||||||
Delinquencies on sold receivables still outstanding
|
$
|
121
|
|
|
$
|
155
|
|
Trade accounts receivable outstanding and derecognized
|
$
|
2,538
|
|
|
$
|
2,385
|
|
Cash Proceeds
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sale of participating interests
|
$
|
16
|
|
|
$
|
41
|
|
|
$
|
32
|
|
|
$
|
87
|
|
Collections reinvested in revolving receivables
|
$
|
16
|
|
|
$
|
34
|
|
|
$
|
29
|
|
|
$
|
79
|
|
Trade Accounts Receivable
In millions
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Derecognized from the consolidated balance sheets
|
$
|
13
|
|
|
$
|
13
|
|
Outstanding in the consolidated balance sheets
|
297
|
|
|
303
|
|
||
Total accounts receivable in select Asia Pacific entities
|
$
|
310
|
|
|
$
|
316
|
|
Notes Payable
In millions
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Notes payable to banks
|
$
|
375
|
|
|
$
|
421
|
|
Notes payable to related companies
|
88
|
|
|
92
|
|
||
Notes payable trade
|
10
|
|
|
28
|
|
||
Total notes payable
|
$
|
473
|
|
|
$
|
541
|
|
Period-end average interest rates
|
2.97
|
%
|
|
3.06
|
%
|
Long-Term Debt
In millions
|
2012
Average
Rate
|
|
|
Jun 30,
2012 |
|
|
2011
Average
Rate
|
|
|
Dec 31,
2011 |
|
||
Promissory notes and debentures:
|
|
|
|
|
|
|
|
||||||
Final maturity 2012
|
6.01
|
%
|
|
$
|
904
|
|
|
5.35
|
%
|
|
$
|
2,158
|
|
Final maturity 2013
|
6.03
|
%
|
|
402
|
|
|
6.10
|
%
|
|
395
|
|
||
Final maturity 2014
|
7.23
|
%
|
|
2,128
|
|
|
7.28
|
%
|
|
2,103
|
|
||
Final maturity 2015
|
5.85
|
%
|
|
1,281
|
|
|
5.92
|
%
|
|
1,257
|
|
||
Final maturity 2016
|
2.55
|
%
|
|
780
|
|
|
2.57
|
%
|
|
757
|
|
||
Final maturity 2017
|
5.92
|
%
|
|
881
|
|
|
6.03
|
%
|
|
857
|
|
||
Final maturity 2018 and thereafter
|
6.53
|
%
|
|
10,386
|
|
|
6.55
|
%
|
|
10,305
|
|
||
Other facilities:
|
|
|
|
|
|
|
|
||||||
U.S. dollar loans, various rates and maturities
|
2.52
|
%
|
|
314
|
|
|
2.37
|
%
|
|
232
|
|
||
Foreign currency loans, various rates and maturities
|
3.61
|
%
|
|
1,635
|
|
|
3.52
|
%
|
|
1,609
|
|
||
Medium-term notes, varying maturities through 2022
|
4.44
|
%
|
|
1,112
|
|
|
4.76
|
%
|
|
902
|
|
||
Pollution control/industrial revenue bonds, varying maturities through 2038
|
5.67
|
%
|
|
717
|
|
|
5.70
|
%
|
|
860
|
|
||
Capital lease obligations
|
—
|
|
|
16
|
|
|
—
|
|
|
17
|
|
||
Unamortized debt discount
|
—
|
|
|
(372
|
)
|
|
—
|
|
|
(393
|
)
|
||
Long-term debt due within one year
|
—
|
|
|
(1,880
|
)
|
|
—
|
|
|
(2,749
|
)
|
||
Long-term debt
|
—
|
|
|
$
|
18,304
|
|
|
—
|
|
|
$
|
18,310
|
|
Annual Installments on Long-Term Debt
For Next Five Years at June 30, 2012
In millions
|
|||
2012
|
$
|
1,439
|
|
2013
|
$
|
714
|
|
2014
|
$
|
2,418
|
|
2015
|
$
|
1,512
|
|
2016
|
$
|
1,028
|
|
2017
|
$
|
1,172
|
|
(a)
|
the obligation to maintain the ratio of the Company’s consolidated indebtedness to consolidated capitalization at no greater than
0.65
to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement dated October 18, 2011 equals or exceeds
$500 million
,
|
(b)
|
a default if the Company or an applicable subsidiary fails to make any payment on indebtedness of
$50 million
or more when due, or any other default under the applicable agreement permits or results in the acceleration of
$200 million
or more of principal, and
|
(c)
|
a default if the Company or any applicable subsidiary fails to discharge or stay within 30 days after the entry of a final judgment of more than
$200 million
.
|
Assets and Liabilities of Consolidated VIEs
In millions
|
Jun 30,
2012 |
|
|
Dec 31, 2011
(1)
|
|
||
Cash and cash equivalents
(2)
|
$
|
174
|
|
|
$
|
170
|
|
Other current assets
|
138
|
|
|
104
|
|
||
Property
|
2,324
|
|
|
2,169
|
|
||
Other noncurrent assets
|
151
|
|
|
151
|
|
||
Total assets
(3)
|
$
|
2,787
|
|
|
$
|
2,594
|
|
Current liabilities (nonrecourse 2012: $230; 2011: $226)
|
$
|
230
|
|
|
$
|
226
|
|
Long-term debt (nonrecourse 2012: $1,308; 2011: $1,138)
|
1,654
|
|
|
1,484
|
|
||
Other noncurrent liabilities (nonrecourse 2012: $93; 2011: $86)
|
93
|
|
|
86
|
|
||
Total liabilities
|
$
|
1,977
|
|
|
$
|
1,796
|
|
(1)
|
December 31, 2011 values do not include assets and liabilities attributable to a seed production joint venture located in the United States that became a VIE in the first quarter of 2012.
|
(2)
|
Included
$5 million
at
June 30, 2012
(
$3 million
at
December 31, 2011
) specifically restricted for the construction of a manufacturing facility.
|
(3)
|
All assets were restricted at
June 30, 2012
and
December 31, 2011
.
|
Net Periodic Benefit Cost for All Significant Plans
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Defined Benefit Pension Plans:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
95
|
|
|
$
|
86
|
|
|
$
|
190
|
|
|
$
|
172
|
|
Interest cost
|
274
|
|
|
282
|
|
|
548
|
|
|
560
|
|
||||
Expected return on plan assets
|
(316
|
)
|
|
(326
|
)
|
|
(632
|
)
|
|
(649
|
)
|
||||
Amortization of prior service cost
|
6
|
|
|
7
|
|
|
13
|
|
|
14
|
|
||||
Amortization of net loss
|
130
|
|
|
94
|
|
|
260
|
|
|
186
|
|
||||
Net periodic benefit cost
|
$
|
189
|
|
|
$
|
143
|
|
|
$
|
379
|
|
|
$
|
283
|
|
|
|
|
|
|
|
|
|
||||||||
Other Postretirement Benefits:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
6
|
|
Interest cost
|
23
|
|
|
25
|
|
|
46
|
|
|
50
|
|
||||
Expected return on plan assets
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Amortization of prior service credit
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
||||
Net periodic benefit cost
|
$
|
26
|
|
|
$
|
27
|
|
|
$
|
52
|
|
|
$
|
54
|
|
•
|
12.8 million
stock options with a weighted-average exercise price of
$34.00
per share and a weighted-average fair value of
$9.38
per share;
|
•
|
3.5 million
shares of deferred stock with a weighted-average fair value of
$34.02
per share; and
|
•
|
1.2 million
shares of performance deferred stock with a weighted-average fair value of
$43.52
per share.
|
•
|
34,650
shares of restricted stock with a weighted-average fair value of
$33.69
per share.
|
Net Income
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30, 2011
|
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net income
|
$
|
740
|
|
|
$
|
1,077
|
|
|
$
|
1,260
|
|
|
$
|
1,798
|
|
Net income attributable to noncontrolling interests
|
(6
|
)
|
|
(10
|
)
|
|
(29
|
)
|
|
(21
|
)
|
||||
Net income attributable to The Dow Chemical Company
|
$
|
734
|
|
|
$
|
1,067
|
|
|
$
|
1,231
|
|
|
$
|
1,777
|
|
Preferred stock dividends
|
(85
|
)
|
|
(85
|
)
|
|
(170
|
)
|
|
(170
|
)
|
||||
Net income attributable to participating securities
(1)
|
(6
|
)
|
|
(12
|
)
|
|
(10
|
)
|
|
(20
|
)
|
||||
Net income attributable to common stockholders
|
$
|
643
|
|
|
$
|
970
|
|
|
$
|
1,051
|
|
|
$
|
1,587
|
|
Earnings Per Share Calculations - Basic
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Dollars per share
|
Jun 30,
2012 |
|
|
Jun 30, 2011
|
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net income
|
$
|
0.63
|
|
|
$
|
0.94
|
|
|
$
|
1.08
|
|
|
$
|
1.57
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||
Net income attributable to The Dow Chemical Company
|
$
|
0.63
|
|
|
$
|
0.93
|
|
|
$
|
1.06
|
|
|
$
|
1.55
|
|
Preferred stock dividends
|
(0.07
|
)
|
|
(0.08
|
)
|
|
(0.15
|
)
|
|
(0.15
|
)
|
||||
Net income attributable to participating securities
(1)
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
||||
Net income attributable to common stockholders
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.39
|
|
Earnings Per Share Calculations - Diluted
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Dollars per share
|
Jun 30,
2012 |
|
|
Jun 30, 2011
|
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net income
|
$
|
0.63
|
|
|
$
|
0.93
|
|
|
$
|
1.07
|
|
|
$
|
1.56
|
|
Net income attributable to noncontrolling interests
|
—
|
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||
Net income attributable to The Dow Chemical Company
|
$
|
0.63
|
|
|
$
|
0.92
|
|
|
$
|
1.05
|
|
|
$
|
1.54
|
|
Preferred stock dividends
(2)
|
(0.07
|
)
|
|
(0.07
|
)
|
|
(0.14
|
)
|
|
(0.15
|
)
|
||||
Net income attributable to participating securities
(1)
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
||||
Net income attributable to common stockholders
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.37
|
|
Shares in millions
|
|
|
|
|
|
|
|
||||
Weighted-average common shares - basic
|
1,169.7
|
|
|
1,149.6
|
|
|
1,165.3
|
|
|
1,144.6
|
|
Plus dilutive effect of stock options and awards
|
6.9
|
|
|
11.3
|
|
|
7.4
|
|
|
11.6
|
|
Weighted-average common shares - diluted
|
1,176.6
|
|
|
1,160.9
|
|
|
1,172.7
|
|
|
1,156.2
|
|
Stock options and deferred stock awards excluded from EPS calculations
(3)
|
54.4
|
|
|
42.8
|
|
|
51.3
|
|
|
43.0
|
|
Conversion of preferred stock excluded from EPS calculations
(4)
|
96.8
|
|
|
96.8
|
|
|
96.8
|
|
|
96.8
|
|
(1)
|
Accounting Standards Codification Topic 260, "Earnings per Share," requires enterprises with participating securities to use the two-class method to calculate earnings per share and to report the most dilutive earnings per share amount. Deferred stock awards are considered participating securities due to Dow's practice of paying dividend equivalents on unvested shares.
|
(2)
|
Preferred stock dividends were not added back in the calculation of diluted earnings per share because the effect of adding them back would have been antidilutive.
|
(3)
|
These outstanding options to purchase shares of common stock and deferred stock awards were excluded from the calculation of diluted earnings per share because the effect of including them would have been antidilutive.
|
(4)
|
Conversion of the 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 because the effect of including them would have been antidilutive.
|
Accumulated Other Comprehensive Income (Loss)
|
Six Months Ended
|
||||||
In millions
|
Jun 30, 2012
|
|
|
Jun 30,
2011 |
|
||
Unrealized Gains on Investments at beginning of year
|
$
|
78
|
|
|
$
|
111
|
|
Net change in unrealized gains
|
32
|
|
|
6
|
|
||
Balance at end of period
|
$
|
110
|
|
|
$
|
117
|
|
Cumulative Translation Adjustments at beginning of year
|
72
|
|
|
367
|
|
||
Translation adjustments
|
(174
|
)
|
|
600
|
|
||
Balance at end of period
|
$
|
(102
|
)
|
|
$
|
967
|
|
Pension and Other Postretirement Benefit Plans at beginning of year
|
(6,134
|
)
|
|
(4,871
|
)
|
||
Adjustments to pension and other postretirement benefit plans
|
182
|
|
|
141
|
|
||
Balance at end of period
|
$
|
(5,952
|
)
|
|
$
|
(4,730
|
)
|
Accumulated Derivative Loss at beginning of year
|
(12
|
)
|
|
(6
|
)
|
||
Net hedging results
|
(21
|
)
|
|
(2
|
)
|
||
Reclassification to earnings
|
10
|
|
|
7
|
|
||
Balance at end of period
|
$
|
(23
|
)
|
|
$
|
(1
|
)
|
Total accumulated other comprehensive loss
|
$
|
(5,967
|
)
|
|
$
|
(3,647
|
)
|
•
|
Dow Elastomers
|
•
|
Dow Electrical and Telecommunications
|
•
|
Dow Performance Packaging
|
•
|
Dow Hygiene and Medical
|
•
|
Products
: AFFINITY™ polyolefin elastomers; AFFINITY™ GA polyolefin plastomers; ENGAGE™ polyolefin elastomers; ENGAGE™ XLT polyolefin elastomers; INFUSE™ olefin block copolymers; NORDEL™ hydrocarbon rubber; VERSIFY™ plastomers and elastomers
|
•
|
Products:
ECOLIBRIUM™ bio-based plasticizers; ENDURANCE™ family of semiconductive and insulation material for power cable insulation; SI-LINK™ moisture crosslinkable polyethylene-based wire and cable insulation compounds; UNIGARD™ flame retardant compound for specialty wire and cable applications
|
•
|
Products:
ADCOTE™ solvent-based laminating adhesives and heat seal coatings; AFFINITY™ polyolefin elastomers; AMPLIFY™ and AMPLIFY™ TY functional polymers; AQUA-LAM™ water-based polyurethane dispersions; ATTANE™ ultra low density polyethylene (ULDPE) copolymers; ATTANE™ ULDPE resins; CONTINUUM™ bimodal polyethylene resins; COSEAL™ cold-seal adhesives; DOW™ adhesive film; DOW™ low density polyethylene; DOW™ medical packaging film; DOW™ very low density polyethylene; DOWLEX™ polyethylene resins; DOWLEX™ NG polyethylene resins; ELITE™ enhanced polyethylene; ELITE™ AT enhanced polyethylene; ENGAGE™ polyolefin elastomers; ENLIGHT™ polyolefin encapsulant films;
|
•
|
Products:
ACRYSOL™ additives; AFFINITY™ polyolefin elastomers; ASPUN™ fiber grade resins; ATTANE™ ultra low density polyethylene resins; DOW™ HEALTH+™ resins; DOWLEX™ polyethylene resins; DOW™ low density polyethylene resins; ELITE™ enhanced polyethylene resins; ENGAGE™ polyolefin elastomers; HYPOD™ polyolefin dispersions; INFUSE™ olefin block copolymers; PRIMAL™ acrylic binders;
|
Operating Segments
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales by operating segment
|
|
|
|
|
|
|
|
||||||||
Electronic and Functional Materials
|
$
|
1,151
|
|
|
$
|
1,197
|
|
|
$
|
2,272
|
|
|
$
|
2,331
|
|
Coatings and Infrastructure Solutions
|
1,888
|
|
|
2,002
|
|
|
3,591
|
|
|
3,734
|
|
||||
Agricultural Sciences
|
1,676
|
|
|
1,500
|
|
|
3,514
|
|
|
3,106
|
|
||||
Performance Materials
|
3,369
|
|
|
3,858
|
|
|
6,842
|
|
|
7,399
|
|
||||
Performance Plastics
|
3,711
|
|
|
4,441
|
|
|
7,302
|
|
|
8,484
|
|
||||
Feedstocks and Energy
|
2,657
|
|
|
2,963
|
|
|
5,592
|
|
|
5,551
|
|
||||
Corporate
|
61
|
|
|
85
|
|
|
119
|
|
|
174
|
|
||||
Total
|
$
|
14,513
|
|
|
$
|
16,046
|
|
|
$
|
29,232
|
|
|
$
|
30,779
|
|
EBITDA
(1)
by operating segment
|
|
|
|
|
|
|
|
||||||||
Electronic and Functional Materials
|
$
|
287
|
|
|
$
|
287
|
|
|
$
|
530
|
|
|
$
|
544
|
|
Coatings and Infrastructure Solutions
|
337
|
|
|
368
|
|
|
541
|
|
|
618
|
|
||||
Agricultural Sciences
|
307
|
|
|
287
|
|
|
758
|
|
|
693
|
|
||||
Performance Materials
|
350
|
|
|
481
|
|
|
682
|
|
|
1,045
|
|
||||
Performance Plastics
|
760
|
|
|
958
|
|
|
1,478
|
|
|
1,939
|
|
||||
Feedstocks and Energy
|
134
|
|
|
254
|
|
|
332
|
|
|
502
|
|
||||
Corporate
|
(215
|
)
|
|
(303
|
)
|
|
(653
|
)
|
|
(1,067
|
)
|
||||
Total
|
$
|
1,960
|
|
|
$
|
2,332
|
|
|
$
|
3,668
|
|
|
$
|
4,274
|
|
Equity in earnings (losses) of nonconsolidated affiliates by operating segment (included in EBITDA)
|
|
|
|||||||||||||
Electronic and Functional Materials
|
$
|
35
|
|
|
$
|
25
|
|
|
$
|
54
|
|
|
$
|
49
|
|
Coatings and Infrastructure Solutions
|
45
|
|
|
79
|
|
|
67
|
|
|
147
|
|
||||
Agricultural Sciences
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Performance Materials
|
(20
|
)
|
|
(4
|
)
|
|
(37
|
)
|
|
(9
|
)
|
||||
Performance Plastics
|
39
|
|
|
59
|
|
|
73
|
|
|
121
|
|
||||
Feedstocks and Energy
|
52
|
|
|
138
|
|
|
177
|
|
|
293
|
|
||||
Corporate
|
(2
|
)
|
|
(6
|
)
|
|
(17
|
)
|
|
(15
|
)
|
||||
Total
|
$
|
148
|
|
|
$
|
291
|
|
|
$
|
317
|
|
|
$
|
589
|
|
(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 “Income Before Income Taxes” is provided below.
|
Reconciliation of EBITDA to “Income Before Income Taxes”
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
EBITDA
|
$
|
1,960
|
|
|
$
|
2,332
|
|
|
$
|
3,668
|
|
|
$
|
4,274
|
|
- Depreciation and amortization
|
674
|
|
|
697
|
|
|
1,353
|
|
|
1,428
|
|
||||
+ Interest income
|
10
|
|
|
10
|
|
|
16
|
|
|
17
|
|
||||
- Interest expense and amortization of debt discount
|
312
|
|
|
328
|
|
|
641
|
|
|
705
|
|
||||
Income Before Income Taxes
|
$
|
984
|
|
|
$
|
1,317
|
|
|
$
|
1,690
|
|
|
$
|
2,158
|
|
Geographic Areas
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales by geographic area
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
4,785
|
|
|
$
|
5,238
|
|
|
$
|
9,635
|
|
|
$
|
10,020
|
|
Europe, Middle East and Africa
|
4,867
|
|
|
5,713
|
|
|
10,234
|
|
|
11,071
|
|
||||
Rest of World
|
4,861
|
|
|
5,095
|
|
|
9,363
|
|
|
9,688
|
|
||||
Total
|
$
|
14,513
|
|
|
$
|
16,046
|
|
|
$
|
29,232
|
|
|
$
|
30,779
|
|
•
|
The Company reported sales in the
second
quarter of
2012
of
$14.5 billion
, down
10 percent
from
$16.0 billion
in the
second
quarter of
2011
. The sales decline was led by Europe, Middle East, and Africa ("EMEA"), which decreased
|
•
|
Price was down
5 percent
compared with the same period last year, impacted by unfavorable currency which contributed to more than half of the price decrease. Price declines were reported in all geographic areas and all operating segments, except Agricultural Sciences (up 2 percent).
|
•
|
Volume was down
5 percent
as increasingly volatile economic conditions and customer de-stocking occurred throughout most value chains. Significant gains were reported in Agricultural Sciences (up 10 percent), driven by healthy agricultural market fundamentals. Excluding recent divestitures,
(1)
volume declined
1 percent
.
|
•
|
Purchased feedstock and energy costs, which account for more than one-third of Dow’s total costs, decreased 17 percent or nearly $1.0 billion compared with the
second
quarter of
2011
. The decrease in these costs was primarily due to lower condensate and naphtha prices in Europe and a decrease in feedstock and energy prices in the United States due to increased supply of shale gas and natural gas liquids.
|
•
|
Research and development expenses decreased slightly in the second quarter of 2012 compared with the second quarter of 2011, as the Company's spending on strategic growth initiatives, led by Electronic and Functional Materials and Agricultural Sciences, was more than offset by lower performance-based compensation costs. Selling, general and administrative expenses decreased $21 million in the second quarter of 2012 compared with the same period last year, primarily due to lower performance-based compensation costs.
|
•
|
Equity earnings were
$148 million
in the
second
quarter of
2012
, down $143 million from
$291 million
in the
second
quarter of 2011. The decline was primarily due to planned maintenance turnarounds at MEGlobal, as well as ongoing silicon value chain weakness impacting Dow Corning Corporation ("Dow Corning").
|
•
|
The Company announced on April 19, 2012 that it will build a new world-scale ethylene production facility in Freeport, Texas, part of a plan to connect its U.S. operations with cost-advantaged feedstocks available from increasing supplies of low-cost U.S. shale gas. The new ethylene production unit is expected to start-up in 2017 and is part of a $4 billion investment in ethylene and propylene production capabilities in the U.S. Gulf Coast region.
|
(1)
|
Excludes sales of the Polypropylene business divested on September 30, 2011 and sales of Dow Haltermann divested during 2011.
|
•
|
In addition to the new ethylene production facility, the Company has commenced engineering work on a new on-purpose propylene facility located in Freeport, Texas. The new propylene production unit will capitalize on the availability of cost-advantaged feedstocks in the United States. The new propylene production unit is expected to start up in 2015.
|
•
|
On May 24, 2012, the International Court of Arbitration of the International Chamber of Commerce ("ICC") released its findings in the arbitration case between the Company and Petrochemical Industries Company of Kuwait ("PIC") related to the K-Dow transaction. The ICC award holds that PIC was liable, and awards damages to Dow of $2.16 billion, not including interest and arbitration costs. See Other Matters in Management's Discussion and Analysis of Financial Condition and Results of Operations; and Note
I
to the Consolidated Financial Statements for additional information on the K-Dow Matter.
|
•
|
On June 29, 2012, the Company, along with Aksa Akrilik Kimya Sanayii A.S., formed DowAksa Advanced Composites Holding BV, a joint venture that will manufacture and commercialize carbon fiber and derivatives.
|
Selected Financial Data
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions, except per share amounts
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Net sales
|
$
|
14,513
|
|
|
$
|
16,046
|
|
|
$
|
29,232
|
|
|
$
|
30,779
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
$
|
12,200
|
|
|
$
|
13,551
|
|
|
$
|
24,485
|
|
|
$
|
25,668
|
|
Percent of net sales
|
84.1
|
%
|
|
84.5
|
%
|
|
83.8
|
%
|
|
83.4
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Research and development expenses
|
$
|
406
|
|
|
$
|
411
|
|
|
$
|
811
|
|
|
$
|
811
|
|
Percent of net sales
|
2.8
|
%
|
|
2.6
|
%
|
|
2.8
|
%
|
|
2.6
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
$
|
674
|
|
|
$
|
695
|
|
|
$
|
1,381
|
|
|
$
|
1,395
|
|
Percent of net sales
|
4.6
|
%
|
|
4.3
|
%
|
|
4.7
|
%
|
|
4.5
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Effective tax rate
|
24.8
|
%
|
|
18.2
|
%
|
|
25.4
|
%
|
|
16.7
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income available for common stockholders
|
$
|
649
|
|
|
$
|
982
|
|
|
$
|
1,061
|
|
|
$
|
1,607
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share – basic
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.39
|
|
Earnings per common share – diluted
|
$
|
0.55
|
|
|
$
|
0.84
|
|
|
$
|
0.90
|
|
|
$
|
1.37
|
|
|
|
|
|
|
|
|
|
||||||||
Operating rate percentage
|
78
|
%
|
|
84
|
%
|
|
81
|
%
|
|
83
|
%
|
Certain Items Impacting Results
|
Pretax
Impact
(1)
|
|
Impact on
Net Income
(2)
|
|
Impact on
EPS
(3)
|
||||||||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||||||||
In millions, except per share amounts
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||||
Loss on early extinguishment of debt
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
Total
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
Certain Items Impacting Results
|
Pretax
Impact
(1)
|
|
Impact on
Net Income
(2)
|
|
Impact on
EPS
(3)
|
||||||||||||||||||
|
Six Months Ended
|
|
Six Months Ended
|
|
Six Months Ended
|
||||||||||||||||||
In millions, except per share amounts
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||||
Restructuring charges
|
$
|
(357
|
)
|
|
$
|
—
|
|
|
$
|
(287
|
)
|
|
$
|
—
|
|
|
$
|
(0.25
|
)
|
|
$
|
—
|
|
Acquisition-related integration expenses
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
(0.02
|
)
|
||||||
Loss on early extinguishment of debt
|
(24
|
)
|
|
(482
|
)
|
|
(15
|
)
|
|
(314
|
)
|
|
(0.01
|
)
|
|
(0.27
|
)
|
||||||
Total
|
$
|
(381
|
)
|
|
$
|
(513
|
)
|
|
$
|
(302
|
)
|
|
$
|
(334
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.29
|
)
|
(1)
|
Impact on “Income Before Income Taxes.”
|
(2)
|
Impact on “Net Income Attributable to The Dow Chemical Company.”
|
(3)
|
Impact on “Earnings per common share – diluted.”
|
Electronic and Functional Materials
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30, 2012
|
|
|
Jun 30, 2011
|
|
|
Jun 30, 2012
|
|
|
Jun 30, 2011
|
|
||||
Sales
|
$
|
1,151
|
|
|
$
|
1,197
|
|
|
$
|
2,272
|
|
|
$
|
2,331
|
|
Price change from comparative period
|
(2
|
)%
|
|
N/A
|
|
|
(1
|
)%
|
|
N/A
|
|
||||
Volume change from comparative period
|
(2
|
)%
|
|
N/A
|
|
|
(2
|
)%
|
|
N/A
|
|
||||
Equity earnings
|
$
|
35
|
|
|
$
|
25
|
|
|
$
|
54
|
|
|
$
|
49
|
|
EBITDA
|
$
|
287
|
|
|
$
|
287
|
|
|
$
|
530
|
|
|
$
|
544
|
|
Certain items impacting EBITDA
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(17
|
)
|
|
$
|
—
|
|
Coatings and Infrastructure Solutions
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30, 2012
|
|
|
Jun 30, 2011
|
|
|
Jun 30, 2012
|
|
|
Jun 30, 2011
|
|
||||
Sales
|
$
|
1,888
|
|
|
$
|
2,002
|
|
|
$
|
3,591
|
|
|
$
|
3,734
|
|
Price change from comparative period
|
(6
|
)%
|
|
N/A
|
|
|
(5
|
)%
|
|
N/A
|
|
||||
Volume change from comparative period
|
—
|
%
|
|
N/A
|
|
|
1
|
%
|
|
N/A
|
|
||||
Equity earnings
|
$
|
45
|
|
|
$
|
79
|
|
|
$
|
67
|
|
|
$
|
147
|
|
EBITDA
|
$
|
337
|
|
|
$
|
368
|
|
|
$
|
541
|
|
|
$
|
618
|
|
Certain items impacting EBITDA
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(41
|
)
|
|
$
|
—
|
|
Agricultural Sciences
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales
|
$
|
1,676
|
|
|
$
|
1,500
|
|
|
$
|
3,514
|
|
|
$
|
3,106
|
|
Price change from comparative period
|
2
|
%
|
|
N/A
|
|
|
2
|
%
|
|
N/A
|
|
||||
Volume change from comparative period
|
10
|
%
|
|
N/A
|
|
|
11
|
%
|
|
N/A
|
|
||||
Equity earnings (losses)
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
EBITDA
|
$
|
307
|
|
|
$
|
287
|
|
|
$
|
758
|
|
|
$
|
693
|
|
Performance Materials
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales
|
$
|
3,369
|
|
|
$
|
3,858
|
|
|
$
|
6,842
|
|
|
$
|
7,399
|
|
Price change from comparative period
|
(6
|
)%
|
|
N/A
|
|
|
(4
|
)%
|
|
N/A
|
|
||||
Volume change from comparative period
|
(7
|
)%
|
|
N/A
|
|
|
(3
|
)%
|
|
N/A
|
|
||||
Volume change, excluding divestitures
|
(5
|
)%
|
|
N/A
|
|
|
(1
|
)%
|
|
N/A
|
|
||||
Equity losses
|
$
|
(20
|
)
|
|
$
|
(4
|
)
|
|
$
|
(37
|
)
|
|
$
|
(9
|
)
|
EBITDA
|
$
|
350
|
|
|
$
|
481
|
|
|
$
|
682
|
|
|
$
|
1,045
|
|
Certain items impacting EBITDA
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(186
|
)
|
|
$
|
—
|
|
Performance Plastics
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales
|
$
|
3,711
|
|
|
$
|
4,441
|
|
|
$
|
7,302
|
|
|
$
|
8,484
|
|
Price change from comparative period
|
(7
|
)%
|
|
N/A
|
|
|
(4
|
)%
|
|
N/A
|
|
||||
Volume change from comparative period
|
(9
|
)%
|
|
N/A
|
|
|
(10
|
)%
|
|
N/A
|
|
||||
Volume change, excluding divestitures
|
3
|
%
|
|
N/A
|
|
|
2
|
%
|
|
N/A
|
|
||||
Equity earnings
|
$
|
39
|
|
|
$
|
59
|
|
|
$
|
73
|
|
|
$
|
121
|
|
EBITDA
|
$
|
760
|
|
|
$
|
958
|
|
|
$
|
1,478
|
|
|
$
|
1,939
|
|
Feedstocks and Energy
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales
|
$
|
2,657
|
|
|
$
|
2,963
|
|
|
$
|
5,592
|
|
|
$
|
5,551
|
|
Price change from comparative period
|
(3
|
)%
|
|
N/A
|
|
|
1
|
%
|
|
N/A
|
|
||||
Volume change from comparative period
|
(7
|
)%
|
|
N/A
|
|
|
—
|
%
|
|
N/A
|
|
||||
Equity earnings
|
$
|
52
|
|
|
$
|
138
|
|
|
$
|
177
|
|
|
$
|
293
|
|
EBITDA
|
$
|
134
|
|
|
$
|
254
|
|
|
$
|
332
|
|
|
$
|
502
|
|
•
|
results of insurance company operations;
|
•
|
results of Ventures (which includes new business incubation platforms focused on identifying and pursuing new commercial opportunities);
|
•
|
Venture Capital;
|
•
|
gains and losses on sales of financial assets;
|
•
|
stock-based compensation expense and severance costs;
|
•
|
changes in the allowance for doubtful receivables;
|
•
|
asbestos-related defense and resolution costs;
|
•
|
foreign exchange hedging results;
|
•
|
non-business aligned technology licensing and catalyst activities;
|
•
|
environmental operations;
|
•
|
enterprise level mega project activities; and
|
•
|
certain corporate overhead costs and cost recovery variances not allocated to the operating segments.
|
Corporate
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
||||
Sales
|
$
|
61
|
|
|
$
|
85
|
|
|
$
|
119
|
|
|
$
|
174
|
|
Equity losses
|
$
|
(2
|
)
|
|
$
|
(6
|
)
|
|
$
|
(17
|
)
|
|
$
|
(15
|
)
|
EBITDA
|
$
|
(215
|
)
|
|
$
|
(303
|
)
|
|
$
|
(653
|
)
|
|
$
|
(1,067
|
)
|
Certain items impacting EBITDA
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
(137
|
)
|
|
$
|
(513
|
)
|
Sales Volume and Price by Operating Segment and
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||
Geographic Area
|
Jun 30, 2012
|
|
Jun 30, 2012
|
||||||||||||||
Percentage change from prior year
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
||||||
Operating segments
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electronic and Functional Materials
|
(2
|
)%
|
|
(2
|
)%
|
|
(4
|
)%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
(3
|
)%
|
Coatings and Infrastructure Solutions
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
|
(4
|
)
|
Agricultural Sciences
|
10
|
|
|
2
|
|
|
12
|
|
|
11
|
|
|
2
|
|
|
13
|
|
Performance Materials
|
(7
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(7
|
)
|
Performance Plastics
|
(9
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(14
|
)
|
Feedstocks and Energy
|
(7
|
)
|
|
(3
|
)
|
|
(10
|
)
|
|
—
|
|
|
1
|
|
|
1
|
|
Total
|
(5
|
)%
|
|
(5
|
)%
|
|
(10
|
)%
|
|
(3
|
)%
|
|
(2
|
)%
|
|
(5
|
)%
|
Geographic areas
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
(5
|
)%
|
|
(4
|
)%
|
|
(9
|
)%
|
|
(3
|
)%
|
|
(1
|
)%
|
|
(4
|
)%
|
Europe, Middle East and Africa
|
(7
|
)
|
|
(8
|
)
|
|
(15
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(8
|
)
|
Rest of World
|
(2
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
Total
|
(5
|
)%
|
|
(5
|
)%
|
|
(10
|
)%
|
|
(3
|
)%
|
|
(2
|
)%
|
|
(5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales Volume and Price by Operating Segment and
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||
Geographic Area Excluding Divestitures
(1)
|
Jun 30, 2012
|
|
Jun 30, 2012
|
||||||||||||||
Percentage change from prior year
|
Volume
|
|
Price
|
|
Total
|
|
Volume
|
|
Price
|
|
Total
|
||||||
Operating segments
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Electronic and Functional Materials
|
(2
|
)%
|
|
(2
|
)%
|
|
(4
|
)%
|
|
(2
|
)%
|
|
(1
|
)%
|
|
(3
|
)%
|
Coatings and Infrastructure Solutions
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
1
|
|
|
(5
|
)
|
|
(4
|
)
|
Agricultural Sciences
|
10
|
|
|
2
|
|
|
12
|
|
|
11
|
|
|
2
|
|
|
13
|
|
Performance Materials
|
(5
|
)
|
|
(6
|
)
|
|
(11
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(5
|
)
|
Performance Plastics
|
3
|
|
|
(9
|
)
|
|
(6
|
)
|
|
2
|
|
|
(5
|
)
|
|
(3
|
)
|
Feedstocks and Energy
|
(7
|
)
|
|
(3
|
)
|
|
(10
|
)
|
|
—
|
|
|
1
|
|
|
1
|
|
Total
|
(1
|
)%
|
|
(5
|
)%
|
|
(6
|
)%
|
|
1
|
%
|
|
(2
|
)%
|
|
(1
|
)%
|
Geographic areas
|
|
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
(1
|
)%
|
|
(4
|
)%
|
|
(5
|
)%
|
|
1
|
%
|
|
(1
|
)%
|
|
—
|
%
|
Europe, Middle East and Africa
|
(1
|
)
|
|
(8
|
)
|
|
(9
|
)
|
|
3
|
|
|
(5
|
)
|
|
(2
|
)
|
Rest of World
|
(1
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
Total
|
(1
|
)%
|
|
(5
|
)%
|
|
(6
|
)%
|
|
1
|
%
|
|
(2
|
)%
|
|
(1
|
)%
|
(1)
|
Excludes sales of the Polypropylene business that was divested on September 30, 2011 and sales of Dow Haltermann that was divested during 2011.
|
Cash Flow Summary
|
Six Months Ended
|
||||||
In millions
|
Jun 30, 2012
|
|
|
Jun 30, 2011
|
|
||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
1,421
|
|
|
$
|
620
|
|
Investing activities
|
(1,115
|
)
|
|
(904
|
)
|
||
Financing activities
|
(1,609
|
)
|
|
(4,599
|
)
|
||
Effect of exchange rate changes on cash
|
(13
|
)
|
|
64
|
|
||
Cash assumed in initial consolidation of variable interest entities
|
—
|
|
|
3
|
|
||
Net change in cash and cash equivalents
|
$
|
(1,316
|
)
|
|
$
|
(4,816
|
)
|
Working Capital
In millions
|
Jun 30, 2012
|
|
|
Dec 31, 2011
|
|
||
Current assets
|
$
|
23,198
|
|
|
$
|
23,422
|
|
Current liabilities
|
12,629
|
|
|
13,634
|
|
||
Working capital
|
$
|
10,569
|
|
|
$
|
9,788
|
|
Current ratio
|
1.84
|
:1
|
|
1.72
|
:1
|
||
Days-sales-outstanding-in-receivables
|
46
|
|
|
44
|
|
||
Days-sales-in-inventory
|
69
|
|
|
64
|
|
Total Debt
In millions
|
Jun 30, 2012
|
|
|
Dec 31, 2011
|
|
||
Notes payable
|
$
|
473
|
|
|
$
|
541
|
|
Long-term debt due within one year
|
1,880
|
|
|
2,749
|
|
||
Long-term debt
|
18,304
|
|
|
18,310
|
|
||
Gross debt
|
$
|
20,657
|
|
|
$
|
21,600
|
|
Cash and cash equivalents
|
$
|
4,128
|
|
|
$
|
5,444
|
|
Marketable securities and interest-bearing deposits
|
2
|
|
|
2
|
|
||
Net debt
|
$
|
16,527
|
|
|
$
|
16,154
|
|
Gross debt as a percent of total capitalization
|
45.9
|
%
|
|
48.0
|
%
|
||
Net debt as a percent of total capitalization
|
40.4
|
%
|
|
40.8
|
%
|
Contractual Obligations at June 30, 2012
|
Payments Due by Year
|
|
|
||||||||||||||||||||||||
In millions
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017 and
beyond
|
|
|
Total
|
|
|||||||
Long-term debt – current and noncurrent
(1)
|
$
|
1,439
|
|
|
$
|
714
|
|
|
$
|
2,418
|
|
|
$
|
1,512
|
|
|
$
|
1,028
|
|
|
$
|
13,445
|
|
|
$
|
20,556
|
|
Expected cash requirements for interest
(2)
|
$
|
607
|
|
|
$
|
1,131
|
|
|
$
|
1,015
|
|
|
$
|
900
|
|
|
$
|
844
|
|
|
$
|
7,650
|
|
|
$
|
12,147
|
|
(1)
|
Excludes unamortized debt discount of
$372 million
.
|
(2)
|
Cash requirements for interest was calculated using current interest rates at June 30, 2012, and includes approximately $1.65 billion of various floating rate notes.
|
Contractual Obligations at December 31, 2011
|
Payments Due by Year
|
|
|
||||||||||||||||||||||||
In millions
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017 and
beyond
|
|
|
Total
|
|
|||||||
Long-term debt – current and noncurrent
(1)
|
$
|
2,749
|
|
|
$
|
662
|
|
|
$
|
2,361
|
|
|
$
|
1,453
|
|
|
$
|
995
|
|
|
$
|
13,232
|
|
|
$
|
21,452
|
|
Expected cash requirements for interest
(2)
|
$
|
1,269
|
|
|
$
|
1,124
|
|
|
$
|
1,011
|
|
|
$
|
897
|
|
|
$
|
845
|
|
|
$
|
7,773
|
|
|
$
|
12,919
|
|
(1)
|
Excludes unamortized debt discount of
$393 million
.
|
(2)
|
Cash requirements for interest was calculated using interest rates at December 31, 2011, and includes approximately $1.1 billion of various floating rate notes.
|
Defense and Resolution Costs
|
Six Months Ended
|
|
Aggregate Costs
to Date as of
|
|
|||||||
In millions
|
Jun 30,
2012 |
|
|
Jun 30,
2011 |
|
|
Jun 30,
2012 |
|
|||
Defense costs
|
$
|
48
|
|
|
$
|
28
|
|
|
$
|
910
|
|
Resolution costs
|
$
|
32
|
|
|
$
|
26
|
|
|
$
|
1,615
|
|
Receivables for Asbestos-Related Costs
In millions
|
Jun 30,
2012 |
|
|
Dec 31,
2011 |
|
||
Receivables for defense costs – carriers with settlement agreements
|
$
|
19
|
|
|
$
|
20
|
|
Receivables for resolution costs – carriers with settlement agreements
|
154
|
|
|
158
|
|
||
Receivables for insurance recoveries – carriers without settlement agreements
|
40
|
|
|
40
|
|
||
Total
|
$
|
213
|
|
|
$
|
218
|
|
The Dow Chemical Company and Subsidiaries
PART I – FINANCIAL INFORMATION
|
Total Daily VAR by Exposure Type
|
|
2011
|
|||||||||
In millions
|
At June 30, 2012
|
|
|
Year-end
|
|
Average
|
|
||||
Foreign exchange
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
2
|
|
Interest rate
|
$
|
148
|
|
|
$
|
286
|
|
|
$
|
199
|
|
Equities
|
$
|
12
|
|
|
$
|
29
|
|
|
$
|
20
|
|
Commodities
|
$
|
10
|
|
|
$
|
4
|
|
|
$
|
4
|
|
Composite
|
$
|
177
|
|
|
$
|
300
|
|
|
$
|
220
|
|
The Dow Chemical Company and Subsidiaries
PART I – FINANCIAL INFORMATION
|
The Dow Chemical Company and Subsidiaries
Trademark Listing
|
/s/ RONALD C. EDMONDS
|
Ronald C. Edmonds
|
Vice President and Controller
|
EXHIBIT NO.
|
|
DESCRIPTION
|
|
|
|
2(e)
|
|
Shareholders' Agreement, dated as of October 8, 2011, between Dow Saudi Arabia Holding B.V. and Performance Chemicals Holding Company, incorporated by reference to Exhibit 99.1 to The Dow Chemical Company Current Report on Form 8-K/A filed on June 27, 2012.
|
|
|
|
10(bbb)
|
|
The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012, incorporated by reference to Exhibit 10.1 to The Dow Chemical Company Current Report on Form 8-K filed on May 14, 2012.
|
|
|
|
10(ccc)
|
|
A copy of the Performance Shares Deferred Stock Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012.
|
|
|
|
10(ddd)
|
|
A copy of the Deferred Stock Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012.
|
|
|
|
10(eee)
|
|
A copy of the Non-Qualified Stock Option Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012.
|
|
|
|
12.1
|
|
Computation of Ratio of Earnings to Fixed Charges.
|
|
|
|
23
|
|
Analysis, Research & Planning Corporation’s Consent.
|
|
|
|
31(a)
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
31(b)
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32(a)
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
32(b)
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(ccc)
|
1.
|
This Agreement is in all respects subject to the provisions of the Plan, as the Plan may be amended from time to time. The Plan is incorporated by reference. In the event of any conflict between this Agreement and the Plan, as the Plan may be amended from time to time, the provisions of the Plan shall govern and this Agreement shall be deemed to be modified accordingly.
|
2.
|
The target number of performance shares of Deferred Stock you are awarded under this Agreement (“Target Shares”) is outlined in the accompanying award letter with [grant date] as the effective date of the grant. Shares are earned over a [duration] beginning [performance period begin date] and ending on [performance period end date] (the "Performance Period"). The maximum number of shares that can be earned totals [percent] of Target Shares.
|
3.
|
The total number of shares earned under this grant will be determined and released into your account as soon as administratively possible in [the year following the end of the performance period]. Prior to issuance and delivery of the Deferred Stock you shall have no rights as a stockholder with respect to the Deferred Stock earned under this Agreement. In each year prior to issuance and delivery, you (or your successors) shall make arrangements satisfactory to the Company for the payment of any taxes required to be withheld in connection with your right to shares of Deferred Stock under all applicable laws and regulations of any governmental authority, whether federal, state or local and whether domestic or foreign. The Company and its Subsidiaries or Affiliates (collectively and individually a “Dow Company”) and their directors, officers, employees, or agents shall not be liable for any delay in issuance or receipt of any shares pursuant to this Agreement.
|
4.
|
This Agreement shall terminate and your rights under this Agreement shall be forfeited if your employment with any Dow Company is terminated for any reason other than death, disability or retirement, or a Special Separation Situation. In the event of your retirement death or disability, your current year's Performance Share Grant will be prorated based on the period of time worked during the year. If you take a leave of absence from a Dow Company, for any reason, your grant under this Agreement will be subject to the leave of absence policy established by the Compensation and Leadership Development Committee for Plan awards. Your death or disability shall not accelerate the time of payment of Deferred Stock under this Agreement.
|
5.
|
A “Special Separation Situation” is defined as a situation in which (a) a Dow Company terminates your employment by employer action for a reason that qualifies you for a severance benefit (which includes the Special Stock Treatment described in this section 5) under a severance plan sponsored by a Dow Company, and (i) you fulfill the requirements of the severance plan in order to qualify for payment of the severance benefit, and (ii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5; or (b) a Dow Company terminates your employment by employer action, and i) you do not qualify for a severance benefit under a severance plan sponsored by the Dow Company under the circumstances specified in paragraph 5a, and ii) the reason for termination was not because of the violation of an employer rule, or a law, regulation or other such government requirement, or dishonesty or theft, or because you engaged in activity harmful to the interests of, or in competition with, a Dow Company, and iii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5. If your employment is terminated under a Special Separation Situation, then your Award will receive Special Stock Treatment. Special Stock Treatment means that (i) the target number of shares in your grant shall be reduced to a new target number of shares that is proportionate to the period of time you were employed by the Dow Company during the stated performance period and (ii) the number of shares actually earned and delivered, if any, under the grant shall be determined by applying the performance measures applicable to the grant to the proportionally reduced target number of shares determined in accordance with subclause (i) above. This proportionally reduced amount of the target shares shall be calculated by dividing (x) the period of time between the beginning of the performance period and the date of termination of employment by (y) the performance period.
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(ccc)
|
6.
|
For each Dow Common Stock dividend record date between during the Performance Period and until the shares are delivered, an account in your name will be credited with a sum of money equal to the amount that you would have
|
7.
|
The Company is under no obligation to grant you the right to receive any cash payment under any law, federal, local, domestic or foreign.
|
8.
|
Your right to future issuance and delivery of Deferred Stock may not be sold, pledged, assigned or otherwise transferred (except as hereinafter provided) and any attempt to sell, pledge, assign or otherwise transfer shall be void and your rights to Deferred Stock shall therefore be forfeited. Your right to such future issuance and delivery shall, however, be transferable by will or pursuant to the laws of descent and distribution or you may make a written designation of a beneficiary on the form prescribed by the Company, which beneficiary (if any) shall succeed to your rights under this Agreement in the event of your death.
|
9.
|
Upon the occurrence of a Change of Control as defined in the Plan, your right to receive the number of shares of Performance Shares credited to your account under this Agreement shall not be forfeitable under any circumstances, and your Performance Shares will generally continue to be delivered based on the original deferral period schedule and Payment Date. If you also experience an involuntary Separation from Service from Dow or an affiliate thereof within two years following a Change of Control, and prior to the Payment Date, the Company shall deliver the Performance Shares credited to your account to you on the 30
th
day following such Separation from Service. Shares credited to Awardees account will be determined based on reported company performance prior to the date of Separation from Service.
|
10.
|
If at any time during the term of this Agreement you engage in any act of Unfair Competition (as defined below), this Agreement shall terminate effective on the date on which you enter into such act of Unfair Competition, unless terminated sooner by operation of another term or condition of this Agreement or the Plan. In addition, if at any time within three years after issuance and delivery of this Deferred Stock you engage in any act of Unfair Competition, you shall promptly pay to the Company the Fair Market Value of Shares Earned and Dividend Equivalents paid. The Compensation and Leadership Development Committee shall, in its sole discretion, determine when any act of Unfair Competition has occurred, and the determination of the Compensation and Leadership Development Committee shall be final and binding as to all parties. For purposes of this Agreement, the term “Unfair Competition” shall mean and include activity on your part that is in competition with a Dow Company or is or may be harmful to the interests of a Dow Company, including but not limited to conduct related to your employment for which either criminal or civil penalties against you may be sought, or your acceptance of employment with an employer that is in competition with a Dow Company.
|
11.
|
In the event that additional shares of Common Stock of the Company are issued pursuant to a stock split or a stock dividend, the Board of Directors shall make appropriate adjustments in the number and kind of Target Shares credited to your account on the books of the Company as deemed appropriate.
|
12.
|
Nothing contained in this Agreement shall confer or be deemed to confer upon you any right with respect to continuance of employment by a Dow Company, nor interfere in any way with the right of a Dow Company to terminate your employment at any time with or without assigning a reason therefore.
|
13.
|
This document shall constitute a Performance Shares Deferred Stock Agreement between the Company and you, and this Agreement shall be deemed to have been made on [grant date]. To the extent that federal laws do not otherwise control, this Agreement shall be governed by the laws of the state of Delaware and construed accordingly. Subject to earlier termination by operation of another term or condition of this Agreement or the Plan, this Agreement will expire when Shares Earned are delivered or when it is determined by the Compensation and Leadership Development Committee that the Company's strategic financial performance objectives have not been achieved, whichever date is earlier. You may choose to reject this award by written notice delivered to the Company within ninety days of your receipt of this instrument. Individuals who reject this Deferred Stock will not receive additional cash or non-cash compensation in lieu of the Deferred Stock.
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(ddd)
|
1.
|
This Agreement is in all respects subject to the provisions of the Plan, as the Plan may be amended from time to time. The Plan is incorporated by reference. In the event of any conflict between this Agreement and the Plan, the provisions of the Plan shall govern and this Agreement shall be deemed to be modified accordingly.
|
2.
|
The deferral period of this Agreement shall be from [grant date] until [vesting date]. Issuance and delivery of the shares of Deferred Stock credited to your account on the books of the Company hereunder shall be deferred until [vesting date] and shall be subject to the conditions described below. The shares will be released into your account at the end of the deferral period. Prior to such issuance and delivery, you shall have no rights as a stockholder with respect to the shares of Deferred Stock credited to your account under this Agreement. In each year prior to issuance and delivery, you (or your successors) shall make arrangements satisfactory to the Company for the payment of any taxes required to be withheld in connection with your right to shares of Deferred Stock under all applicable laws and regulations of any governmental authority, whether federal, state or local and whether domestic or foreign. The Company and its Subsidiaries or Affiliates (collectively and individually a “Dow Company”) and their directors, officers, employees, or agents shall not be liable for any delay in issuance or receipt of any shares pursuant to this Agreement.
|
3.
|
For each Dow Common Stock dividend record date during the period while shares of Deferred Stock remain credited to your account on the books of the Company and before their issuance and delivery to you, the Company shall pay to you as additional compensation a sum of money equal to the amount which you would have received in dividends if the shares of Deferred Stock credited to your account had been issued and delivered to you (the “Dividend Equivalents”). Awardees regularly paid compensation by a Dow Company in other than U.S. dollars will receive such payment of Dividend Equivalents converted from U.S. dollars at the Dow inter-company trading rate in effect at the time of delivery. Such Dividend Equivalents shall be paid to you on the date the dividend was paid to shareholders of the Company's common stock.
|
4.
|
This Agreement shall terminate and your rights under this Agreement shall be forfeited if your employment with any Dow Company is terminated for any reason other than death, disability, retirement, or Special Separation Situation. In the event of your retirement, death or disability, your current year's Deferred Stock Grant will be prorated based on the period of time worked during the year. If you take a leave of absence from a Dow Company, for any reason, your award under this Agreement will be subject to the leave of absence policy established by the Company for Plan awards. Your death or disability shall not accelerate the time of payment of Deferred Stock under this Agreement.
|
5.
|
A “Special Separation Situation” is defined as a situation in which (a) a Dow Company terminates your employment by employer action for a reason that qualifies you for a severance benefit (which includes the Special Stock Treatment described in this section 5) under a severance plan sponsored by a Dow Company, and (i) you fulfill the requirements of the severance plan in order to qualify for payment of the severance benefit, and (ii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5; or (b) a Dow Company terminates your employment by employer action, and i) you do not qualify for a severance benefit under a severance plan sponsored by the Dow Company under the circumstances specified in paragraph 5a, and ii) the reason for termination was not because of the violation of an employer rule, or a law, regulation or other such government requirement, or dishonesty or theft, or because you engaged in activity harmful to the interests of, or in competition with, a Dow Company, and iii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5. If your employment is terminated under a Special Separation Situation, then your Award shall receive Special Stock Treatment. Special Stock Treatment means that your Award will be reduced to a number of shares proportionate to the total period of time you were employed by the Dow Company during the deferral period. This proportionally reduced amount shall be calculated by dividing (x) the period of time between the grant date and the date of termination of employment by (y) the deferral period.
|
6.
|
The Company is under no obligation to grant you the right to receive any cash payment under any law, federal, local, domestic or foreign.
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(ddd)
|
7.
|
Your right to future issuance and delivery of Deferred Stock may not be sold, pledged, or otherwise transferred (except as hereinafter provided) and any attempt to sell, pledge, assign or otherwise transfer shall be void and your rights to Deferred Stock shall therefore be forfeited. Your right to such future issuance and delivery shall, however, be transferable by will or pursuant to the laws of descent and distribution or you may make a written designation of a beneficiary on the form prescribed by the Company, which beneficiary (if any) shall succeed to your rights under this Agreement in the event of your death.
|
8.
|
Upon the occurrence of a Change of Control as defined in the Plan, your right to receive the number of shares of Deferred Stock credited to your account under this Agreement shall not be forfeitable under any circumstances, and your Deferred Shares will generally continue to be delivered based on the original deferral period schedule. If you also experience an involuntary Separation from Service from Dow or an affiliate thereof within two years following a Change of Control and prior to the Payment Date, the Company shall deliver these shares to you on the 30th day following your Separation from Service.
|
9.
|
If at any time during the term of this Agreement you engage in any act of Unfair Competition (as defined below), this Agreement shall terminate effective on the date on which you enter into such act of Unfair Competition, unless terminated sooner by operation of another term or condition of this Agreement or the Plan. In addition, if at any time within three years after issuance and delivery of this Deferred Stock you engage in any act of Unfair Competition, you shall promptly pay to the Company the Fair Market Value of Shares Earned and Dividend Equivalents paid. The Compensation and Leadership Development Committee shall, in its sole discretion, determine when any act of Unfair Competition has occurred, and the determination of the Compensation and Leadership Development Committee shall be final and binding as to all parties. For purposes of this Agreement, the term “Unfair Competition” shall mean and include activity on your part that is in competition with a Dow Company or is or may be harmful to the interests of a Dow Company, including but not limited to conduct related to your employment for which either criminal or civil penalties against you may be sought, or your acceptance of employment with an employer that is in competition with a Dow Company.
|
10.
|
In the event that additional shares of Common Stock of the Company are issued pursuant to a stock split or a stock dividend, the Board of Directors shall make appropriate adjustments in the number and kind of Deferred Stock credited to your account on the books of the Company as deemed appropriate.
|
11.
|
Nothing contained in this Agreement shall confer or be deemed to confer upon you any right with respect to continuance of employment by a Dow Company, nor interfere in any way with the right of a Dow Company to terminate your employment at any time with or without assigning a reason therefore.
|
12.
|
This instrument shall constitute a Deferred Stock Agreement between the Company and you, and this Agreement shall be deemed to have been made on [grant date]. To the extent that federal laws do not otherwise control, this Agreement shall be governed by the laws of the state of Delaware and construed accordingly. You may choose to reject this award by written notice delivered to the Company within ninety days of your receipt of this instrument. Individuals who reject this Deferred Stock will not receive additional cash or non-cash compensation in lieu of the Deferred Stock.
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(eee)
|
1.
|
This Agreement is in all respects subject to the provisions of the Plan, as the Plan may be amended from time to time. The Plan is incorporated by reference. In the event of any conflict between this Agreement and the Plan, as the Plan may be amended from time to time, the provisions of the Plan shall govern and this Agreement shall be deemed to be modified accordingly.
|
2.
|
Subject to the vesting and exercise periods specified on the accompanying award letter and the conditions described below, this Agreement grants you the right to purchase the number of shares of Common Stock of the Company at the option price specified on the letter attached to this Agreement (the “Option”). Notice of the exercise of this Option in whole or in part shall be made to the stock plan administrator via on-line trading or their customer service. Such notice of exercise shall be accompanied by payment in full for the shares covered thereby. Payment shall be in United States dollars or, at the discretion of the Company, in Common Stock of the Company valued at Fair Market Value or a combination of dollars and Common Stock of the Company. Dollar payment shall be made by official bank check, certified check, or the equivalent. The Stock Award Resource Center shall have discretionary authority to accept a personal uncertified check or bank transfer in lieu of the foregoing methods of payment. Prior to such notice of exercise, and prior to the issuance and delivery of any shares, you (or your successors) shall make arrangements satisfactory to the Compensation and Leadership Development Committee for the payment of any taxes required to be withheld in connection with the exercise of this Option under all applicable laws and regulations of any governmental authority, whether federal, state or local and whether domestic or foreign. The Company and its Subsidiaries and Affiliates (collectively and individually a “Dow Company”) and their directors, officers, employees, or agents shall not be liable for any delay in issuance or receipt of any shares pursuant to this Agreement.
|
3.
|
This Agreement shall terminate and your rights under this Agreement shall be forfeited if your employment with any Dow Company is terminated for any reason other than death, disability or retirement, or Special Separation Situation. In the event of your death, disability, or retirement while employed by a Dow Company, this Agreement shall, except as provided below, terminate upon the earlier to occur of (a) five years after your death, disability or retirement or (b) the original expiration date of this Agreement as specified on the reverse side of this Agreement. In the event of your retirement, death, or disability, your current year's Stock Option Grant will be prorated based on the time period worked during the year. If you take a leave of absence from a Dow Company, for any reason, your award under this Agreement will be subject to the leave of absence policy established by the Company for Plan awards.
|
4.
|
If (a) you exercise any portion of this Option prior to the expiration date of this option, and (b) you leave the employment of a Dow Company within one year after such exercise for any reason except death, disability or retirement, then you shall pay to the Company any excess of the Fair Market Value over the exercise price on the date of exercise. You may be released from this obligation to pay the Company only if the Compensation and Leadership Development Committee (or its duly appointed agent or agents) determines in its or their sole judgment that such action is in the best interests of a Dow Company.
|
5.
|
A “Special Separation Situation” is defined as a situation in which (a) a Dow Company terminates your employment by employer action for a reason that qualifies you for a severance benefit (which includes the Special Stock Treatment described in this section 5) under a severance plan sponsored by a Dow Company, and (i) you fulfill the requirements of the severance plan in order to qualify for payment of the severance benefit, and (ii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5; or (b) a Dow Company terminates your employment by employer action, and i) you do not qualify for a severance benefit under a severance plan sponsored by the Dow Company under the circumstances specified in paragraph 5a, and ii) the reason for termination was not because of the violation of an employer rule, or a law, regulation or other such government requirement, or dishonesty or theft, or because you engaged in activity harmful to the interests of, or in competition with, a Dow Company, and iii) you and the Dow Company sign a Release that provides for the Special Stock Treatment described in this section 5. If your employment is terminated under a Special Separation Situation, then your Award shall receive Special Stock Treatment. Special Stock Treatment means that with respect to unexpired, unexercised options under this Agreement the time period for vesting and
|
|
The Dow Chemical Company and Subsidiaries
|
EXHIBIT 10(eee)
|
6.
|
Your right to exercise this Option may not be sold, pledged, or otherwise transferred (except as hereinafter provided) and any attempts to sell, pledge, assign or otherwise transfer shall be void and your rights to the Option shall therefore be forfeited. Your right to exercise such Option shall, however, be transferable by will or pursuant to the laws of descent and distribution or you may make a written designation of a beneficiary on the form prescribed by the Company, which beneficiary (if any) shall succeed to your rights under this Agreement in the event of your death.
|
7.
|
If at any time during the term of this Agreement you engage in any act of Unfair Competition (as defined below), this Agreement shall terminate effective on the date on which you enter into such act of Unfair Competition, unless terminated sooner by operation of another term or condition of this Agreement or the Plan. In addition, if at any time within three years after you exercise any portion of this Option you engage in any act of Unfair Competition, you shall promptly pay to the Company any excess of the Fair Market Value over the exercise price on the date of exercise. The Compensation and Leadership Development Committee shall, in its sole discretion, determine when any act of Unfair Competition has occurred, and the determination of the Compensation and Leadership Development Committee shall be final and binding as to all parties. For purposes of this Agreement, the term “Unfair Competition” shall mean and include activity on your part that is in competition with a Dow Company or is or may be harmful to the interests of a Dow Company, including but not limited to conduct related to your employment for which either criminal or civil penalties against you may be sought, or your acceptance of employment with an employer that is in competition with a Dow Company.
|
8.
|
In the event that additional shares of Common Stock of the Company are issued pursuant to a stock split or a stock dividend, the Board of Directors shall make appropriate adjustments in the number and kind of Stock Options credited to your account and the Option price recorded on the books of the Company as deemed appropriate, provided that any adjustments to a Stock Option shall be made in a manner that will not result in the grant of a new Stock Option under Code Section 409A
|
9.
|
Nothing contained in this Agreement shall confer or be deemed to confer upon you any right with respect to continuance of employment by a Dow Company, nor interfere in any way with the right of a Dow Company to terminate your employment at any time with or without assigning a reason therefore.
|
10.
|
This instrument shall constitute a Non-Qualified Stock Option Agreement between the Company and you, and this Agreement shall be deemed to have been made on [grant date]. To the extent that federal laws do not otherwise control, this Agreement shall be governed by the laws of the state of Delaware and construed accordingly. Subject to earlier termination by operation of another term or condition of this Agreement or the Plan, this Agreement expires when all Options granted under this Agreement have been exercised or on the expiration date outlined in the letter attached to this Agreement, whichever date is earlier. You may choose to reject this award by written notice delivered to the Company within ninety days of your receipt of this instrument. Individuals who reject this Stock Option will not receive additional cash or non-cash compensation in lieu of the Stock Option.
|
11.
|
Upon the occurrence of a Change of Control as defined in the Plan, your right to receive the number of unvested Stock Options credited to your account under this Agreement shall not be forfeitable under any circumstances. If you also experience an involuntary Separation from Service from Dow or an affiliate thereof within two years following a Change of Control, the Company shall deliver these Stock Options to you on the 30
th
day following such Separation from Service.
|
|
|
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 12.1
|
|
Six Months Ended
|
|
For the Years Ended December 31
|
|||||||||||||||||||
In millions, except ratios (Unaudited)
|
Jun 30,
2012 |
|
Jun 30,
2011 |
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
|
2007
|
|
|||||||
Income from Continuing Operations Before
Income Taxes
|
$
|
1,690
|
|
$
|
2,158
|
|
|
$
|
3,601
|
|
$
|
2,802
|
|
$
|
469
|
|
$
|
1,277
|
|
$
|
4,192
|
|
Add (deduct):
|
|
|
|
|
|
|
|
|
||||||||||||||
Equity in earnings of nonconsolidated affiliates
|
(317
|
)
|
(589
|
)
|
|
(1,223
|
)
|
(1,112
|
)
|
(630
|
)
|
(787
|
)
|
(1,122
|
)
|
|||||||
Distributed income of earnings of
nonconsolidated affiliates
|
508
|
|
639
|
|
|
1,016
|
|
668
|
|
690
|
|
836
|
|
774
|
|
|||||||
Capitalized interest
|
(45
|
)
|
(45
|
)
|
|
(90
|
)
|
(72
|
)
|
(61
|
)
|
(97
|
)
|
(85
|
)
|
|||||||
Amortization of capitalized interest
|
45
|
|
50
|
|
|
100
|
|
95
|
|
91
|
|
84
|
|
79
|
|
|||||||
Preferred security dividends
|
—
|
|
—
|
|
|
—
|
|
—
|
|
(20
|
)
|
(63
|
)
|
(81
|
)
|
|||||||
Adjusted earnings
|
$
|
1,881
|
|
$
|
2,213
|
|
|
$
|
3,404
|
|
$
|
2,381
|
|
$
|
539
|
|
$
|
1,250
|
|
$
|
3,757
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense and amortization of debt
discount
|
641
|
|
705
|
|
|
1,341
|
|
1,473
|
|
1,571
|
|
648
|
|
584
|
|
|||||||
Capitalized interest
|
45
|
|
45
|
|
|
90
|
|
72
|
|
61
|
|
97
|
|
85
|
|
|||||||
Preferred security dividends
|
—
|
|
—
|
|
|
—
|
|
—
|
|
20
|
|
63
|
|
81
|
|
|||||||
Rental expense – interest component
|
58
|
|
51
|
|
|
112
|
|
95
|
|
107
|
|
120
|
|
124
|
|
|||||||
Total fixed charges
|
$
|
744
|
|
$
|
801
|
|
|
$
|
1,543
|
|
$
|
1,640
|
|
$
|
1,759
|
|
$
|
928
|
|
$
|
874
|
|
Earnings available for the payment of
fixed charges
|
$
|
2,625
|
|
$
|
3,014
|
|
|
$
|
4,947
|
|
$
|
4,021
|
|
$
|
2,298
|
|
$
|
2,178
|
|
$
|
4,631
|
|
Ratio of earnings to fixed charges
|
3.5
|
|
3.8
|
|
|
3.2
|
|
2.5
|
|
1.3
|
|
2.3
|
|
5.3
|
|
|||||||
|
|
|
|
|
|
|
|
|
||||||||||||||
Earnings required for combined fixed
charges and preferred stock dividends:
|
|
|
|
|
|
|
|
|
||||||||||||||
Preferred stock dividends
|
$
|
170
|
|
$
|
170
|
|
|
$
|
340
|
|
$
|
340
|
|
$
|
312
|
|
$
|
—
|
|
$
|
—
|
|
Adjustment to pretax basis (at 35 percent)
|
92
|
|
92
|
|
|
183
|
|
183
|
|
168
|
|
—
|
|
—
|
|
|||||||
Preferred stock dividends - pretax
|
$
|
262
|
|
$
|
262
|
|
|
$
|
523
|
|
$
|
523
|
|
$
|
480
|
|
$
|
—
|
|
$
|
—
|
|
Combined fixed charges and preferred stock
dividend requirements
|
$
|
1,006
|
|
$
|
1,063
|
|
|
$
|
2,066
|
|
$
|
2,163
|
|
$
|
2,239
|
|
$
|
928
|
|
$
|
874
|
|
Ratio of earnings to combined fixed charges
and preferred stock dividend requirements
|
2.6
|
|
2.8
|
|
|
2.4
|
|
1.9
|
|
1.0
|
|
2.3
|
|
5.3
|
|
|
Analysis, Research & Planning Corporation's Consent
|
EXHIBIT 23
|
Form S-3:
|
|
|
|
No.
|
333-164985
|
|
|
Form S-4:
|
|
|
|
No.
|
333-88443
|
|
|
Form S-8:
|
|
|
|
Nos.
|
2-64560
|
|
33-21748
|
|
33-51453
|
|
33-52841
|
|
33-58205
|
|
33-61795
|
|
333-27381
|
|
333-40271
|
|
333-43730
|
|
333-49183
|
|
333-67414
|
|
333-88443
|
|
333-91027
|
|
333-103518
|
|
333-103519
|
|
333-105080
|
|
333-115185
|
|
333-122932
|
|
333-145015
|
|
333-162910
|
|
333-177658
|
|
333-181356
|
/s/ B. THOMAS FLORENCE
|
B. Thomas Florence
|
President
|
Analysis, Research & Planning Corporation
|
July 31, 2012
|
|
|
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 31(a)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Dow Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ ANDREW N. LIVERIS
|
Andrew N. Liveris
|
President, Chief Executive Officer and
|
Chairman of the Board
|
|
|
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 31(b)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of The Dow Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ WILLIAM H. WEIDEMAN
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William H. Weideman
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Executive Vice President and Chief Financial Officer
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The Dow Chemical Company and Subsidiaries
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EXHIBIT 32(a)
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1.
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the Quarterly Report on Form 10-Q of the Company for the quarter ended
June 30, 2012
as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ANDREW N. LIVERIS
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Andrew N. Liveris
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President, Chief Executive Officer and
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Chairman of the Board
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August 1, 2012
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The Dow Chemical Company and Subsidiaries
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EXHIBIT 32(b)
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1.
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the Quarterly Report on Form 10-Q of the Company for the quarter ended
June 30, 2012
as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ WILLIAM H. WEIDEMAN
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William H. Weideman
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Executive Vice President and Chief Financial Officer
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August 1, 2012
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