Delaware | 38-1285128 | |
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
Title of each class | Name of each exchange on which registered | |
Common Stock, par value $2.50 per share | New York Stock Exchange |
PAGE | ||
Business. | ||
Risk Factors. | ||
Unresolved Staff Comments. | ||
Properties. | ||
Legal Proceedings. | ||
Mine Safety Disclosures. | ||
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | ||
Selected Financial Data. | ||
Management’s Discussion and Analysis of Financial Condition and Results of Operations. | ||
Quantitative and Qualitative Disclosures About Market Risk. | ||
Financial Statements and Supplementary Data. | ||
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. | ||
Controls and Procedures. | ||
Other Information. | ||
Directors, Executive Officers and Corporate Governance. | ||
Executive Compensation. | ||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | ||
Certain Relationships and Related Transactions, and Director Independence. | ||
Principal Accounting Fees and Services. | ||
Exhibits, Financial Statement Schedules. | ||
The Dow Chemical Company and Subsidiaries |
The Dow Chemical Company and Subsidiaries | ||
PART I, Item 1. Business. |
(1) | Europe, Middle East, Africa and India |
Crop Application | ||||||||||
Key Product Lines | Canola | Cereals | Corn | Cotton | Range and Pasture | Rice | Soybeans | Sunflower | Trees, Fruits and Vegetables | Others |
Insecticides | x | x | x | x | x | x | x | x | x | |
Fungicides | x | x | x | x | x | x | ||||
Herbicides | x | x | x | x | x | x | x | x | x | x |
Seeds | x | x | x | x | x | x | x | x | ||
Other | x | x | x |
Key Product Lines | Brands and Technologies |
Insecticides | ISOCLAST™; LORSBAN™; RADIANT™; SENTRICON™; TRACER™ |
Fungicides | DITHANE™; INATREQ™ |
Herbicides | ARYLEX™; BROADWAY™; CLINCHER™; DURANGO™; FENCER™; GARLON™; LONTREL™; MILESTONE™; PANZER™; PRIMUS™; RESICORE™; RINSKOR™; SPIDER™; STARANE™; SURESTART™; TORDON™ |
AGROMEN™(1); BRODBECK™ Seeds; DAIRYLAND SEED™; DOW™ Seeds; MYCOGEN™ Seeds; NEXERA™; Omega-9 Healthier Oils; PFISTER™ Seeds; PHYTOGEN™; PRAIRIE BRAND™ Seeds; PROPOUND™ | |
Seed Traits and Technologies | ENLIST™; ENLIST DUO™; EXZACT™ Precision Technology; POWERCORE™ Insect Trait Technology(2); |
Other | INSTINCT®; N-SERVE™ Nitrogen Stabilizer; TELONE™ |
(1) | AGROMEN trademark used under license from Agromen Sementes Agricolas Ltda. |
(2) | Smartstax® and POWERCORE™ multi-event technology developed by Dow AgroSciences LLC and Monsanto. Smartstax®, the Smartstax® logo, POWERCORE™ and the POWERCORE™ logo are trademarks of Monsanto Technology, LLC. |
Business | Market Segments | Technologies |
Dow Home, Institutional & Personal Care Solutions | Personal care, home care and specialty applications with key focus on hair care, skin care, sun care, cleansing, as well as fabric, dish, floor, hard surface and air care applications | From polymers and emollients to chelants and dispersants, Dow offers unique innovations that empower consumer brands around the world to deliver exceptional product performance and process enhancements that create value. Other notable technologies include opacifiers, rheology modifiers, surfactants and solvents. |
Dow Pharma and Food Solutions | Pharmaceutical, food and nutrition | Cellulosic and other technologies help bring new classes of medicines to market and enable foods that are healthier (gluten-free, reduced oil/fat content). Notable technologies include excipients and active pharmaceutical ingredients, solubility enhancers, reagents, granulation and binders, as well as coatings and controlled release. |
SAFECHEM™(1) | A service business responsible for the sustainable and innovative use of solvents | Offers cleaning solutions, equipment and services for metal and dry cleaning applications. Provides closed-loop SAFE-TAINER™ System delivery systems to ensure emission free use of cleaning agents. |
(1) | On December 31, 2016, the Company sold its SAFECHEM™ business. SAFECHEM™ was reported as part of the Consumer Solutions segment through the date of divestiture. |
Business | Market Segments | Technologies |
Adhesives | Elastic, structural and specialty adhesives | Innovative and differentiated adhesive technologies to meet customer specifications for durability and crash performance |
Performance Solutions | Performance plastics, fluids and polyurethane foam solutions | Technologies that differentiate customers’ products with improved performance characteristics |
Business | Market Segments | Technologies |
Semiconductor Technologies | Integrated circuit fabrication for memory and logic | CMP consumables, photolithography materials |
Interconnect Technologies | Printed circuit board, electronic and industrial finishing | Interconnect metallization and imaging process chemistries |
Display Technologies | Display materials | Display films and filters, OLED materials |
Growth Technologies | New and emerging technologies | Advanced chip packaging materials, metalorganic precursors, optical and ceramic materials |
Business | Applications/Market Segments | Technologies |
Beauty and Personal Care | Hair care, skin care, sun care and color cosmetics | Innovative beauty care ingredients that help improve product performance and meet the needs of consumers. Notable silicone technologies include elastomers, emulsifiers, rheology modifiers, film formers-resins, gums and acrylates, powders and fluids. |
Household Care | Laundry and fabric care, hard surface care | Proven solutions to deliver benefits to both consumers and manufacturers alike. Notable silicone technologies include antifoams, processing aids, polishing gloss aids and softening agents. |
Healthcare | Drug delivery, medical device, wound care and topical ingredient applications | Innovative silicone solutions backed by industry application and regulatory expertise. Notable silicone technologies include elastomers, emulsifiers, excipients, tubing and molded assemblies, adhesives, antifoams and fluids. |
Consumer Goods | Electronics, packaging, sporting goods, household goods, infant care | Elastomer and thermal plastic technologies with proven performance delivering benefits to consumers around the world in multiple applications. Notable technology includes liquid silicone rubbers, high consistency rubbers, TPSiV™, thermoplastic additives and food-grade materials. |
Automotive | Safety, lighting, sealing, electronics, NVH (noise, vibration, harshness), exterior trim | Notable technology includes: elastomers, liquid silicone rubbers, high consistency rubbers, thermoplastics, additives, coatings, thermal management materials, sealants and lubricants. |
Business | Applications/Market Segments | Major Products |
Dow Building & Construction | Rigid and spray foam insulation; weatherization, waterproofing and air sealing; caulks and sealants; elastomeric roof coatings; exterior insulation finishing systems; roof tiles and siding; industrial non-wovens; cement-based tile adhesives; plasters and renders; tape joint compounds; and concrete additives | AQUASET™ acrylic thermosetting resins, DOW™ latex powder, FROTH-PAK™ foam insulation and sealants, GREAT STUFF™ insulating foam sealants and adhesives, RHOPLEX™ and PRIMAL™ acrylic emulsion polymers, STYROFOAM™ brand insulation products, THERMAX™ exterior insulation, WALOCEL™ cellulose ethers, WEATHERMATE™ house wrap, XENERGY™ high performance insulation, |
Dow Coating Materials | Acrylic binders for architectural paint and coatings, industrial coatings, and paper; dispersants; rheology modifiers; opacifiers and surfactants for both architectural and industrial applications; protective and functional coatings | ACRYSOL™ Rheology Modifiers, AVANSE™ acrylic binders, EVOQUE™ Pre-Composite Polymer, FORMASHIELD™ acrylic binder, RHOPLEX™ acrylic resin, TAMOL™ Dispersants, MAINCOTE™ acrylic epoxy hybrid, PARALOID™ Edge ISO-free technology and ACOUSTICRYL™ liquid-applied sound damping technology |
Energy & Water Solutions | Helping customers in exploration, production, transmission, refining and gas processing to optimize supply, improve efficiencies and manage emissions. Providing expertise and localized solutions for microbial control for well souring, industrial cooling water, fabric odor elimination, in-can preservation and dry film protection. Providing advanced, cost effective separation and purification technology for water treatment and filtration, pharmaceutical, food and beverage, and chemical processing | Demulsifiers, drilling and completion fluids, heat transfer fluids, rheology modifiers, scale inhibitors, shale inhibitors, specialty amine solvents, surfactants, water clarifiers, DOW ADSORBSIA™ selective media, DOW EDI™ modules, DOWEX™ and AMBERJET™ ion exchange resins, DOWEX™ OPTIPORE™ polymeric adsorbent resins, DOW FILMTEC™ reverse osmosis and nanofiltration elements, TEQUATIC™ PLUS fine particle filter, AMBERLYST™ polymeric catalysts, AQUCAR™, BIOBAN™, SILVADUR™ antimicrobial |
Performance Monomers | Super absorbents, water treatment, flocculants and detergents, acrylic sheets, coatings, inks and paints, molding compounds, impact modifiers, processing aids, electronic displays, adhesives, textiles, automotive and architectural safety glass, and plastics additives | Acrylates, methacrylates, vinyl acetate monomers, high-quality impact modifiers, processing aids, foam cell promoters and weatherable acrylic capstock compounds for thermoplastic and thermosetting materials |
Infrastructure Solutions - Silicones | Commercial glazing, building envelope, construction chemicals, window and door infrastructure, wire and cable, electrical and high voltage insulation, power transmission, sleeving, optical devices, light-emitting diodes, lamp and luminaire, oil and gas, solar | Elastomers, fluids, pottants, potting agents, thermal interface materials, adhesives and sealants, encapsulants, gels, resins, antifoams, demulsifiers, lubricants |
(1) | Hydrogen peroxide to propylene oxide manufacturing technology is utilized by MTP HPPO Manufacturing Company Limited, a Thailand-based consolidated variable interest entity ultimately owned 50 percent by the Company and 50 percent by SCG Chemicals Co. Ltd.; and BASF DOW HPPO Production B.V.B.A., a Belgium-based joint venture ultimately owned 100 percent by HPPO Holding & Finance C.V., which is owned 50 percent by the Company and 50 percent by BASF. |
Business | Applications/Market Segments | Major Products |
Dow Elastomers | Adhesives, footwear, housewares, infrastructure, sports recreation, toys and infant products, transportation | Elastomers, polyolefin plastomers, ethylene propylene diene monomer elastomers ("EPDMs") |
Dow Electrical and Telecommunications | Building and construction, electrical transmission and distribution infrastructure, telecommunications infrastructure | Wire and cable insulation, semiconductive and jacketing compound solutions, bio-based plasticizers |
Dow Packaging and Specialty Plastics | Adhesives, food and specialty packaging, hygiene and medical, industrial and consumer packaging, | Acrylics, polyethylene, low-density polyethylene, linear low-density polyethylene, high-density polyethylene, |
Energy | Principally for use in Dow’s global operations | Power, steam and other utilities |
Hydrocarbons | Purchaser of feedstocks; production of cost competitive monomers utilized by Dow’s derivative businesses | Ethylene, propylene, benzene, butadiene, octene, aromatics co-products, crude C4 Advantaged feedstock positions in the United States, Canada, Argentina and the Middle East |
Significant Raw Materials | Performance Materials & Chemicals | |||||||
Raw Material | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Plastics | ||||
Acetone | x | x | ||||||
Ammonia | x | x | x | |||||
Aniline (1) | x | |||||||
Benzene | x | x | ||||||
x | ||||||||
Butene | x | x | ||||||
Butyl Acrylate (1) | x | x | x | |||||
Carbon Black | x | x | ||||||
Carbon Monoxide | x | |||||||
Caustic Soda (1) | x | x | x | x | ||||
Chlorine(1) | x | x | x | x | ||||
Condensate | x | |||||||
Electric Power | x | x | ||||||
Ethane | x | |||||||
Ethanol | x | x | x | x | ||||
Ethylene (1) | x | x | x | |||||
Formaldehyde | x | x | x | |||||
Hexene | x | |||||||
Hydrogen Peroxide (2) | x | |||||||
Isopropanol | x | x | ||||||
Methanol | x | x | x | x | x | |||
Naphtha | x | |||||||
Natural Gas | x | |||||||
Nitrogen | x | x | ||||||
Octene(1) | x | |||||||
Polystyrene | x | x | ||||||
Propane | x | x | x | |||||
Propylene (1) | x | x | x | x | ||||
Pygas | x | |||||||
Silica | x | x | ||||||
Silicon Metal (1) | x | x | ||||||
Styrene | x | x | ||||||
Wood Pulp | x | x |
Patents Owned at December 31, 2015 | United States | Foreign | ||||||||||
Patents Owned at December 31, 2016 | United States | Foreign | ||||||||||
Agricultural Sciences | 940 | 3,886 | 1,041 | 4,603 | ||||||||
Consumer Solutions | 1,187 | 3,686 | 1,645 | 6,189 | ||||||||
Infrastructure Solutions | 950 | 5,185 | 1,338 | 6,827 | ||||||||
Performance Materials & Chemicals | 363 | 1,994 | 375 | 2,332 | ||||||||
Performance Plastics | 1,102 | 4,559 | 1,150 | 5,283 | ||||||||
Corporate | 109 | 231 | 102 | 215 | ||||||||
Total | 4,651 | 19,541 | 5,651 | 25,449 |
Remaining Life of Patents Owned at December 31, 2015 | ||||||||||||
Remaining Life of Patents Owned at December 31, 2016 | Remaining Life of Patents Owned at December 31, 2016 | |||||||||||
United States | Foreign | United States | Foreign | |||||||||
Within 5 years | 969 | 3,053 | 1,384 | 5,170 | ||||||||
6 to 10 years | 1,023 | 5,540 | 1,187 | 8,000 | ||||||||
11 to 15 years | 1,479 | 8,209 | 2,312 | 10,843 | ||||||||
16 to 20 years | 1,180 | 2,739 | 768 | 1,436 | ||||||||
Total | 4,651 | 19,541 | 5,651 | 25,449 |
Principal Nonconsolidated Affiliate | Ownership Interest | Business Description | |||
Dow Corning Corporation (1) | A U.S. company that manufactures silicone and silicone products | ||||
EQUATE Petrochemical Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins | ||
The HSC Group: (1) | |||||
DC HSC Holdings LLC (2) | 50.00 | % | A U.S.-based group of companies that manufactures polycrystalline silicon products | ||
Hemlock Semiconductor L.L.C. | 50.10 | % | A U.S. company that sells polycrystalline silicon products | ||
The Kuwait Olefins Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene and ethylene glycol | ||
The Kuwait Styrene Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures styrene monomer | ||
Map Ta Phut Olefins Company Limited (3) | 32.77 | % | A Thailand-based company that manufactures propylene and ethylene | ||
Sadara Chemical Company(4) | 35.00 | % | A | ||
The SCG-Dow Group: | |||||
Siam Polyethylene Company Limited | 50.00 | % | A Thailand-based company that manufactures polyethylene | ||
Siam Polystyrene Company Limited | 50.00 | % | A Thailand-based company that manufactures polystyrene | ||
Siam Styrene Monomer Co., Ltd. | 50.00 | % | A Thailand-based company that manufactures styrene | ||
Siam Synthetic Latex Company Limited | 50.00 | % | A Thailand-based company that manufactures latex |
(1) |
(2) |
(3) | The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited. |
(4) | Dow is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company's established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. |
Name - Age | Present Position with Registrant | Year Elected to be an Officer | Other Business Experience since January 1, |
Ronald C. Edmonds, | Controller and Vice President of Controllers and | 2009 | Vice President and Controller 2009 to date. Present position held since January 2016. |
James R. Fitterling, | President and Chief Operating Officer | 2010 | |
Heinz Haller, | Executive Vice President and President of Dow Europe, Middle East, Africa and India | 2006 | Executive Vice President and Chief Commercial Officer August 2010 to September 2012. Present position held since September 2012. |
Joe E. Harlan, | Vice Chairman and Chief Commercial Officer | 2011 | |
Peter Holicki, | Senior Vice President, Operations, Manufacturing & Engineering, Environment, Health & Safety Operations, and Emergency Services & Security | 2014 | Global Manufacturing Vice President, Hydrocarbons May 2009 to October 2012. Vice President for Manufacturing and Engineering Europe, Middle East and Africa May 2009 to October 2012. Vice President of Operations for Europe, Middle East and Africa and the Ethylene Envelope October 2012 to December 2013. Emergency Services and Security Expertise Center September 2014 to present. Corporate Vice President October 2014 to October 2015. Present position held since 2015. |
Charles J. Kalil, | 2004 | General Counsel 2004 to date. Executive Vice President 2008 to date. Corporate Secretary 2005 to February 2015. | |
Andrew N. Liveris, | Chief Executive Officer and Chairman of the Board | 2003 | President 2004 to February 2016. Chief Executive Officer 2004 to date. Chairman 2006 to date. |
Johanna Söderström, | Corporate Vice President, Human Resources and Aviation, and Chief Human Resource Officer | 2015 | Global Human Resources Director, Performance Materials Division January 2011 to October 2012. Vice President, Human Resource Center of Expertise October 2012 to January 2015. Present position held since January 2015. |
A. N. Sreeram, | Senior Vice President, Research & Development and Chief Technology Officer | 2013 | Vice President, Research & Development, Dow Advanced Materials 2009 to October 2013. Corporate Vice President, Research & Development October 2013 to October 2015. Present position held since October 2015. |
Howard I. Ungerleider, | Vice Chairman and Chief Financial Officer | 2011 |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1A. Risk Factors. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1B. Unresolved Staff Comments. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 2. Properties. |
Location | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics |
Bahia Blanca, Argentina | x | ||||
Candeias, Brazil | x | ||||
Canada: | |||||
Fort Saskatchewan, Alberta | x | ||||
Joffre, Alberta | x | ||||
Germany: | |||||
Boehlen | x | x | x | ||
Bomlitz | x | x | |||
Leuna | x | ||||
Schkopau | x | x | x | x | |
Stade | x | x | x | x | x |
Terneuzen, The Netherlands | x | x | x | x | |
Tarragona, Spain | x | x | x | ||
Map Ta Phut, Thailand | x | x | x | ||
United States: | |||||
Carrollton, Kentucky | x | x | |||
Louisville, Kentucky | x | ||||
Hahnville (St. Charles), Louisiana | x | x | x | ||
Plaquemine, Louisiana | x | x | x | x | |
Midland, Michigan | x | x | x | x | x |
Deer Park, Texas | x | x | |||
Freeport, Texas | x | x | x | x | |
Seadrift, Texas | x | x | x | x | |
Texas City, Texas | x | x | |||
Wales, United Kingdom | x | x | |||
Zhangjiagang, China | x | x | x |
Asia Pacific: | |
Canada: | 6 manufacturing locations in 3 provinces. |
Europe, Middle East, Africa and India: | |
Latin America: | |
United States: | |
The Dow Chemical Company and Subsidiaries |
PART I, Item 3. Legal Proceedings. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 4. Mine Safety Disclosures. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 5. Market for Registrant’s Common Equity, |
Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Issuer Purchases of Equity Securities | Average price paid per share | Total number of shares purchased as part of the Company's publicly announced share repurchase program (1) | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (1) (In millions) | |||||||||||
Period | Total number of shares purchased | |||||||||||||
October 2015 (2) | 35,098,198 | $ | 44.81 | 35,098,198 | $ | 2,927 | ||||||||
November 2015 | 9,630,236 | $ | 51.93 | 9,630,236 | $ | 2,427 | ||||||||
December 2015 | 2,195,537 | $ | 52.63 | 2,195,537 | $ | 2,312 | ||||||||
Fourth quarter 2015 | 46,923,971 | $ | 46.63 | 46,923,971 | $ | 2,312 |
Issuer Purchases of Equity Securities | Average price paid per share | Total number of shares purchased as part of the Company's publicly announced share repurchase program (1) | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (1) (In millions) | |||||||||||
Period | Total number of shares purchased | |||||||||||||
October 2016 | — | $ | — | — | $ | 1,896 | ||||||||
November 2016 | 8,822,551 | $ | 53.64 | 8,822,551 | $ | 1,423 | ||||||||
December 2016 | 493,480 | $ | 54.25 | 493,480 | $ | 1,396 | ||||||||
Fourth quarter 2016 | 9,316,031 | $ | 53.67 | 9,316,031 | $ | 1,396 |
(1) | On February 13, 2013, the Board of Directors approved a share buy-back program, authorizing up to $1.5 billion to be spent on the repurchase of the Company’s common stock. On January 29, 2014, the Board of Directors announced an expansion of the Company's share buy-back authorization, authorizing an additional amount not to exceed $3 billion to be spent on the repurchase of the Company's common stock over a period of time. On November 12, 2014, the Board of Directors announced a new $5 billion tranche to its share buy-back program. As a result of these actions, the total authorized amount of the share repurchase program is $9.5 billion. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 6. Selected Financial Data. |
In millions, except as noted (Unaudited) | 2015 | 2014 | 2013 | 2012 | 2011 | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||||||||||||
Summary of Operations | ||||||||||||||||||||||||||||||
Net sales | $ | 48,778 | $ | 58,167 | $ | 57,080 | $ | 56,786 | $ | 59,985 | $ | 48,158 | $ | 48,778 | $ | 58,167 | $ | 57,080 | $ | 56,786 | ||||||||||
Net income | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 1,100 | $ | 2,784 | $ | 4,404 | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 1,100 | ||||||||||
Per share of common stock (in dollars): | ||||||||||||||||||||||||||||||
Net income per common share - basic | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 0.71 | $ | 2.06 | $ | 3.57 | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 0.71 | ||||||||||
Net income per common share - diluted | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 0.70 | $ | 2.05 | $ | 3.52 | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 0.70 | ||||||||||
Cash dividends declared per share of common stock | $ | 1.72 | $ | 1.53 | $ | 1.28 | $ | 1.21 | $ | 0.90 | $ | 1.84 | $ | 1.72 | $ | 1.53 | $ | 1.28 | $ | 1.21 | ||||||||||
Book value per share of common stock | $ | 23.06 | $ | 19.71 | $ | 22.59 | $ | 17.73 | $ | 19.28 | $ | 21.70 | $ | 23.06 | $ | 19.71 | $ | 22.59 | $ | 17.73 | ||||||||||
Year-end Financial Position | ||||||||||||||||||||||||||||||
Total assets (1) | $ | 68,026 | $ | 68,687 | $ | 69,402 | $ | 69,492 | $ | 69,119 | ||||||||||||||||||||
Total assets (2) (3) | $ | 79,511 | $ | 67,938 | $ | 68,639 | $ | 69,380 | $ | 69,462 | ||||||||||||||||||||
Long-term debt | $ | 16,215 | $ | 18,741 | $ | 16,732 | $ | 19,819 | $ | 18,219 | $ | 20,456 | $ | 16,215 | $ | 18,741 | $ | 16,732 | $ | 19,819 | ||||||||||
Financial Ratios | ||||||||||||||||||||||||||||||
Research and development expenses as percent of net sales | 3.3 | % | 2.8 | % | 3.1 | % | 3.0 | % | 2.7 | % | 3.3 | % | 3.3 | % | 2.8 | % | 3.1 | % | 3.0 | % | ||||||||||
Income before income taxes as percent of net sales | 20.4 | % | 9.1 | % | 11.9 | % | 2.9 | % | 6.0 | % | 9.2 | % | 20.4 | % | 9.1 | % | 11.9 | % | 2.9 | % | ||||||||||
Return on stockholders’ equity | 34.4 | % | 18.6 | % | 19.4 | % | 5.0 | % | 13.1 | % | 15.3 | % | 34.4 | % | 18.6 | % | 19.4 | % | 5.0 | % | ||||||||||
Debt as a percent of total capitalization | 39.7 | % | 45.5 | % | 38.9 | % | 48.7 | % | 47.8 | % | 44.0 | % | 39.7 | % | 45.5 | % | 38.9 | % | 48.7 | % |
(1) | The 2016 values include the impact of a change in accounting policy for asbestos-related defense and processing costs. See Notes 1 and 15 to the Consolidated Financial Statements for additional information. |
(2) | Adjusted for the reclassification of debt issuance costs related to the adoption of ASU |
(3) | Adjusted for the adoption of ASU 2015-17 in 2016. See Notes 1 and 2 to the Consolidated Financial Statements for additional information. |
The Dow Chemical Company and Subsidiaries | ||
PART II, Item 7. Management’s Discussion and | ||
(Unaudited) | Analysis of Financial Condition and Results of Operations. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Table of Contents | Page |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics) |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics); the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences); ANGUS Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals); and the global Sodium Borohydride business, divested on January 30, 2015 (Performance Materials & Chemicals). Also excludes current period sales related to the ownership restructure of Dow Corning announced on June 1, 2016 (Consumer Solutions and Infrastructure Solutions) and sales from January 1, 2016 through April 30, 2016 for the step acquisition of Univation, acquired on May 5, 2015 (Performance Plastics). |
Production Costs and Operating Expenses | ||||||||||||||||||
Cost components as a percent of total | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||
Hydrocarbon feedstocks and energy | 27 | % | 38 | % | 38 | % | 24 | % | 27 | % | 38 | % | ||||||
Salaries, wages and employee benefits | 18 | 15 | 15 | 17 | 18 | 15 | ||||||||||||
Maintenance | 5 | 4 | 4 | 4 | 5 | 4 | ||||||||||||
Depreciation | 4 | 4 | 4 | 5 | 4 | 4 | ||||||||||||
Restructuring charges | 1 | — | — | 1 | 1 | — | ||||||||||||
Supplies, services and other raw materials | 45 | 39 | 39 | 49 | 45 | 39 | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(1) | Europe, Middle East, Africa and India |
Crop Application | ||||||||||
Key Product Lines | Canola | Cereals | Corn | Cotton | Range and Pasture | Rice | Soybeans | Sunflower | Trees, Fruits and Vegetables | Others |
Insecticides | x | x | x | x | x | x | x | x | x | |
Fungicides | x | x | x | x | x | x | ||||
Herbicides | x | x | x | x | x | x | x | x | x | x |
Seeds | x | x | x | x | x | x | x | x | ||
Other | x | x | x |
Key Product Lines | Brands and Technologies |
Insecticides | ISOCLAST™; LORSBAN™; RADIANT™; SENTRICON™; TRACER™ |
Fungicides | DITHANE™; INATREQ™ |
Herbicides | ARYLEX™; BROADWAY™; CLINCHER™; DURANGO™; FENCER™; GARLON™; LONTREL™; MILESTONE™; PANZER™; PRIMUS™; RESICORE™; RINSKOR™; SPIDER™; STARANE™; SURESTART™; TORDON™ |
Seed Brands | AGROMEN™(1); BRODBECK™ Seeds; DAIRYLAND SEED™; DOW™ Seeds; MYCOGEN™ Seeds; NEXERA™; Omega-9 Healthier Oils; PFISTER™ Seeds; PHYTOGEN™; PRAIRIE BRAND™ Seeds; PROPOUND™ |
Seed Traits and Technologies | ENLIST™; ENLIST DUO™; EXZACT™ Precision Technology; POWERCORE™ Insect Trait Technology(2); REFUGE ADVANCED™ powered by SmartStax®(2); SmartStax® Insect Trait Technology(2) |
Other | INSTINCT®; N-SERVE™ Nitrogen Stabilizer; TELONE™ |
(1) | AGROMEN trademark used under license from Agromen Sementes Agricolas Ltda. |
(2) | Smartstax® and POWERCORE™ multi-event technology developed by Dow AgroSciences LLC and Monsanto. Smartstax®, the Smartstax® logo, POWERCORE™ and the POWERCORE™ logo are trademarks of Monsanto Technology, LLC. |
Business | Market Segments | Technologies |
Dow Home, Institutional & Personal Care Solutions | Personal care, home care and specialty applications with key focus on hair care, skin care, sun care, cleansing, as well as fabric, dish, floor, hard surface and air care applications | From polymers and emollients to chelants and dispersants, Dow offers unique innovations that empower consumer brands around the world to deliver exceptional product performance and process enhancements that create value. Other notable technologies include opacifiers, rheology modifiers, surfactants and solvents. |
Dow Pharma and Food Solutions | Pharmaceutical, food and nutrition | Cellulosic and other technologies help bring new classes of medicines to market and enable foods that are healthier (gluten-free, reduced oil/fat content). Notable technologies include excipients and active pharmaceutical ingredients, solubility enhancers, reagents, granulation and binders, as well as coatings and controlled release. |
SAFECHEM™(1) | A service business responsible for the sustainable and innovative use of solvents | Offers cleaning solutions, equipment and services for metal and dry cleaning applications. Provides closed-loop SAFE-TAINER™ System delivery systems to ensure emission free use of cleaning agents. |
(1) | On December 31, 2016, the Company sold its SAFECHEM™ business. SAFECHEM™ was reported as part of the Consumer Solutions segment through the date of divestiture. |
Business | Market Segments | Technologies |
Adhesives | Elastic, structural and specialty adhesives | Innovative and differentiated adhesive technologies to meet customer specifications for durability and crash performance |
Performance Solutions | Performance plastics, fluids and polyurethane foam solutions | Technologies that differentiate customers’ products with improved performance characteristics |
Business | Market Segments | Technologies |
Semiconductor Technologies | Integrated circuit fabrication for memory and logic | CMP consumables, photolithography materials |
Interconnect Technologies | Printed circuit board, electronic and industrial finishing | Interconnect metallization and imaging process chemistries |
Display Technologies | Display materials | Display films and filters, OLED materials |
Growth Technologies | New and emerging technologies | Advanced chip packaging materials, metalorganic precursors, optical and ceramic materials |
Business | Applications/Market Segments | Technologies |
Beauty and Personal Care | Hair care, skin care, sun care and color cosmetics | Innovative beauty care ingredients that help improve product performance and meet the needs of consumers. Notable silicone technologies include elastomers, emulsifiers, rheology modifiers, film formers-resins, gums and acrylates, powders and fluids. |
Household Care | Laundry and fabric care, hard surface care | Proven solutions to deliver benefits to both consumers and manufacturers alike. Notable silicone technologies include antifoams, processing aids, polishing gloss aids and softening agents. |
Healthcare | Drug delivery, medical device, wound care and topical ingredient applications | Innovative silicone solutions backed by industry application and regulatory expertise. Notable silicone technologies include elastomers, emulsifiers, excipients, tubing and molded assemblies, adhesives, antifoams and fluids. |
Consumer Goods | Electronics, packaging, sporting goods, household goods, infant care | Elastomer and thermal plastic technologies with proven performance delivering benefits to consumers around the world in multiple applications. Notable technology includes liquid silicone rubbers, high consistency rubbers, TPSiV™, thermoplastic additives and food-grade materials. |
Automotive | Safety, lighting, sealing, electronics, NVH (noise, vibration, harshness), exterior trim | Notable technology includes: elastomers, liquid silicone rubbers, high consistency rubbers, thermoplastics, additives, coatings, thermal management materials, sealants and lubricants. |
Business | Applications/Market Segments | Major Products |
Dow Building & Construction | Rigid and spray foam insulation; weatherization, waterproofing and air sealing; caulks and sealants; elastomeric roof coatings; exterior insulation finishing systems; roof tiles and siding; industrial non-wovens; cement-based tile adhesives; plasters and renders; tape joint compounds; and concrete additives | AQUASET™ acrylic thermosetting resins, DOW™ latex powder, FROTH-PAK™ foam insulation and sealants, GREAT STUFF™ insulating foam sealants and adhesives, RHOPLEX™ and PRIMAL™ acrylic emulsion polymers, STYROFOAM™ brand insulation products, THERMAX™ exterior insulation, WALOCEL™ cellulose ethers, WEATHERMATE™ house wrap, XENERGY™ high performance insulation, LIQUIDARMOR™ flashing and sealant |
Dow Coating Materials | Acrylic binders for architectural paint and coatings, industrial coatings, and paper; dispersants; rheology modifiers; opacifiers and surfactants for both architectural and industrial applications; protective and functional coatings | ACRYSOL™ Rheology Modifiers, AVANSE™ acrylic binders, EVOQUE™ Pre-Composite Polymer, FORMASHIELD™ acrylic binder, RHOPLEX™ acrylic resin, TAMOL™ Dispersants, MAINCOTE™ acrylic epoxy hybrid, PARALOID™ Edge ISO-free technology and ACOUSTICRYL™ liquid-applied sound damping technology |
Energy & Water Solutions | Helping customers in exploration, production, transmission, refining and gas processing to optimize supply, improve efficiencies and manage emissions. Providing expertise and localized solutions for microbial control for well souring, industrial cooling water, fabric odor elimination, in-can preservation and dry film protection. Providing advanced, cost effective separation and purification technology for water treatment and filtration, pharmaceutical, food and beverage, and chemical processing | Demulsifiers, drilling and completion fluids, heat transfer fluids, rheology modifiers, scale inhibitors, shale inhibitors, specialty amine solvents, surfactants, water clarifiers, DOW ADSORBSIA™ selective media, DOW EDI™ modules, DOWEX™ and AMBERJET™ ion exchange resins, DOWEX™ OPTIPORE™ polymeric adsorbent resins, DOW FILMTEC™ reverse osmosis and nanofiltration elements, TEQUATIC™ PLUS fine particle filter, AMBERLYST™ polymeric catalysts, AQUCAR™, BIOBAN™, SILVADUR™ antimicrobial |
Performance Monomers | Super absorbents, water treatment, flocculants and detergents, acrylic sheets, coatings, inks and paints,molding compounds, impact modifiers, processing aids, electronic displays, adhesives, textiles, automotive and architectural safetyglass, and plastics additives | Acrylates, methacrylates, vinyl acetate monomers, high-quality impact modifiers, processing aids, foam cell promoters and weatherable acrylic capstock compounds forthermoplastic and thermosetting materials |
Infrastructure Solutions - Silicones | Commercial glazing, building envelope, construction chemicals, window and door infrastructure, wire and cable, electrical and high voltage insulation, power transmission, sleeving, optical devices, light-emitting diodes, lamp and luminaire, oil and gas, solar | Elastomers, fluids, pottants, potting agents, thermal interface materials, adhesives and sealants, encapsulants, gels, resins, antifoams, demulsifiers, lubricants |
(1) | Hydrogen peroxide to propylene oxide manufacturing technology is utilized by MTP HPPO Manufacturing Company Limited, a Thailand-based consolidated variable interest entity ultimately owned 50 percent by the Company and 50 percent by SCG Chemicals Co. Ltd.; and BASF DOW HPPO Production B.V.B.A., a Belgium-based joint venture ultimately owned 100 percent by HPPO Holding & Finance C.V., which is owned 50 percent by the Company and 50 percent by BASF. |
Business | Applications/Market Segments | Major Products |
Dow Elastomers | Adhesives, footwear, housewares, infrastructure, sports recreation, toys and infant products, transportation | Elastomers, polyolefin plastomers, ethylene propylene diene monomer elastomers ("EPDMs") |
Dow Electrical and Telecommunications | Building and construction, electrical transmission and distribution infrastructure, telecommunications infrastructure | Wire and cable insulation, semiconductive and jacketing compound solutions, bio-based plasticizers |
Dow Packaging and Specialty Plastics | Adhesives, food and specialty packaging, hygiene and medical, industrial and consumer packaging, transmission pipe and photovoltaics | Acrylics, polyethylene, low-density polyethylene, linear low-density polyethylene, high-density polyethylene, polyolefin plastomers |
Energy | Principally for use in Dow’s global operations | Power, steam and other utilities |
Hydrocarbons | Purchaser of feedstocks; production of cost competitive monomers utilized by Dow’s derivative businesses | Ethylene, propylene, benzene, butadiene, octene, aromatics co-products, crude C4 Advantaged feedstock positions in the United States, Canada, Argentina and the Middle East |
Significant Raw Materials | Performance Materials & Chemicals | ||||
Raw Material | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Plastics | |
Acetone | x | x | |||
Ammonia | x | x | x | ||
Aniline (1) | x | ||||
Benzene | x | x | |||
Butane | x | ||||
Butene | x | x | |||
Butyl Acrylate (1) | x | x | x | ||
Carbon Black | x | x | |||
Carbon Monoxide | x | ||||
Caustic Soda (1) | x | x | x | x | |
Chlorine (1) | x | x | x | x | |
Condensate | x | ||||
Electric Power | x | x | |||
Ethane | x | ||||
Ethanol | x | x | x | x | |
Ethylene (1) | x | x | x | ||
Formaldehyde | x | x | x | ||
Hexene | x | ||||
Hydrogen Peroxide (2) | x | ||||
Isopropanol | x | x | |||
Methanol | x | x | x | x | x |
Naphtha | x | ||||
Natural Gas | x | ||||
Nitrogen | x | x | |||
Octene (1) | x | ||||
Polystyrene | x | x | |||
Propane | x | x | x | ||
Propylene (1) | x | x | x | x | |
Pygas | x | ||||
Silica | x | x | |||
Silicon Metal (1) | x | x | |||
Styrene | x | x | |||
Wood Pulp | x | x |
Patents Owned at December 31, 2016 | United States | Foreign | ||||
Agricultural Sciences | 1,041 | 4,603 | ||||
Consumer Solutions | 1,645 | 6,189 | ||||
Infrastructure Solutions | 1,338 | 6,827 | ||||
Performance Materials & Chemicals | 375 | 2,332 | ||||
Performance Plastics | 1,150 | 5,283 | ||||
Corporate | 102 | 215 | ||||
Total | 5,651 | 25,449 |
Remaining Life of Patents Owned at December 31, 2016 | ||||||
United States | Foreign | |||||
Within 5 years | 1,384 | 5,170 | ||||
6 to 10 years | 1,187 | 8,000 | ||||
11 to 15 years | 2,312 | 10,843 | ||||
16 to 20 years | 768 | 1,436 | ||||
Total | 5,651 | 25,449 |
Principal Nonconsolidated Affiliate | Ownership Interest | Business Description | |||
Dow Corning Corporation (1) | N/A | A U.S. company that manufactures silicone and silicone products | |||
EQUATE Petrochemical Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins | ||
The HSC Group: (1) | |||||
DC HSC Holdings LLC (2) | 50.00 | % | A U.S.-based group of companies that manufactures polycrystalline silicon products | ||
Hemlock Semiconductor L.L.C. | 50.10 | % | A U.S. company that sells polycrystalline silicon products | ||
The Kuwait Olefins Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene and ethylene glycol | ||
The Kuwait Styrene Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures styrene monomer | ||
Map Ta Phut Olefins Company Limited (3) | 32.77 | % | A Thailand-based company that manufactures propylene and ethylene | ||
Sadara Chemical Company (4) | 35.00 | % | A Saudi Arabian company that currently manufactures chlorine, ethylene and propylene for internal consumption and manufactures and sells polyethylene; will produce and sell high-value added chemical products and other performance plastics when fully operational | ||
The SCG-Dow Group: | |||||
Siam Polyethylene Company Limited | 50.00 | % | A Thailand-based company that manufactures polyethylene | ||
Siam Polystyrene Company Limited | 50.00 | % | A Thailand-based company that manufactures polystyrene | ||
Siam Styrene Monomer Co., Ltd. | 50.00 | % | A Thailand-based company that manufactures styrene | ||
Siam Synthetic Latex Company Limited | 50.00 | % | A Thailand-based company that manufactures latex |
(1) | As of June 1, 2016, Dow Corning, previously a 50:50 joint venture with Corning, became a wholly owned subsidiary of Dow as a result of the DCC Transaction. Dow and Corning continue to maintain their historical proportional equity interest in the HSC Group. Dow Corning was treated as a principal nonconsolidated affiliate through May 31, 2016. Beginning in June 2016, the results of Dow Corning, excluding the HSC Group, are fully consolidated into the Company's consolidated statements of income. The results of the HSC Group will continue to be reported as "Equity in earnings of nonconsolidated affiliates" in the Company's consolidated statements of income. See Note 4 to the Consolidated Financial Statements for additional information on this transaction. |
(2) | DC HSC Holdings LLC holds an 80.5 percent indirect ownership interest in Hemlock Semiconductor Operations. |
(3) | The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited. |
(4) | Dow is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company's established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. |
Name - Age | Present Position with Registrant | Year Elected to be an Officer | Other Business Experience since January 1, 2012 |
Ronald C. Edmonds, 59 | Controller and Vice President of Controllers and Tax | 2009 | Vice President and Controller 2009 to date. Present position held since January 2016. |
James R. Fitterling, 55 | President and Chief Operating Officer | 2010 | Executive Vice President and President, Feedstocks & Energy and Corporate Development September 2011 to September 2012. Executive Vice President, Feedstocks, Performance Plastics, Asia and Latin America September 2012 to December 2013. Executive Vice President, Feedstocks, Performance Plastics and Supply Chain December 2013 to October 2014. Vice Chairman, Business Operations October 2014 to October 2015. Vice Chairman and Chief Operating Officer October 2015 to February 2016. Present position held since February 2016. |
Heinz Haller, 61 | Executive Vice President and President of Dow Europe, Middle East, Africa and India | 2006 | Executive Vice President and Chief Commercial Officer August 2010 to September 2012. Present position held since September 2012. |
Joe E. Harlan, 57 | Vice Chairman and Chief Commercial Officer | 2011 | Executive Vice President, Performance Materials September 2011 to September 2012. Executive Vice President, Chemicals, Energy and Performance Materials September 2012 to October 2014. Chief Commercial Officer and Vice Chairman, Market Businesses October 2014 to October 2015. Present position held since October 2015. |
Peter Holicki, 56 | Senior Vice President, Operations, Manufacturing & Engineering, Environment, Health & Safety Operations, and Emergency Services & Security | 2014 | Global Manufacturing Vice President, Hydrocarbons May 2009 to October 2012. Vice President for Manufacturing and Engineering Europe, Middle East and Africa May 2009 to October 2012. Vice President of Operations for Europe, Middle East and Africa and the Ethylene Envelope October 2012 to December 2013. Emergency Services and Security Expertise Center September 2014 to present. Corporate Vice President October 2014 to October 2015. Present position held since 2015. |
Charles J. Kalil, 65 | Executive Vice President and General Counsel | 2004 | General Counsel 2004 to date. Executive Vice President 2008 to date. Corporate Secretary 2005 to February 2015. |
Andrew N. Liveris, 62 | Chief Executive Officer and Chairman of the Board | 2003 | President 2004 to February 2016. Chief Executive Officer 2004 to date. Chairman 2006 to date. |
Johanna Söderström, 45 | Corporate Vice President, Human Resources and Aviation, and Chief Human Resource Officer | 2015 | Global Human Resources Director, Performance Materials Division January 2011 to October 2012. Vice President, Human Resource Center of Expertise October 2012 to January 2015. Present position held since January 2015. |
A. N. Sreeram, 49 | Senior Vice President, Research & Development and Chief Technology Officer | 2013 | Vice President, Research & Development, Dow Advanced Materials 2009 to October 2013. Corporate Vice President, Research & Development October 2013 to October 2015. Present position held since October 2015. |
Howard I. Ungerleider, 48 | Vice Chairman and Chief Financial Officer | 2011 | Senior Vice President and President, Performance Plastics March 2011 to September 2012. Executive Vice President, Advanced Materials September 2012 to October 2014. Chief Financial Officer and Executive Vice President October 2014 to October 2015. Present position held since October 2015. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1A. Risk Factors. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1B. Unresolved Staff Comments. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 2. Properties. |
Location | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics |
Bahia Blanca, Argentina | x | ||||
Candeias, Brazil | x | ||||
Canada: | |||||
Fort Saskatchewan, Alberta | x | ||||
Joffre, Alberta | x | ||||
Germany: | |||||
Boehlen | x | x | x | ||
Bomlitz | x | x | |||
Leuna | x | ||||
Schkopau | x | x | x | x | |
Stade | x | x | x | x | x |
Terneuzen, The Netherlands | x | x | x | x | |
Tarragona, Spain | x | x | x | ||
Map Ta Phut, Thailand | x | x | x | ||
United States: | |||||
Carrollton, Kentucky | x | x | |||
Louisville, Kentucky | x | ||||
Hahnville (St. Charles), Louisiana | x | x | x | ||
Plaquemine, Louisiana | x | x | x | x | |
Midland, Michigan | x | x | x | x | x |
Deer Park, Texas | x | x | |||
Freeport, Texas | x | x | x | x | |
Seadrift, Texas | x | x | x | x | |
Texas City, Texas | x | x | |||
Wales, United Kingdom | x | x | |||
Zhangjiagang, China | x | x | x |
Asia Pacific: | 40 manufacturing locations in 11 countries. |
Canada: | 6 manufacturing locations in 3 provinces. |
Europe, Middle East, Africa and India: | 50 manufacturing locations in 17 countries. |
Latin America: | 33 manufacturing locations in 4 countries. |
United States: | 60 manufacturing locations in 25 states and 1 U.S. territory. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 3. Legal Proceedings. |
Certain Items Impacting Results | Pretax Impact (1) | Impact on Net Income (2) | Impact on EPS (3) (4) | ||||||||||||||||||||||||||||||||
In millions, except per share amounts | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||
Adjusted to exclude certain items (non-GAAP measures) | $ | 4,054 | $ | 3,709 | $ | 2,981 | $ | 3.47 | $ | 3.11 | $ | 2.48 | |||||||||||||||||||||||
Certain items: | |||||||||||||||||||||||||||||||||||
Cost of sales: | |||||||||||||||||||||||||||||||||||
Asset impairments and related costs | $ | (91 | ) | $ | (23 | ) | $ | (181 | ) | (70 | ) | (14 | ) | (124 | ) | (0.06 | ) | (0.01 | ) | (0.10 | ) | ||||||||||||||
Warranty accrual adjustment of exited business | — | (100 | ) | — | — | (63 | ) | — | — | (0.05 | ) | — | |||||||||||||||||||||||
Univation step acquisition | (12 | ) | — | — | (8 | ) | — | — | (0.01 | ) | — | — | |||||||||||||||||||||||
Restructuring plan implementation costs | — | — | (40 | ) | — | — | (29 | ) | — | — | (0.03 | ) | |||||||||||||||||||||||
Portfolio and productivity actions | (24 | ) | — | — | (16 | ) | — | — | (0.01 | ) | — | — | |||||||||||||||||||||||
R&D: | |||||||||||||||||||||||||||||||||||
Restructuring plan implementation costs | — | — | (2 | ) | — | — | (1 | ) | — | — | — | ||||||||||||||||||||||||
SG&A: | |||||||||||||||||||||||||||||||||||
Restructuring plan implementation costs | — | — | (2 | ) | — | — | (2 | ) | — | — | — | ||||||||||||||||||||||||
Portfolio and productivity actions | (51 | ) | — | — | (38 | ) | — | — | (0.03 | ) | — | — | |||||||||||||||||||||||
Amortization of intangibles: | |||||||||||||||||||||||||||||||||||
Asset impairments and related costs | — | — | (3 | ) | — | — | (2 | ) | — | — | — | ||||||||||||||||||||||||
Goodwill and other intangible asset impairment losses | — | (50 | ) | — | — | (33 | ) | — | — | (0.03 | ) | — | |||||||||||||||||||||||
Restructuring (charges) credits | (415 | ) | — | 22 | (274 | ) | — | 21 | (0.24 | ) | — | 0.02 | |||||||||||||||||||||||
Asbestos-related charge | — | (78 | ) | — | — | (49 | ) | — | — | (0.04 | ) | — | |||||||||||||||||||||||
Equity in earnings of nonconsolidated affiliates: | |||||||||||||||||||||||||||||||||||
Joint venture actions | (36 | ) | (93 | ) | — | (26 | ) | (87 | ) | — | (0.02 | ) | (0.08 | ) | — | ||||||||||||||||||||
Asset impairments at a formulated electrolytes joint venture | — | — | (10 | ) | — | — | (6 | ) | — | — | (0.01 | ) | |||||||||||||||||||||||
Sundry income (expense) - net: | |||||||||||||||||||||||||||||||||||
Gain on split-off of chlorine value chain | 2,233 | — | — | 2,215 | — | — | 1.96 | — | — | ||||||||||||||||||||||||||
Gain on sale of MEGlobal | 723 | — | — | 589 | — | — | 0.52 | — | — | ||||||||||||||||||||||||||
Gain on 2015 business divestitures | 1,320 | — | — | 823 | — | — | 0.71 | — | — | ||||||||||||||||||||||||||
Gain on Univation step acquisition | 361 | — | — | 359 | — | — | 0.31 | — | — | ||||||||||||||||||||||||||
Gain from K-Dow settlement | — | — | 2,161 | — | — | 1,647 | — | — | 1.37 | ||||||||||||||||||||||||||
Gain on sale of Polypropylene Licensing and Catalysts business | — | — | 451 | — | — | 356 | — | — | 0.29 | ||||||||||||||||||||||||||
Gain on sale of a 7.5 percent interest in Freeport LNG Development, L.P. | — | — | 87 | — | — | 69 | — | — | 0.06 | ||||||||||||||||||||||||||
Gain on sale of ownership interest in Dow Kokam | — | — | 26 | — | — | 18 | — | — | 0.01 | ||||||||||||||||||||||||||
Asset impairments and related costs | (53 | ) | — | — | (53 | ) | — | — | (0.05 | ) | — | — | |||||||||||||||||||||||
Impact of Argentine peso devaluation | (98 | ) | — | — | (106 | ) | — | — | (0.09 | ) | — | — | |||||||||||||||||||||||
Loss on early extinguishment of debt | (8 | ) | — | (326 | ) | (5 | ) | — | (205 | ) | — | — | (0.17 | ) | |||||||||||||||||||||
Portfolio and productivity actions | (119 | ) | (49 | ) | — | (99 | ) | (31 | ) | — | (0.09 | ) | (0.03 | ) | — | ||||||||||||||||||||
Provision for income taxes: | |||||||||||||||||||||||||||||||||||
Uncertain tax position adjustments | — | — | — | — | — | (276 | ) | — | — | (0.23 | ) | ||||||||||||||||||||||||
Total certain items | $ | 3,730 | $ | (393 | ) | $ | 2,183 | $ | 3,291 | $ | (277 | ) | $ | 1,466 | $ | 2.90 | $ | (0.24 | ) | $ | 1.21 | ||||||||||||||
Dilutive effect of assumed preferred stock conversion into shares of common stock | $ | (0.22 | ) | $ | — | $ | (0.01 | ) | |||||||||||||||||||||||||||
Reported U.S. GAAP Amounts (5) (6) | $ | 7,345 | $ | 3,432 | $ | 4,447 | $ | 6.15 | $ | 2.87 | $ | 3.68 |
The Dow Chemical Company and Subsidiaries |
PART I, Item 4. Mine Safety Disclosures. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 5. Market for Registrant’s Common Equity, |
Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Issuer Purchases of Equity Securities | Average price paid per share | Total number of shares purchased as part of the Company's publicly announced share repurchase program (1) | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (1) (In millions) | |||||||||||
Period | Total number of shares purchased | |||||||||||||
October 2016 | — | $ | — | — | $ | 1,896 | ||||||||
November 2016 | 8,822,551 | $ | 53.64 | 8,822,551 | $ | 1,423 | ||||||||
December 2016 | 493,480 | $ | 54.25 | 493,480 | $ | 1,396 | ||||||||
Fourth quarter 2016 | 9,316,031 | $ | 53.67 | 9,316,031 | $ | 1,396 |
(1) |
The Dow Chemical Company and Subsidiaries |
PART II, Item 6. Selected Financial Data. |
In millions, except as noted (Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||
Summary of Operations | |||||||||||||||
Net sales | $ | 48,158 | $ | 48,778 | $ | 58,167 | $ | 57,080 | $ | 56,786 | |||||
Net income (1) | $ | 4,404 | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 1,100 | |||||
Per share of common stock (in dollars): | |||||||||||||||
Net income per common share - basic (1) | $ | 3.57 | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 0.71 | |||||
Net income per common share - diluted (1) | $ | 3.52 | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 0.70 | |||||
Cash dividends declared per share of common stock | $ | 1.84 | $ | 1.72 | $ | 1.53 | $ | 1.28 | $ | 1.21 | |||||
Book value per share of common stock | $ | 21.70 | $ | 23.06 | $ | 19.71 | $ | 22.59 | $ | 17.73 | |||||
Year-end Financial Position | |||||||||||||||
Total assets (2) (3) | $ | 79,511 | $ | 67,938 | $ | 68,639 | $ | 69,380 | $ | 69,462 | |||||
Long-term debt (2) | $ | 20,456 | $ | 16,215 | $ | 18,741 | $ | 16,732 | $ | 19,819 | |||||
Financial Ratios | |||||||||||||||
Research and development expenses as percent of net sales | 3.3 | % | 3.3 | % | 2.8 | % | 3.1 | % | 3.0 | % | |||||
Income before income taxes as percent of net sales (1) | 9.2 | % | 20.4 | % | 9.1 | % | 11.9 | % | 2.9 | % | |||||
Return on stockholders’ equity (1) | 15.3 | % | 34.4 | % | 18.6 | % | 19.4 | % | 5.0 | % | |||||
Debt as a percent of total capitalization | 44.0 | % | 39.7 | % | 45.5 | % | 38.9 | % | 48.7 | % |
(1) | The 2016 values include the impact of a change in accounting policy for asbestos-related defense and processing costs. See Notes 1 and 15 to the Consolidated Financial Statements for additional information. |
(2) |
(3) |
Sales Volume and Price by Operating Segment and Geographic Area | |||||||||||||||||||||||||||
2015 | 2014 | 2013 | |||||||||||||||||||||||||
Percent change from prior year | Volume | Price | Total | Volume | Price | Total | Volume | Price | Total | ||||||||||||||||||
Operating Segments: | |||||||||||||||||||||||||||
Agricultural Sciences | (4 | )% | (8 | )% | (12 | )% | 3 | % | (1 | )% | 2 | % | 11 | % | 1 | % | 12 | % | |||||||||
Consumer Solutions | 1 | (7 | ) | (6 | ) | 3 | (1 | ) | 2 | 3 | (2 | ) | 1 | ||||||||||||||
Infrastructure Solutions | 2 | (14 | ) | (12 | ) | 1 | — | 1 | 4 | (1 | ) | 3 | |||||||||||||||
Performance Materials & Chemicals | (6 | ) | (15 | ) | (21 | ) | 2 | — | 2 | (2 | ) | 1 | (1 | ) | |||||||||||||
Performance Plastics | 5 | (23 | ) | (18 | ) | — | 2 | 2 | (4 | ) | 1 | (3 | ) | ||||||||||||||
Total | 1 | % | (17 | )% | (16 | )% | 2 | % | — | % | 2 | % | — | % | 1 | % | 1 | % | |||||||||
Geographic Areas: | |||||||||||||||||||||||||||
United States | — | % | (14 | )% | (14 | )% | 2 | % | 2 | % | 4 | % | — | % | 2 | % | 2 | % | |||||||||
Europe, Middle East, Africa and India | — | (22 | ) | (22 | ) | 3 | (1 | ) | 2 | (4 | ) | — | (4 | ) | |||||||||||||
Rest of World | 1 | (13 | ) | (12 | ) | (1 | ) | — | (1 | ) | 4 | — | 4 | ||||||||||||||
Total | 1 | % | (17 | )% | (16 | )% | 2 | % | — | % | 2 | % | — | % | 1 | % | 1 | % |
The Dow Chemical Company and Subsidiaries | ||
PART II, Item 7. Management’s Discussion and | ||
(Unaudited) | Analysis of Financial Condition and Results of Operations. |
Sales Volume and Price by Operating Segment and Geographic Area Excluding Acquisitions and Divestitures (1) | |||||||||||||||||||||||||||
2015 | 2014 | 2013 | |||||||||||||||||||||||||
Percent change from prior year | Volume | Price | Total | Volume | Price | Total | Volume | Price | Total | ||||||||||||||||||
Operating Segments: | |||||||||||||||||||||||||||
Agricultural Sciences | (3 | )% | (8 | )% | (11 | )% | 3 | % | (1 | )% | 2 | % | 11 | % | 1 | % | 12 | % | |||||||||
Consumer Solutions | 1 | (7 | ) | (6 | ) | 3 | (1 | ) | 2 | 3 | (2 | ) | 1 | ||||||||||||||
Infrastructure Solutions | 2 | (14 | ) | (12 | ) | 1 | — | 1 | 4 | (1 | ) | 3 | |||||||||||||||
Performance Materials & Chemicals | 1 | (16 | ) | (15 | ) | 2 | — | 2 | (2 | ) | 1 | (1 | ) | ||||||||||||||
Performance Plastics | 5 | (23 | ) | (18 | ) | 1 | 2 | 3 | (3 | ) | 1 | (2 | ) | ||||||||||||||
Total | 2 | % | (17 | )% | (15 | )% | 2 | % | — | % | 2 | % | — | % | 1 | % | 1 | % | |||||||||
Geographic Areas: | |||||||||||||||||||||||||||
United States | 2 | % | (14 | )% | (12 | )% | 2 | % | 2 | % | 4 | % | — | % | 2 | % | 2 | % | |||||||||
Europe, Middle East, Africa and India | 3 | (23 | ) | (20 | ) | 4 | (1 | ) | 3 | (4 | ) | — | (4 | ) | |||||||||||||
Rest of World | 2 | (13 | ) | (11 | ) | — | — | — | 6 | — | 6 | ||||||||||||||||
Total | 2 | % | (17 | )% | (15 | )% | 2 | % | — | % | 2 | % | — | % | 1 | % | 1 | % |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Table of Contents | Page |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics) |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics); the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences); ANGUS Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals); and the global Sodium Borohydride business, divested on January 30, 2015 (Performance Materials & Chemicals). Also excludes current period sales related to the ownership restructure of Dow Corning announced on June 1, 2016 (Consumer Solutions and Infrastructure Solutions) and sales from January 1, 2016 through April 30, 2016 for the step acquisition of Univation, acquired on May 5, 2015 (Performance Plastics). |
Production Costs and Operating Expenses | |||||||||
Cost components as a percent of total | 2016 | 2015 | 2014 | ||||||
Hydrocarbon feedstocks and energy | 24 | % | 27 | % | 38 | % | |||
Salaries, wages and employee benefits | 17 | 18 | 15 | ||||||
Maintenance | 4 | 5 | 4 | ||||||
Depreciation | 5 | 4 | 4 | ||||||
Restructuring charges | 1 | 1 | — | ||||||
Supplies, services and other raw materials | 49 | 45 | 39 | ||||||
Total | 100 | % | 100 | % | 100 | % |
(1) | Europe, Middle East, Africa and India |
Crop Application | ||||||||||
Key Product Lines | Canola | Cereals | Corn | Cotton | Range and Pasture | Rice | Soybeans | Sunflower | Trees, Fruits and Vegetables | Others |
Insecticides | x | x | x | x | x | x | x | x | x | |
Fungicides | x | x | x | x | x | x | ||||
Herbicides | x | x | x | x | x | x | x | x | x | x |
Seeds | x | x | x | x | x | x | x | x | ||
Other | x | x | x |
Key Product Lines | Brands and Technologies |
Insecticides | ISOCLAST™; LORSBAN™; RADIANT™; SENTRICON™; TRACER™ |
Fungicides | DITHANE™; INATREQ™ |
Herbicides | ARYLEX™; BROADWAY™; CLINCHER™; DURANGO™; FENCER™; GARLON™; LONTREL™; MILESTONE™; PANZER™; PRIMUS™; RESICORE™; RINSKOR™; SPIDER™; STARANE™; SURESTART™; TORDON™ |
Seed Brands | AGROMEN™(1); BRODBECK™ Seeds; DAIRYLAND SEED™; DOW™ Seeds; MYCOGEN™ Seeds; NEXERA™; Omega-9 Healthier Oils; PFISTER™ Seeds; PHYTOGEN™; PRAIRIE BRAND™ Seeds; PROPOUND™ |
Seed Traits and Technologies | ENLIST™; ENLIST DUO™; EXZACT™ Precision Technology; POWERCORE™ Insect Trait Technology(2); REFUGE ADVANCED™ powered by SmartStax®(2); SmartStax® Insect Trait Technology(2) |
Other | INSTINCT®; N-SERVE™ Nitrogen Stabilizer; TELONE™ |
(1) | AGROMEN trademark used under license from Agromen Sementes Agricolas Ltda. |
(2) | Smartstax® and POWERCORE™ multi-event technology developed by Dow AgroSciences LLC and Monsanto. Smartstax®, the Smartstax® logo, POWERCORE™ and the POWERCORE™ logo are trademarks of Monsanto Technology, LLC. |
Agricultural Sciences In millions | 2015 | 2014 | 2013 | |||||||||
Sales | $ | 6,381 | $ | 7,290 | $ | 7,137 | ||||||
Price change from comparative period | (8 | )% | (1 | )% | 1 | % | ||||||
Volume change from comparative period | (4 | )% | 3 | % | 11 | % | ||||||
Volume change, excluding acquisitions and divestitures | (3 | )% | 3 | % | 11 | % | ||||||
Equity earnings (losses) | $ | (15 | ) | $ | 4 | $ | 5 | |||||
EBITDA | $ | 1,432 | $ | 962 | $ | 894 | ||||||
Certain items impacting EBITDA | $ | 573 | $ | — | $ | — | ||||||
EBITDA excluding certain items | $ | 859 | $ | 962 | $ | 894 |
Consumer Solutions In millions | 2015 | 2014 | 2013 | |||||||||
Sales | $ | 4,379 | $ | 4,639 | $ | 4,562 | ||||||
Price change from comparative period | (7 | )% | (1 | )% | (2 | )% | ||||||
Volume change from comparative period | 1 | % | 3 | % | 3 | % | ||||||
Equity earnings | $ | 91 | $ | 281 | $ | 107 | ||||||
EBITDA | $ | 1,048 | $ | 1,130 | $ | 933 | ||||||
Certain items impacting EBITDA | $ | (59 | ) | $ | 82 | $ | — | |||||
EBITDA excluding certain items | $ | 1,107 | $ | 1,048 | $ | 933 |
Business | Market Segments | Technologies |
Dow Home, Institutional & Personal Care Solutions | Personal care, home care and specialty applications with key focus on hair care, skin care, sun care, cleansing, as well as fabric, dish, floor, hard surface and air care applications | From polymers and emollients to chelants and dispersants, Dow offers unique innovations that empower consumer brands around the world to deliver exceptional product performance and process enhancements that create value. Other notable technologies include opacifiers, rheology modifiers, surfactants and solvents. |
Dow Pharma and Food Solutions | Pharmaceutical, food and nutrition | Cellulosic and other technologies help bring new classes of medicines to market and enable foods that are healthier (gluten-free, reduced oil/fat content). Notable technologies include excipients and active pharmaceutical ingredients, solubility enhancers, reagents, granulation and binders, as well as coatings and controlled release. |
SAFECHEM™(1) | A service business responsible for the sustainable and innovative use of solvents | Offers cleaning solutions, equipment and services for metal and dry cleaning applications. Provides closed-loop SAFE-TAINER™ System delivery systems to ensure emission free use of cleaning agents. |
(1) | On December 31, 2016, the Company sold its SAFECHEM™ business. SAFECHEM™ was reported as part of the Consumer Solutions segment through the date of divestiture. |
Business | Market Segments | Technologies |
Adhesives | Elastic, structural and specialty adhesives | Innovative and differentiated adhesive technologies to meet customer specifications for durability and crash performance |
Performance Solutions | Performance plastics, fluids and polyurethane foam solutions | Technologies that differentiate customers’ products with improved performance characteristics |
Business | Market Segments | Technologies |
Semiconductor Technologies | Integrated circuit fabrication for memory and logic | CMP consumables, photolithography materials |
Interconnect Technologies | Printed circuit board, electronic and industrial finishing | Interconnect metallization and imaging process chemistries |
Display Technologies | Display materials | Display films and filters, OLED materials |
Growth Technologies | New and emerging technologies | Advanced chip packaging materials, metalorganic precursors, optical and ceramic materials |
Business | Applications/Market Segments | Technologies |
Beauty and Personal Care | Hair care, skin care, sun care and color cosmetics | Innovative beauty care ingredients that help improve product performance and meet the needs of consumers. Notable silicone technologies include elastomers, emulsifiers, rheology modifiers, film formers-resins, gums and acrylates, powders and fluids. |
Household Care | Laundry and fabric care, hard surface care | Proven solutions to deliver benefits to both consumers and manufacturers alike. Notable silicone technologies include antifoams, processing aids, polishing gloss aids and softening agents. |
Healthcare | Drug delivery, medical device, wound care and topical ingredient applications | Innovative silicone solutions backed by industry application and regulatory expertise. Notable silicone technologies include elastomers, emulsifiers, excipients, tubing and molded assemblies, adhesives, antifoams and fluids. |
Consumer Goods | Electronics, packaging, sporting goods, household goods, infant care | Elastomer and thermal plastic technologies with proven performance delivering benefits to consumers around the world in multiple applications. Notable technology includes liquid silicone rubbers, high consistency rubbers, TPSiV™, thermoplastic additives and food-grade materials. |
Automotive | Safety, lighting, sealing, electronics, NVH (noise, vibration, harshness), exterior trim | Notable technology includes: elastomers, liquid silicone rubbers, high consistency rubbers, thermoplastics, additives, coatings, thermal management materials, sealants and lubricants. |
Infrastructure Solutions In millions | 2015 | 2014 | 2013 | |||||||||
Sales | $ | 7,394 | $ | 8,429 | $ | 8,339 | ||||||
Price change from comparative period | (14 | )% | — | % | (1 | )% | ||||||
Volume change from comparative period | 2 | % | 1 | % | 4 | % | ||||||
Equity earnings (losses) | $ | 203 | $ | (6 | ) | $ | 126 | |||||
EBITDA | $ | 1,021 | $ | 817 | $ | 941 | ||||||
Certain items impacting EBITDA | $ | (101 | ) | $ | (348 | ) | $ | (94 | ) | |||
EBITDA excluding certain items | $ | 1,122 | $ | 1,165 | $ | 1,035 |
Business | Applications/Market Segments | Major Products |
Dow Building & Construction | Rigid and spray foam insulation; weatherization, waterproofing and air sealing; caulks and sealants; elastomeric roof coatings; exterior insulation finishing systems; roof tiles and siding; industrial non-wovens; cement-based tile adhesives; plasters and renders; tape joint compounds; and concrete additives | AQUASET™ acrylic thermosetting resins, DOW™ latex powder, FROTH-PAK™ foam insulation and sealants, GREAT STUFF™ insulating foam sealants and adhesives, RHOPLEX™ and PRIMAL™ acrylic emulsion polymers, STYROFOAM™ brand insulation products, THERMAX™ exterior insulation, WALOCEL™ cellulose ethers, WEATHERMATE™ house wrap, XENERGY™ high performance insulation, LIQUIDARMOR™ flashing and sealant |
Dow Coating Materials | Acrylic binders for architectural paint and coatings, industrial coatings, and paper; dispersants; rheology modifiers; opacifiers and surfactants for both architectural and industrial applications; protective and functional coatings | ACRYSOL™ Rheology Modifiers, AVANSE™ acrylic binders, EVOQUE™ Pre-Composite Polymer, FORMASHIELD™ acrylic binder, RHOPLEX™ acrylic resin, TAMOL™ Dispersants, MAINCOTE™ acrylic epoxy hybrid, PARALOID™ Edge ISO-free technology and ACOUSTICRYL™ liquid-applied sound damping technology |
Energy & Water Solutions | Helping customers in exploration, production, transmission, refining and gas processing to optimize supply, improve efficiencies and manage emissions. Providing expertise and localized solutions for microbial control for well souring, industrial cooling water, fabric odor elimination, in-can preservation and dry film protection. Providing advanced, cost effective separation and purification technology for water treatment and filtration, pharmaceutical, food and beverage, and chemical processing | Demulsifiers, drilling and completion fluids, heat transfer fluids, rheology modifiers, scale inhibitors, shale inhibitors, specialty amine solvents, surfactants, water clarifiers, DOW ADSORBSIA™ selective media, DOW EDI™ modules, DOWEX™ and AMBERJET™ ion exchange resins, DOWEX™ OPTIPORE™ polymeric adsorbent resins, DOW FILMTEC™ reverse osmosis and nanofiltration elements, TEQUATIC™ PLUS fine particle filter, AMBERLYST™ polymeric catalysts, AQUCAR™, BIOBAN™, SILVADUR™ antimicrobial |
Performance Monomers | Super absorbents, water treatment, flocculants and detergents, acrylic sheets, coatings, inks and paints,molding compounds, impact modifiers, processing aids, electronic displays, adhesives, textiles, automotive and architectural safetyglass, and plastics additives | Acrylates, methacrylates, vinyl acetate monomers, high-quality impact modifiers, processing aids, foam cell promoters and weatherable acrylic capstock compounds forthermoplastic and thermosetting materials |
Infrastructure Solutions - Silicones | Commercial glazing, building envelope, construction chemicals, window and door infrastructure, wire and cable, electrical and high voltage insulation, power transmission, sleeving, optical devices, light-emitting diodes, lamp and luminaire, oil and gas, solar | Elastomers, fluids, pottants, potting agents, thermal interface materials, adhesives and sealants, encapsulants, gels, resins, antifoams, demulsifiers, lubricants |
(1) | Hydrogen peroxide to propylene oxide manufacturing technology is utilized by MTP HPPO Manufacturing Company Limited, a Thailand-based consolidated variable interest entity ultimately owned 50 percent by the Company and 50 percent by SCG Chemicals Co. Ltd.; and BASF DOW HPPO Production B.V.B.A., a Belgium-based joint venture ultimately owned 100 percent by HPPO Holding & Finance C.V., which is owned 50 percent by the Company and 50 percent by BASF. |
Performance Materials & Chemicals In millions | 2015 | 2014 | 2013 | |||||||||
Sales | $ | 11,973 | $ | 15,114 | $ | 14,824 | ||||||
Price change from comparative period | (15 | )% | — | % | 1 | % | ||||||
Volume change from comparative period | (6 | )% | 2 | % | (2 | )% | ||||||
Volume change, excluding divestitures | 1 | % | 2 | % | (2 | )% | ||||||
Equity earnings | $ | 225 | $ | 322 | $ | 480 | ||||||
EBITDA | $ | 5,479 | $ | 2,193 | $ | 1,913 | ||||||
Certain items impacting EBITDA | $ | 3,409 | $ | — | $ | (55 | ) | |||||
EBITDA excluding certain items | $ | 2,070 | $ | 2,193 | $ | 1,968 |
Business | Applications/Market Segments | Major Products |
Dow Elastomers | Adhesives, footwear, housewares, infrastructure, sports recreation, toys and infant products, transportation | Elastomers, polyolefin plastomers, ethylene propylene diene monomer elastomers ("EPDMs") |
Dow Electrical and Telecommunications | Building and construction, electrical transmission and distribution infrastructure, telecommunications infrastructure | Wire and cable insulation, semiconductive and jacketing compound solutions, bio-based plasticizers |
Dow Packaging and Specialty Plastics | Adhesives, food and specialty packaging, hygiene and medical, industrial and consumer packaging, transmission pipe and photovoltaics | Acrylics, polyethylene, low-density polyethylene, linear low-density polyethylene, high-density polyethylene, polyolefin plastomers |
Energy | Principally for use in Dow’s global operations | Power, steam and other utilities |
Hydrocarbons | Purchaser of feedstocks; production of cost competitive monomers utilized by Dow’s derivative businesses | Ethylene, propylene, benzene, butadiene, octene, aromatics co-products, crude C4 Advantaged feedstock positions in the United States, Canada, Argentina and the Middle East |
Significant Raw Materials | Performance Materials & Chemicals | ||||
Raw Material | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Plastics | |
Acetone | x | x | |||
Ammonia | x | x | x | ||
Aniline (1) | x | ||||
Benzene | x | x | |||
Butane | x | ||||
Butene | x | x | |||
Butyl Acrylate (1) | x | x | x | ||
Carbon Black | x | x | |||
Carbon Monoxide | x | ||||
Caustic Soda (1) | x | x | x | x | |
Chlorine (1) | x | x | x | x | |
Condensate | x | ||||
Electric Power | x | x | |||
Ethane | x | ||||
Ethanol | x | x | x | x | |
Ethylene (1) | x | x | x | ||
Formaldehyde | x | x | x | ||
Hexene | x | ||||
Hydrogen Peroxide (2) | x | ||||
Isopropanol | x | x | |||
Methanol | x | x | x | x | x |
Naphtha | x | ||||
Natural Gas | x | ||||
Nitrogen | x | x | |||
Octene (1) | x | ||||
Polystyrene | x | x | |||
Propane | x | x | x | ||
Propylene (1) | x | x | x | x | |
Pygas | x | ||||
Silica | x | x | |||
Silicon Metal (1) | x | x | |||
Styrene | x | x | |||
Wood Pulp | x | x |
Patents Owned at December 31, 2016 | United States | Foreign | ||||
Agricultural Sciences | 1,041 | 4,603 | ||||
Consumer Solutions | 1,645 | 6,189 | ||||
Infrastructure Solutions | 1,338 | 6,827 | ||||
Performance Materials & Chemicals | 375 | 2,332 | ||||
Performance Plastics | 1,150 | 5,283 | ||||
Corporate | 102 | 215 | ||||
Total | 5,651 | 25,449 |
Remaining Life of Patents Owned at December 31, 2016 | ||||||
United States | Foreign | |||||
Within 5 years | 1,384 | 5,170 | ||||
6 to 10 years | 1,187 | 8,000 | ||||
11 to 15 years | 2,312 | 10,843 | ||||
16 to 20 years | 768 | 1,436 | ||||
Total | 5,651 | 25,449 |
Principal Nonconsolidated Affiliate | Ownership Interest | Business Description | |||
Dow Corning Corporation (1) | N/A | A U.S. company that manufactures silicone and silicone products | |||
EQUATE Petrochemical Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins | ||
The HSC Group: (1) | |||||
DC HSC Holdings LLC (2) | 50.00 | % | A U.S.-based group of companies that manufactures polycrystalline silicon products | ||
Hemlock Semiconductor L.L.C. | 50.10 | % | A U.S. company that sells polycrystalline silicon products | ||
The Kuwait Olefins Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures ethylene and ethylene glycol | ||
The Kuwait Styrene Company K.S.C. | 42.50 | % | A Kuwait-based company that manufactures styrene monomer | ||
Map Ta Phut Olefins Company Limited (3) | 32.77 | % | A Thailand-based company that manufactures propylene and ethylene | ||
Sadara Chemical Company (4) | 35.00 | % | A Saudi Arabian company that currently manufactures chlorine, ethylene and propylene for internal consumption and manufactures and sells polyethylene; will produce and sell high-value added chemical products and other performance plastics when fully operational | ||
The SCG-Dow Group: | |||||
Siam Polyethylene Company Limited | 50.00 | % | A Thailand-based company that manufactures polyethylene | ||
Siam Polystyrene Company Limited | 50.00 | % | A Thailand-based company that manufactures polystyrene | ||
Siam Styrene Monomer Co., Ltd. | 50.00 | % | A Thailand-based company that manufactures styrene | ||
Siam Synthetic Latex Company Limited | 50.00 | % | A Thailand-based company that manufactures latex |
(1) | As of June 1, 2016, Dow Corning, previously a 50:50 joint venture with Corning, became a wholly owned subsidiary of Dow as a result of the DCC Transaction. Dow and Corning continue to maintain their historical proportional equity interest in the HSC Group. Dow Corning was treated as a principal nonconsolidated affiliate through May 31, 2016. Beginning in June 2016, the results of Dow Corning, excluding the HSC Group, are fully consolidated into the Company's consolidated statements of income. The results of the HSC Group will continue to be reported as "Equity in earnings of nonconsolidated affiliates" in the Company's consolidated statements of income. See Note 4 to the Consolidated Financial Statements for additional information on this transaction. |
(2) | DC HSC Holdings LLC holds an 80.5 percent indirect ownership interest in Hemlock Semiconductor Operations. |
(3) | The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited. |
(4) | Dow is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company's established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. |
Name - Age | Present Position with Registrant | Year Elected to be an Officer | Other Business Experience since January 1, 2012 |
Ronald C. Edmonds, 59 | Controller and Vice President of Controllers and Tax | 2009 | Vice President and Controller 2009 to date. Present position held since January 2016. |
James R. Fitterling, 55 | President and Chief Operating Officer | 2010 | Executive Vice President and President, Feedstocks & Energy and Corporate Development September 2011 to September 2012. Executive Vice President, Feedstocks, Performance Plastics, Asia and Latin America September 2012 to December 2013. Executive Vice President, Feedstocks, Performance Plastics and Supply Chain December 2013 to October 2014. Vice Chairman, Business Operations October 2014 to October 2015. Vice Chairman and Chief Operating Officer October 2015 to February 2016. Present position held since February 2016. |
Heinz Haller, 61 | Executive Vice President and President of Dow Europe, Middle East, Africa and India | 2006 | Executive Vice President and Chief Commercial Officer August 2010 to September 2012. Present position held since September 2012. |
Joe E. Harlan, 57 | Vice Chairman and Chief Commercial Officer | 2011 | Executive Vice President, Performance Materials September 2011 to September 2012. Executive Vice President, Chemicals, Energy and Performance Materials September 2012 to October 2014. Chief Commercial Officer and Vice Chairman, Market Businesses October 2014 to October 2015. Present position held since October 2015. |
Peter Holicki, 56 | Senior Vice President, Operations, Manufacturing & Engineering, Environment, Health & Safety Operations, and Emergency Services & Security | 2014 | Global Manufacturing Vice President, Hydrocarbons May 2009 to October 2012. Vice President for Manufacturing and Engineering Europe, Middle East and Africa May 2009 to October 2012. Vice President of Operations for Europe, Middle East and Africa and the Ethylene Envelope October 2012 to December 2013. Emergency Services and Security Expertise Center September 2014 to present. Corporate Vice President October 2014 to October 2015. Present position held since 2015. |
Charles J. Kalil, 65 | Executive Vice President and General Counsel | 2004 | General Counsel 2004 to date. Executive Vice President 2008 to date. Corporate Secretary 2005 to February 2015. |
Andrew N. Liveris, 62 | Chief Executive Officer and Chairman of the Board | 2003 | President 2004 to February 2016. Chief Executive Officer 2004 to date. Chairman 2006 to date. |
Johanna Söderström, 45 | Corporate Vice President, Human Resources and Aviation, and Chief Human Resource Officer | 2015 | Global Human Resources Director, Performance Materials Division January 2011 to October 2012. Vice President, Human Resource Center of Expertise October 2012 to January 2015. Present position held since January 2015. |
A. N. Sreeram, 49 | Senior Vice President, Research & Development and Chief Technology Officer | 2013 | Vice President, Research & Development, Dow Advanced Materials 2009 to October 2013. Corporate Vice President, Research & Development October 2013 to October 2015. Present position held since October 2015. |
Howard I. Ungerleider, 48 | Vice Chairman and Chief Financial Officer | 2011 | Senior Vice President and President, Performance Plastics March 2011 to September 2012. Executive Vice President, Advanced Materials September 2012 to October 2014. Chief Financial Officer and Executive Vice President October 2014 to October 2015. Present position held since October 2015. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1A. Risk Factors. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 1B. Unresolved Staff Comments. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 2. Properties. |
Location | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics |
Bahia Blanca, Argentina | x | ||||
Candeias, Brazil | x | ||||
Canada: | |||||
Fort Saskatchewan, Alberta | x | ||||
Joffre, Alberta | x | ||||
Germany: | |||||
Boehlen | x | x | x | ||
Bomlitz | x | x | |||
Leuna | x | ||||
Schkopau | x | x | x | x | |
Stade | x | x | x | x | x |
Terneuzen, The Netherlands | x | x | x | x | |
Tarragona, Spain | x | x | x | ||
Map Ta Phut, Thailand | x | x | x | ||
United States: | |||||
Carrollton, Kentucky | x | x | |||
Louisville, Kentucky | x | ||||
Hahnville (St. Charles), Louisiana | x | x | x | ||
Plaquemine, Louisiana | x | x | x | x | |
Midland, Michigan | x | x | x | x | x |
Deer Park, Texas | x | x | |||
Freeport, Texas | x | x | x | x | |
Seadrift, Texas | x | x | x | x | |
Texas City, Texas | x | x | |||
Wales, United Kingdom | x | x | |||
Zhangjiagang, China | x | x | x |
Asia Pacific: | 40 manufacturing locations in 11 countries. |
Canada: | 6 manufacturing locations in 3 provinces. |
Europe, Middle East, Africa and India: | 50 manufacturing locations in 17 countries. |
Latin America: | 33 manufacturing locations in 4 countries. |
United States: | 60 manufacturing locations in 25 states and 1 U.S. territory. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 3. Legal Proceedings. |
The Dow Chemical Company and Subsidiaries |
PART I, Item 4. Mine Safety Disclosures. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 5. Market for Registrant’s Common Equity, |
Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Issuer Purchases of Equity Securities | Average price paid per share | Total number of shares purchased as part of the Company's publicly announced share repurchase program (1) | Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program (1) (In millions) | |||||||||||
Period | Total number of shares purchased | |||||||||||||
October 2016 | — | $ | — | — | $ | 1,896 | ||||||||
November 2016 | 8,822,551 | $ | 53.64 | 8,822,551 | $ | 1,423 | ||||||||
December 2016 | 493,480 | $ | 54.25 | 493,480 | $ | 1,396 | ||||||||
Fourth quarter 2016 | 9,316,031 | $ | 53.67 | 9,316,031 | $ | 1,396 |
(1) | On February 13, 2013, the Board of Directors approved a share buy-back program, authorizing up to $1.5 billion to be spent on the repurchase of the Company’s common stock. On January 29, 2014, the Board of Directors announced an expansion of the Company's share buy-back authorization, authorizing an additional amount not to exceed $3 billion to be spent on the repurchase of the Company's common stock over a period of time. On November 12, 2014, the Board of Directors announced a new $5 billion tranche to its share buy-back program. As a result of these actions, the total authorized amount of the share repurchase program is $9.5 billion. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 6. Selected Financial Data. |
In millions, except as noted (Unaudited) | 2016 | 2015 | 2014 | 2013 | 2012 | ||||||||||
Summary of Operations | |||||||||||||||
Net sales | $ | 48,158 | $ | 48,778 | $ | 58,167 | $ | 57,080 | $ | 56,786 | |||||
Net income (1) | $ | 4,404 | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 1,100 | |||||
Per share of common stock (in dollars): | |||||||||||||||
Net income per common share - basic (1) | $ | 3.57 | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 0.71 | |||||
Net income per common share - diluted (1) | $ | 3.52 | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 0.70 | |||||
Cash dividends declared per share of common stock | $ | 1.84 | $ | 1.72 | $ | 1.53 | $ | 1.28 | $ | 1.21 | |||||
Book value per share of common stock | $ | 21.70 | $ | 23.06 | $ | 19.71 | $ | 22.59 | $ | 17.73 | |||||
Year-end Financial Position | |||||||||||||||
Total assets (2) (3) | $ | 79,511 | $ | 67,938 | $ | 68,639 | $ | 69,380 | $ | 69,462 | |||||
Long-term debt (2) | $ | 20,456 | $ | 16,215 | $ | 18,741 | $ | 16,732 | $ | 19,819 | |||||
Financial Ratios | |||||||||||||||
Research and development expenses as percent of net sales | 3.3 | % | 3.3 | % | 2.8 | % | 3.1 | % | 3.0 | % | |||||
Income before income taxes as percent of net sales (1) | 9.2 | % | 20.4 | % | 9.1 | % | 11.9 | % | 2.9 | % | |||||
Return on stockholders’ equity (1) | 15.3 | % | 34.4 | % | 18.6 | % | 19.4 | % | 5.0 | % | |||||
Debt as a percent of total capitalization | 44.0 | % | 39.7 | % | 45.5 | % | 38.9 | % | 48.7 | % |
(1) | The 2016 values include the impact of a change in accounting policy for asbestos-related defense and processing costs. See Notes 1 and 15 to the Consolidated Financial Statements for additional information. |
(2) | Adjusted for the reclassification of debt issuance costs related to the adoption of ASU 2015-03 in 2015. See Note 2 to the Consolidated Financial Statements for additional information. |
(3) | Adjusted for the adoption of ASU 2015-17 in 2016. See Notes 1 and 2 to the Consolidated Financial Statements for additional information. |
The Dow Chemical Company and Subsidiaries | ||
PART II, Item 7. Management’s Discussion and | ||
(Unaudited) | Analysis of Financial Condition and Results of Operations. |
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Table of Contents | Page |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics); the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences); ANGUS Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals); and the global Sodium Borohydride business, divested on January 30, 2015 (Performance Materials & Chemicals). Also excludes current period sales related to the ownership restructure of Dow Corning announced on June 1, 2016 (Consumer Solutions and Infrastructure Solutions) and sales from January 1, 2016 through April 30, 2016 for the step acquisition of Univation Technologies, LLC, acquired on May 5, 2015 (Performance Plastics). |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics); the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences); ANGUS Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals); and the global Sodium Borohydride business, divested on January 30, 2015 (Performance Materials & Chemicals). Also excludes current period sales related to the ownership restructure of Dow Corning announced on June 1, 2016 (Consumer Solutions and Infrastructure Solutions) and sales from January 1, 2016 through April 30, 2016 for the step acquisition of Univation, acquired on May 5, 2015 (Performance Plastics). |
Production Costs and Operating Expenses | |||||||||
Cost components as a percent of total | 2016 | 2015 | 2014 | ||||||
Hydrocarbon feedstocks and energy | 24 | % | 27 | % | 38 | % | |||
Salaries, wages and employee benefits | 17 | 18 | 15 | ||||||
Maintenance | 4 | 5 | 4 | ||||||
Depreciation | 5 | 4 | 4 | ||||||
Restructuring charges | 1 | 1 | — | ||||||
Supplies, services and other raw materials | 49 | 45 | 39 | ||||||
Total | 100 | % | 100 | % | 100 | % |
Certain Items Impacting Results | Pretax Impact (1) | Impact on Net Income (2) | Impact on EPS (3) (4) (5) | ||||||||||||||||||||||||||||||||
In millions, except per share amounts | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||
Reported U.S. GAAP Amounts (6) | $ | 3,978 | $ | 7,345 | $ | 3,432 | $ | 3.52 | $ | 6.15 | $ | 2.87 | |||||||||||||||||||||||
- Certain items: | |||||||||||||||||||||||||||||||||||
Cost of sales: | |||||||||||||||||||||||||||||||||||
Environmental charges | $ | (295 | ) | $ | — | $ | — | (205 | ) | — | — | (0.17 | ) | — | — | ||||||||||||||||||||
Charge for termination of a terminal use agreement | (117 | ) | — | — | (74 | ) | — | — | (0.06 | ) | — | — | |||||||||||||||||||||||
Impact of Dow Corning ownership restructure | (317 | ) | — | — | (216 | ) | — | — | (0.19 | ) | — | — | |||||||||||||||||||||||
Asset impairments and related costs | — | (91 | ) | (23 | ) | — | (70 | ) | (14 | ) | — | (0.06 | ) | (0.01 | ) | ||||||||||||||||||||
Warranty accrual adjustment of exited business | — | — | (100 | ) | — | — | (63 | ) | — | — | (0.05 | ) | |||||||||||||||||||||||
Univation step acquisition | — | (12 | ) | — | — | (8 | ) | — | — | (0.01 | ) | — | |||||||||||||||||||||||
Transactions and productivity costs | (124 | ) | (24 | ) | — | (79 | ) | (16 | ) | — | (0.06 | ) | (0.01 | ) | — | ||||||||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||||||||||||||||
Transactions and productivity costs | (379 | ) | (51 | ) | — | (307 | ) | (38 | ) | — | (0.27 | ) | (0.03 | ) | — | ||||||||||||||||||||
Goodwill and other intangible asset impairment losses | — | — | (50 | ) | — | — | (33 | ) | — | — | (0.03 | ) | |||||||||||||||||||||||
Restructuring charges | (454 | ) | (415 | ) | — | (308 | ) | (274 | ) | — | (0.27 | ) | (0.24 | ) | — | ||||||||||||||||||||
Asbestos-related charge | (1,113 | ) | — | (78 | ) | (701 | ) | — | (49 | ) | (0.58 | ) | — | (0.04 | ) | ||||||||||||||||||||
Equity in earnings of nonconsolidated affiliates: | |||||||||||||||||||||||||||||||||||
Impact of Dow Corning ownership restructure | (22 | ) | — | — | (20 | ) | — | — | (0.02 | ) | — | — | |||||||||||||||||||||||
Joint venture actions | — | (36 | ) | (93 | ) | — | (26 | ) | (87 | ) | — | (0.02 | ) | (0.08 | ) | ||||||||||||||||||||
Sundry income (expense) - net: | |||||||||||||||||||||||||||||||||||
Implant liability adjustment | 27 | — | — | 17 | — | — | 0.01 | — | — | ||||||||||||||||||||||||||
Charges related to AgroFresh | (163 | ) | — | — | (103 | ) | — | — | (0.08 | ) | — | — | |||||||||||||||||||||||
Impact of Dow Corning ownership restructure | 2,445 | — | — | 2,586 | — | — | 2.28 | — | — | ||||||||||||||||||||||||||
Urethane matters legal settlements | (1,235 | ) | — | — | (778 | ) | — | — | (0.70 | ) | — | — | |||||||||||||||||||||||
Gain on split-off of chlorine value chain | 6 | 2,233 | — | 6 | 2,215 | — | 0.01 | 1.96 | — | ||||||||||||||||||||||||||
Gain on sale of MEGlobal | — | 723 | — | — | 589 | — | — | 0.52 | — | ||||||||||||||||||||||||||
Gain on 2015 business divestitures | — | 1,320 | — | — | 823 | — | — | 0.71 | — | ||||||||||||||||||||||||||
Gain on Univation step acquisition | — | 361 | — | — | 359 | — | — | 0.31 | — | ||||||||||||||||||||||||||
Asset impairments and related costs | — | (53 | ) | — | — | (53 | ) | — | — | (0.05 | ) | — | |||||||||||||||||||||||
Impact of Argentine peso devaluation | — | (98 | ) | — | — | (106 | ) | — | — | (0.09 | ) | — | |||||||||||||||||||||||
Loss on early extinguishment of debt | — | (8 | ) | — | — | (5 | ) | — | — | — | — | ||||||||||||||||||||||||
Transactions and productivity costs | (41 | ) | (119 | ) | (49 | ) | (48 | ) | (99 | ) | (31 | ) | (0.05 | ) | (0.09 | ) | (0.03 | ) | |||||||||||||||||
Provision for income taxes: | |||||||||||||||||||||||||||||||||||
Uncertain tax position | — | — | — | (13 | ) | — | — | (0.01 | ) | — | — | ||||||||||||||||||||||||
Total certain items | $ | (1,782 | ) | $ | 3,730 | $ | (393 | ) | $ | (243 | ) | $ | 3,291 | $ | (277 | ) | $ | (0.16 | ) | $ | 2.90 | $ | (0.24 | ) | |||||||||||
+ Dilutive effect of assumed preferred stock conversion into shares of common stock | $ | 0.04 | $ | 0.22 | N/A | ||||||||||||||||||||||||||||||
= Operating Results (Non-GAAP) (7) | $ | 4,221 | $ | 4,054 | $ | 3,709 | $ | 3.72 | $ | 3.47 | $ | 3.11 |
(1) | Impact on "Income Before Income Taxes." |
(2) | Impact on "Net Income Available for The Dow Chemical Company Common Stockholders." |
(3) | Impact on "Earnings per common share - diluted." |
(4) | The assumed conversion of the Company's Preferred Stock into shares of the Company's common stock was excluded from the calculation of "Earnings per common share - diluted" for the twelve-month periods ended December 31, 2016 and December 31, 2014. The assumed conversion of the Company's Preferred Stock into shares of the Company's common stock was excluded from the calculation of "Operating earnings per common share - diluted" (Non-GAAP) as well as the certain items earnings per share impact for the twelve-month periods ended December 31, 2015 and December 31, 2014 because the effect of including them would have been antidilutive. |
(5) | For the twelve-month period ended December 31, 2016, an assumed conversion of the Company's Preferred Stock into shares of the Company's common stock was included in the calculation of "Operating earnings per common share - diluted" (Non-GAAP). For the twelve-month period ended December 31, 2015, an assumed conversion of the Company's Preferred Stock into shares of the Company's common stock was included in the calculation of "Earnings per common share - diluted" (GAAP). |
(6) | The Company used "Net Income Attributable to The Dow Chemical Company" when calculating "Earnings per common share - diluted" (GAAP) for the twelve-month period ended December 31, 2015, as it excludes preferred dividends of $340 million. |
(7) | "Operating earnings per common share - diluted" (Non-GAAP) for the twelve-month period ended December 31, 2016, excludes preferred dividends of $340 million. |
Sales Volume and Price by Operating Segment and Geographic Area | ||||||||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||||||||
Percent change from prior year | Volume | Price | Total | Volume | Price | Total | Volume | Price | Total | |||||||||||||||||
Operating Segments: | ||||||||||||||||||||||||||
Agricultural Sciences | (3 | )% | — | % | (3 | )% | (4 | )% | (8 | )% | (12 | )% | 3 | % | (1 | )% | 2 | % | ||||||||
Consumer Solutions | 29 | (4 | ) | 25 | 1 | (7 | ) | (6 | ) | 3 | (1 | ) | 2 | |||||||||||||
Infrastructure Solutions | 23 | (6 | ) | 17 | 2 | (14 | ) | (12 | ) | 1 | — | 1 | ||||||||||||||
Performance Materials & Chemicals | (14 | ) | (9 | ) | (23 | ) | (6 | ) | (15 | ) | (21 | ) | 2 | — | 2 | |||||||||||
Performance Plastics | 8 | (8 | ) | — | 5 | (23 | ) | (18 | ) | — | 2 | 2 | ||||||||||||||
Total | 5 | % | (6 | )% | (1 | )% | 1 | % | (17 | )% | (16 | )% | 2 | % | — | % | 2 | % | ||||||||
Geographic Areas: | ||||||||||||||||||||||||||
United States | 5 | % | (6 | )% | (1 | )% | — | % | (14 | )% | (14 | )% | 2 | % | 2 | % | 4 | % | ||||||||
Europe, Middle East, Africa & India | 3 | (7 | ) | (4 | ) | — | (22 | ) | (22 | ) | 3 | (1 | ) | 2 | ||||||||||||
Rest of World | 7 | (6 | ) | 1 | 1 | (13 | ) | (12 | ) | (1 | ) | — | (1 | ) | ||||||||||||
Total | 5 | % | (6 | )% | (1 | )% | 1 | % | (17 | )% | (16 | )% | 2 | % | — | % | 2 | % |
Sales Volume and Price by Operating Segment and Geographic Area, Excluding Acquisitions and Divestitures (1) | ||||||||||||||||||||||||||
2016 | 2015 | 2014 | ||||||||||||||||||||||||
Percent change from prior year | Volume | Price | Total | Volume | Price | Total | Volume | Price | Total | |||||||||||||||||
Operating Segments: | ||||||||||||||||||||||||||
Agricultural Sciences | (2 | )% | — | % | (2 | )% | (3 | )% | (8 | )% | (11 | )% | 3 | % | (1 | )% | 2 | % | ||||||||
Consumer Solutions | 4 | (4 | ) | — | 1 | (7 | ) | (6 | ) | 3 | (1 | ) | 2 | |||||||||||||
Infrastructure Solutions | (3 | ) | (6 | ) | (9 | ) | 2 | (14 | ) | (12 | ) | 1 | — | 1 | ||||||||||||
Performance Materials & Chemicals | 2 | (11 | ) | (9 | ) | 1 | (16 | ) | (15 | ) | 2 | — | 2 | |||||||||||||
Performance Plastics | 9 | (8 | ) | 1 | 5 | (23 | ) | (18 | ) | 1 | 2 | 3 | ||||||||||||||
Total | 4 | % | (7 | )% | (3 | )% | 2 | % | (17 | )% | (15 | )% | 2 | % | — | % | 2 | % | ||||||||
Geographic Areas: | ||||||||||||||||||||||||||
United States | 4 | % | (7 | )% | (3 | )% | 2 | % | (14 | )% | (12 | )% | 2 | % | 2 | % | 4 | % | ||||||||
Europe, Middle East, Africa & India | 4 | (8 | ) | (4 | ) | 3 | (23 | ) | (20 | ) | 4 | (1 | ) | 3 | ||||||||||||
Rest of World | 3 | (6 | ) | (3 | ) | 2 | (13 | ) | (11 | ) | — | — | — | |||||||||||||
Total | 4 | % | (7 | )% | (3 | )% | 2 | % | (17 | )% | (15 | )% | 2 | % | — | % | 2 | % |
(1) | Excludes prior period sales of recent divestitures including the chlorine value chain, divested on October 5, 2015 (primarily Performance Materials & Chemicals and Performance Plastics); the AgroFresh business, divested on July 31, 2015 (Agricultural Sciences); ANGUS Chemical Company, divested on February 2, 2015 (Performance Materials & Chemicals); the global Sodium Borohydride business, divested on January 30, 2015 (Performance Materials & Chemicals); the Polypropylene Licensing and Catalysts business, divested on December 2, 2013 (Performance Plastics); and sales related to Nippon Unicar Company Limited, divested on July 1, 2013 (Performance Plastics). Also excludes current period sales related to the ownership restructure of Dow Corning announced on June 1, 2016 (Consumer Solutions and Infrastructure Solutions), the step acquisition of Univation, acquired on May 5, 2015 (Performance Plastics) and sales from Cooperativa Central de Pesquisa Agrícola's ("Coodetec"), acquired on February 1, 2015 (Agricultural Sciences). |
Agricultural Sciences In millions | 2016 | 2015 | 2014 | |||||||||
Sales | $ | 6,174 | $ | 6,381 | $ | 7,290 | ||||||
Price change from comparative period | — | % | (8 | )% | (1 | )% | ||||||
Volume change from comparative period | (3 | )% | (4 | )% | 3 | % | ||||||
Volume change, excluding acquisitions and divestitures | (2 | )% | (3 | )% | 3 | % | ||||||
Equity earnings (losses) | $ | 3 | $ | (15 | ) | $ | 4 | |||||
EBITDA | $ | 806 | $ | 1,432 | $ | 962 | ||||||
Certain items impacting EBITDA | $ | (170 | ) | $ | 573 | $ | — | |||||
EBITDA excluding certain items | $ | 976 | $ | 859 | $ | 962 |
Consumer Solutions In millions | 2016 | 2015 | 2014 | |||||||||
Sales | $ | 5,455 | $ | 4,379 | $ | 4,639 | ||||||
Price change from comparative period | (4 | )% | (7 | )% | (1 | )% | ||||||
Volume change from comparative period | 29 | % | 1 | % | 3 | % | ||||||
Volume change, excluding acquisitions | 4 | % | 1 | % | 3 | % | ||||||
Equity earnings | $ | 132 | $ | 91 | $ | 281 | ||||||
EBITDA | $ | 2,828 | $ | 1,048 | $ | 1,130 | ||||||
Certain items impacting EBITDA | $ | 1,144 | $ | (59 | ) | $ | 82 | |||||
EBITDA excluding certain items | $ | 1,684 | $ | 1,107 | $ | 1,048 |
Infrastructure Solutions In millions | 2016 | 2015 | 2014 | |||||||||
Sales | $ | 8,621 | $ | 7,394 | $ | 8,429 | ||||||
Price change from comparative period | (6 | )% | (14 | )% | — | % | ||||||
Volume change from comparative period | 23 | % | 2 | % | 1 | % | ||||||
Volume change, excluding acquisitions | (3 | )% | 2 | % | 1 | % | ||||||
Equity earnings (losses) | $ | 215 | $ | 203 | $ | (6 | ) | |||||
EBITDA | $ | 2,318 | $ | 1,021 | $ | 817 | ||||||
Certain items impacting EBITDA | $ | 864 | $ | (101 | ) | $ | (348 | ) | ||||
EBITDA excluding certain items | $ | 1,454 | $ | 1,122 | $ | 1,165 |
Performance Materials & Chemicals In millions | 2016 | 2015 | 2014 | |||||||||
Sales | $ | 9,225 | $ | 11,973 | $ | 15,114 | ||||||
Price change from comparative period | (9 | )% | (15 | )% | — | % | ||||||
Volume change from comparative period | (14 | )% | (6 | )% | 2 | % | ||||||
Volume change, excluding divestitures | 2 | % | 1 | % | 2 | % | ||||||
Equity earnings (losses) | $ | (18 | ) | $ | 225 | $ | 322 | |||||
EBITDA | $ | 134 | $ | 5,479 | $ | 2,193 | ||||||
Certain items impacting EBITDA | $ | (1,230 | ) | $ | 3,409 | $ | — | |||||
EBITDA excluding certain items | $ | 1,364 | $ | 2,070 | $ | 2,193 |
Performance Plastics In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Sales | $ | 18,357 | $ | 22,386 | $ | 21,910 | $ | 18,404 | $ | 18,357 | $ | 22,386 | ||||||||||||
Price change from comparative period | (23 | )% | 2 | % | 1 | % | (8 | )% | (23 | )% | 2 | % | ||||||||||||
Volume change from comparative period | 5 | % | — | % | (4 | )% | 8 | % | 5 | % | — | % | ||||||||||||
Volume change, excluding acquisitions and divestitures | 5 | % | 1 | % | (3 | )% | 9 | % | 5 | % | 1 | % | ||||||||||||
Equity earnings | $ | 220 | $ | 257 | $ | 355 | $ | 137 | $ | 220 | $ | 257 | ||||||||||||
EBITDA | $ | 5,399 | $ | 4,422 | $ | 4,503 | $ | 4,503 | $ | 5,399 | $ | 4,422 | ||||||||||||
Certain items impacting EBITDA | $ | 597 | $ | — | $ | 544 | $ | (129 | ) | $ | 597 | $ | — | |||||||||||
EBITDA excluding certain items | $ | 4,802 | $ | 4,422 | $ | 3,959 | $ | 4,632 | $ | 4,802 | $ | 4,422 |
Performance Plastics, Excluding Hydrocarbons and Energy In millions | 2015 | 2014 | 2013 | ||||||
Price change from comparative period | (16 | )% | 4 | % | 4 | % | |||
Volume change from comparative period | 7 | % | (1 | )% | (3 | )% | |||
Volume change, excluding acquisitions and divestitures | 6 | % | 1 | % | (1 | )% |
Corporate In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Sales | $ | 294 | $ | 309 | $ | 308 | $ | 279 | $ | 294 | $ | 309 | ||||||||||||
Equity losses | $ | (50 | ) | $ | (23 | ) | $ | (39 | ) | $ | (27 | ) | $ | (50 | ) | $ | (23 | ) | ||||||
EBITDA | $ | (1,053 | ) | $ | (580 | ) | $ | 1,361 | $ | (2,563 | ) | $ | (1,053 | ) | $ | (580 | ) | |||||||
Certain items impacting EBITDA | $ | (689 | ) | $ | (127 | ) | $ | 1,788 | $ | (2,261 | ) | $ | (689 | ) | $ | (127 | ) | |||||||
EBITDA excluding certain items | $ | (364 | ) | $ | (453 | ) | $ | (427 | ) | $ | (302 | ) | $ | (364 | ) | $ | (453 | ) |
Cash Flow Summary In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Cash provided by (used in): | ||||||||||||||||||||||||
Operating activities | $ | 7,516 | $ | 6,502 | $ | 7,823 | $ | 5,478 | $ | 7,516 | $ | 6,502 | ||||||||||||
Investing activities | (1,350 | ) | (3,105 | ) | (1,469 | ) | (3,479 | ) | (1,350 | ) | (3,105 | ) | ||||||||||||
Financing activities | (3,041 | ) | (3,583 | ) | (4,731 | ) | (3,892 | ) | (3,041 | ) | (3,583 | ) | ||||||||||||
Effect of exchange rate changes on cash | (202 | ) | (100 | ) | (1 | ) | (77 | ) | (202 | ) | (100 | ) | ||||||||||||
Summary | ||||||||||||||||||||||||
Increase (decrease) in cash and cash equivalents | $ | 2,923 | $ | (286 | ) | $ | 1,622 | $ | (1,970 | ) | $ | 2,923 | $ | (286 | ) | |||||||||
Cash and cash equivalents at beginning of year | 5,654 | 5,940 | 4,318 | 8,577 | 5,654 | 5,940 | ||||||||||||||||||
Cash and cash equivalents at end of year | $ | 8,577 | $ | 5,654 | $ | 5,940 | $ | 6,607 | $ | 8,577 | $ | 5,654 |
Net Working Capital at December 31 In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Current assets (1) | $ | 24,475 | $ | 24,255 | $ | 23,659 | $ | 23,941 | ||||||||
Current liabilities (1) | 11,215 | 11,581 | 12,604 | 11,115 | ||||||||||||
Net working capital | $ | 13,260 | $ | 12,674 | $ | 11,055 | $ | 12,826 | ||||||||
Current ratio | 2.18 | :1 | 2.09 | :1 | 1.88 | :1 | 2.15 | :1 | ||||||||
Days-sales-outstanding-in-receivables | 47 | 46 | 47 | 47 | ||||||||||||
Days-sales-in-inventory | 72 | 69 | 67 | 72 |
(1) | Presented in accordance with newly implemented ASU |
Capital Expenditures Summary | ||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Capital expenditures | $ | 3,703 | $ | 3,572 | $ | 2,302 | $ | 3,804 | $ | 3,703 | $ | 3,572 | ||||||||||||
Spending by project type: | ||||||||||||||||||||||||
Projects related to additional capacity for new and existing products | 68 | % | 68 | % | 55 | % | 67 | % | 68 | % | 68 | % | ||||||||||||
Projects related to environmental protection, safety, loss prevention and industrial hygiene | 9 | % | 10 | % | 14 | % | 9 | % | 9 | % | 10 | % | ||||||||||||
Other (primarily shared infrastructure and plant maintenance/health) | 23 | % | 22 | % | 31 | % | 24 | % | 23 | % | 22 | % |
Reconciliation of Free Cash Flow to "Cash Provided by Operating Activities" In millions | |||||||||||
2015 | 2014 | 2013 | |||||||||
Cash provided by operating activities | $ | 7,516 | $ | 6,502 | $ | 7,823 | |||||
- Capital expenditures | (3,703 | ) | (3,572 | ) | (2,302 | ) | |||||
Free Cash Flow | $ | 3,813 | $ | 2,930 | $ | 5,521 |
Reconciliation of Free Cash Flow to "Cash Provided by Operating Activities" | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Cash provided by operating activities | $ | 5,478 | $ | 7,516 | $ | 6,502 | |||||
Capital expenditures | (3,804 | ) | (3,703 | ) | (3,572 | ) | |||||
Free Cash Flow | $ | 1,674 | $ | 3,813 | $ | 2,930 |
Committed and Available Credit Facilities at December 31, 2015 | ||||||||||||||
In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest | |||||||||
Five Year Competitive Advance and Revolving Credit Facility (1) | March 2015 | $ | 5,000 | $ | 5,000 | March 2020 | Floating rate | |||||||
Bilateral Revolving Credit Facility (2) | March 2015 | 100 | 100 | March 2016 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 280 | 280 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 200 | 200 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | August 2016 | Floating rate | |||||||||
Total Committed and Available Credit Facilities | $ | 5,980 | $ | 5,980 |
Committed and Available Credit Facilities at December 31, 2016 | ||||||||||||||
In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest | |||||||||
Five Year Competitive Advance and Revolving Credit Facility | March 2015 | $ | 5,000 | $ | 5,000 | March 2020 | Floating rate | |||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2017 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 280 | 280 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 200 | 200 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | May 2016 | 200 | 200 | May 2018 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | July 2016 | 200 | 200 | July 2018 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2016 | 100 | 100 | August 2018 | Floating rate | |||||||||
DCC Term Loan Facility (1) | February 2016 | 4,500 | — | May 2018 | Floating rate | |||||||||
Total Committed and Available Credit Facilities | $ | 10,880 | $ | 6,380 |
(1) | Drawn on May 31, 2016, by Dow Corning, a wholly owned subsidiary of the Company as of June 1, 2016. |
Total Debt at December 31 In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Notes payable | $ | 454 | $ | 551 | $ | 272 | $ | 454 | ||||||||
Long-term debt due within one year (1) | 541 | 382 | 635 | 541 | ||||||||||||
Long-term debt (1) | 16,215 | 18,741 | 20,456 | 16,215 | ||||||||||||
Gross debt | $ | 17,210 | $ | 19,674 | $ | 21,363 | $ | 17,210 | ||||||||
Cash and cash equivalents | $ | 8,577 | $ | 5,654 | $ | 6,607 | $ | 8,577 | ||||||||
Net debt | $ | 8,633 | $ | 14,020 | $ | 14,756 | $ | 8,633 | ||||||||
Gross debt as a percent of total capitalization | 39.7 | % | 45.5 | % | 44.0 | % | 39.7 | % | ||||||||
Net debt as a percent of total capitalization | 24.8 | % | 37.3 | % | 35.1 | % | 24.8 | % |
(1) | Presented |
Credit Ratings | Long-Term | Short-Term | |
Rating Agency | Rating | Rating | Outlook |
Standard & Poor’s | BBB | A-2 | Watch Developing |
Moody’s Investors Service | Baa2 | P-2 | Stable |
Fitch Ratings | BBB | F2 | Watch Positive |
Dividends Paid at December 31 In millions, except per share amounts | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Dividends paid, per common share | $ | 1.68 | $ | 1.43 | $ | 0.96 | $ | 1.84 | $ | 1.68 | $ | 1.43 | ||||||||||
Dividends paid to common shareholders | $ | 1,913 | $ | 1,680 | $ | 1,139 | $ | 2,037 | $ | 1,913 | $ | 1,680 | ||||||||||
Dividends paid to preferred shareholders | $ | 340 | $ | 340 | $ | 340 | $ | 425 | $ | 340 | $ | 340 |
(1) | Dividends paid to preferred shareholders in 2016 includes payment of the fourth quarter 2016 declared dividend. |
Contractual Obligations at December 31, 2015 | Payments Due by Year | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligations at December 31, 2016 | Payments Due by Year | |||||||||||||||||||||||||||||||||||||||||||||||||||||
In millions | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 and beyond | Total | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 and beyond | Total | ||||||||||||||||||||||||||||||||||||||||
Long-term debt – current and noncurrent (1) | $ | 550 | $ | 644 | $ | 730 | $ | 2,389 | $ | 1,769 | $ | 11,079 | $ | 17,161 | $ | 659 | $ | 5,237 | $ | 2,391 | $ | 1,825 | $ | 1,567 | $ | 9,785 | $ | 21,464 | ||||||||||||||||||||||||||
Deferred income tax liabilities – noncurrent (2) | — | — | — | — | — | 575 | 575 | |||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax liabilities (2) | — | — | — | — | — | 923 | 923 | |||||||||||||||||||||||||||||||||||||||||||||||
Pension and other postretirement benefits | 766 | 366 | 365 | 370 | 874 | 6,230 | 8,971 | 658 | 450 | 450 | 883 | 933 | 7,825 | 11,199 | ||||||||||||||||||||||||||||||||||||||||
Other noncurrent obligations (3) | 16 | 580 | 379 | 366 | 222 | 2,778 | 4,341 | — | 756 | 691 | 548 | 372 | 4,326 | 6,693 | ||||||||||||||||||||||||||||||||||||||||
Uncertain tax positions, including interest and penalties (4) | — | — | — | — | — | 378 | 378 | 26 | — | — | — | — | 231 | 257 | ||||||||||||||||||||||||||||||||||||||||
Other contractual obligations: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Minimum lease commitments | 302 | 277 | 249 | 230 | 215 | 1,500 | 2,773 | 351 | 300 | 272 | 246 | 221 | 1,064 | 2,454 | ||||||||||||||||||||||||||||||||||||||||
Purchase commitments – take-or-pay and throughput obligations | 2,935 | 2,415 | 2,262 | 1,927 | 1,799 | 7,827 | 19,165 | 2,600 | 2,498 | 2,172 | 2,083 | 1,725 | 7,304 | 18,382 | ||||||||||||||||||||||||||||||||||||||||
Purchase commitments – other (5) | 155 | 69 | 49 | 38 | 24 | 19 | 354 | 203 | 145 | 148 | 85 | 63 | 88 | 732 | ||||||||||||||||||||||||||||||||||||||||
Expected cash requirements for interest (6) | 929 | 917 | 875 | 766 | 668 | 7,145 | 11,300 | 997 | 921 | 789 | 690 | 609 | 6,710 | 10,716 | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 5,653 | $ | 5,268 | $ | 4,909 | $ | 6,086 | $ | 5,571 | $ | 37,531 | $ | 65,018 | $ | 5,494 | $ | 10,307 | $ | 6,913 | $ | 6,360 | $ | 5,490 | $ | 38,256 | $ | 72,820 |
(1) | Excludes unamortized debt discount and issuance costs of |
(2) | Deferred income tax liabilities may vary according to changes in tax laws, tax rates and the operating results of the Company. As a result, it is impractical to determine whether there will be a cash impact to an individual year. All noncurrent deferred income tax liabilities have been reflected in |
(3) | Includes "Asbestos-related liabilities - noncurrent." Annual payments to resolve |
(4) | Due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities, the Company is unable to determine the timing of payments related to its uncertain tax positions, including interest and penalties. Amounts beyond the current year are therefore reflected in |
(5) | Includes outstanding purchase orders and other commitments greater than $1 million, obtained through a survey conducted within the Company. |
(6) | Cash requirements for interest on long-term debt was calculated using current interest rates at December 31, |
Increase (Decrease) in Market-Related Asset Value Due to Recognition of Prior Gains (Losses) In millions | ||||||
2016 | $ | 74 | ||||
Decrease in Market-Related Asset Value Due to Recognition of Prior Losses In millions | Decrease in Market-Related Asset Value Due to Recognition of Prior Losses In millions | |||||
2017 | (55 | ) | $ | 94 | ||
2018 | (109 | ) | 148 | |||
2019 | (205 | ) | 241 | |||
2020 | 37 | |||||
Total | $ | (295 | ) | $ | 520 |
Environmental Sites | Dow-owned Sites (1) | Superfund Sites (2) | Dow-owned Sites (1) | Superfund Sites (2) | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
Number of sites at January 1 | 184 | 200 | 124 | 121 | 180 | 184 | 124 | 124 | ||||||||||||||||
Sites added during year | 7 | 6 | 7 | 5 | 16 | 7 | 10 | 7 | ||||||||||||||||
Sites closed during year | (11 | ) | (22 | ) | (7 | ) | (2 | ) | (7 | ) | (11 | ) | (3 | ) | (7 | ) | ||||||||
Number of sites at December 31 | 180 | 184 | 124 | 124 | 189 | 180 | 131 | 124 |
(1) | Dow-owned sites are sites currently or formerly owned by Dow. In the United States, remediation obligations are imposed by the Resource Conservation and Recovery Act or analogous state law. At December 31, |
(2) | Superfund sites are sites, including sites not owned by Dow, where remediation obligations are imposed by Superfund Law. |
2015 | 2014 | 2013 | ||||||||||||||||
Asbestos-Related Claim Activity | 2016 | 2015 | 2014 | |||||||||||||||
Claims unresolved at January 1 | 26,116 | 29,005 | 33,449 | 18,778 | 26,116 | 29,005 | ||||||||||||
Claims filed | 7,544 | 8,857 | 12,069 | 7,813 | 7,544 | 8,857 | ||||||||||||
Claims settled, dismissed or otherwise resolved | (14,882 | ) | (11,746 | ) | (16,513 | ) | (10,450 | ) | (14,882 | ) | (11,746 | ) | ||||||
Claims unresolved at December 31 | 18,778 | 26,116 | 29,005 | 16,141 | 18,778 | 26,116 | ||||||||||||
Claimants with claims against both UCC and Amchem | (6,804 | ) | (8,209 | ) | (8,331 | ) | (5,741 | ) | (6,804 | ) | (8,209 | ) | ||||||
Individual claimants at December 31 | 11,974 | 17,907 | 20,674 | 10,400 | 11,974 | 17,907 |
The Dow Chemical Company and Subsidiaries |
PART II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk. |
Total Daily VAR by Exposure Type at December 31 | 2015 | 2014 | 2016 | 2015 | ||||||||||||||||||||||||||
In millions | Year-end | Average | Year-end | Average | Year-end | Average | Year-end | Average | ||||||||||||||||||||||
Commodities | $ | 21 | $ | 20 | $ | 13 | $ | 9 | $ | 24 | $ | 23 | $ | 21 | $ | 20 | ||||||||||||||
Equities | $ | 15 | $ | 16 | $ | 10 | $ | 10 | $ | 17 | $ | 16 | $ | 15 | $ | 16 | ||||||||||||||
Foreign exchange | $ | 1 | $ | 2 | $ | 4 | $ | 5 | $ | 28 | $ | 9 | $ | 1 | $ | 2 | ||||||||||||||
Interest rate | $ | 96 | $ | 103 | $ | 119 | $ | 114 | $ | 82 | $ | 90 | $ | 96 | $ | 103 | ||||||||||||||
Composite | $ | 133 | $ | 141 | $ | 145 | $ | 138 | $ | 151 | $ | 138 | $ | 133 | $ | 141 |
The Dow Chemical Company and Subsidiaries |
PART II, Item 8. Financial Statements and Supplementary Data. |
/s/ DELOITTE & TOUCHE LLP |
(In millions, except per share amounts) For the years ended December 31 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Sales | $ | 48,778 | $ | 58,167 | $ | 57,080 | $ | 48,158 | $ | 48,778 | $ | 58,167 | ||||||||||
Cost of sales | 37,836 | 47,464 | 47,594 | 37,641 | 37,836 | 47,464 | ||||||||||||||||
Research and development expenses | 1,598 | 1,647 | 1,747 | 1,584 | 1,598 | 1,647 | ||||||||||||||||
Selling, general and administrative expenses | 2,971 | 3,106 | 3,024 | 3,304 | 2,971 | 3,106 | ||||||||||||||||
Amortization of intangibles | 419 | 436 | 461 | 544 | 419 | 436 | ||||||||||||||||
Goodwill and other intangible asset impairment losses | — | 50 | — | — | — | 50 | ||||||||||||||||
Restructuring charges (credits) | 415 | (3 | ) | (22 | ) | 452 | 415 | (3 | ) | |||||||||||||
Asbestos-related charge | — | 78 | — | 1,113 | — | 78 | ||||||||||||||||
Equity in earnings of nonconsolidated affiliates | 674 | 835 | 1,034 | 442 | 674 | 835 | ||||||||||||||||
Sundry income (expense) - net | 4,592 | (27 | ) | 2,554 | 1,202 | 4,592 | (27 | ) | ||||||||||||||
Interest income | 71 | 51 | 41 | 107 | 71 | 51 | ||||||||||||||||
Interest expense and amortization of debt discount | 946 | 983 | 1,101 | 858 | 946 | 983 | ||||||||||||||||
Income Before Income Taxes | 9,930 | 5,265 | 6,804 | 4,413 | 9,930 | 5,265 | ||||||||||||||||
Provision for income taxes | 2,147 | 1,426 | 1,988 | 9 | 2,147 | 1,426 | ||||||||||||||||
Net Income | 7,783 | 3,839 | 4,816 | 4,404 | 7,783 | 3,839 | ||||||||||||||||
Net income attributable to noncontrolling interests | 98 | 67 | 29 | 86 | 98 | 67 | ||||||||||||||||
Net Income Attributable to The Dow Chemical Company | 7,685 | 3,772 | 4,787 | 4,318 | 7,685 | 3,772 | ||||||||||||||||
Preferred stock dividends | 340 | 340 | 340 | 340 | 340 | 340 | ||||||||||||||||
Net Income Available for The Dow Chemical Company Common Stockholders | $ | 7,345 | $ | 3,432 | $ | 4,447 | $ | 3,978 | $ | 7,345 | $ | 3,432 | ||||||||||
Per Common Share Data: | ||||||||||||||||||||||
Earnings per common share - basic | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 3.57 | $ | 6.45 | $ | 2.91 | ||||||||||
Earnings per common share - diluted | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 3.52 | $ | 6.15 | $ | 2.87 | ||||||||||
Dividends declared per share of common stock | $ | 1.72 | $ | 1.53 | $ | 1.28 | $ | 1.84 | $ | 1.72 | $ | 1.53 | ||||||||||
Weighted-average common shares outstanding - basic | 1,130.1 | 1,170.9 | 1,186.2 | 1,108.1 | 1,130.1 | 1,170.9 | ||||||||||||||||
Weighted-average common shares outstanding - diluted | 1,241.4 | 1,187.0 | 1,290.4 | 1,123.2 | 1,241.4 | 1,187.0 |
(In millions) For the years ended December 31 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Net Income | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 4,404 | $ | 7,783 | $ | 3,839 | ||||||||||
Other Comprehensive Income (Loss), Net of Tax | ||||||||||||||||||||||
Net change in unrealized gains on investments | (94 | ) | (19 | ) | 13 | |||||||||||||||||
Translation adjustments | (986 | ) | (1,227 | ) | 148 | |||||||||||||||||
Adjustments to pension and other postretirement benefit plans | 552 | (1,861 | ) | 2,535 | ||||||||||||||||||
Net losses on cash flow hedging derivative instruments | (122 | ) | (83 | ) | (7 | ) | ||||||||||||||||
Total other comprehensive income (loss) | (650 | ) | (3,190 | ) | 2,689 | |||||||||||||||||
Unrealized losses on investments | (4 | ) | (94 | ) | (19 | ) | ||||||||||||||||
Cumulative translation adjustments | (644 | ) | (986 | ) | (1,227 | ) | ||||||||||||||||
Pension and other postretirement benefit plans | (620 | ) | 552 | (1,861 | ) | |||||||||||||||||
Derivative instruments | 113 | (122 | ) | (83 | ) | |||||||||||||||||
Total other comprehensive loss | (1,155 | ) | (650 | ) | (3,190 | ) | ||||||||||||||||
Comprehensive Income | 7,133 | 649 | 7,505 | 3,249 | 7,133 | 649 | ||||||||||||||||
Comprehensive income attributable to noncontrolling interests, net of tax | 65 | 35 | 29 | 83 | 65 | 35 | ||||||||||||||||
Comprehensive Income Attributable to The Dow Chemical Company | $ | 7,068 | $ | 614 | $ | 7,476 | $ | 3,166 | $ | 7,068 | $ | 614 |
(In millions, except share amounts) At December 31 | 2015 | 2014 | 2016 | 2015 | Assets | |||||||||
Current Assets | ||||||||||||||
Cash and cash equivalents (variable interest entities restricted - 2015: $158; 2014: $190) | $ | 8,577 | $ | 5,654 | ||||||||||
Cash and cash equivalents (variable interest entities restricted - 2016: $75; 2015: $158) | $ | 6,607 | $ | 8,577 | ||||||||||
Accounts and notes receivable: | ||||||||||||||
Trade (net of allowance for doubtful receivables - 2015: $94; 2014: $110) | 4,078 | 4,685 | ||||||||||||
Trade (net of allowance for doubtful receivables - 2016: $110; 2015: $94) | 4,666 | 4,078 | ||||||||||||
Other | 3,768 | 4,687 | 4,358 | 3,768 | ||||||||||
Inventories | 6,871 | 8,101 | 7,363 | 6,871 | ||||||||||
Deferred income tax assets - current | 827 | 812 | ||||||||||||
Other current assets | 354 | 316 | 665 | 647 | ||||||||||
Total current assets | 24,475 | 24,255 | 23,659 | 23,941 | ||||||||||
Investments | ||||||||||||||
Investment in nonconsolidated affiliates | 3,958 | 4,201 | 3,747 | 3,958 | ||||||||||
Other investments (investments carried at fair value - 2015: $1,866; 2014: $2,009) | 2,923 | 2,439 | ||||||||||||
Other investments (investments carried at fair value - 2016: $1,959; 2015: $1,866) | 2,969 | 2,923 | ||||||||||||
Noncurrent receivables | 765 | 620 | 708 | 816 | ||||||||||
Total investments | 7,646 | 7,260 | 7,424 | 7,697 | ||||||||||
Property | ||||||||||||||
Property | 50,802 | 55,230 | 57,438 | 50,802 | ||||||||||
Less accumulated depreciation | 32,948 | 37,179 | 33,952 | 32,948 | ||||||||||
Net property (variable interest entities restricted - 2015: $1,717; 2014: $2,726) | 17,854 | 18,051 | ||||||||||||
Net property (variable interest entities restricted - 2016: $961; 2015: $1,717) | 23,486 | 17,854 | ||||||||||||
Other Assets | ||||||||||||||
Goodwill | 12,154 | 12,632 | 15,272 | 12,154 | ||||||||||
Other intangible assets (net of accumulated amortization - 2015: $3,770; 2014: $3,737) | 3,617 | 3,768 | ||||||||||||
Deferred income tax assets - noncurrent | 1,694 | 2,135 | ||||||||||||
Asbestos-related insurance receivables - noncurrent | 51 | 62 | ||||||||||||
Other intangible assets (net of accumulated amortization - 2016: $4,295; 2015: $3,770) | 6,026 | 3,617 | ||||||||||||
Deferred income tax assets | 3,079 | 2,140 | ||||||||||||
Deferred charges and other assets | 535 | 524 | 565 | 535 | ||||||||||
Total other assets | 18,051 | 19,121 | 24,942 | 18,446 | ||||||||||
Total Assets | $ | 68,026 | $ | 68,687 | $ | 79,511 | $ | 67,938 | Liabilities and Equity | |||||
Current Liabilities | ||||||||||||||
Notes payable | $ | 454 | $ | 551 | $ | 272 | $ | 454 | ||||||
Long-term debt due within one year | 541 | 382 | 635 | 541 | ||||||||||
Accounts payable: | ||||||||||||||
Trade | 3,577 | 4,481 | 4,519 | 3,577 | ||||||||||
Other | 2,287 | 2,299 | 2,401 | 2,287 | ||||||||||
Income taxes payable | 452 | 361 | 600 | 452 | ||||||||||
Deferred income tax liabilities - current | 100 | 105 | ||||||||||||
Dividends payable | 592 | 563 | 508 | 592 | ||||||||||
Accrued and other current liabilities | 3,212 | 2,839 | 3,669 | 3,212 | ||||||||||
Total current liabilities | 11,215 | 11,581 | 12,604 | 11,115 | ||||||||||
Long-Term Debt (variable interest entities nonrecourse - 2015: $487; 2014: $1,216) | 16,215 | 18,741 | ||||||||||||
Long-Term Debt (variable interest entities nonrecourse - 2016: $330; 2015: $487) | 20,456 | 16,215 | ||||||||||||
Other Noncurrent Liabilities | ||||||||||||||
Deferred income tax liabilities - noncurrent | 575 | 622 | ||||||||||||
Deferred income tax liabilities | 923 | 587 | ||||||||||||
Pension and other postretirement benefits - noncurrent | 9,119 | 10,459 | 11,375 | 9,119 | ||||||||||
Asbestos-related liabilities - noncurrent | 387 | 438 | 1,364 | 387 | ||||||||||
Other noncurrent obligations | 4,332 | 3,290 | 5,560 | 4,332 | ||||||||||
Total other noncurrent liabilities | 14,413 | 14,809 | 19,222 | 14,425 | ||||||||||
Redeemable Noncontrolling Interest | — | 202 | ||||||||||||
Stockholders’ Equity | ||||||||||||||
Preferred stock, series A ($1.00 par, $1,000 liquidation preference, 4,000,000 shares) | 4,000 | 4,000 | ||||||||||||
Common stock (authorized 1,500,000,000 shares of $2.50 par value each; issued 2015: 1,242,794,836 shares; 2014: 1,242,763,276 shares) | 3,107 | 3,107 | ||||||||||||
Preferred stock, series A (issued $1.00 par, $1,000 liquidation preference; outstanding 2016: zero; 2015: 4,000,000 shares) | — | 4,000 | ||||||||||||
Common stock (authorized 1,500,000,000 shares of $2.50 par value each; issued 2016: 1,242,794,836 shares; 2015: 1,242,794,836 shares) | 3,107 | 3,107 | ||||||||||||
Additional paid-in capital | 4,936 | 4,846 | 4,262 | 4,936 | ||||||||||
Retained earnings | 28,425 | 23,045 | 30,338 | 28,425 | ||||||||||
Accumulated other comprehensive loss | (8,667 | ) | (8,017 | ) | (9,822 | ) | (8,667 | ) | ||||||
Unearned ESOP shares | (272 | ) | (325 | ) | (239 | ) | (272 | ) | ||||||
Treasury stock at cost (2015: 125,853,161 shares; 2014: 85,168,571 shares) | (6,155 | ) | (4,233 | ) | ||||||||||
Treasury stock at cost (2016: 31,661,501 shares; 2015: 125,853,161 shares) | (1,659 | ) | (6,155 | ) | ||||||||||
The Dow Chemical Company’s stockholders’ equity | 25,374 | 22,423 | 25,987 | 25,374 | ||||||||||
Non-redeemable noncontrolling interests | 809 | 931 | ||||||||||||
Noncontrolling interests | 1,242 | 809 | ||||||||||||
Total equity | 26,183 | 23,354 | 27,229 | 26,183 | ||||||||||
Total Liabilities and Equity | $ | 68,026 | $ | 68,687 | $ | 79,511 | $ | 67,938 |
(In millions) For the years ended December 31 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Operating Activities | ||||||||||||||||||||||
Net income | $ | 7,783 | $ | 3,839 | $ | 4,816 | $ | 4,404 | $ | 7,783 | $ | 3,839 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||||
Depreciation and amortization | 2,521 | 2,747 | 2,681 | 2,862 | 2,521 | 2,747 | ||||||||||||||||
Provision for deferred income tax | 305 | 466 | 113 | |||||||||||||||||||
Earnings of nonconsolidated affiliates less than (in excess of) dividends received | 142 | 121 | (129 | ) | ||||||||||||||||||
Provision (Credit) for deferred income tax | (1,259 | ) | 305 | 466 | ||||||||||||||||||
Earnings of nonconsolidated affiliates less than dividends received | 243 | 142 | 121 | |||||||||||||||||||
Pension contributions | (844 | ) | (815 | ) | (865 | ) | (629 | ) | (844 | ) | (815 | ) | ||||||||||
Net gain on sales of investments | (95 | ) | (76 | ) | (135 | ) | (116 | ) | (95 | ) | (76 | ) | ||||||||||
Net gain on sales of property, businesses and consolidated companies | (3,811 | ) | (45 | ) | (582 | ) | (88 | ) | (3,811 | ) | (45 | ) | ||||||||||
Net (gain) loss on sales of ownership interests in nonconsolidated affiliates | (749 | ) | 1 | (30 | ) | (10 | ) | (749 | ) | 1 | ||||||||||||
Net gain on step acquisition of a nonconsolidated affiliate | (361 | ) | — | — | ||||||||||||||||||
Net gain on step acquisition of nonconsolidated affiliates | (2,445 | ) | (361 | ) | — | |||||||||||||||||
Goodwill and other intangible asset impairment losses | — | 50 | — | — | — | 50 | ||||||||||||||||
Asset impairments and related costs | 144 | 23 | 184 | 143 | 144 | 23 | ||||||||||||||||
Restructuring charges (credits) | 415 | (3 | ) | (22 | ) | 452 | 415 | (3 | ) | |||||||||||||
Loss on early extinguishment of debt | 8 | — | 329 | — | 8 | — | ||||||||||||||||
Asbestos-related charge | — | 78 | — | 1,113 | — | 78 | ||||||||||||||||
Excess tax benefits from share-based payment arrangements | (41 | ) | (42 | ) | (23 | ) | (57 | ) | (41 | ) | (42 | ) | ||||||||||
Other net loss | 172 | 70 | 37 | 113 | 172 | 70 | ||||||||||||||||
Changes in assets and liabilities, net of effects of acquired and divested companies: | ||||||||||||||||||||||
Accounts and notes receivable | (84 | ) | (884 | ) | (915 | ) | (1,539 | ) | (84 | ) | (884 | ) | ||||||||||
Proceeds from interests in trade accounts receivable conduits | 1,034 | 1,079 | 1,028 | 1,257 | 1,034 | 1,079 | ||||||||||||||||
Inventories | 780 | 224 | 130 | 610 | 780 | 224 | ||||||||||||||||
Accounts payable | (681 | ) | (79 | ) | (408 | ) | 458 | (681 | ) | (79 | ) | |||||||||||
Other assets and liabilities | 878 | (252 | ) | 1,614 | (34 | ) | 878 | (252 | ) | |||||||||||||
Cash provided by operating activities | 7,516 | 6,502 | 7,823 | 5,478 | 7,516 | 6,502 | ||||||||||||||||
Investing Activities | ||||||||||||||||||||||
Capital expenditures | (3,703 | ) | (3,572 | ) | (2,302 | ) | (3,804 | ) | (3,703 | ) | (3,572 | ) | ||||||||||
Construction of assets pending sale-leaseback | — | (48 | ) | — | ||||||||||||||||||
Proceeds from sale-leaseback of assets | 3 | 470 | 42 | |||||||||||||||||||
Investment in gas field developments | (113 | ) | — | — | ||||||||||||||||||
Construction of assets pending sale / leaseback | (63 | ) | — | (48 | ) | |||||||||||||||||
Proceeds from sale / leaseback of assets | 87 | 3 | 470 | |||||||||||||||||||
Payment into escrow account | (835 | ) | — | — | ||||||||||||||||||
Distribution from escrow account | 835 | — | — | |||||||||||||||||||
Proceeds from sales of property, businesses and consolidated companies, net of cash divested | 2,383 | 119 | 660 | 284 | 2,383 | 119 | ||||||||||||||||
Acquisitions of property, businesses and consolidated companies, net of cash acquired | (123 | ) | — | — | (187 | ) | (123 | ) | — | |||||||||||||
Purchases of previously leased assets | (46 | ) | — | — | — | (46 | ) | — | ||||||||||||||
Cash acquired in step acquisition of nonconsolidated affiliate | 1,050 | — | — | |||||||||||||||||||
Investments in consolidated companies, net of cash acquired | — | (5 | ) | (21 | ) | — | — | (5 | ) | |||||||||||||
Investments in and loans to nonconsolidated affiliates | (803 | ) | (270 | ) | (137 | ) | (1,020 | ) | (803 | ) | (270 | ) | ||||||||||
Distributions and loan repayments from nonconsolidated affiliates | 17 | 69 | 46 | 109 | 17 | 69 | ||||||||||||||||
Proceeds from sales of ownership interests in nonconsolidated affiliates | 1,528 | 8 | 66 | 22 | 1,528 | 8 | ||||||||||||||||
Purchases of investments | (1,246 | ) | (643 | ) | (462 | ) | (577 | ) | (1,246 | ) | (643 | ) | ||||||||||
Proceeds from sales and maturities of investments | 640 | 767 | 639 | 733 | 640 | 767 | ||||||||||||||||
Cash used in investing activities | (1,350 | ) | (3,105 | ) | (1,469 | ) | (3,479 | ) | (1,350 | ) | (3,105 | ) | ||||||||||
Financing Activities | ||||||||||||||||||||||
Changes in short-term notes payable | (82 | ) | 74 | (37 | ) | (33 | ) | (82 | ) | 74 | ||||||||||||
Proceeds from issuance of long-term debt | 1,383 | 2,448 | 959 | 32 | 1,383 | 2,448 | ||||||||||||||||
Payments on long-term debt | (1,114 | ) | (747 | ) | (4,272 | ) | (588 | ) | (1,114 | ) | (747 | ) | ||||||||||
Purchases of treasury stock | (1,166 | ) | (4,193 | ) | (307 | ) | (916 | ) | (1,166 | ) | (4,193 | ) | ||||||||||
Proceeds from issuance of common stock | — | 679 | 386 | — | — | 679 | ||||||||||||||||
Proceeds from sales of common stock | 508 | 269 | — | 398 | 508 | 269 | ||||||||||||||||
Transaction financing, debt issuance and other costs | (88 | ) | (20 | ) | (7 | ) | (2 | ) | (88 | ) | (20 | ) | ||||||||||
Excess tax benefits from share-based payment arrangements | 41 | 42 | 23 | 57 | 41 | 42 | ||||||||||||||||
Distributions to noncontrolling interests | (112 | ) | (91 | ) | (55 | ) | (176 | ) | (112 | ) | (91 | ) | ||||||||||
Contributions from noncontrolling interests | 17 | 36 | 58 | — | 17 | 36 | ||||||||||||||||
Purchases of noncontrolling interests | (175 | ) | (60 | ) | — | (202 | ) | (175 | ) | (60 | ) | |||||||||||
Dividends paid to stockholders | (2,253 | ) | (2,020 | ) | (1,479 | ) | (2,462 | ) | (2,253 | ) | (2,020 | ) | ||||||||||
Cash used in financing activities | (3,041 | ) | (3,583 | ) | (4,731 | ) | (3,892 | ) | (3,041 | ) | (3,583 | ) | ||||||||||
Effect of Exchange Rate Changes on Cash | (202 | ) | (100 | ) | (1 | ) | (77 | ) | (202 | ) | (100 | ) | ||||||||||
Summary | ||||||||||||||||||||||
Increase (decrease) in cash and cash equivalents | 2,923 | (286 | ) | 1,622 | (1,970 | ) | 2,923 | (286 | ) | |||||||||||||
Cash and cash equivalents at beginning of year | 5,654 | 5,940 | 4,318 | 8,577 | 5,654 | 5,940 | ||||||||||||||||
Cash and cash equivalents at end of year | $ | 8,577 | $ | 5,654 | $ | 5,940 | $ | 6,607 | $ | 8,577 | $ | 5,654 |
(In millions, except per share amounts) For the years ended December 31 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Preferred Stock | ||||||||||||||||||||||
Balance at beginning of year and end of year | $ | 4,000 | $ | 4,000 | $ | 4,000 | ||||||||||||||||
Balance at beginning of year | $ | 4,000 | $ | 4,000 | $ | 4,000 | ||||||||||||||||
Preferred stock converted to common stock | (4,000 | ) | — | — | ||||||||||||||||||
Balance at end of year | — | 4,000 | 4,000 | |||||||||||||||||||
Common Stock | ||||||||||||||||||||||
Balance at beginning of year | 3,107 | 3,054 | 3,008 | 3,107 | 3,107 | 3,054 | ||||||||||||||||
Common stock issued | — | 53 | 46 | — | — | 53 | ||||||||||||||||
Balance at end of year | 3,107 | 3,107 | 3,054 | 3,107 | 3,107 | 3,107 | ||||||||||||||||
Additional Paid-in Capital | ||||||||||||||||||||||
Balance at beginning of year | 4,846 | 3,928 | 3,281 | 4,936 | 4,846 | 3,928 | ||||||||||||||||
Common stock issued / sold | 508 | 895 | 340 | 398 | 508 | 895 | ||||||||||||||||
Stock-based compensation and allocation of ESOP shares | (429 | ) | 30 | 307 | (376 | ) | (429 | ) | 30 | |||||||||||||
Preferred stock converted to common stock | (695 | ) | — | — | ||||||||||||||||||
Other | 11 | (7 | ) | — | (1 | ) | 11 | (7 | ) | |||||||||||||
Balance at end of year | 4,936 | 4,846 | 3,928 | 4,262 | 4,936 | 4,846 | ||||||||||||||||
Retained Earnings | ||||||||||||||||||||||
Balance at beginning of year | 23,045 | 21,407 | 18,495 | 28,425 | 23,045 | 21,407 | ||||||||||||||||
Net income available for The Dow Chemical Company common stockholders | 7,345 | 3,432 | 4,447 | 3,978 | 7,345 | 3,432 | ||||||||||||||||
Dividends declared on common stock (per share - 2015: $1.72; 2014: $1.53; 2013: $1.28) | (1,942 | ) | (1,777 | ) | (1,520 | ) | ||||||||||||||||
Dividends declared on common stock (per share - 2016: $1.84; 2015: $1.72; 2014: $1.53) | (2,037 | ) | (1,942 | ) | (1,777 | ) | ||||||||||||||||
Dividend equivalents on participating securities | (23 | ) | (17 | ) | (15 | ) | (28 | ) | (23 | ) | (17 | ) | ||||||||||
Balance at end of year | 28,425 | 23,045 | 21,407 | 30,338 | 28,425 | 23,045 | ||||||||||||||||
Accumulated Other Comprehensive Loss | ||||||||||||||||||||||
Balance at beginning of year | (8,017 | ) | (4,827 | ) | (7,516 | ) | (8,667 | ) | (8,017 | ) | (4,827 | ) | ||||||||||
Other comprehensive income (loss) | (650 | ) | (3,190 | ) | 2,689 | |||||||||||||||||
Other comprehensive loss | (1,155 | ) | (650 | ) | (3,190 | ) | ||||||||||||||||
Balance at end of year | (8,667 | ) | (8,017 | ) | (4,827 | ) | (9,822 | ) | (8,667 | ) | (8,017 | ) | ||||||||||
Unearned ESOP Shares | ||||||||||||||||||||||
Balance at beginning of year | (325 | ) | (357 | ) | (391 | ) | (272 | ) | (325 | ) | (357 | ) | ||||||||||
Shares acquired | — | (11 | ) | (11 | ) | (18 | ) | — | (11 | ) | ||||||||||||
Shares allocated to ESOP participants | 53 | 43 | 45 | 51 | 53 | 43 | ||||||||||||||||
Balance at end of year | (272 | ) | (325 | ) | (357 | ) | (239 | ) | (272 | ) | (325 | ) | ||||||||||
Treasury Stock | ||||||||||||||||||||||
Balance at beginning of year | (4,233 | ) | (307 | ) | — | (6,155 | ) | (4,233 | ) | (307 | ) | |||||||||||
Purchases | (2,688 | ) | (4,193 | ) | (307 | ) | (916 | ) | (2,688 | ) | (4,193 | ) | ||||||||||
Issuances - compensation plans | 766 | 267 | — | 717 | 766 | 267 | ||||||||||||||||
Issuances - Preferred stock converted to common stock | 4,695 | — | — | |||||||||||||||||||
Balance at end of year | (6,155 | ) | (4,233 | ) | (307 | ) | (1,659 | ) | (6,155 | ) | (4,233 | ) | ||||||||||
The Dow Chemical Company’s Stockholders’ Equity | 25,374 | 22,423 | 26,898 | 25,987 | 25,374 | 22,423 | ||||||||||||||||
Non-redeemable Noncontrolling Interests | 809 | 931 | 1,026 | |||||||||||||||||||
Noncontrolling Interests | 1,242 | 809 | 931 | |||||||||||||||||||
Total Equity | $ | 26,183 | $ | 23,354 | $ | 27,924 | $ | 27,229 | $ | 26,183 | $ | 23,354 |
The Dow Chemical Company and Subsidiaries |
Notes to the Consolidated Financial Statements |
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Summary of Changes to the Consolidated Balance Sheets at December 31, 2015 | |||||||
In millions | As Filed | Updated | |||||
Deferred income tax assets - current | $ | 827 | $ | — | |||
Other current assets | $ | 354 | $ | 647 | |||
Total current assets | $ | 24,475 | $ | 23,941 | |||
Noncurrent receivables | $ | 765 | $ | 816 | |||
Total investments | $ | 7,646 | $ | 7,697 | |||
Deferred income tax assets - noncurrent | $ | 1,694 | $ | 2,140 | |||
Asbestos-related insurance receivables - noncurrent | $ | 51 | $ | — | |||
Total other assets | $ | 18,051 | $ | 18,446 | |||
Total Assets | $ | 68,026 | $ | 67,938 | |||
Deferred income tax liabilities - current | $ | 100 | $ | — | |||
Total current liabilities | $ | 11,215 | $ | 11,115 | |||
Deferred income tax liabilities - noncurrent | $ | 575 | $ | 587 | |||
Total other noncurrent liabilities | $ | 14,413 | $ | 14,425 | |||
Total Liabilities and Equity | $ | 68,026 | $ | 67,938 |
2015 Restructuring Charges by Operating Segment In millions | Costs Associated with Exit or Disposal Activities | Severance Costs | Impairment of Long-Lived Assets, Investments and Other Assets | Total | ||||||||||||
Agricultural Sciences | $ | 6 | $ | — | $ | 8 | $ | 14 | ||||||||
Consumer Solutions | 2 | — | 65 | 67 | ||||||||||||
Infrastructure Solutions | 2 | — | 25 | 27 | ||||||||||||
Performance Plastics | — | — | 12 | 12 | ||||||||||||
Corporate | — | 196 | 59 | 255 | ||||||||||||
2015 Restructuring Charges | $ | 10 | $ | 196 | $ | 169 | $ | 375 | ||||||||
Adjustments to 2015 Restructuring Charges: | ||||||||||||||||
Agricultural Sciences | 1 | — | 1 | 2 | ||||||||||||
Infrastructure Solutions | — | — | (1 | ) | (1 | ) | ||||||||||
Corporate | — | 39 | — | 39 | ||||||||||||
Total 2015 Restructuring Charges | $ | 11 | $ | 235 | $ | 169 | $ | 415 |
2016 Restructuring Charges | Severance Costs | Impairment of Long-Lived Assets and Other Assets | Costs Associated with Exit and Disposal Activities | Total | ||||||||||||
In millions | ||||||||||||||||
Consumer Solutions | $ | — | $ | 23 | $ | 5 | $ | 28 | ||||||||
Infrastructure Solutions | — | 74 | 23 | 97 | ||||||||||||
Performance Plastics | — | 10 | — | 10 | ||||||||||||
Corporate | 268 | 46 | — | 314 | ||||||||||||
2016 restructuring charges | $ | 268 | $ | 153 | $ | 28 | $ | 449 | ||||||||
Charges against the reserve | — | (153 | ) | — | (153 | ) | ||||||||||
Cash payments | (67 | ) | — | (1 | ) | (68 | ) | |||||||||
Reserve balance at December 31, 2016 | $ | 201 | $ | — | $ | 27 | $ | 228 |
2015 Restructuring Charges | Impairment of Long-Lived Assets, Investments and Other Assets | Costs Associated with Exit and Disposal Activities | ||||||||||||||
In millions | Severance Costs | Total | ||||||||||||||
Agricultural Sciences | $ | — | $ | 8 | $ | 6 | $ | 14 | ||||||||
Consumer Solutions | — | 65 | 2 | 67 | ||||||||||||
Infrastructure Solutions | — | 25 | 2 | 27 | ||||||||||||
Performance Plastics | — | 12 | — | 12 | ||||||||||||
Corporate | 196 | 59 | — | 255 | ||||||||||||
2015 restructuring charges | $ | 196 | $ | 169 | $ | 10 | $ | 375 | ||||||||
Charges against the reserve | — | (169 | ) | — | (169 | ) | ||||||||||
Adjustments to the reserve | 39 | — | 1 | 40 | ||||||||||||
Impact of currency | — | — | (1 | ) | (1 | ) | ||||||||||
Cash payments | (92 | ) | — | — | (92 | ) | ||||||||||
Reserve balance at December 31, 2015 | $ | 143 | $ | — | $ | 10 | $ | 153 | ||||||||
Charges against the reserve | — | 3 | — | 3 | ||||||||||||
Adjustments to the reserve | — | (3 | ) | 6 | 3 | |||||||||||
Cash payments | (98 | ) | — | (8 | ) | (106 | ) | |||||||||
Reserve balance at December 31, 2016 | $ | 45 | $ | — | $ | 8 | $ | 53 |
2015 Restructuring Activities In millions | Costs Associated with Exit and Disposal Activities | Severance Costs | Impairment of Long-Lived Assets, Investments and Other Assets | Total | ||||||||||||
Restructuring Charges recognized in the second quarter of 2015 | $ | 10 | $ | 196 | $ | 169 | $ | 375 | ||||||||
Charges against the reserve | — | — | (169 | ) | (169 | ) | ||||||||||
Adjustments to the reserve | 1 | 39 | — | 40 | ||||||||||||
Impact of currency | (1 | ) | — | — | (1 | ) | ||||||||||
Cash payments | — | (92 | ) | — | (92 | ) | ||||||||||
Reserve balance at Dec 31, 2015 | $ | 10 | $ | 143 | $ | — | $ | 153 |
Assets Acquired and Liabilities Assumed on June 1, 2016 | |||
In millions | |||
Fair Value of Previously Held Equity Investment, excluding the HSC Group | $ | 4,818 | |
Fair Value of Assets Acquired | |||
Cash and cash equivalents | $ | 1,050 | |
Accounts and notes receivable - Trade | 647 | ||
Accounts and notes receivable - Other | 223 | ||
Inventories | 1,147 | ||
Other current assets | 51 | ||
Investment in nonconsolidated affiliates | 110 | ||
Noncurrent receivables | 112 | ||
Net property | 3,996 | ||
Other intangible assets (1) | 2,987 | ||
Deferred income tax assets | 999 | ||
Other assets | 98 | ||
Total Assets Acquired | $ | 11,420 | |
Fair Value of Liabilities Assumed | |||
Accounts payable - Trade | $ | 374 | |
Income taxes payable | 260 | ||
Accrued and other current liabilities | 404 | ||
Other current liabilities | 112 | ||
Long-Term Debt | 4,672 | ||
Deferred income tax liabilities | 1,858 | ||
Pension and other postretirement benefits - noncurrent (2) | 1,241 | ||
Other noncurrent obligations | 437 | ||
Total Liabilities Assumed | $ | 9,358 | |
Noncontrolling interests | $ | 473 | |
Goodwill | $ | 3,229 |
(1) | Includes $30 million of trademarks, $1,200 million of licenses and intellectual property, $2 million of software and $1,755 million of customer-related intangibles. See Note 10 for additional information. |
(2) | Includes pension and other postretirement benefits as well as long-term disability obligations. |
Deferred Tax Balances at June 1, 2016 | Deferred Tax | Deferred Tax | ||||
In millions | Assets | Liabilities | ||||
Property | $ | 161 | $ | 762 | ||
Tax loss and credit carryforwards | 227 | — | ||||
Postretirement benefit obligations | 474 | — | ||||
Other accruals and reserves | 70 | 47 | ||||
Intangibles | 11 | 1,008 | ||||
Inventory | 2 | 33 | ||||
Long-term debt | 49 | — | ||||
Investments | 23 | 8 | ||||
Subtotal | $ | 1,017 | $ | 1,858 | ||
Valuation allowances | (18 | ) | — | |||
Total Deferred Tax Balances | $ | 999 | $ | 1,858 |
Assets Acquired and Liabilities Assumed on January 30, 2015 | ||||||
In millions | ||||||
Purchase Price | $ | 169 | $ | 169 | ||
Fair Value of Assets Acquired | ||||||
Inventories | $ | 24 | $ | 24 | ||
Property | 35 | |||||
Net property | 35 | |||||
Other intangible assets (1) | 81 | 81 | ||||
Total Assets Acquired | $ | 140 | $ | 140 | ||
Fair Value of Liabilities Assumed | ||||||
Accrued and other current liabilities | $ | 2 | $ | 2 | ||
Goodwill | $ | 31 | $ | 31 |
(1) | Includes $14 million of trademarks, $1 million of customer-related intangibles, $20 million of germplasm and $46 million of in-process research and development. See Note 10 for additional information. |
Assets Acquired and Liabilities Assumed on May 5, 2015 | ||||||
In millions | ||||||
Fair Value of Previously Held Equity Investment | $ | 520 | $ | 520 | ||
Fair Value of Assets Acquired | ||||||
Current assets | $ | 113 | $ | 113 | ||
Property | 56 | |||||
Net property | 56 | |||||
Other intangible assets (1) | 433 | 433 | ||||
Total Assets Acquired | $ | 602 | $ | 602 | ||
Fair Value of Liabilities Assumed | ||||||
Current liabilities | $ | 102 | $ | 102 | ||
Long-term debt | 9 | |||||
Deferred income tax liabilities - noncurrent | 126 | |||||
Long-Term Debt | 9 | |||||
Deferred income tax liabilities | 126 | |||||
Total Liabilities Assumed | $ | 237 | $ | 237 | ||
Goodwill (2) | $ | 141 | $ | 141 |
(1) | Includes $340 million of licenses and intellectual property, $5 million of software, $12 million of trademarks and $76 million of customer-related intangibles. See Note 10 for additional information. |
(2) | Net of a $14 million settlement of an affiliate's pre-existing obligations and not deductible for tax purposes. |
SBH Assets and Liabilities Divested on January 30, 2015 | ||||||
In millions | ||||||
Inventories | $ | 23 | $ | 23 | ||
Property | 21 | |||||
Net property | 21 | |||||
Goodwill | 45 | 45 | ||||
Other intangible assets | 75 | 75 | ||||
Total assets divested | $ | 164 | $ | 164 | ||
Components of accumulated other comprehensive loss divested | $ | 2 | $ | 2 | ||
Net carrying value divested | $ | 166 | $ | 166 |
ANGUS Assets and Liabilities Divested on February 2, 2015 | |||
In millions | |||
Current assets | $ | 124 | |
Property | 101 | ||
Goodwill | 292 | ||
Deferred charges and other assets | 8 | ||
Total assets divested | $ | 525 | |
Current liabilities | $ | 17 | |
Other noncurrent liabilities | 37 | ||
Total liabilities divested | $ | 54 | |
Components of accumulated other comprehensive loss divested | $ | 10 | |
Net carrying value divested | $ | 481 |
ANGUS Assets and Liabilities Divested on February 2, 2015 | |||
In millions | |||
Current assets | $ | 124 | |
Net property | 101 | ||
Goodwill | 292 | ||
Deferred charges and other assets | 8 | ||
Total assets divested | $ | 525 | |
Current liabilities | $ | 17 | |
Other noncurrent liabilities | 37 | ||
Total liabilities divested | $ | 54 | |
Components of accumulated other comprehensive loss divested | $ | 10 | |
Net carrying value divested | $ | 481 |
AgroFresh Assets and Liabilities Divested on July 31, 2015 | ||||||
In millions | ||||||
Current assets | $ | 40 | $ | 40 | ||
Inventories | 18 | 18 | ||||
Property | 5 | |||||
Net property | 5 | |||||
Goodwill | 101 | 101 | ||||
Other intangible assets | 82 | 82 | ||||
Deferred charges and other assets | 1 | 1 | ||||
Total assets divested | $ | 247 | $ | 247 | ||
Current liabilities | $ | 8 | $ | 8 | ||
Other noncurrent obligations | 4 | 4 | ||||
Total liabilities divested | $ | 12 | $ | 12 | ||
Net carrying value divested | $ | 235 | $ | 235 |
Dow Chlorine Value Chain Assets and Liabilities Divested | Dow Chlorine Value Chain Assets and Liabilities Divested | Performance Materials & Chemicals | Performance Plastics | Corporate | Total | |||||||||||||||||||||||||||
In millions | Performance Materials & Chemicals | Performance Plastics | Corporate | Total | ||||||||||||||||||||||||||||
Accounts and notes receivable - trade | $ | 269 | $ | — | $ | (6 | ) | $ | 263 | |||||||||||||||||||||||
Accounts and notes receivable - Trade | $ | 269 | $ | — | $ | (6 | ) | $ | 263 | |||||||||||||||||||||||
Inventories | 297 | 34 | 7 | 338 | 297 | 34 | 7 | 338 | ||||||||||||||||||||||||
Other current assets | 5 | 6 | 100 | 111 | 5 | 6 | 100 | 111 | ||||||||||||||||||||||||
Net property | 1,268 | 205 | 58 | 1,531 | 1,268 | 205 | 58 | 1,531 | ||||||||||||||||||||||||
Goodwill | 71 | — | — | 71 | 71 | — | — | 71 | ||||||||||||||||||||||||
Other noncurrent assets | 9 | 1 | 34 | 44 | 9 | 1 | 34 | 44 | ||||||||||||||||||||||||
Total assets divested | $ | 1,919 | $ | 246 | $ | 193 | $ | 2,358 | $ | 1,919 | $ | 246 | $ | 193 | $ | 2,358 | ||||||||||||||||
Long-term debt due within one year (1) | $ | — | $ | — | $ | 51 | $ | 51 | $ | — | $ | — | $ | 51 | $ | 51 | ||||||||||||||||
Other current liabilities | 99 | 17 | — | 116 | 99 | 17 | — | 116 | ||||||||||||||||||||||||
Long-Term Debt (1) | — | — | 518 | 518 | — | — | 518 | 518 | ||||||||||||||||||||||||
Deferred income tax liabilities - noncurrent | — | — | 265 | 265 | ||||||||||||||||||||||||||||
Deferred income tax liabilities | — | — | 265 | 265 | ||||||||||||||||||||||||||||
Pension and other postretirement benefits - noncurrent | — | — | 439 | 439 | — | — | 439 | 439 | ||||||||||||||||||||||||
Total liabilities divested | $ | 99 | $ | 17 | $ | 1,273 | $ | 1,389 | $ | 99 | $ | 17 | $ | 1,273 | $ | 1,389 | ||||||||||||||||
Components of accumulated other comprehensive loss divested | $ | — | $ | — | $ | (215 | ) | $ | (215 | ) | $ | — | $ | — | $ | (215 | ) | $ | (215 | ) | ||||||||||||
Net carrying value divested | $ | 1,820 | $ | 229 | $ | (865 | ) | $ | 1,184 | $ | 1,820 | $ | 229 | $ | (865 | ) | $ | 1,184 |
(1) | Excludes $1,161 million included as part of the debt exchange offer and $875 million from a term loan entered into under the terms of the Transaction. See Note 17 for additional information. |
Dow Chlorine Value Chain Income Statement Information | ||||||||||||||||||
In millions | 2015 (1) | 2014 | 2013 | 2015 (1) | 2014 | |||||||||||||
Income Before Income Taxes (2) | $ | 139 | $ | 281 | $ | 212 | $ | 139 | $ | 281 | ||||||||
Loss before income taxes attributable to noncontrolling interests | 11 | 5 | 4 | 11 | 5 | |||||||||||||
Income Before Income Taxes attributable to The Dow Chemical Company (2) | $ | 150 | $ | 286 | $ | 216 | $ | 150 | $ | 286 |
Inventories at December 31 In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Finished goods | $ | 3,850 | $ | 4,547 | $ | 4,230 | $ | 3,879 | ||||||
Work in process | 1,506 | 1,905 | 1,510 | 1,502 | ||||||||||
Raw materials | 747 | 797 | 853 | 730 | ||||||||||
Supplies | 768 | 852 | 823 | 768 | ||||||||||
Total FIFO inventories | $ | 7,416 | $ | 6,879 | ||||||||||
Adjustment of inventories to a LIFO basis | (53 | ) | (8 | ) | ||||||||||
Total inventories | $ | 6,871 | $ | 8,101 | $ | 7,363 | $ | 6,871 |
Property at December 31 In millions | Estimated Useful Lives (Years) | 2015 | 2014 | Estimated Useful Lives (Years) | 2016 | 2015 | ||||||||||||||||
Land | — | $ | 855 | $ | 874 | — | $ | 1,157 | $ | 855 | ||||||||||||
Land and waterway improvements | 15-25 | 1,282 | 1,374 | 15-25 | 1,367 | 1,282 | ||||||||||||||||
Buildings | 5-55 | 4,793 | 4,910 | 5-55 | 5,935 | 4,793 | ||||||||||||||||
Machinery and equipment | 3-20 | 35,454 | 39,278 | 3-20 | 38,499 | 35,454 | ||||||||||||||||
Utility and supply lines | 5-20 | 2,053 | 2,448 | 5-20 | 2,117 | 2,053 | ||||||||||||||||
Other property | 3-50 | 2,010 | 1,940 | 3-50 | 2,263 | 2,010 | ||||||||||||||||
Construction in progress | — | 4,355 | 4,406 | — | 6,100 | 4,355 | ||||||||||||||||
Total property | $ | 50,802 | $ | 55,230 | $ | 57,438 | $ | 50,802 |
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Depreciation expense | $ | 1,908 | $ | 2,136 | $ | 2,051 | $ | 2,130 | $ | 1,908 | $ | 2,136 | ||||||||||||
Manufacturing maintenance and repair costs | $ | 1,991 | $ | 2,117 | $ | 2,325 | $ | 1,972 | $ | 1,991 | $ | 2,117 | ||||||||||||
Capitalized interest | $ | 218 | $ | 125 | $ | 78 | $ | 243 | $ | 218 | $ | 125 |
Investments in Nonconsolidated Affiliates at December 31 | |||||||
In millions | 2016 (1) | 2015 (2) | |||||
Investment in nonconsolidated affiliates | $ | 3,747 | $ | 3,958 | |||
Other noncurrent obligations | (1,030 | ) | (148 | ) | |||
Net investment in nonconsolidated affiliates | $ | 2,717 | $ | 3,810 |
(1) | The carrying amount of the Company’s investments in nonconsolidated affiliates was $62 million more than its share of the investees’ net assets, exclusive of additional differences for EQUATE and AFSI, which are discussed separately below. |
(2) | The carrying amount of the Company’s investments in nonconsolidated affiliates was $97 million more than its share of the investees’ net assets, exclusive of additional differences for Dow Corning and EQUATE, which are discussed separately below. |
Dividends Received from Nonconsolidated Affiliates | |||||||||||
In millions | 2016 | 2015 | 2014 (1) | ||||||||
Dividends from nonconsolidated affiliates | $ | 685 | $ | 816 | $ | 961 |
(1) | Includes accrued dividends of $5 million. |
HSC Group at June 1, 2016 | Ownership Interest | Investment | Balance Sheet Classification | |||||
In millions | ||||||||
Hemlock Semiconductor L.L.C. (1) | 50.1 | % | $ | (958 | ) | Other noncurrent obligations | ||
DC HSC Holdings LLC (2) | 50.0 | % | $ | 571 | Investment in nonconsolidated affiliates |
(1) | Hemlock Semiconductor L.L.C. is a nonconsolidated variable interest entity. See Note 20 for additional information. |
(2) | DC HSC Holdings LLC holds an 80.5 percent indirect ownership interest in Hemlock Semiconductor Operations. |
Balances Due To or Due From Nonconsolidated Affiliates at December 31 | ||||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Accounts and notes receivable - other | $ | 389 | $ | 511 | ||||||||||||
Accounts and notes receivable - Other | $ | 388 | $ | 389 | ||||||||||||
Noncurrent receivables | 473 | 212 | 267 | 473 | ||||||||||||
Total assets | $ | 862 | $ | 723 | $ | 655 | $ | 862 | ||||||||
Notes payable | $ | 171 | $ | 189 | $ | 44 | $ | 171 | ||||||||
Accounts payable - other | 230 | 274 | ||||||||||||||
Accounts payable - Other | 400 | 230 | ||||||||||||||
Total current liabilities | $ | 401 | $ | 463 | $ | 444 | $ | 401 |
Principal Nonconsolidated Affiliates at December 31 | Ownership Interest | Ownership Interest | ||||||||||||||||
2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||
Dow Corning Corporation (1) | 50 | % | 50 | % | 50 | % | N/A | 50 | % | 50 | % | |||||||
EQUATE Petrochemical Company K.S.C. | 42.5 | % | 42.5 | % | 42.5 | % | 42.5 | % | 42.5 | % | 42.5 | % | ||||||
The Kuwait Olefins Company K.S.C. | 42.5 | % | 42.5 | % | 42.5 | % | ||||||||||||
The Kuwait Styrene Company K.S.C. (2) | 42.5 | % | 42.5 | % | N/A | |||||||||||||
The HSC Group: (2) | ||||||||||||||||||
DC HSC Holdings LLC | 50 | % | N/A | N/A | ||||||||||||||
Hemlock Semiconductor L.L.C. | 50.1 | % | N/A | N/A | ||||||||||||||
The Kuwait Olefins Company K.S.C. ("TKOC") | 42.5 | % | 42.5 | % | 42.5 | % | ||||||||||||
The Kuwait Styrene Company K.S.C. ("TKSC") | 42.5 | % | 42.5 | % | 42.5 | % | ||||||||||||
Map Ta Phut Olefins Company Limited (3) | 32.77 | % | 32.77 | % | 32.77 | % | 32.77 | % | 32.77 | % | 32.77 | % | ||||||
MEGlobal (4) | N/A | 50 | % | 50 | % | N/A | N/A | 50 | % | |||||||||
Sadara Chemical Company | 35 | % | 35 | % | 35 | % | 35 | % | 35 | % | 35 | % | ||||||
The SCG-Dow Group: | ||||||||||||||||||
Siam Polyethylene Company Limited | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | ||||||
Siam Polystyrene Company Limited | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | ||||||
Siam Styrene Monomer Co., Ltd. | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | ||||||
Siam Synthetic Latex Company Limited | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | 50 | % | ||||||
Univation Technologies, LLC (5) | N/A | 50 | % | 50 | % | N/A | N/A | 50 | % |
(1) | On |
(2) | The |
(3) | The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited. |
(4) | On December 23, 2015, the Company sold its 50 percent ownership interest in MEGlobal to EQUATE. MEGlobal is treated as a separate principal nonconsolidated affiliate through the date of divestiture. See Note 5 for additional information. |
(5) | On May 5, 2015, Univation, previously a 50:50 joint venture between Dow and ExxonMobil, became a wholly owned subsidiary of Dow. See Note 4 for additional |
Investment in Principal Nonconsolidated Affiliates at December 31 | |||||||
In millions | 2016 | 2015 (1) | |||||
Investment in nonconsolidated affiliates | $ | 3,029 | $ | 3,120 | |||
Other noncurrent obligations | (1,030 | ) | (148 | ) | |||
Net investment in principal nonconsolidated affiliates | $ | 1,999 | $ | 2,972 |
(1) | Adjusted to conform to the current year presentation. |
Equity Earnings from Principal Nonconsolidated Affiliates | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Equity in earnings of nonconsolidated affiliates | $ | 449 | $ | 704 | $ | 845 |
Summarized Balance Sheet Information at December 31 | ||||||||||||||||
In millions | 2015 (1) | 2014 | 2016 (1) | 2015 (2) | ||||||||||||
Current assets | $ | 8,794 | $ | 9,611 | $ | 6,092 | $ | 8,794 | ||||||||
Noncurrent assets | 31,723 | 27,025 | 28,588 | 31,723 | ||||||||||||
Total assets | $ | 40,517 | $ | 36,636 | $ | 34,680 | $ | 40,517 | ||||||||
Current liabilities | $ | 9,850 | $ | 6,321 | $ | 3,953 | $ | 9,850 | ||||||||
Noncurrent liabilities | 21,461 | 21,047 | 23,223 | 21,461 | ||||||||||||
Total liabilities | $ | 31,311 | $ | 27,368 | $ | 27,176 | $ | 31,311 | ||||||||
Noncontrolling interests | $ | 663 | $ | 666 | $ | 300 | $ | 663 |
(1) | The summarized balance sheet information for 2016 does not include Dow Corning. |
(2) | The summarized balance sheet information for 2015 does not include Univation; MEGlobal is included as part of EQUATE. |
Summarized Income Statement Information | ||||||||||||||||||||||||
In millions | 2015 (1) | 2014 | 2013 (2) | 2016 (1) | 2015 (2) | 2014 | ||||||||||||||||||
Sales | $ | 15,468 | $ | 19,333 | $ | 18,257 | $ | 12,003 | $ | 15,468 | $ | 19,333 | ||||||||||||
Gross profit | $ | 3,206 | $ | 3,526 | $ | 3,403 | $ | 2,518 | $ | 3,206 | $ | 3,526 | ||||||||||||
Net income | $ | 1,343 | $ | 1,673 | $ | 1,906 | $ | 831 | $ | 1,343 | $ | 1,673 |
(1) | The summarized income statement information for 2016 includes the results of Dow Corning through May 31, 2016. |
(2) | The summarized income statement information for 2015 includes the results of Univation through April 30, 2015 and MEGlobal through November 30, 2015. |
2015 Goodwill | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics | Total | |||||||||||||||||
In millions | |||||||||||||||||||||||
Gross goodwill at Jan 1, 2015 | $ | 1,558 | $ | 4,598 | $ | 4,451 | $ | 1,029 | $ | 1,425 | $ | 13,061 | |||||||||||
Accumulated impairments at Jan 1, 2015 | — | (209 | ) | — | (220 | ) | — | (429 | ) | ||||||||||||||
Net goodwill at Jan 1, 2015 | $ | 1,558 | $ | 4,389 | $ | 4,451 | $ | 809 | $ | 1,425 | $ | 12,632 | |||||||||||
Divestiture of ANGUS Chemical Company | — | — | — | (292 | ) | — | (292 | ) | |||||||||||||||
Divestiture of the Sodium Borohydride business | — | — | — | (45 | ) | — | (45 | ) | |||||||||||||||
Sale of Agricultural Sciences product lines | (16 | ) | — | — | — | — | (16 | ) | |||||||||||||||
Divestiture of AgroFresh | (101 | ) | — | — | — | — | (101 | ) | |||||||||||||||
Split-off of the chlorine value chain | — | — | — | (71 | ) | — | (71 | ) | |||||||||||||||
Goodwill related to the Coodetec acquisition | 31 | — | — | — | — | 31 | |||||||||||||||||
Goodwill related to the Univation step acquisition | — | — | — | — | 141 | 141 | |||||||||||||||||
Foreign currency impact | — | (15 | ) | (69 | ) | (10 | ) | (31 | ) | (125 | ) | ||||||||||||
Net goodwill at Dec 31, 2015 | $ | 1,472 | $ | 4,374 | $ | 4,382 | $ | 391 | $ | 1,535 | $ | 12,154 | |||||||||||
Accumulated impairments at Dec 31, 2015 | — | 209 | — | 220 | — | 429 | |||||||||||||||||
Gross goodwill at Dec 31, 2015 | $ | 1,472 | $ | 4,583 | $ | 4,382 | $ | 611 | $ | 1,535 | $ | 12,583 |
2014 Goodwill | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics | Total | |||||||||||||||||
In millions | |||||||||||||||||||||||
Gross goodwill at Jan 1, 2014 | $ | 1,563 | $ | 4,618 | $ | 4,540 | $ | 1,041 | $ | 1,465 | $ | 13,227 | |||||||||||
Accumulated impairments at Jan 1, 2014 | — | (209 | ) | — | (220 | ) | — | (429 | ) | ||||||||||||||
Net goodwill at Jan 1, 2014 | $ | 1,563 | $ | 4,409 | $ | 4,540 | $ | 821 | $ | 1,465 | $ | 12,798 | |||||||||||
Purchase price adjustment of a seed company | (5 | ) | — | — | — | — | (5 | ) | |||||||||||||||
Foreign currency impact | — | (20 | ) | (89 | ) | (12 | ) | (40 | ) | (161 | ) | ||||||||||||
Net goodwill at Dec 31, 2014 | $ | 1,558 | $ | 4,389 | $ | 4,451 | $ | 809 | $ | 1,425 | $ | 12,632 | |||||||||||
Accumulated impairments at Dec 31, 2014 | — | 209 | — | 220 | — | 429 | |||||||||||||||||
Gross goodwill at Dec 31, 2014 | $ | 1,558 | $ | 4,598 | $ | 4,451 | $ | 1,029 | $ | 1,425 | $ | 13,061 |
Goodwill | Agricultural Sciences | Consumer Solutions | Infrastructure Solutions | Performance Materials & Chemicals | Performance Plastics | Total | |||||||||||||||||
In millions | |||||||||||||||||||||||
Balance at January 1, 2015 | $ | 1,558 | $ | 4,389 | $ | 4,451 | $ | 809 | $ | 1,425 | $ | 12,632 | |||||||||||
Divestiture of ANGUS Chemical Company | — | — | — | (292 | ) | — | (292 | ) | |||||||||||||||
Divestiture of the Sodium Borohydride business | — | — | — | (45 | ) | — | (45 | ) | |||||||||||||||
Sale of Agricultural Sciences product lines | (16 | ) | — | — | — | — | (16 | ) | |||||||||||||||
Divestiture of AgroFresh | (101 | ) | — | — | — | — | (101 | ) | |||||||||||||||
Split-off of the chlorine value chain | — | — | — | (71 | ) | — | (71 | ) | |||||||||||||||
Goodwill related to the Coodetec acquisition | 31 | — | — | — | — | 31 | |||||||||||||||||
Goodwill related to the Univation step acquisition | — | — | — | — | 141 | 141 | |||||||||||||||||
Foreign currency impact | — | (15 | ) | (69 | ) | (10 | ) | (31 | ) | (125 | ) | ||||||||||||
Balance at December 31, 2015 | $ | 1,472 | $ | 4,374 | $ | 4,382 | $ | 391 | $ | 1,535 | $ | 12,154 | |||||||||||
Acquisition of an aniline plant | — | — | — | 37 | — | 37 | |||||||||||||||||
Sale of product lines | — | (10 | ) | — | — | (5 | ) | (15 | ) | ||||||||||||||
Goodwill related to the DCC Transaction | — | 1,705 | 1,524 | — | — | 3,229 | |||||||||||||||||
Foreign currency impact | — | (52 | ) | (66 | ) | (3 | ) | (12 | ) | (133 | ) | ||||||||||||
Balance at December 31, 2016 | $ | 1,472 | $ | 6,017 | $ | 5,840 | $ | 425 | $ | 1,518 | $ | 15,272 |
Other Intangible Assets at December 31 | 2015 | 2014 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||||||||||
In millions | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||||||
Intangible assets with finite lives: | ||||||||||||||||||||||||||||||||||||||||||||||
Licenses and intellectual property | $ | 1,943 | $ | (1,087 | ) | $ | 856 | $ | 1,777 | $ | (1,060 | ) | $ | 717 | $ | 3,148 | $ | (1,286 | ) | $ | 1,862 | $ | 1,943 | $ | (1,087 | ) | $ | 856 | ||||||||||||||||||
Patents | 119 | (108 | ) | 11 | 122 | (108 | ) | 14 | 106 | (97 | ) | 9 | 119 | (108 | ) | 11 | ||||||||||||||||||||||||||||||
Software | 1,253 | (628 | ) | 625 | 1,287 | (648 | ) | 639 | 1,336 | (696 | ) | 640 | 1,253 | (628 | ) | 625 | ||||||||||||||||||||||||||||||
Trademarks | 666 | (441 | ) | 225 | 685 | (409 | ) | 276 | 696 | (503 | ) | 193 | 666 | (441 | ) | 225 | ||||||||||||||||||||||||||||||
Customer-related | 3,164 | (1,366 | ) | 1,798 | 3,443 | (1,366 | ) | 2,077 | 4,806 | (1,567 | ) | 3,239 | 3,164 | (1,366 | ) | 1,798 | ||||||||||||||||||||||||||||||
Other | 165 | (140 | ) | 25 | 158 | (146 | ) | 12 | 168 | (146 | ) | 22 | 165 | (140 | ) | 25 | ||||||||||||||||||||||||||||||
Total other intangible assets, finite lives | $ | 7,310 | $ | (3,770 | ) | $ | 3,540 | $ | 7,472 | $ | (3,737 | ) | $ | 3,735 | $ | 10,260 | $ | (4,295 | ) | $ | 5,965 | $ | 7,310 | $ | (3,770 | ) | $ | 3,540 | ||||||||||||||||||
IPR&D (1), indefinite lives | 77 | — | 77 | 33 | — | 33 | 61 | — | 61 | 77 | — | 77 | ||||||||||||||||||||||||||||||||||
Total other intangible assets | $ | 7,387 | $ | (3,770 | ) | $ | 3,617 | $ | 7,505 | $ | (3,737 | ) | $ | 3,768 | $ | 10,321 | $ | (4,295 | ) | $ | 6,026 | $ | 7,387 | $ | (3,770 | ) | $ | 3,617 |
Dow Corning Intangible Assets at June 1, 2016 | Gross Carrying Amount | Weighted-average Amortization Period | |||
In millions | |||||
Intangible assets with finite lives: | |||||
Licenses and intellectual property | $ | 1,200 | 9 years | ||
Software | 2 | 5 years | |||
Trademarks | 30 | 3 years | |||
Customer-related | 1,755 | 19 years | |||
Total | $ | 2,987 | 15 years |
Univation Intangible Assets at May 5, 2015 | Gross Carrying Amount | Weighted-average Amortization Period | |||
In millions | |||||
Intangible assets with finite lives: | |||||
Licenses and intellectual property | $ | 340 | 10 years | ||
Software | 5 | 5 years | |||
Trademarks | 12 | 18 years | |||
Customer-related | 76 | 10 years | |||
Total | $ | 433 | 10 years |
Univation Intangible Assets | Gross Carrying Amount | Weighted-average Amortization Period | ||
In millions | ||||
Intangible assets with finite lives: | ||||
Licenses and intellectual property | $ | 340 | 10 years | |
Software | 5 | 5 years | ||
Trademarks | 12 | 18 years | ||
Customer-related | 76 | 10 years | ||
Total | $ | 433 | 10 years |
Amortization Expense In millions | 2015 | 2014 | 2013 | |||||||||
Other intangible assets, excluding software (1) | $ | 419 | $ | 436 | $ | 461 | ||||||
Software, included in “Cost of sales” | $ | 72 | $ | 70 | $ | 67 |
Amortization Expense In millions | 2016 | 2015 | 2014 | |||||||||
Other intangible assets, excluding software | $ | 544 | $ | 419 | $ | 436 | ||||||
Software, included in “Cost of sales” | $ | 73 | $ | 72 | $ | 70 |
Estimated Amortization Expense for Next Five Years In millions | Estimated Amortization Expense for Next Five Years In millions | Estimated Amortization Expense for Next Five Years In millions | ||||
2016 | $ | 486 | ||||
2017 | $ | 467 | $ | 716 | ||
2018 | $ | 453 | $ | 722 | ||
2019 | $ | 387 | $ | 646 | ||
2020 | $ | 357 | $ | 609 | ||
2021 | $ | 576 |
Fair Value of Financial Instruments at December 31 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 2014 | 2016 | 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In millions | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value | Cost | Gain | Loss | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||
Marketable securities: (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt (2) | $ | 597 | $ | 22 | $ | (7 | ) | $ | 612 | $ | 559 | $ | 26 | $ | (1 | ) | $ | 584 | $ | 607 | $ | 13 | $ | (12 | ) | $ | 608 | $ | 597 | $ | 22 | $ | (7 | ) | $ | 612 | ||||||||||||||||||||||||||
Corporate bonds | 633 | 26 | (8 | ) | 651 | 654 | 45 | (2 | ) | 697 | 623 | 27 | (5 | ) | 645 | 633 | 26 | (8 | ) | 651 | ||||||||||||||||||||||||||||||||||||||||||
Total debt securities | $ | 1,230 | $ | 48 | $ | (15 | ) | $ | 1,263 | $ | 1,213 | $ | 71 | $ | (3 | ) | $ | 1,281 | $ | 1,230 | $ | 40 | $ | (17 | ) | $ | 1,253 | $ | 1,230 | $ | 48 | $ | (15 | ) | $ | 1,263 | ||||||||||||||||||||||||||
Equity securities | 555 | 108 | (60 | ) | 603 | 566 | 177 | (15 | ) | 728 | 658 | 98 | (50 | ) | 706 | 555 | 108 | (60 | ) | 603 | ||||||||||||||||||||||||||||||||||||||||||
Total marketable securities | $ | 1,785 | $ | 156 | $ | (75 | ) | $ | 1,866 | $ | 1,779 | $ | 248 | $ | (18 | ) | $ | 2,009 | $ | 1,888 | $ | 138 | $ | (67 | ) | $ | 1,959 | $ | 1,785 | $ | 156 | $ | (75 | ) | $ | 1,866 | ||||||||||||||||||||||||||
Long-term debt including debt due within one year (3) (4) | $ | (16,756 | ) | $ | 424 | $ | (1,668 | ) | $ | (18,000 | ) | $ | (19,123 | ) | $ | 69 | $ | (2,396 | ) | $ | (21,450 | ) | ||||||||||||||||||||||||||||||||||||||||
Long-term debt including debt due within one year (3) | $ | (21,091 | ) | $ | 129 | $ | (1,845 | ) | $ | (22,807 | ) | $ | (16,756 | ) | $ | 424 | $ | (1,668 | ) | $ | (18,000 | ) | ||||||||||||||||||||||||||||||||||||||||
Derivatives relating to: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest rates | $ | — | $ | — | $ | (4 | ) | $ | (4 | ) | $ | — | $ | — | $ | (12 | ) | $ | (12 | ) | $ | — | $ | — | $ | (5 | ) | $ | (5 | ) | $ | — | $ | — | $ | (4 | ) | $ | (4 | ) | ||||||||||||||||||||||
Commodities | $ | — | $ | 6 | $ | (248 | ) | $ | (242 | ) | $ | — | $ | 3 | $ | (81 | ) | $ | (78 | ) | $ | — | $ | 56 | $ | (213 | ) | $ | (157 | ) | $ | — | $ | 6 | $ | (248 | ) | $ | (242 | ) | ||||||||||||||||||||||
Foreign currency | $ | — | $ | 109 | $ | (32 | ) | $ | 77 | $ | — | $ | 26 | $ | (71 | ) | $ | (45 | ) | $ | — | $ | 84 | $ | (30 | ) | $ | 54 | $ | — | $ | 109 | $ | (32 | ) | $ | 77 |
(1) | Included in “Other investments” in the consolidated balance sheets. |
(2) | U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations. |
(3) | Cost includes fair value adjustments of $18 million at December 31, |
(4) |
Presented net of cash collateral, as disclosed in Note 12. |
Investing Results | ||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Proceeds from sales of available-for-sale securities | $ | 565 | $ | 675 | $ | 486 | $ | 535 | $ | 565 | $ | 675 | ||||||||||
Gross realized gains | $ | 96 | $ | 99 | $ | 66 | $ | 58 | $ | 96 | $ | 99 | ||||||||||
Gross realized losses | $ | (14 | ) | $ | (6 | ) | $ | (4 | ) | $ | (2 | ) | $ | (14 | ) | $ | (6 | ) |
Contractual Maturities of Debt Securities at December 31, 2015 | ||||||||||||||
Contractual Maturities of Debt Securities at December 31, 2016 | Contractual Maturities of Debt Securities at December 31, 2016 | |||||||||||||
In millions | Amortized Cost | Fair Value | Amortized Cost | Fair Value | ||||||||||
Within one year | $ | 18 | $ | 18 | $ | 33 | $ | 32 | ||||||
One to five years | 442 | 453 | 331 | 341 | ||||||||||
Six to ten years | 567 | 578 | 665 | 664 | ||||||||||
After ten years | 203 | 214 | 201 | 216 | ||||||||||
Total | $ | 1,230 | $ | 1,263 | $ | 1,230 | $ | 1,253 |
Temporarily Impaired Securities at December 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||
Temporarily Impaired Securities at December 31, 2016 | Temporarily Impaired Securities at December 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||||||||||
In millions | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||
Government debt (1) | $ | 251 | $ | (7 | ) | $ | 1 | $ | — | $ | 252 | $ | (7 | ) | $ | 351 | $ | (12 | ) | $ | — | $ | — | $ | 351 | $ | (12 | ) | ||||||||||||||||||
Corporate bonds | 175 | (8 | ) | 1 | — | 176 | (8 | ) | 193 | (4 | ) | 16 | (1 | ) | 209 | (5 | ) | |||||||||||||||||||||||||||||
Equity securities | 197 | (54 | ) | 10 | (6 | ) | 207 | (60 | ) | 48 | (6 | ) | 163 | (44 | ) | 211 | (50 | ) | ||||||||||||||||||||||||||||
Total temporarily impaired securities | $ | 623 | $ | (69 | ) | $ | 12 | $ | (6 | ) | $ | 635 | $ | (75 | ) | $ | 592 | $ | (22 | ) | $ | 179 | $ | (45 | ) | $ | 771 | $ | (67 | ) |
(1) | U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities' obligations. |
Temporarily Impaired Securities at December 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||
Temporarily Impaired Securities at December 31, 2015 | Temporarily Impaired Securities at December 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||
Less than 12 months | 12 months or more | Total | Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||||||||||||||||||||
In millions | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||||
Government debt (1) | $ | 74 | $ | (1 | ) | $ | 31 | $ | (1 | ) | $ | 105 | $ | (2 | ) | $ | 251 | $ | (7 | ) | $ | 1 | $ | — | $ | 252 | $ | (7 | ) | |||||||||||||||||
Corporate bonds | 102 | (1 | ) | 4 | — | 106 | (1 | ) | 175 | (8 | ) | 1 | — | 176 | (8 | ) | ||||||||||||||||||||||||||||||
Equity securities | 175 | (15 | ) | — | — | 175 | (15 | ) | 197 | (54 | ) | 10 | (6 | ) | 207 | (60 | ) | |||||||||||||||||||||||||||||
Total temporarily impaired securities | $ | 351 | $ | (17 | ) | $ | 35 | $ | (1 | ) | $ | 386 | $ | (18 | ) | $ | 623 | $ | (69 | ) | $ | 12 | $ | (6 | ) | $ | 635 | $ | (75 | ) |
(1) | U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities' obligations. |
Commodity | Dec 31, 2015 | Dec 31, 2014 | Notional Volume Unit | Dec 31, 2016 | Dec 31, 2015 | Notional Volume Unit | ||||||||
Corn | 1.0 | 1.3 | million bushels | 0.4 | 1.0 | million bushels | ||||||||
Crude Oil | 0.4 | 0.5 | million barrels | 0.6 | 0.4 | million barrels | ||||||||
Ethane | — | 0.9 | million barrels | 3.6 | — | million barrels | ||||||||
Natural Gas | 257.4 | 192.5 | million million British thermal units | 78.6 | 257.4 | million British thermal units | ||||||||
Propane | 1.5 | — | million barrels | |||||||||||
Soybeans | 1.4 | 1.2 | million bushels | — | 1.4 | million bushels |
Commodity | Dec 31, 2015 | Dec 31, 2014 | Notional Volume Unit | Dec 31, 2016 | Dec 31, 2015 | Notional Volume Unit | ||||||
Ethane | — | 0.2 | million barrels | 2.6 | — | million barrels | ||||||
Gasoline | — | 15.0 | kilotons | 30.0 | — | kilotons | ||||||
Naphtha Price Spread | 15.0 | 91.0 | kilotons | 50.0 | 15.0 | kilotons | ||||||
Natural Gas | — | 0.5 | million million British thermal units | |||||||||
Propane | 0.5 | — | million barrels | 2.7 | 0.5 | million barrels |
Fair Value of Derivative Instruments In millions | Balance Sheet Classification | 2015 | 2014 | Balance Sheet Classification | 2016 | 2015 | ||||||||||||
Asset Derivatives | ||||||||||||||||||
Derivatives designated as hedges: | ||||||||||||||||||
Commodities | Other current assets | $ | 3 | $ | 4 | Other current assets | $ | 42 | $ | 3 | ||||||||
Commodities | Deferred charges and other assets | 10 | — | |||||||||||||||
Foreign currency | Accounts and notes receivable – Other | 5 | 25 | Accounts and notes receivable – Other | 90 | 5 | ||||||||||||
Total derivatives designated as hedges | $ | 8 | $ | 29 | $ | 142 | $ | 8 | ||||||||||
Derivatives not designated as hedges: | ||||||||||||||||||
Commodities | Other current assets | $ | 13 | $ | 4 | |||||||||||||
Commodities | Other current assets | $ | 4 | $ | 2 | Deferred charges and other assets | 12 | — | ||||||||||
Foreign currency | Accounts and notes receivable – Other | 156 | 91 | Accounts and notes receivable – Other | 103 | 156 | ||||||||||||
Total derivatives not designated as hedges | $ | 160 | $ | 93 | $ | 128 | $ | 160 | ||||||||||
Total asset derivatives | $ | 168 | $ | 122 | $ | 270 | $ | 168 | ||||||||||
Liability Derivatives | ||||||||||||||||||
Derivatives designated as hedges: | ||||||||||||||||||
Interest rates | Accounts payable – Other | $ | 4 | $ | 12 | Accrued and other current liabilities | $ | 3 | $ | 3 | ||||||||
Interest rates | Other noncurrent obligations | 2 | 1 | |||||||||||||||
Commodities | Accounts payable – Other | 28 | 58 | Accrued and other current liabilities | 32 | 28 | ||||||||||||
Commodities | Other noncurrent obligations | 234 | 48 | Other noncurrent obligations | 196 | 234 | ||||||||||||
Foreign currency | Accounts payable – Other | 1 | — | Accrued and other current liabilities | 55 | 1 | ||||||||||||
Total derivatives designated as hedges | $ | 267 | $ | 118 | $ | 288 | $ | 267 | ||||||||||
Derivatives not designated as hedges: | ||||||||||||||||||
Commodities | Accounts payable – Other | $ | — | $ | 2 | Accrued and other current liabilities | $ | 4 | $ | — | ||||||||
Commodities | Other noncurrent obligations | 2 | — | |||||||||||||||
Foreign currency | Accounts payable – Other | 83 | 161 | Accounts payable – Other | 84 | 83 | ||||||||||||
Total derivatives not designated as hedges | $ | 83 | $ | 163 | $ | 90 | $ | 83 | ||||||||||
Total liability derivatives | $ | 350 | $ | 281 | $ | 378 | $ | 350 |
Basis of Fair Value Measurements on a Recurring Basis at December 31, 2015 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 | |||||||||||||||||||||||||||||||||
Basis of Fair Value Measurements on a Recurring Basis at December 31, 2016 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: | ||||||||||||||||||||||||||||||||||||||
Cash equivalents (2) | $ | — | $ | 5,043 | $ | — | $ | — | $ | 5,043 | $ | — | $ | 500 | $ | — | $ | — | $ | 500 | ||||||||||||||||||
Interests in trade accounts receivable conduits (3) | — | — | 943 | — | 943 | — | — | 1,237 | — | 1,237 | ||||||||||||||||||||||||||||
Equity securities (4) | 564 | 39 | — | — | 603 | 619 | 87 | — | — | 706 | ||||||||||||||||||||||||||||
Debt securities: (4) | ||||||||||||||||||||||||||||||||||||||
Government debt (5) | — | 612 | — | — | 612 | — | 608 | — | — | 608 | ||||||||||||||||||||||||||||
Corporate bonds | — | 651 | — | — | 651 | — | 645 | — | — | 645 | ||||||||||||||||||||||||||||
Derivatives relating to: (6) | ||||||||||||||||||||||||||||||||||||||
Commodities | 5 | 2 | — | (1 | ) | 6 | 48 | 29 | — | (21 | ) | 56 | ||||||||||||||||||||||||||
Foreign currency | — | 161 | — | (52 | ) | 109 | — | 193 | — | (109 | ) | 84 | ||||||||||||||||||||||||||
Total assets at fair value | $ | 569 | $ | 6,508 | $ | 943 | $ | (53 | ) | $ | 7,967 | $ | 667 | $ | 2,062 | $ | 1,237 | $ | (130 | ) | $ | 3,836 | ||||||||||||||||
Liabilities at fair value: | ||||||||||||||||||||||||||||||||||||||
Long-term debt (7) | $ | — | $ | 18,000 | $ | — | $ | — | $ | 18,000 | $ | — | $ | 22,807 | $ | — | $ | — | $ | 22,807 | ||||||||||||||||||
Derivatives relating to: (6) | ||||||||||||||||||||||||||||||||||||||
Interest rates | — | 4 | — | — | 4 | — | 5 | — | — | 5 | ||||||||||||||||||||||||||||
Commodities | 6 | 256 | — | (14 | ) | 248 | 20 | 214 | — | (21 | ) | 213 | ||||||||||||||||||||||||||
Foreign currency | — | 84 | — | (52 | ) | 32 | — | 139 | — | (109 | ) | 30 | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | 6 | $ | 18,344 | $ | — | $ | (66 | ) | $ | 18,284 | $ | 20 | $ | 23,165 | $ | — | $ | (130 | ) | $ | 23,055 |
(1) |
(2) | Treasury Bills and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value. |
(3) | Included in "Accounts and notes receivable – Other" in the consolidated balance sheets. See Note 16 for additional information on transfers of financial assets. |
(4) | 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. |
(5) | U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations. |
(6) | See Note 11 for the classification of derivatives in the consolidated balance sheets. |
(7) | See Note 11 for information on fair value measurements of long-term debt. |
Basis of Fair Value Measurements on a Recurring Basis at December 31, 2014 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 | |||||||||||||||||||||||||||||||||
Basis of Fair Value Measurements on a Recurring Basis at December 31, 2015 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: | ||||||||||||||||||||||||||||||||||||||
Cash equivalents (2) | $ | — | $ | 2,705 | $ | — | $ | — | $ | 2,705 | $ | — | $ | 5,043 | $ | — | $ | — | $ | 5,043 | ||||||||||||||||||
Interests in trade accounts receivable conduits (3) | — | — | 1,328 | — | 1,328 | — | — | 943 | — | 943 | ||||||||||||||||||||||||||||
Equity securities (4) | 692 | 36 | — | — | 728 | 564 | 39 | — | — | 603 | ||||||||||||||||||||||||||||
Debt securities: (4) | ||||||||||||||||||||||||||||||||||||||
Government debt (5) | — | 584 | — | — | 584 | — | 612 | — | — | 612 | ||||||||||||||||||||||||||||
Corporate bonds | — | 697 | — | — | 697 | — | 651 | — | — | 651 | ||||||||||||||||||||||||||||
Derivatives relating to: (6) | ||||||||||||||||||||||||||||||||||||||
Commodities | — | 6 | — | (3 | ) | 3 | 5 | 2 | — | (1 | ) | 6 | ||||||||||||||||||||||||||
Foreign currency | — | 116 | — | (90 | ) | 26 | — | 161 | — | (52 | ) | 109 | ||||||||||||||||||||||||||
Total assets at fair value | $ | 692 | $ | 4,144 | $ | 1,328 | $ | (93 | ) | $ | 6,071 | $ | 569 | $ | 6,508 | $ | 943 | $ | (53 | ) | $ | 7,967 | ||||||||||||||||
Liabilities at fair value: | ||||||||||||||||||||||||||||||||||||||
Long-term debt (7) | $ | — | $ | 21,450 | $ | — | $ | — | $ | 21,450 | $ | — | $ | 18,000 | $ | — | $ | — | $ | 18,000 | ||||||||||||||||||
Derivatives relating to: (6) | ||||||||||||||||||||||||||||||||||||||
Interest Rates | — | 12 | — | — | 12 | — | 4 | — | — | 4 | ||||||||||||||||||||||||||||
Commodities | 9 | 99 | — | (27 | ) | 81 | 6 | 256 | — | (14 | ) | 248 | ||||||||||||||||||||||||||
Foreign currency | — | 161 | — | (90 | ) | 71 | — | 84 | — | (52 | ) | 32 | ||||||||||||||||||||||||||
Total liabilities at fair value | $ | 9 | $ | 21,722 | $ | — | $ | (117 | ) | $ | 21,614 | $ | 6 | $ | 18,344 | $ | — | $ | (66 | ) | $ | 18,284 |
(1) |
(2) | Treasury Bills and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value. |
(3) | Included in "Accounts and notes receivable – Other" in the consolidated balance sheets. See Note 16 for additional information on transfers of financial assets. |
(4) | 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. |
(5) | U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations. |
(6) | See Note 11 for the classification of derivatives in the consolidated balance sheets. |
(7) | See Note 11 for information on fair value measurements of long-term debt. |
Fair Value Measurements Using Level 3 Inputs for Interests Held in Trade Receivable Conduits (1) | 2015 | 2014 | 2016 | 2015 | ||||||||||
In millions | ||||||||||||||
Balance at January 1 | $ | 1,328 | $ | 1,227 | $ | 943 | $ | 1,328 | ||||||
Gain included in earnings (2) | 2 | 9 | ||||||||||||
Gain (Loss) included in earnings (2) | (1 | ) | 2 | |||||||||||
Purchases | 647 | 1,171 | 1,552 | 647 | ||||||||||
Settlements | (1,034 | ) | (1,079 | ) | (1,257 | ) | (1,034 | ) | ||||||
Balance at December 31 | $ | 943 | $ | 1,328 | $ | 1,237 | $ | 943 |
(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 | Significant Other Unobservable Inputs | Total | ||||||||||||||||
Basis of Fair Value Measurements on a Nonrecurring Basis at December 31 | Quoted Prices in Active Markets for Identical Items | Significant Other Unobservable Inputs | ||||||||||||||||
In millions | (Level 3) | Losses | (Level 1) | (Level 3) | Total Losses | |||||||||||||
2016 | ||||||||||||||||||
Assets at fair value: | ||||||||||||||||||
Long-lived assets, other assets and equity method investments | $ | 46 | $ | — | $ | (296 | ) | |||||||||||
2015 | ||||||||||||||||||
Assets at fair value: | ||||||||||||||||||
Long-lived assets, equity method investments, investments and other assets | $ | 24 | $ | (313 | ) | $ | — | $ | 24 | $ | (313 | ) | ||||||
2014 | ||||||||||||||||||
Assets at fair value: | ||||||||||||||||||
Long-lived assets and other assets | $ | 4 | $ | (73 | ) | $ | — | $ | 4 | $ | (73 | ) | ||||||
2013 | ||||||||||||||||||
Assets at fair value: | ||||||||||||||||||
Long-lived assets, other assets and equity method investments | $ | 127 | $ | (178 | ) |
Sundry Income (Expense) – Net | ||||||||||||
In millions | 2015 | 2014 | 2013 | |||||||||
Gain on sales of other assets and investments (1) | $ | 237 | $ | 40 | $ | 98 | ||||||
Foreign exchange loss | (191 | ) | (61 | ) | (31 | ) | ||||||
Gain on split-off of chlorine value chain (2) | 2,233 | — | — | |||||||||
Gain on sale of MEGlobal (3) | 723 | — | — | |||||||||
Gain on divestiture of ANGUS Chemical Company (3) | 682 | — | — | |||||||||
Gain on divestiture of AgroFresh business (3) (9) | 618 | — | — | |||||||||
Gain on Univation step acquisition (4) | 361 | — | — | |||||||||
Costs associated with portfolio and productivity actions (5) | (119 | ) | (49 | ) | — | |||||||
Gain on sale of Agricultural Sciences subsidiary (6) | 44 | — | — | |||||||||
Gain on divestiture of Sodium Borohydride business (3) | 20 | — | — | |||||||||
Loss on early extinguishment of debt (7) | (8 | ) | — | (329 | ) | |||||||
Gain on termination of ethylene off-take agreement | — | 53 | — | |||||||||
K-Dow settlement (8) | — | — | 2,161 | |||||||||
Gain on sale of Polypropylene Licensing and Catalysts business (3) | — | 5 | 451 | |||||||||
Gain on sale of a 7.5 percent ownership interest in Freeport LNG Development, L.P. | — | — | 87 | |||||||||
Gain on sale of ownership interest in Dow Kokam LLC (3) | — | — | 26 | |||||||||
Reclassification of cumulative translation adjustments | (4 | ) | (12 | ) | 21 | |||||||
Other - net | (4 | ) | (3 | ) | 70 | |||||||
Total sundry income (expense) – net | $ | 4,592 | $ | (27 | ) | $ | 2,554 |
Sundry Income (Expense) – Net | ||||||||||||
In millions | 2016 | 2015 | 2014 | |||||||||
Gain on sales of other assets and investments | $ | 170 | $ | 237 | $ | 40 | ||||||
Foreign exchange losses | (126 | ) | (191 | ) | (61 | ) | ||||||
Gain on ownership restructure of Dow Corning (1) | 2,445 | — | — | |||||||||
Settlement of the urethane matters class action lawsuit and opt-out cases (2) | (1,235 | ) | — | — | ||||||||
Loss on partial impairment of equity interest in AgroFresh (3) | (143 | ) | — | — | ||||||||
Costs associated with transactions and productivity actions (4) | (41 | ) | (119 | ) | (49 | ) | ||||||
Implant liability adjustment | 27 | — | — | |||||||||
Gain (Loss) on divestiture of AgroFresh business (3) (5) | (25 | ) | 618 | — | ||||||||
Impact of split-off of chlorine value chain (6) | 6 | 2,233 | — | |||||||||
Gain (Loss) on sale of MEGlobal (3) | (1 | ) | 723 | — | ||||||||
Gain on sale of Agricultural Sciences subsidiary (7) | — | 44 | — | |||||||||
Gain on divestiture of ANGUS Chemical Company (3) | — | 682 | — | |||||||||
Gain on Univation step acquisition (1) | — | 361 | — | |||||||||
Gain on divestiture of Sodium Borohydride business (3) | — | 20 | — | |||||||||
Loss on early extinguishment of debt (8) | — | (8 | ) | — | ||||||||
Gain on termination of ethylene off-take agreement | — | — | 53 | |||||||||
Gain on sale of Polypropylene Licensing and Catalysts business (3) | — | — | 5 | |||||||||
Reclassification of cumulative translation adjustments | — | (4 | ) | (12 | ) | |||||||
Other - net | 125 | (4 | ) | (3 | ) | |||||||
Total sundry income (expense) – net | $ | 1,202 | $ | 4,592 | $ | (27 | ) |
(1) |
(2) | See Note |
(3) | See Note 5 for additional information. |
(4) | Transaction costs associated with the separation of the chlorine value chain. |
(5) | Includes a $5 million loss in 2016 ($8 million loss in 2015) on mark-to-market adjustments related to warrants. |
(6) | See Note |
See Note 20 for additional information. |
Excludes |
Other Income Statement Information | ||||||||||||||||||||||||
In millions | 2015 (1) | 2014 | 2013 | 2016 | 2015 (1) | 2014 | ||||||||||||||||||
Provision for doubtful receivables (2) | $ | 1 | $ | 52 | $ | 59 | $ | 22 | $ | 1 | $ | 52 |
(1) | Dow's provision for doubtful accounts was lower in 2015 due to the adjustment of certain reserve rates based on historical write-off experience, the impact of lower selling prices and the impact of divestitures. |
(2) | Included in “Selling, general and administrative expenses” in the consolidated statements of income. |
Supplemental Disclosure of Cash Flow Information | ||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Cash payments for interest | $ | 1,137 | $ | 1,038 | $ | 1,191 | $ | 1,192 | $ | 1,137 | $ | 1,038 | ||||||||||||
Cash payments for income taxes | $ | 1,405 | $ | 1,109 | $ | 1,708 | $ | 1,592 | $ | 1,405 | $ | 1,109 |
Investments in Company-owned Life Insurance at December 31 | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Gross cash value | $ | 850 | $ | 869 | $ | 834 | $ | 850 | ||||||
Less: Outstanding borrowings | 58 | 767 | 59 | 58 | ||||||||||
Investment in Company-owned life insurance (1) | $ | 792 | $ | 102 | $ | 775 | $ | 792 |
Net Income for Earnings Per Share Calculations - Basic In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net income attributable to The Dow Chemical Company | $ | 7,685 | $ | 3,772 | $ | 4,787 | $ | 4,318 | $ | 7,685 | $ | 3,772 | ||||||||||||
Preferred stock dividends | (340 | ) | (340 | ) | (340 | ) | (340 | ) | (340 | ) | (340 | ) | ||||||||||||
Net income attributable to participating securities (1) | (51 | ) | (27 | ) | (38 | ) | (22 | ) | (51 | ) | (27 | ) | ||||||||||||
Net income attributable to common stockholders | $ | 7,294 | $ | 3,405 | $ | 4,409 | $ | 3,956 | $ | 7,294 | $ | 3,405 |
Earnings Per Share Calculations - Basic Dollars per share | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net income attributable to The Dow Chemical Company | $ | 6.80 | $ | 3.22 | $ | 4.04 | $ | 3.90 | $ | 6.80 | $ | 3.22 | ||||||||||||
Preferred stock dividends | (0.30 | ) | (0.29 | ) | (0.29 | ) | (0.31 | ) | (0.30 | ) | (0.29 | ) | ||||||||||||
Net income attributable to participating securities (1) | (0.05 | ) | (0.02 | ) | (0.03 | ) | (0.02 | ) | (0.05 | ) | (0.02 | ) | ||||||||||||
Net income attributable to common stockholders | $ | 6.45 | $ | 2.91 | $ | 3.72 | $ | 3.57 | $ | 6.45 | $ | 2.91 |
Net Income for Earnings Per Share Calculations - Diluted In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net income attributable to The Dow Chemical Company | $ | 7,685 | $ | 3,772 | $ | 4,787 | $ | 4,318 | $ | 7,685 | $ | 3,772 | ||||||||||||
Preferred stock dividends (2) | — | (340 | ) | — | (340 | ) | — | (340 | ) | |||||||||||||||
Net income attributable to participating securities (1) | (51 | ) | (27 | ) | (38 | ) | (22 | ) | (51 | ) | (27 | ) | ||||||||||||
Net income attributable to common stockholders | $ | 7,634 | $ | 3,405 | $ | 4,749 | $ | 3,956 | $ | 7,634 | $ | 3,405 |
Earnings Per Share Calculations - Diluted Dollars per share | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net income attributable to The Dow Chemical Company | $ | 6.19 | $ | 3.18 | $ | 3.71 | $ | 3.84 | $ | 6.19 | $ | 3.18 | ||||||||||||
Preferred stock dividends (2) | — | (0.29 | ) | — | (0.30 | ) | — | (0.29 | ) | |||||||||||||||
Net income attributable to participating securities (1) | (0.04 | ) | (0.02 | ) | (0.03 | ) | (0.02 | ) | (0.04 | ) | (0.02 | ) | ||||||||||||
Net income attributable to common stockholders | $ | 6.15 | $ | 2.87 | $ | 3.68 | $ | 3.52 | $ | 6.15 | $ | 2.87 |
Share Count Information Shares in millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||
Weighted-average common shares - basic | 1,130.1 | 1,170.9 | 1,186.2 | 1,108.1 | 1,130.1 | 1,170.9 | ||||||||||||
Plus dilutive effect of stock options and awards | 14.5 | 16.1 | 7.4 | 15.1 | 14.5 | 16.1 | ||||||||||||
Plus dilutive effect of assumed conversion of preferred stock (3) | 96.8 | — | 96.8 | |||||||||||||||
Plus dilutive effect of preferred stock (4) | — | 96.8 | — | |||||||||||||||
Weighted-average common shares - diluted | 1,241.4 | 1,187.0 | 1,290.4 | 1,123.2 | 1,241.4 | 1,187.0 | ||||||||||||
Stock options and deferred stock awards excluded from EPS calculations | 4.6 | 5.8 | 47.4 | 1.9 | 4.6 | 5.8 |
(1) | 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 for the |
(3) |
(4) | The calculation of diluted earnings per share for the period |
These deferred stock awards and outstanding options to purchase shares of common stock |
Accrued Obligations for Environmental Matters | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Balance at January 1 | $ | 706 | $ | 722 | $ | 670 | $ | 706 | ||||||
Additional accruals | 230 | 228 | ||||||||||||
Charges against reserve | (233 | ) | (219 | ) | ||||||||||
Accrual adjustment | 479 | 230 | ||||||||||||
Payments against reserve | (246 | ) | (233 | ) | ||||||||||
Foreign currency impact | (33 | ) | (25 | ) | 6 | (33 | ) | |||||||
Balance at December 31 | $ | 670 | $ | 706 | $ | 909 | $ | 670 |
Receivables for Asbestos-Related Costs at December 31 In millions | 2015 | 2014 | |||||
Receivables for defense and resolution costs – carriers with settlement agreements | $ | 51 | $ | 69 | |||
Receivables for insurance recoveries – carriers without settlement agreements | 10 | 10 | |||||
Total | $ | 61 | $ | 79 |
Fixed and Determinable Portion of Take-or-Pay and Throughput Obligations at December 31, 2015 In millions | ||||||
2016 | $ | 2,935 | ||||
Fixed and Determinable Portion of Take-or-Pay and Throughput Obligations at December 31, 2016 In millions | Fixed and Determinable Portion of Take-or-Pay and Throughput Obligations at December 31, 2016 In millions | |||||
2017 | 2,415 | $ | 2,600 | |||
2018 | 2,262 | 2,498 | ||||
2019 | 1,927 | 2,172 | ||||
2020 | 1,799 | 2,083 | ||||
2021 and beyond | 7,827 | |||||
2021 | 1,725 | |||||
2022 and beyond | 7,304 | |||||
Total | $ | 19,165 | $ | 18,382 |
Guarantees at December 31, 2015 In millions | Final Expiration | Maximum Future Payments | Recorded Liability | |||||||||||||||
Guarantees at December 31, 2016 In millions | Final Expiration | Maximum Future Payments | Recorded Liability | |||||||||||||||
Guarantees | 2021 | $ | 4,910 | $ | 102 | 2021 | $ | 5,096 | $ | 86 | ||||||||
Residual value guarantees | 2025 | 912 | 117 | 2027 | 947 | 134 | ||||||||||||
Total guarantees | $ | 5,822 | $ | 219 | $ | 6,043 | $ | 220 |
Guarantees at December 31, 2014 In millions | Final Expiration | Maximum Future Payments | Recorded Liability | |||||||||||||||
Guarantees at December 31, 2015 In millions | Final Expiration | Maximum Future Payments | Recorded Liability | |||||||||||||||
Guarantees | 2021 | $ | 5,042 | $ | 160 | 2021 | $ | 4,910 | $ | 102 | ||||||||
Residual value guarantees | 2024 | 951 | 123 | 2025 | 912 | 117 | ||||||||||||
Total guarantees | $ | 5,993 | $ | 283 | $ | 5,822 | $ | 219 |
Warranty Accrual | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Balance at January 1 | $ | 107 | $ | 24 | $ | 93 | $ | 107 | ||||||
Accruals related to existing warranties (1) | 5 | 104 | 11 | 5 | ||||||||||
Settlements made during the year | (19 | ) | (21 | ) | (20 | ) | (19 | ) | ||||||
Balance at December 31 | $ | 93 | $ | 107 | $ | 84 | $ | 93 |
(1) | In the |
Asset Retirement Obligations | ||||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Balance at January 1 | $ | 84 | $ | 89 | $ | 96 | $ | 84 | ||||||||
Additional accruals | 8 | 3 | 17 | 8 | ||||||||||||
Liabilities settled | (8 | ) | (8 | ) | (9 | ) | (8 | ) | ||||||||
Accretion expense | 1 | 1 | 2 | 1 | ||||||||||||
Revisions in estimated cash flows | 17 | 3 | 5 | 17 | ||||||||||||
Other | (6 | ) | (4 | ) | (1 | ) | (6 | ) | ||||||||
Balance at December 31 | $ | 96 | $ | 84 | $ | 110 | $ | 96 |
(1) | Includes $14 million of asset retirement obligations from the DCC Transaction. |
Interests Held at December 31 | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Carrying value of interests held | $ | 943 | $ | 1,328 | $ | 1,237 | $ | 943 | ||||||
Percentage of anticipated credit losses | 0.34 | % | 0.35 | % | 0.36 | % | 0.34 | % | ||||||
Impact to carrying value - 10% adverse change | $ | 1 | $ | 1 | $ | 1 | $ | 1 | ||||||
Impact to carrying value - 20% adverse change | $ | 1 | $ | 2 | $ | 1 | $ | 1 |
Cash Proceeds | ||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||
Sale of receivables | $ | 18 | $ | 98 | $ | 34 | $ | 1 | $ | 18 | $ | 98 | ||||||||||
Collections reinvested in revolving receivables | $ | 22,951 | $ | 26,479 | $ | 25,864 | $ | 21,652 | $ | 22,951 | $ | 26,479 | ||||||||||
Interests in conduits (1) | $ | 1,034 | $ | 1,079 | $ | 1,028 | $ | 1,257 | $ | 1,034 | $ | 1,079 |
Trade Accounts Receivable Sold at December 31 | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Delinquencies on sold receivables still outstanding | $ | 97 | $ | 133 | $ | 86 | $ | 97 | ||||||
Trade accounts receivable outstanding and derecognized | $ | 2,152 | $ | 2,607 | $ | 2,257 | $ | 2,152 |
Notes Payable at December 31 In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||
Notes payable to banks and other lenders | $ | 277 | $ | 353 | $ | 225 | $ | 277 | ||||||
Notes payable to related companies | 171 | 189 | 44 | 171 | ||||||||||
Notes payable trade | 6 | 9 | 3 | 6 | ||||||||||
Total notes payable | $ | 454 | $ | 551 | $ | 272 | $ | 454 | ||||||
Year-end average interest rates | 4.00 | % | 4.08 | % | 4.60 | % | 4.00 | % |
Long-Term Debt at December 31 In millions | 2015 Average Rate | 2015 | 2014 Average Rate | 2014 | 2016 Average Rate | 2016 | 2015 Average Rate | 2015 | ||||||||||||||||||
Promissory notes and debentures: | ||||||||||||||||||||||||||
Final maturity 2015 | — | % | $ | — | 2.74 | % | $ | 60 | ||||||||||||||||||
Final maturity 2016 | 2.64 | % | 356 | 2.52 | % | 805 | — | % | $ | — | 2.64 | % | $ | 356 | ||||||||||||
Final maturity 2017 | 6.06 | % | 442 | 5.66 | % | 489 | 6.06 | % | 442 | 6.06 | % | 442 | ||||||||||||||
Final maturity 2018 | 5.78 | % | 339 | 5.44 | % | 567 | 5.78 | % | 339 | 5.78 | % | 339 | ||||||||||||||
Final maturity 2019 | 8.55 | % | 2,123 | 8.41 | % | 2,168 | 8.55 | % | 2,122 | 8.55 | % | 2,123 | ||||||||||||||
Final maturity 2020 | 4.46 | % | 1,547 | 4.37 | % | 1,877 | 4.46 | % | 1,547 | 4.46 | % | 1,547 | ||||||||||||||
Final maturity 2021 and thereafter | 5.42 | % | 9,872 | 5.31 | % | 10,186 | ||||||||||||||||||||
Final maturity 2021 | 4.72 | % | 1,424 | 4.72 | % | 1,424 | ||||||||||||||||||||
Final maturity 2022 and thereafter | 5.54 | % | 8,449 | 5.54 | % | 8,448 | ||||||||||||||||||||
Other facilities: | ||||||||||||||||||||||||||
U.S. dollar loans, various rates and maturities | 2.32 | % | 125 | 1.38 | % | 461 | 1.60 | % | 4,595 | 2.32 | % | 125 | ||||||||||||||
Foreign currency loans, various rates and maturities | 2.74 | % | 856 | 3.01 | % | 1,013 | 3.42 | % | 882 | 2.74 | % | 856 | ||||||||||||||
Medium-term notes, varying maturities through 2025 | 3.79 | % | 1,082 | 3.55 | % | 1,528 | 3.82 | % | 1,026 | 3.79 | % | 1,082 | ||||||||||||||
Tax-exempt bonds, varying maturities through 2038 | 5.66 | % | 343 | 5.66 | % | 343 | 5.66 | % | 343 | 5.66 | % | 343 | ||||||||||||||
Capital lease obligations | — | 76 | — | 85 | — | 295 | — | 76 | ||||||||||||||||||
Unamortized debt discount and issuance costs | — | (405 | ) | — | (459 | ) | — | (373 | ) | — | (405 | ) | ||||||||||||||
Long-term debt due within one year (1) (2) | — | (541 | ) | — | (382 | ) | ||||||||||||||||||||
Long-term debt due within one year (1) | — | (635 | ) | — | (541 | ) | ||||||||||||||||||||
Long-term debt | — | $ | 16,215 | — | $ | 18,741 | — | $ | 20,456 | — | $ | 16,215 |
(1) |
Presented net of current portion of unamortized debt issuance costs of |
Annual Installments on Long-Term Debt for Next Five Years In millions | ||||||
2016 | $ | 550 | ||||
Annual Installments on Long-Term Debt for Next Five Years (1) In millions | Annual Installments on Long-Term Debt for Next Five Years (1) In millions | |||||
2017 | $ | 644 | $ | 659 | ||
2018 | $ | 730 | $ | 5,237 | ||
2019 | $ | 2,389 | $ | 2,391 | ||
2020 | $ | 1,769 | $ | 1,825 | ||
2021 | $ | 1,567 |
(1) | Assumes the option to extend a term loan facility |
Committed and Available Credit Facilities at December 31, 2015 | ||||||||||||||
In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest | |||||||||
Five Year Competitive Advance and Revolving Credit Facility (1) | March 2015 | $ | 5,000 | $ | 5,000 | March 2020 | Floating rate | |||||||
Bilateral Revolving Credit Facility (2) | March 2015 | 100 | 100 | March 2016 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 280 | 280 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility (2) | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 200 | 200 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | August 2016 | Floating rate | |||||||||
Total Committed and Available Credit Facilities | $ | 5,980 | $ | 5,980 |
Committed and Available Credit Facilities at December 31, 2016 | ||||||||||||||
In millions | Effective Date | Committed Credit | Credit Available | Maturity Date | Interest | |||||||||
Five Year Competitive Advance and Revolving Credit Facility | March 2015 | $ | 5,000 | $ | 5,000 | March 2020 | Floating rate | |||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2017 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 280 | 280 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 100 | 100 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2015 | 200 | 200 | March 2020 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | May 2016 | 200 | 200 | May 2018 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | July 2016 | 200 | 200 | July 2018 | Floating rate | |||||||||
Bilateral Revolving Credit Facility | August 2016 | 100 | 100 | August 2018 | Floating rate | |||||||||
DCC Term Loan Facility (1) | February 2016 | 4,500 | — | May 2018 | Floating rate | |||||||||
Total Committed and Available Credit Facilities | $ | 10,880 | $ | 6,380 |
(1) |
(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 March 24, 2015, equals or exceeds $500 million, |
(b) | a default if the Company or an applicable subsidiary fails to make any payment, including principal, premium or interest, under the applicable agreement on other indebtedness of, or guaranteed by, the Company or such applicable subsidiary in an aggregate amount of $100 million or more when due, or any other default or other event under the applicable agreement with respect to such indebtedness occurs which permits or results in the acceleration of $400 million or more in the aggregate of principal, and |
(c) | a default if the Company or any applicable subsidiary fails to discharge or stay within 60 days after the entry of a final judgment against the Company or such applicable subsidiary of more than $400 million. |
Plan Assets and Obligations for all Significant Plans Assumed from Dow Corning at June 1, 2016 | Defined Benefit Pension Plans | Other Postretirement Benefits | |||||
In millions | |||||||
Fair value of plan assets | $ | 2,327 | $ | — | |||
Projected benefit obligations | 3,252 | 313 | |||||
Net liability assumed | $ | 925 | $ | 313 |
Weighted-Average Assumptions for All Pension Plans | Benefit Obligations at December 31 | Net Periodic Costs for the Year | Benefit Obligations at December 31 | Net Periodic Costs for the Year | ||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||
Discount rate | 3.88 | % | 3.60 | % | 4.54 | % | 3.60 | % | 4.54 | % | 3.88 | % | 3.52 | % | 3.88 | % | 3.60 | % | 3.85 | % | 3.60 | % | 4.54 | % | ||||||||||||
Rate of increase in future compensation levels | 4.13 | % | 4.13 | % | 4.15 | % | 4.13 | % | 4.15 | % | 3.96 | % | 3.90 | % | 4.13 | % | 4.13 | % | 4.04 | % | 4.13 | % | 4.15 | % | ||||||||||||
Expected long-term rate of return on plan assets | — | — | — | 7.35 | % | 7.40 | % | 7.47 | % | — | — | — | 7.22 | % | 7.35 | % | 7.40 | % |
Weighted-Average Assumptions for U.S. Pension Plans | Benefit Obligations at December 31 | Net Periodic Costs for the Year | Benefit Obligations at December 31 | Net Periodic Costs for the Year | ||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||
Discount rate | 4.40 | % | 4.04 | % | 4.92 | % | 4.04 | % | 4.92 | % | 4.02 | % | 4.11 | % | 4.40 | % | 4.04 | % | 4.40 | % | 4.04 | % | 4.92 | % | ||||||||||||
Rate of increase in future compensation levels | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.25 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | 4.50 | % | ||||||||||||
Expected long-term rate of return on plan assets | — | — | — | 7.85 | % | 7.82 | % | 7.85 | % | — | — | — | 7.77 | % | 7.85 | % | 7.82 | % |
Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets at December 31 | Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets at December 31 | Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets at December 31 | ||||||||||||||
In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Projected benefit obligations | $ | 23,421 | $ | 25,539 | $ | 27,877 | $ | 23,421 | ||||||||
Accumulated benefit obligations | $ | 22,409 | $ | 24,281 | $ | 26,590 | $ | 22,409 | ||||||||
Fair value of plan assets | $ | 16,066 | $ | 16,932 | $ | 18,523 | $ | 16,066 |
U.S. Plan Assumptions for Other Postretirement Benefits | Benefit Obligations at December 31 | Net Periodic Costs for the Year | Benefit Obligations at December 31 | Net Periodic Costs for the Year | ||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||
Discount rate | 3.97 | % | 3.68 | % | 4.37 | % | 3.68 | % | 4.37 | % | 3.67 | % | 3.83 | % | 3.97 | % | 3.68 | % | 3.96 | % | 3.68 | % | 4.37 | % | ||||||||||||
Initial health care cost trend rate | 7.25 | % | 7.06 | % | 7.45 | % | 7.06 | % | 7.45 | % | 7.84 | % | 7.00 | % | 7.25 | % | 7.06 | % | 7.25 | % | 7.06 | % | 7.45 | % | ||||||||||||
Ultimate health care cost trend rate | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | 5.00 | % | ||||||||||||
Year ultimate trend rate to be reached | 2025 | 2020 | 2020 | 2025 | 2020 | 2020 | 2025 | 2025 | 2020 | 2025 | 2020 | 2020 |
Net Periodic Benefit Cost for All Significant Plans | ||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Pension Plans | Other Postretirement Benefits | Defined Benefit Pension Plans | Other Postretirement Benefits | |||||||||||||||||||||||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | 2016 (1) | 2015 | 2014 | 2016 (1) | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||
Service cost | $ | 484 | $ | 411 | $ | 471 | $ | 14 | $ | 14 | $ | 19 | $ | 463 | $ | 484 | $ | 411 | $ | 13 | $ | 14 | $ | 14 | ||||||||||||||||||||||||
Interest cost | 975 | 1,096 | 1,012 | 59 | 72 | 78 | 846 | 975 | 1,096 | 52 | 59 | 72 | ||||||||||||||||||||||||||||||||||||
Expected return on plan assets | (1,382 | ) | (1,322 | ) | (1,248 | ) | — | — | — | (1,447 | ) | (1,382 | ) | (1,322 | ) | — | — | — | ||||||||||||||||||||||||||||||
Amortization of prior service cost (credit) | (28 | ) | 22 | 25 | (2 | ) | (2 | ) | (4 | ) | (24 | ) | (28 | ) | 22 | (3 | ) | (2 | ) | (2 | ) | |||||||||||||||||||||||||||
Amortization of unrecognized (gain) loss | 706 | 500 | 788 | (11 | ) | (14 | ) | 4 | 587 | 706 | 500 | (7 | ) | (11 | ) | (14 | ) | |||||||||||||||||||||||||||||||
Curtailment/settlement/other (1) (2) | — | (2 | ) | 5 | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Curtailment/settlement/other (2) | (36 | ) | — | (2 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net periodic benefit cost | $ | 755 | $ | 705 | $ | 1,053 | $ | 60 | $ | 70 | $ | 97 | $ | 389 | $ | 755 | $ | 705 | $ | 55 | $ | 60 | $ | 70 |
(1) |
(2) | The 2016 impact relates to the curtailment of benefits for certain participants of a Dow Corning plan in the U.S. The 2014 impact relates to settlements associated with the wind-up of a pension plan in The Netherlands and a pension plan in Canada. |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Income) Loss for All Significant Plans | ||||||||||||||||||||||||
Defined Benefit Pension Plans | Other Postretirement Benefits | |||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2015 | 2014 | 2013 | ||||||||||||||||||
Net (gain) loss | $ | (127 | ) | $ | 3,528 | $ | (2,343 | ) | $ | 11 | $ | 63 | $ | (404 | ) | |||||||||
Prior service cost (credit) arising during period | 63 | (500 | ) | — | — | — | — | |||||||||||||||||
Amortization of prior service (cost) credit | 28 | (22 | ) | (25 | ) | 2 | 2 | 4 | ||||||||||||||||
Amortization of unrecognized gain (loss) | (706 | ) | (498 | ) | (793 | ) | 11 | 14 | (4 | ) | ||||||||||||||
Total recognized in other comprehensive (income) loss | $ | (742 | ) | $ | 2,508 | $ | (3,161 | ) | $ | 24 | $ | 79 | $ | (404 | ) | |||||||||
Total recognized in net periodic benefit cost and other comprehensive (income) loss | $ | 13 | $ | 3,213 | $ | (2,108 | ) | $ | 84 | $ | 149 | $ | (307 | ) |
Change in Projected Benefit Obligations, Plan Assets and Funded Status of All Significant Plans | ||||||||||||||||
In millions | Defined Benefit Pension Plans | Other Postretirement Benefits | ||||||||||||||
Change in projected benefit obligations: | 2015 | 2014 | 2015 | 2014 | ||||||||||||
Benefit obligations at beginning of year | $ | 27,979 | $ | 25,027 | $ | 1,707 | $ | 1,742 | ||||||||
Service cost | 484 | 411 | 14 | 14 | ||||||||||||
Interest cost | 975 | 1,096 | 59 | 72 | ||||||||||||
Plan participants’ contributions | 19 | 21 | — | — | ||||||||||||
Plan amendments (1) | 30 | (500 | ) | — | — | |||||||||||
Actuarial changes in assumptions and experience | (929 | ) | 4,096 | 11 | 63 | |||||||||||
Acquisition/divestiture/other activity (2) | (894 | ) | (1 | ) | — | — | ||||||||||
Benefits paid | (1,289 | ) | (1,316 | ) | (172 | ) | (169 | ) | ||||||||
Currency impact | (723 | ) | (779 | ) | (22 | ) | (15 | ) | ||||||||
Termination benefits/curtailment cost/settlements (3) | — | (76 | ) | — | — | |||||||||||
Benefit obligations at end of year | $ | 25,652 | $ | 27,979 | $ | 1,597 | $ | 1,707 | ||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | $ | 19,629 | $ | 18,827 | $ | — | $ | — | ||||||||
Actual return on plan assets | 314 | 1,961 | — | — | ||||||||||||
Currency impact | (488 | ) | (593 | ) | — | — | ||||||||||
Employer contributions | 844 | 815 | — | — | ||||||||||||
Plan participants’ contributions | 19 | 21 | — | — | ||||||||||||
Acquisition/divestiture/other activity (4) | (255 | ) | (86 | ) | — | — | ||||||||||
Benefits paid | (1,289 | ) | (1,316 | ) | — | — | ||||||||||
Fair value of plan assets at end of year | $ | 18,774 | $ | 19,629 | $ | — | $ | — | ||||||||
Less: Fair value of assets due to Olin | $ | (179 | ) | $ | — | $ | — | $ | — | |||||||
Net fair value of plan assets at end of year | $ | 18,595 | $ | 19,629 | $ | — | $ | — | ||||||||
Funded status at end of year | $ | (7,057 | ) | $ | (8,350 | ) | $ | (1,597 | ) | $ | (1,707 | ) | ||||
Net amounts recognized in the consolidated balance sheets at December 31: | ||||||||||||||||
Noncurrent assets | $ | 317 | $ | 263 | $ | — | $ | — | ||||||||
Current liabilities | (64 | ) | (68 | ) | (146 | ) | (147 | ) | ||||||||
Noncurrent liabilities | (7,310 | ) | (8,545 | ) | (1,451 | ) | (1,560 | ) | ||||||||
Net amounts recognized in the consolidated balance sheets | $ | (7,057 | ) | $ | (8,350 | ) | $ | (1,597 | ) | $ | (1,707 | ) | ||||
Pretax amounts recognized in AOCL at December 31: | ||||||||||||||||
Net loss (gain) (5) | $ | 10,012 | $ | 10,845 | $ | (154 | ) | $ | (176 | ) | ||||||
Prior service credit (5) | (328 | ) | (419 | ) | (3 | ) | (5 | ) | ||||||||
Pretax balance in AOCL at end of year | $ | 9,684 | $ | 10,426 | $ | (157 | ) | $ | (181 | ) |
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Income) Loss for All Significant Plans | ||||||||||||||||||||||||
Defined Benefit Pension Plans | Other Postretirement Benefits | |||||||||||||||||||||||
In millions | 2016 | 2015 | 2014 | 2016 | 2015 | 2014 | ||||||||||||||||||
Net (gain) loss | $ | 1,954 | $ | (127 | ) | $ | 3,528 | $ | 14 | $ | 11 | $ | 63 | |||||||||||
Prior service cost (credit) arising during period | — | 63 | (500 | ) | — | — | — | |||||||||||||||||
Amortization of prior service (cost) credit | 24 | 28 | (22 | ) | 3 | 2 | 2 | |||||||||||||||||
Amortization of unrecognized gain (loss) | (587 | ) | (706 | ) | (498 | ) | 7 | 11 | 14 | |||||||||||||||
Total recognized in other comprehensive (income) loss | $ | 1,391 | $ | (742 | ) | $ | 2,508 | $ | 24 | $ | 24 | $ | 79 | |||||||||||
Total recognized in net periodic benefit cost and other comprehensive loss | $ | 1,780 | $ | 13 | $ | 3,213 | $ | 79 | $ | 84 | $ | 149 |
Change in Projected Benefit Obligations, Plan Assets and Funded Status of All Significant Plans | ||||||||||||||||
In millions | Defined Benefit Pension Plans | Other Postretirement Benefits | ||||||||||||||
Change in projected benefit obligations: | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Benefit obligations at beginning of year | $ | 25,652 | $ | 27,979 | $ | 1,597 | $ | 1,707 | ||||||||
Service cost | 463 | 484 | 13 | 14 | ||||||||||||
Interest cost | 846 | 975 | 52 | 59 | ||||||||||||
Plan participants’ contributions | 19 | 19 | — | — | ||||||||||||
Plan amendments | — | 30 | — | — | ||||||||||||
Actuarial changes in assumptions and experience | 1,967 | (929 | ) | 13 | 11 | |||||||||||
Acquisition/divestiture/other activity (1) | 3,201 | (894 | ) | 313 | — | |||||||||||
Benefits paid | (1,324 | ) | (1,289 | ) | (154 | ) | (172 | ) | ||||||||
Currency impact | (506 | ) | (723 | ) | 1 | (22 | ) | |||||||||
Termination benefits/curtailment cost/settlements (2) | (38 | ) | — | — | — | |||||||||||
Benefit obligations at end of year | $ | 30,280 | $ | 25,652 | $ | 1,835 | $ | 1,597 | ||||||||
Change in plan assets: | ||||||||||||||||
Fair value of plan assets at beginning of year | $ | 18,774 | $ | 19,629 | $ | — | $ | — | ||||||||
Actual return on plan assets | 1,437 | 314 | — | — | ||||||||||||
Currency impact | (404 | ) | (488 | ) | — | — | ||||||||||
Employer contributions | 629 | 844 | — | — | ||||||||||||
Plan participants’ contributions | 19 | 19 | — | — | ||||||||||||
Acquisition/divestiture/other activity (3) | 2,077 | (255 | ) | — | — | |||||||||||
Benefits paid | (1,324 | ) | (1,289 | ) | — | — | ||||||||||
Fair value of plan assets at end of year | $ | 21,208 | $ | 18,774 | $ | — | $ | — | ||||||||
Less: Fair value of assets due to Olin | $ | — | $ | (179 | ) | $ | — | $ | — | |||||||
Net fair value of plan assets at end of year | $ | 21,208 | $ | 18,595 | $ | — | $ | — | ||||||||
Funded status at end of year | $ | (9,072 | ) | $ | (7,057 | ) | $ | (1,835 | ) | $ | (1,597 | ) | ||||
Net amounts recognized in the consolidated balance sheets at December 31: | ||||||||||||||||
Noncurrent assets | $ | 292 | $ | 317 | $ | — | $ | — | ||||||||
Current liabilities | (74 | ) | (64 | ) | (158 | ) | (146 | ) | ||||||||
Noncurrent liabilities | (9,290 | ) | (7,310 | ) | (1,677 | ) | (1,451 | ) | ||||||||
Net amounts recognized in the consolidated balance sheets | $ | (9,072 | ) | $ | (7,057 | ) | $ | (1,835 | ) | $ | (1,597 | ) | ||||
Pretax amounts recognized in AOCL at December 31: | ||||||||||||||||
Net loss (gain) | $ | 11,379 | $ | 10,012 | $ | (133 | ) | $ | (154 | ) | ||||||
Prior service credit | (304 | ) | (328 | ) | — | (3 | ) | |||||||||
Pretax balance in AOCL at end of year | $ | 11,075 | $ | 9,684 | $ | (133 | ) | $ | (157 | ) |
(1) | The |
through the purchase of annuity contracts from an insurance company. The 2015 impact includes the transfer of benefit obligations associated with the Reverse Morris Trust transaction with Olin of $618 million and the transfer of benefit obligations associated with the divestiture of ANGUS to Golden Gate Capital of $34 million. |
(2) | The 2016 impact primarily relates to the curtailment of benefits for certain participants of a U.S. Dow Corning plan of $36 million. |
(3) | The |
assets associated with the Reverse Morris Trust transaction with Olin of $184 million. The 2015 impact includes the transfer of plan assets associated with the divestiture of ANGUS to Golden Gate Capital of $9 million. The 2015 impact also includes the purchase of annuity contracts of $247 million in the U.S. associated with the transfer of benefit obligations to an insurance company. |
Estimated Future Benefit Payments at December 31, 2015 | ||||||||||||||||
Estimated Future Benefit Payments at December 31, 2016 | Estimated Future Benefit Payments at December 31, 2016 | |||||||||||||||
In millions | Defined Benefit Pension Plans | Other Postretirement Benefits | Defined Benefit Pension Plans | Other Postretirement Benefits | ||||||||||||
2016 | $ | 1,277 | $ | 149 | ||||||||||||
2017 | 1,281 | 144 | $ | 1,433 | $ | 161 | ||||||||||
2018 | 1,311 | 139 | 1,460 | 155 | ||||||||||||
2019 | 1,351 | 135 | 1,501 | 151 | ||||||||||||
2020 | 1,385 | 130 | 1,536 | 146 | ||||||||||||
2021 through 2025 | 7,361 | 560 | ||||||||||||||
2021 | 1,571 | 142 | ||||||||||||||
2022 through 2026 | 8,374 | 627 | ||||||||||||||
Total | $ | 13,966 | $ | 1,257 | $ | 15,875 | $ | 1,382 |
Strategic Weighted-Average Target Allocation of Plan Assets for All Significant Plans | ||
Asset Category | Target Allocation | |
Equity securities | 35 | % |
Fixed income securities | 34 | % |
Alternative investments | 30 | % |
Other investments | 1 | % |
Total | 100 | % |
Basis of Fair Value Measurements of Pension Plan Assets at December 31, 2015 | Quoted Prices in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||||||||
Basis of Fair Value Measurements of Pension Plan Assets at December 31, 2016 | Quoted Prices in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||||||||||
In millions | (Level 1) | (Level 2) | (Level 3) | Total | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 84 | $ | 733 | $ | — | $ | 817 | $ | 73 | $ | 806 | $ | — | $ | 879 | ||||||||||||||||
Equity securities: | ||||||||||||||||||||||||||||||||
U.S. equity (1) | $ | 2,525 | $ | 558 | $ | 1 | $ | 3,084 | $ | 2,642 | $ | 983 | $ | 1 | $ | 3,626 | ||||||||||||||||
Non-U.S. equity – developed countries | 1,877 | 1,167 | — | 3,044 | 1,955 | 1,232 | 1 | 3,188 | ||||||||||||||||||||||||
Emerging markets | 462 | 542 | 27 | 1,031 | 508 | 557 | 31 | 1,096 | ||||||||||||||||||||||||
Convertible bonds | 26 | 177 | — | 203 | 21 | 199 | 1 | 221 | ||||||||||||||||||||||||
Equity derivatives | — | 8 | — | 8 | ||||||||||||||||||||||||||||
Total equity securities | $ | 4,890 | $ | 2,452 | $ | 28 | $ | 7,370 | $ | 5,126 | $ | 2,971 | $ | 34 | $ | 8,131 | ||||||||||||||||
Fixed income securities: | ||||||||||||||||||||||||||||||||
U.S. government and municipalities | $ | — | $ | 1,320 | $ | — | $ | 1,320 | $ | — | $ | 2,091 | $ | — | $ | 2,091 | ||||||||||||||||
U.S. agency and agency mortgage-backed securities | — | 279 | — | 279 | — | 309 | — | 309 | ||||||||||||||||||||||||
Corporate bonds – investment grade | — | 1,527 | — | 1,527 | — | 1,562 | — | 1,562 | ||||||||||||||||||||||||
Non-U.S. governments – developed countries | — | 1,161 | — | 1,161 | — | 1,135 | — | 1,135 | ||||||||||||||||||||||||
Non-U.S. corporate bonds – developed countries | — | 917 | — | 917 | — | 1,176 | — | 1,176 | ||||||||||||||||||||||||
Emerging market debt | — | 109 | — | 109 | — | 131 | — | 131 | ||||||||||||||||||||||||
Other asset-backed securities | — | 88 | 1 | 89 | — | 95 | 2 | 97 | ||||||||||||||||||||||||
High yield bonds | 47 | 166 | 16 | 229 | — | 190 | 13 | 203 | ||||||||||||||||||||||||
Other fixed income funds | — | 295 | 276 | 571 | — | 351 | 483 | 834 | ||||||||||||||||||||||||
Fixed income derivatives | — | 33 | — | 33 | — | (17 | ) | — | (17 | ) | ||||||||||||||||||||||
Total fixed income securities | $ | 47 | $ | 5,895 | $ | 293 | $ | 6,235 | $ | — | $ | 7,023 | $ | 498 | $ | 7,521 | ||||||||||||||||
Alternative investments: | ||||||||||||||||||||||||||||||||
Real estate | $ | 22 | $ | 38 | $ | 1,772 | $ | 1,832 | $ | 21 | $ | 24 | $ | 2,042 | $ | 2,087 | ||||||||||||||||
Private equity | — | — | 1,054 | 1,054 | — | — | 1,128 | 1,128 | ||||||||||||||||||||||||
Absolute return | — | 483 | 695 | 1,178 | — | 723 | 465 | 1,188 | ||||||||||||||||||||||||
Total alternative investments | $ | 22 | $ | 521 | $ | 3,521 | $ | 4,064 | $ | 21 | $ | 747 | $ | 3,635 | $ | 4,403 | ||||||||||||||||
Other investments | $ | — | $ | 250 | $ | 38 | $ | 288 | $ | — | $ | 179 | $ | 95 | $ | 274 | ||||||||||||||||
Total pension plan assets at fair value | $ | 5,043 | $ | 9,851 | $ | 3,880 | $ | 18,774 | $ | 5,220 | $ | 11,726 | $ | 4,262 | $ | 21,208 | ||||||||||||||||
Less: Fair value of pension plan assets due to Olin (2) | (179 | ) | — | — | (179 | ) | ||||||||||||||||||||||||||
Net pension plan assets at fair value | $ | 4,864 | $ | 9,851 | $ | 3,880 | $ | 18,595 |
(1) | Includes no Company common stock. |
Basis of Fair Value Measurements of Pension Plan Assets at December 31, 2015 | Quoted Prices in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
In millions | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Cash and cash equivalents | $ | 84 | $ | 733 | $ | — | $ | 817 | ||||||||
Equity securities: | ||||||||||||||||
U.S. equity (1) | $ | 2,525 | $ | 558 | $ | 1 | $ | 3,084 | ||||||||
Non-U.S. equity – developed countries | 1,877 | 1,167 | — | 3,044 | ||||||||||||
Emerging markets | 462 | 542 | 27 | 1,031 | ||||||||||||
Convertible bonds | 26 | 177 | — | 203 | ||||||||||||
Equity derivatives | — | 8 | — | 8 | ||||||||||||
Total equity securities | $ | 4,890 | $ | 2,452 | $ | 28 | $ | 7,370 | ||||||||
Fixed income securities: | ||||||||||||||||
U.S. government and municipalities | $ | — | $ | 1,320 | $ | — | $ | 1,320 | ||||||||
U.S. agency and agency mortgage-backed securities | — | 279 | — | 279 | ||||||||||||
Corporate bonds – investment grade | — | 1,527 | — | 1,527 | ||||||||||||
Non-U.S. governments – developed countries | — | 1,161 | — | 1,161 | ||||||||||||
Non-U.S. corporate bonds – developed countries | — | 917 | — | 917 | ||||||||||||
Emerging market debt | — | 109 | — | 109 | ||||||||||||
Other asset-backed securities | — | 88 | 1 | 89 | ||||||||||||
High yield bonds | 47 | 166 | 16 | 229 | ||||||||||||
Other fixed income funds | — | 295 | 276 | 571 | ||||||||||||
Fixed income derivatives | — | 33 | — | 33 | ||||||||||||
Total fixed income securities | $ | 47 | $ | 5,895 | $ | 293 | $ | 6,235 | ||||||||
Alternative investments: | ||||||||||||||||
Real estate | $ | 22 | $ | 38 | $ | 1,772 | $ | 1,832 | ||||||||
Private equity | — | — | 1,054 | 1,054 | ||||||||||||
Absolute return | — | 483 | 695 | 1,178 | ||||||||||||
Total alternative investments | $ | 22 | $ | 521 | $ | 3,521 | $ | 4,064 | ||||||||
Other investments | $ | — | $ | 250 | $ | 38 | $ | 288 | ||||||||
Total pension plan assets at fair value | $ | 5,043 | $ | 9,851 | $ | 3,880 | $ | 18,774 | ||||||||
Less: Fair value of pension plan assets due to Olin (2) | (179 | ) | — | — | (179 | ) | ||||||||||
Net pension plan assets at fair value | $ | 4,864 | $ | 9,851 | $ | 3,880 | $ | 18,595 |
(1) | Includes no Company common stock. |
(2) | Pension plan assets |
Basis of Fair Value Measurements of Pension Plan Assets at December 31, 2014 | Quoted Prices in Active Markets for Identical Items | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||
In millions | (Level 1) | (Level 2) | (Level 3) | Total | ||||||||||||
Cash and cash equivalents | $ | 61 | $ | 953 | $ | — | $ | 1,014 | ||||||||
Equity securities: | ||||||||||||||||
U.S. equity (1) | $ | 3,011 | $ | 428 | $ | 9 | $ | 3,448 | ||||||||
Non-U.S. equity – developed countries | 1,814 | 1,410 | — | 3,224 | ||||||||||||
Emerging markets | 472 | 538 | 23 | 1,033 | ||||||||||||
Convertible bonds | 15 | 195 | — | 210 | ||||||||||||
Equity derivatives | — | 7 | — | 7 | ||||||||||||
Total equity securities | $ | 5,312 | $ | 2,578 | $ | 32 | $ | 7,922 | ||||||||
Fixed income securities: | ||||||||||||||||
U.S. government and municipalities | $ | — | $ | 1,406 | $ | — | $ | 1,406 | ||||||||
U.S. agency and agency mortgage-backed securities | — | 310 | — | 310 | ||||||||||||
Corporate bonds – investment grade | — | 1,605 | — | 1,605 | ||||||||||||
Non-U.S. governments – developed countries | — | 1,212 | — | 1,212 | ||||||||||||
Non-U.S. corporate bonds – developed countries | — | 961 | — | 961 | ||||||||||||
Emerging market debt | — | 93 | — | 93 | ||||||||||||
Other asset-backed securities | — | 105 | 1 | 106 | ||||||||||||
High yield bonds | — | 168 | 16 | 184 | ||||||||||||
Other fixed income funds | — | 299 | 294 | 593 | ||||||||||||
Fixed income derivatives | — | 31 | — | 31 | ||||||||||||
Total fixed income securities | $ | — | $ | 6,190 | $ | 311 | $ | 6,501 | ||||||||
Alternative investments: | ||||||||||||||||
Real estate | $ | 31 | $ | 36 | $ | 1,627 | $ | 1,694 | ||||||||
Private equity | — | — | 1,059 | 1,059 | ||||||||||||
Absolute return | — | 586 | 656 | 1,242 | ||||||||||||
Total alternative investments | $ | 31 | $ | 622 | $ | 3,342 | $ | 3,995 | ||||||||
Other investments | $ | — | $ | 157 | $ | 40 | $ | 197 | ||||||||
Total pension plan assets at fair value | $ | 5,404 | $ | 10,500 | $ | 3,725 | $ | 19,629 |
Fair Value Measurement of Level 3 Pension Plan Assets | Equity Securities | Fixed Income Securities | Alternative Investments | Other Investments | Total | Equity Securities | Fixed Income Securities | Alternative Investments | Other Investments | Total | ||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2014 | $ | 12 | $ | 237 | $ | 2,761 | $ | 40 | $ | 3,050 | ||||||||||||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||||||||||||||||||
Relating to assets sold during 2014 | — | 22 | 139 | — | 161 | |||||||||||||||||||||||||||||||||||
Relating to assets held at Dec 31, 2014 | (12 | ) | (7 | ) | 191 | 1 | 173 | |||||||||||||||||||||||||||||||||
Purchases, sales and settlements | 32 | 63 | 300 | (1 | ) | 394 | ||||||||||||||||||||||||||||||||||
Transfers out of Level 3, net | — | (3 | ) | — | — | (3 | ) | |||||||||||||||||||||||||||||||||
Foreign currency impact | — | (1 | ) | (49 | ) | — | (50 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2014 | $ | 32 | $ | 311 | $ | 3,342 | $ | 40 | $ | 3,725 | ||||||||||||||||||||||||||||||
Balance at January 1, 2015 | $ | 32 | $ | 311 | $ | 3,342 | $ | 40 | $ | 3,725 | ||||||||||||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||||||||||||||||||
Relating to assets sold during 2015 | — | 18 | 233 | — | 251 | — | 18 | 233 | — | 251 | ||||||||||||||||||||||||||||||
Relating to assets held at Dec 31, 2015 | — | (9 | ) | 58 | (2 | ) | 47 | — | (9 | ) | 58 | (2 | ) | 47 | ||||||||||||||||||||||||||
Purchases, sales and settlements | 2 | (27 | ) | (90 | ) | — | (115 | ) | ||||||||||||||||||||||||||||||||
Transfers out of Level 3, net | (6 | ) | (1 | ) | 5 | — | (2 | ) | ||||||||||||||||||||||||||||||||
Purchases, sales and settlements | 2 | (27 | ) | (90 | ) | — | (115 | ) | ||||||||||||||||||||||||||||||||
Transfers in (out) of Level 3, net | (6 | ) | (1 | ) | 5 | — | (2 | ) | ||||||||||||||||||||||||||||||||
Foreign currency impact | — | 1 | (27 | ) | — | (26 | ) | — | 1 | (27 | ) | — | (26 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2015 | $ | 28 | $ | 293 | $ | 3,521 | $ | 38 | $ | 3,880 | $ | 28 | $ | 293 | $ | 3,521 | $ | 38 | $ | 3,880 | ||||||||||||||||||||
Actual return on plan assets: | ||||||||||||||||||||||||||||||||||||||||
Relating to assets sold during 2016 | — | 2 | 163 | (7 | ) | 158 | ||||||||||||||||||||||||||||||||||
Relating to assets held at Dec 31, 2016 | 9 | (4 | ) | 10 | 11 | 26 | ||||||||||||||||||||||||||||||||||
Purchases, sales and settlements | 1 | 202 | (35 | ) | 53 | 221 | ||||||||||||||||||||||||||||||||||
Transfers in (out) of Level 3, net | (2 | ) | 3 | — | — | 1 | ||||||||||||||||||||||||||||||||||
Foreign currency impact | (2 | ) | 2 | (24 | ) | — | (24 | ) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2016 | $ | 34 | $ | 498 | $ | 3,635 | $ | 95 | $ | 4,262 |
(1) | Includes $35 million of alternative investments associated with the ownership restructure of Dow Corning. |
Minimum Lease Commitments at December 31, 2015 In millions | ||||||
2016 | $ | 302 | ||||
Minimum Lease Commitments at December 31, 2016 In millions | Minimum Lease Commitments at December 31, 2016 In millions | |||||
2017 | 277 | $ | 351 | |||
2018 | 249 | 300 | ||||
2019 | 230 | 272 | ||||
2020 | 215 | 246 | ||||
2021 and thereafter | 1,500 | |||||
2021 | 221 | |||||
2022 and thereafter | 1,064 | |||||
Total | $ | 2,773 | $ | 2,454 |
Assets and Liabilities of Consolidated VIEs at December 31 In millions | 2015 | 2014 | 2016 | 2015 | ||||||||||||
Cash and cash equivalents | $ | 158 | $ | 190 | $ | 75 | $ | 158 | ||||||||
Other current assets | 112 | 174 | 95 | 112 | ||||||||||||
Property | 1,717 | 2,726 | ||||||||||||||
Net property | 961 | 1,717 | ||||||||||||||
Other noncurrent assets | 65 | 72 | 55 | 65 | ||||||||||||
Total assets (2) (3) | $ | 2,052 | $ | 3,162 | ||||||||||||
Current liabilities (nonrecourse 2015: $256; 2014: $389) (2) | $ | 258 | $ | 392 | ||||||||||||
Long-term debt (nonrecourse 2015: $487; 2014: $1,216) (2) | 504 | 1,247 | ||||||||||||||
Other noncurrent obligations (nonrecourse 2015: $51; 2014: $62) | 51 | 62 | ||||||||||||||
Total assets (1) | $ | 1,186 | $ | 2,052 | ||||||||||||
Current liabilities (nonrecourse 2016: $286; 2015: $256) | $ | 286 | $ | 258 | ||||||||||||
Long-term debt (nonrecourse 2016: $330; 2015: $487) | 330 | 504 | ||||||||||||||
Other noncurrent obligations (nonrecourse 2016: $47; 2015: $51) | 47 | 51 | ||||||||||||||
Total liabilities | $ | 813 | $ | 1,701 | $ | 663 | $ | 813 |
(1) |
All assets were restricted at December 31, |
Weighted-Average Assumptions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||
Dividend yield | 3.54 | % | 3.08 | % | 3.89 | % | 4.13 | % | 3.54 | % | 3.08 | % | ||||||
Expected volatility | 27.84 | % | 28.11 | % | 29.93 | % | 31.60 | % | 27.84 | % | 28.11 | % | ||||||
Risk-free interest rate | 1.02 | % | 1.11 | % | 1.08 | % | 1.12 | % | 1.02 | % | 1.11 | % | ||||||
Expected life of stock options granted during period (years) | 7.7 | 7.7 | 7.8 | 7.8 | 7.7 | 7.7 | ||||||||||||
Life of Employee Stock Purchase Plan (months) | 6 | 6 | 5 | 4 | 6 | 6 |
Employee Stock Purchase Plan | 2015 | 2016 | ||||||||||||
Shares in thousands | Shares | Exercise Price (1) | Shares | Exercise Price (1) | ||||||||||
Outstanding and exercisable at January 1, 2015 | 16 | $ | 38.13 | |||||||||||
Outstanding and exercisable at January 1, 2016 | 7 | $ | 41.49 | |||||||||||
Granted | 3,183 | $ | 41.49 | 2,122 | $ | 40.44 | ||||||||
Exercised | (3,148 | ) | $ | 41.48 | (2,124 | ) | $ | 40.44 | ||||||
Forfeited/Expired | (44 | ) | $ | 40.69 | (5 | ) | $ | 40.56 | ||||||
Outstanding and exercisable at December 31, 2015 | 7 | $ | 41.49 | |||||||||||
Outstanding and exercisable at December 31, 2016 | — | $ | — |
(1) | Weighted average price per share |
Additional Information about Employee Stock Purchase Plan In millions, except per share amounts | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Weighted-average fair value per share of purchase rights granted | $ | 4.62 | $ | 5.45 | $ | 7.20 | $ | 3.40 | $ | 4.62 | $ | 5.45 | ||||||||||||
Total compensation expense for ESPP | $ | 15 | $ | 20 | $ | 60 | $ | 7 | $ | 15 | $ | 20 | ||||||||||||
Related tax benefit | $ | 5 | $ | 7 | $ | 22 | $ | 3 | $ | 5 | $ | 7 | ||||||||||||
Total amount of cash received from the exercise of purchase rights | $ | 131 | $ | 138 | $ | 198 | $ | 86 | $ | 131 | $ | 138 | ||||||||||||
Total intrinsic value of purchase rights exercised (1) | $ | 25 | $ | 42 | $ | 68 | $ | 23 | $ | 25 | $ | 42 | ||||||||||||
Related tax benefit | $ | 9 | $ | 15 | $ | 25 | $ | 9 | $ | 9 | $ | 15 |
(1) | Difference between the market price at exercise and the price paid by the employee to exercise the purchase rights. |
Stock Options | 2015 | 2016 | ||||||||||||||
Shares in thousands | Shares | Exercise Price (1) | Shares | Exercise Price (1) | ||||||||||||
Outstanding at January 1, 2015 | 53,647 | $ | 36.05 | |||||||||||||
Outstanding at January 1, 2016 | 41,461 | $ | 35.50 | |||||||||||||
Granted | 3,024 | $ | 49.44 | 2,988 | $ | 46.01 | ||||||||||
Exercised | (11,226 | ) | $ | 36.06 | (9,061 | ) | $ | 35.89 | ||||||||
Forfeited/Expired | (3,984 | ) | $ | 51.94 | (618 | ) | $ | 41.56 | ||||||||
Outstanding at December 31, 2015 | 41,461 | $ | 35.50 | |||||||||||||
Outstanding at December 31, 2016 | 34,770 | $ | 36.20 | |||||||||||||
Remaining contractual life in years | 5.50 | 5.24 | ||||||||||||||
Aggregate intrinsic value in millions | $ | 662 | $ | 731 | ||||||||||||
Exercisable at December 31, 2015 | 30,992 | $ | 34.02 | |||||||||||||
Exercisable at December 31, 2016 | 28,932 | $ | 33.96 | |||||||||||||
Remaining contractual life in years | 4.75 | 4.60 | ||||||||||||||
Aggregate intrinsic value in millions | $ | 541 | $ | 673 |
(1) | Weighted-average per share. |
Additional Information about Stock Options In millions, except per share amounts | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Weighted-average fair value per share of options granted | $ | 11.61 | $ | 11.49 | $ | 6.99 | $ | 10.95 | $ | 11.61 | $ | 11.49 | ||||||||||||
Total compensation expense for stock option plans | $ | 55 | $ | 65 | $ | 101 | $ | 32 | $ | 55 | $ | 65 | ||||||||||||
Related tax benefit | $ | 20 | $ | 24 | $ | 37 | $ | 12 | $ | 20 | $ | 24 | ||||||||||||
Total amount of cash received from the exercise of options | $ | 377 | $ | 810 | $ | 188 | $ | 312 | $ | 377 | $ | 810 | ||||||||||||
Total intrinsic value of options exercised (1) | $ | 175 | $ | 300 | $ | 102 | $ | 153 | $ | 175 | $ | 300 | ||||||||||||
Related tax benefit | $ | 65 | $ | 111 | $ | 38 | $ | 57 | $ | 65 | $ | 111 |
(1) | Difference between the market price at exercise and the price paid by the employee to exercise the options. |
Deferred Stock | 2015 | 2016 | ||||||||||||
Shares in thousands | Shares | Grant Date Fair Value (1) | Shares | Grant Date Fair Value (1) | ||||||||||
Nonvested at January 1, 2015 | 9,352 | $ | 36.45 | |||||||||||
Nonvested at January 1, 2016 | 7,979 | $ | 40.96 | |||||||||||
Granted | 2,168 | $ | 49.42 | 2,134 | $ | 46.25 | ||||||||
Vested | (3,339 | ) | $ | 33.95 | (3,525 | ) | $ | 32.16 | ||||||
Canceled | (202 | ) | $ | 39.07 | (206 | ) | $ | 43.70 | ||||||
Nonvested at December 31, 2015 | 7,979 | $ | 40.96 | |||||||||||
Nonvested at December 31, 2016 | 6,382 | $ | 47.49 |
(1) | Weighted-average per share. |
Additional Information about Deferred Stock In millions, except per share amounts | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Weighted-average fair value per share of deferred stock granted | $ | 49.42 | $ | 46.88 | $ | 32.13 | $ | 46.25 | $ | 49.42 | $ | 46.88 | ||||||||||||
Total fair value of deferred stock vested and delivered (1) | $ | 162 | $ | 156 | $ | 137 | $ | 166 | $ | 162 | $ | 156 | ||||||||||||
Related tax benefit | $ | 60 | $ | 58 | $ | 51 | $ | 61 | $ | 60 | $ | 58 | ||||||||||||
Total compensation expense for deferred stock awards | $ | 110 | $ | 99 | $ | 104 | $ | 97 | $ | 110 | $ | 99 | ||||||||||||
Related tax benefit | $ | 41 | $ | 37 | $ | 39 | $ | 36 | $ | 41 | $ | 37 |
(1) | Includes the fair value of shares vested in prior years and delivered in the reporting year. |
Performance Deferred Stock Awards | Performance Deferred Stock Awards | Target Shares Granted (1) | Grant Date Fair Value (2) (3) | Performance Deferred Stock Awards | Target Shares Granted (1) | Grant Date Fair Value (2) | ||||||||||||
Shares in thousands | Shares in thousands | Shares in thousands | ||||||||||||||||
Year | Performance Period | Performance Period | ||||||||||||||||
2016 | January 1, 2016 – December 31, 2018 | 2,283 | $ | 52.68 | ||||||||||||||
2015 | January 1, 2015 – December 31, 2017 | 2,258 | $ | 59.08 | January 1, 2015 – December 31, 2017 | 2,258 | $ | 59.08 | ||||||||||
2014 | January 1, 2014 – December 31, 2016 | 2,425 | $ | 54.42 | January 1, 2014 – December 31, 2016 | 2,425 | $ | 54.42 | ||||||||||
2013 | January 1, 2013 – December 31, 2015 | 1,321 | $ | 34.41 |
(1) | At the end of the performance period, the actual number of shares issued can range from zero to |
(2) | Weighted-average per share. |
Performance Deferred Stock | 2015 | 2016 | ||||||||||||
Shares in thousands | Target Shares Granted (1) | Grant Date Fair Value (2) | Target Shares Granted (1) | Grant Date Fair Value (2) | ||||||||||
Nonvested at January 1, 2015 | 3,720 | $ | 47.40 | |||||||||||
Nonvested at January 1, 2016 | 4,621 | $ | 56.68 | |||||||||||
Granted | 2,258 | $ | 59.08 | 2,283 | $ | 52.68 | ||||||||
Vested (3) | (1,295 | ) | $ | 34.41 | (2,342 | ) | $ | 54.42 | ||||||
Canceled | (62 | ) | $ | 52.51 | (108 | ) | $ | 55.46 | ||||||
Nonvested at December 31, 2015 | 4,621 | $ | 56.68 | |||||||||||
Nonvested at December 31, 2016 | 4,454 | $ | 55.85 |
(1) | At the end of the performance period, the actual number of shares issued can range from zero to |
(2) | Weighted-average per share. |
(3) | Vested shares for the |
Additional Information about Performance Deferred Stock | ||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Total fair value of performance deferred stock vested and delivered (1) | $ | 37 | $ | 12 | $ | 14 | $ | 103 | $ | 37 | $ | 12 | ||||||||||||
Related tax benefit | $ | 14 | $ | 5 | $ | 5 | $ | 38 | $ | 14 | $ | 5 | ||||||||||||
Total compensation expense for performance deferred stock awards | $ | 172 | $ | 67 | $ | 62 | $ | 125 | $ | 172 | $ | 67 | ||||||||||||
Related tax benefit | $ | 63 | $ | 25 | $ | 23 | $ | 46 | $ | 63 | $ | 25 | ||||||||||||
Shares of performance deferred stock settled in cash (2) | 0.3 | 0.1 | 0.2 | 0.9 | 0.3 | 0.1 | ||||||||||||||||||
Total cash paid to settle performance deferred stock awards (3) | $ | 16 | $ | 6 | $ | 6 | $ | 40 | $ | 16 | $ | 6 |
(1) | Includes the fair value of shares vested in prior years and delivered in the reporting year. |
(2) | Performance deferred stock awards vested in prior years and delivered in the reporting year. |
(3) | Cash paid to certain executive employees for performance deferred stock awards vested in prior periods and delivered in the reporting year, equal to the value of the stock award on the date of delivery. |
Restricted Stock | Shares Issued | Weighted-Average Fair Value | Shares Issued | Weighted-Average Fair Value | ||||||||||
Year | ||||||||||||||
2016 | 32,160 | $ | 50.55 | |||||||||||
2015 | 31,560 | $ | 51.51 | 31,560 | $ | 51.51 | ||||||||
2014 | 24,840 | $ | 48.98 | 24,840 | $ | 48.98 | ||||||||
2013 | 35,280 | $ | 34.46 |
New Common Stock Shares Issued | ||||||
Shares in thousands | 2016 | 2015 | 2014 | |||
To employees | — | — | 21,181 | |||
To non-employee directors | — | 32 | 25 |
Treasury Shares Repurchased with Cash | ||
Shares in millions | ||
2016 | 17.1 | |
2015 | 23.1 | |
2014 | 84.1 |
Treasury Shares Issued to Employees and Non-Employee Directors | ||
Shares in millions | ||
2016 | 14.5 | |
2015 | 16.5 | |
2014 | 7.1 |
Domestic and Foreign Components of Income Before Income Taxes | ||||||||||||||||||||||||
In millions | 2015 (1) | 2014 | 2013 (2) | 2016 | 2015 | 2014 | ||||||||||||||||||
Domestic | $ | 5,313 | $ | 1,652 | $ | 3,979 | ||||||||||||||||||
Domestic (1) (2) | $ | 485 | $ | 5,313 | $ | 1,652 | ||||||||||||||||||
Foreign | 4,617 | 3,613 | 2,825 | 3,928 | 4,617 | 3,613 | ||||||||||||||||||
Total | $ | 9,930 | $ | 5,265 | $ | 6,804 | $ | 4,413 | $ | 9,930 | $ | 5,265 |
(1) | In |
(2) | In |
Provision for Income Taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2015 | 2014 | 2013 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In millions | Current | Deferred | Total | Current | Deferred | Total | Current | Deferred | Total | Current | Deferred | Total | Current | Deferred | Total | Current | Deferred | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Federal (1) | $ | 583 | $ | 358 | $ | 941 | $ | (161 | ) | $ | 442 | $ | 281 | $ | 805 | $ | 278 | $ | 1,083 | $ | 91 | $ | (1,255 | ) | $ | (1,164 | ) | $ | 583 | $ | 358 | $ | 941 | $ | (161 | ) | $ | 442 | $ | 281 | ||||||||||||||||||||||||||||||||
State and local | 38 | (8 | ) | 30 | (4 | ) | 43 | 39 | 42 | (73 | ) | (31 | ) | 21 | (10 | ) | 11 | 38 | (8 | ) | 30 | (4 | ) | 43 | 39 | |||||||||||||||||||||||||||||||||||||||||||||||
Foreign | 1,221 | (45 | ) | 1,176 | 1,125 | (19 | ) | 1,106 | 1,028 | (92 | ) | 936 | 1,156 | 6 | 1,162 | 1,221 | (45 | ) | 1,176 | 1,125 | (19 | ) | 1,106 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | 1,842 | $ | 305 | $ | 2,147 | $ | 960 | $ | 466 | $ | 1,426 | $ | 1,875 | $ | 113 | $ | 1,988 | $ | 1,268 | $ | (1,259 | ) | $ | 9 | $ | 1,842 | $ | 305 | $ | 2,147 | $ | 960 | $ | 466 | $ | 1,426 |
(1) |
Reconciliation to U.S. Statutory Rate | ||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Taxes at U.S. statutory rate | $ | 3,476 | $ | 1,843 | $ | 2,381 | $ | 1,545 | $ | 3,476 | $ | 1,843 | ||||||||||||
Equity earnings effect | (197 | ) | (307 | ) | (276 | ) | (52 | ) | (197 | ) | (307 | ) | ||||||||||||
Foreign income taxed at rates other than 35% (1) | (398 | ) | (195 | ) | (76 | ) | (309 | ) | (398 | ) | (195 | ) | ||||||||||||
U.S. tax effect of foreign earnings and dividends | 130 | 54 | 102 | (204 | ) | 130 | 54 | |||||||||||||||||
Goodwill impact from divestitures | 57 | — | — | 5 | 57 | — | ||||||||||||||||||
Discrete equity earnings (2) | 21 | 26 | — | — | 21 | 26 | ||||||||||||||||||
Change in valuation allowances | (32 | ) | 33 | (197 | ) | 8 | (32 | ) | 33 | |||||||||||||||
Unrecognized tax benefits | 81 | (30 | ) | 243 | (34 | ) | 81 | (30 | ) | |||||||||||||||
Federal tax accrual adjustments | 13 | (3 | ) | 29 | (6 | ) | 13 | (3 | ) | |||||||||||||||
Gain from K-Dow arbitration (3) | — | — | (212 | ) | ||||||||||||||||||||
Gain on split-off of chlorine value chain (4) | (763 | ) | — | — | ||||||||||||||||||||
Gain on Univation step acquisition (5) | (124 | ) | — | — | ||||||||||||||||||||
Gain on sale of MEGlobal (6) | (120 | ) | — | — | ||||||||||||||||||||
Gain on ownership restructure of Dow Corning (3) | (993 | ) | — | — | ||||||||||||||||||||
Non-deductible costs associated with transactions and productivity actions | 33 | — | — | |||||||||||||||||||||
Impact from split-off of chlorine value chain (4) | 21 | (763 | ) | — | ||||||||||||||||||||
Gain on Univation step acquisition (3) | — | (124 | ) | — | ||||||||||||||||||||
Gain on sale of MEGlobal (5) | — | (120 | ) | — | ||||||||||||||||||||
Other – net | 3 | 5 | (6 | ) | (5 | ) | 3 | 5 | ||||||||||||||||
Total tax provision | $ | 2,147 | $ | 1,426 | $ | 1,988 | $ | 9 | $ | 2,147 | $ | 1,426 | ||||||||||||
Effective tax rate | 21.6 | % | 27.1 | % | 29.2 | % | 0.2 | % | 21.6 | % | 27.1 | % |
(1) | Includes the tax provision for statutory taxable income in foreign jurisdictions for which there is no corresponding amount in “Income Before Income Taxes.” |
(2) | Includes nonrecurring charges related to equity in earnings of nonconsolidated |
(3) |
(4) | See Note 6 for further information. |
(5) | See Note |
Deferred Tax Balances at December 31 | 2015 | 2014 | 2016 | 2015 | ||||||||||||||||||||||||||||
In millions | Deferred Tax Assets (1) | Deferred Tax Liabilities | Deferred Tax Assets (1) | Deferred Tax Liabilities | Deferred Tax Assets (1) | Deferred Tax Liabilities (1) | Deferred Tax Assets | Deferred Tax Liabilities | ||||||||||||||||||||||||
Property | $ | 48 | $ | 2,015 | $ | 63 | $ | 2,005 | $ | 307 | $ | 2,860 | $ | 130 | $ | 2,097 | ||||||||||||||||
Tax loss and credit carryforwards | 1,647 | — | 1,843 | — | 2,450 | — | 1,647 | — | ||||||||||||||||||||||||
Postretirement benefit obligations | 4,199 | 1,344 | 4,526 | 1,220 | 3,715 | 75 | 2,939 | 84 | ||||||||||||||||||||||||
Other accruals and reserves | 1,191 | 684 | 1,213 | 411 | 1,964 | 883 | 1,389 | 882 | ||||||||||||||||||||||||
Intangibles | 208 | 692 | 217 | 691 | 128 | 1,536 | 208 | 692 | ||||||||||||||||||||||||
Inventory | 306 | 218 | 412 | 177 | 50 | 197 | 13 | 218 | ||||||||||||||||||||||||
Long-term debt | — | 440 | — | 673 | ||||||||||||||||||||||||||||
Investments (2) | 204 | 242 | 130 | 346 | ||||||||||||||||||||||||||||
Investments | 179 | 119 | 204 | 242 | ||||||||||||||||||||||||||||
Other – net (2) | 1,114 | 436 | 972 | 527 | 737 | 643 | 780 | 542 | ||||||||||||||||||||||||
Subtotal | $ | 8,917 | $ | 6,071 | $ | 9,376 | $ | 6,050 | $ | 9,530 | $ | 6,313 | $ | 7,310 | $ | 4,757 | ||||||||||||||||
Valuation allowances | (1,000 | ) | — | (1,106 | ) | — | (1,061 | ) | — | (1,000 | ) | — | ||||||||||||||||||||
Total | $ | 7,917 | $ | 6,071 | $ | 8,270 | $ | 6,050 | $ | 8,469 | $ | 6,313 | $ | 6,310 | $ | 4,757 |
(1) |
(2) | Prior year was adjusted to conform to the current year presentation. |
(3) | Prior year was adjusted to conform to the current year presentation for the reclassification of $293 million of prepaid tax assets to "Other current assets." See Note 1 for additional information. |
Total Gross Unrecognized Tax Benefits | ||||||||||||||||||||||||
In millions | 2015 | 2014 | 2013 | 2016 | 2015 | 2014 | ||||||||||||||||||
Balance at January 1 | $ | 240 | $ | 266 | $ | 409 | $ | 280 | $ | 240 | $ | 266 | ||||||||||||
Increases related to positions taken on items from prior years | 92 | 42 | 385 | 153 | 92 | 42 | ||||||||||||||||||
Decreases related to positions taken on items from prior years | (6 | ) | (57 | ) | (137 | ) | (12 | ) | (6 | ) | (57 | ) | ||||||||||||
Increases related to positions taken in the current year | 10 | 10 | 10 | 135 | 10 | 10 | ||||||||||||||||||
Settlement of uncertain tax positions with tax authorities | (56 | ) | (13 | ) | (393 | ) | (325 | ) | (56 | ) | (13 | ) | ||||||||||||
Decreases due to expiration of statutes of limitations | — | (8 | ) | (8 | ) | — | — | (8 | ) | |||||||||||||||
Balance at December 31 | $ | 280 | $ | 240 | $ | 266 | $ | 231 | $ | 280 | $ | 240 |
(1) | Includes the impact of a settlement agreement related to a historical change in the legal ownership structure of a nonconsolidated affiliate. |
(2) | Includes $126 million assumed in the DCC Transaction. |
Tax Years Subject to Examination by Major Tax Jurisdiction at December 31 | Tax Years Subject to Examination by Major Tax Jurisdiction at December 31 | Tax Years Subject to Examination by Major Tax Jurisdiction at December 31 | ||||||
Earliest Open Year | Earliest Open Year | |||||||
Jurisdiction | 2015 | 2014 | 2016 | 2015 | ||||
Argentina | 2008 | 2007 | 2009 | 2008 | ||||
Brazil | 2006 | 2008 | 2006 | 2006 | ||||
Canada | 2010 | 2010 | 2012 | 2010 | ||||
Germany | 2006 | 2006 | 2006 | 2006 | ||||
Italy | 2011 | 2009 | 2012 | 2011 | ||||
The Netherlands | 2013 | 2013 | 2015 | 2013 | ||||
Switzerland | 2012 | 2011 | 2012 | 2012 | ||||
United States: | ||||||||
Federal income tax | 2004 | 2004 | 2004 | 2004 | ||||
State and local income tax | 2004 | 2004 | 2004 | 2004 |
Accumulated Other Comprehensive Loss | |||||||||||
In millions | 2015 | 2014 | 2013 | ||||||||
Unrealized Gains on Investments at beginning of year | $ | 141 | $ | 160 | $ | 147 | |||||
Net change in unrealized gains (losses) (net of tax of $(22), $22, $25) | (40 | ) | 41 | 55 | |||||||
Reclassification to earnings - Net sales (net of tax of $(27), $(32), $(20)) (1) | (49 | ) | (59 | ) | (42 | ) | |||||
Reclassification to earnings - Sundry income (expense) - net (net of tax of $(3), $(1), $-) (1) | (5 | ) | (1 | ) | — | ||||||
Balance at end of period | $ | 47 | $ | 141 | $ | 160 | |||||
Cumulative Translation Adjustments at beginning of year | $ | (751 | ) | $ | 476 | $ | 328 | ||||
Translation adjustments (net of tax of $(84), $(28), $6) | (990 | ) | (1,239 | ) | 169 | ||||||
Reclassification to earnings - Sundry income (expense) - net (2) | 4 | 12 | (21 | ) | |||||||
Balance at end of period | $ | (1,737 | ) | $ | (751 | ) | $ | 476 | |||
Pension and Other Postretirement Benefit Plans at beginning of year | $ | (7,321 | ) | $ | (5,460 | ) | $ | (7,995 | ) | ||
Net gain (loss) arising during period (net of tax of $70, $(1,228), $876) (3) | 132 | (2,516 | ) | 1,984 | |||||||
Prior service credit (cost) arising during period (net of tax of $(36), $185, $1) (3) | (27 | ) | 315 | 5 | |||||||
Amortization of prior service cost (credit) included in net periodic pension costs (net of tax of $(10), $6, $6) (3) | (20 | ) | 14 | 15 | |||||||
Amortization of net loss included in net periodic pension costs (net of tax of $228, $158, $266) (3) | 467 | 326 | 531 | ||||||||
Balance at end of period | $ | (6,769 | ) | $ | (7,321 | ) | $ | (5,460 | ) | ||
Accumulated Derivative Gain (Loss) at beginning of year | $ | (86 | ) | $ | (3 | ) | $ | 4 | |||
Net hedging results (net of tax of $(79), $(25), $5) | (136 | ) | (91 | ) | 10 | ||||||
Reclassification to earnings - Cost of sales (net of tax of $9, $2, $(8)) (1) | 14 | 8 | (17 | ) | |||||||
Balance at end of period | $ | (208 | ) | $ | (86 | ) | $ | (3 | ) | ||
Total accumulated other comprehensive loss | $ | (8,667 | ) | $ | (8,017 | ) | $ | (4,827 | ) |
Accumulated Other Comprehensive Loss | |||||||||||
In millions | 2016 | 2015 | 2014 | ||||||||
Unrealized Gains on Investments at beginning of year | $ | 47 | $ | 141 | $ | 160 | |||||
Net change in unrealized gains (losses) (net of tax of $22, $(22), $22) | 32 | (40 | ) | 41 | |||||||
Reclassification to earnings - Net sales (net of tax of $(19), $(27), $(32)) (1) | (34 | ) | (49 | ) | (59 | ) | |||||
Reclassification to earnings - Sundry income (expense) - net (net of tax of $(1), $(3), $(1)) (1) | (2 | ) | (5 | ) | (1 | ) | |||||
Balance at end of period | $ | 43 | $ | 47 | $ | 141 | |||||
Cumulative Translation Adjustments at beginning of year | $ | (1,737 | ) | $ | (751 | ) | $ | 476 | |||
Translation adjustments (net of tax of $171, $(84), $(28)) | (644 | ) | (990 | ) | (1,239 | ) | |||||
Reclassification to earnings - Sundry income (expense) - net (2) | — | 4 | 12 | ||||||||
Balance at end of period | $ | (2,381 | ) | $ | (1,737 | ) | $ | (751 | ) | ||
Pension and Other Postretirement Benefit Plans at beginning of year | $ | (6,769 | ) | $ | (7,321 | ) | $ | (5,460 | ) | ||
Net gain (loss) arising during period (net of tax of $(617), $70, $(1,228)) (3) | (1,354 | ) | 132 | (2,516 | ) | ||||||
Prior service credit (cost) arising during period (net of tax of $-, $(36), $185) (3) | — | (27 | ) | 315 | |||||||
Amortization of prior service cost (credit) included in net periodic pension costs (net of tax of $(10), $(10), $6) (3) | (17 | ) | (20 | ) | 14 | ||||||
Amortization of net loss included in net periodic pension costs (net of tax of $189, $228, $158) (3) | 391 | 467 | 326 | ||||||||
Reclassification to earnings - Sundry income (expense) - net (4) | 360 | — | — | ||||||||
Balance at end of period | $ | (7,389 | ) | $ | (6,769 | ) | $ | (7,321 | ) | ||
Derivative Instruments at beginning of year | $ | (208 | ) | $ | (86 | ) | $ | (3 | ) | ||
Net hedging results (net of tax of $27, $(79), $(25)) | 84 | (136 | ) | (91 | ) | ||||||
Reclassification to earnings - Cost of sales (net of tax of $5, $9, $2) (1) | 28 | 14 | 8 | ||||||||
Reclassification to earnings - Sundry income (expense) - net | 1 | — | — | ||||||||
Balance at end of period | $ | (95 | ) | $ | (208 | ) | $ | (86 | ) | ||
Total Accumulated Other Comprehensive Loss | $ | (9,822 | ) | $ | (8,667 | ) | $ | (8,017 | ) |
(1) | Tax amounts are included in "Provision for income taxes" in the consolidated statements of income. |
(2) | In 2015 and 2014, reclassification resulted from the liquidation and divestiture of subsidiaries. |
(3) | See Note 18 for additional information. |
(4) | Related to the DCC Transaction. See Note 4 for additional information. |
Non-redeemable Noncontrolling Interests In millions | 2015 | 2014 | 2013 | |||||||||||||||||||
Noncontrolling Interests In millions | 2016 | 2015 | 2014 | |||||||||||||||||||
Balance at January 1 | $ | 931 | $ | 1,026 | $ | 990 | $ | 809 | $ | 931 | $ | 1,026 | ||||||||||
Net income attributable to noncontrolling interests | 98 | 67 | 29 | 86 | 98 | 67 | ||||||||||||||||
Distributions to noncontrolling interests (1) | (76 | ) | (64 | ) | (55 | ) | (123 | ) | (76 | ) | (64 | ) | ||||||||||
Capital contributions (2) | 38 | 36 | 58 | — | 38 | 36 | ||||||||||||||||
Purchases of noncontrolling interests (3) | (42 | ) | (56 | ) | — | — | (42 | ) | (56 | ) | ||||||||||||
Transfers of redeemable noncontrolling interest (4) | (108 | ) | (46 | ) | (9 | ) | — | (108 | ) | (46 | ) | |||||||||||
Acquisition of noncontrolling interests (5) | 473 | — | — | |||||||||||||||||||
Cumulative translation adjustments | (34 | ) | (29 | ) | (43 | ) | (4 | ) | (34 | ) | (29 | ) | ||||||||||
Deconsolidation of noncontrolling interests | — | — | 52 | |||||||||||||||||||
Other | 2 | (3 | ) | 4 | 1 | 2 | (3 | ) | ||||||||||||||
Balance at December 31 | $ | 809 | $ | 931 | $ | 1,026 | $ | 1,242 | $ | 809 | $ | 931 |
(1) | Distributions to noncontrolling interests is net of |
(2) | Includes non-cash capital contributions of $21 million in 2015. |
(3) | The 2016 value excludes a $202 million cash payment as the noncontrolling interest was classified as "Accrued and other current liabilities" in the consolidated balance sheets. The 2015 value excludes a $133 million cash payment for the purchase of a Redeemable Noncontrolling Interest. See Notes 6 and 20 for additional information. |
(4) | See Notes 6 and 20 for additional information. |
(5) | Assumed in the DCC Transaction. See Note 4 for additional information. |
Geographic Area Information | United States | Europe, Middle East, Africa and India | Rest of World | Total | United States | Europe, Middle East, Africa and India | Rest of World | Total | ||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||
Sales to external customers | $ | 16,637 | $ | 14,667 | $ | 16,854 | $ | 48,158 | ||||||||||||||||||||||||
Long-lived assets | $ | 14,812 | $ | 2,751 | $ | 5,923 | $ | 23,486 | ||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||||||
Sales to external customers | $ | 16,821 | $ | 15,291 | $ | 16,666 | $ | 48,778 | $ | 16,821 | $ | 15,291 | $ | 16,666 | $ | 48,778 | ||||||||||||||||
Long-lived assets | $ | 11,062 | $ | 2,172 | $ | 4,620 | $ | 17,854 | $ | 11,062 | $ | 2,172 | $ | 4,620 | $ | 17,854 | ||||||||||||||||
2014 | ||||||||||||||||||||||||||||||||
Sales to external customers | $ | 19,449 | $ | 19,671 | $ | 19,047 | $ | 58,167 | $ | 19,449 | $ | 19,671 | $ | 19,047 | $ | 58,167 | ||||||||||||||||
Long-lived assets | $ | 10,605 | $ | 2,628 | $ | 4,818 | $ | 18,051 | $ | 10,605 | $ | 2,628 | $ | 4,818 | $ | 18,051 | ||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||
Sales to external customers | $ | 18,712 | $ | 19,208 | $ | 19,160 | $ | 57,080 | ||||||||||||||||||||||||
Long-lived assets | $ | 9,320 | $ | 3,256 | $ | 4,878 | $ | 17,454 |
Operating Segment Information | Agri-cultural Sciences | Consumer Solutions | Infra-structure Solutions | Perf Materials & Chemicals | Perf Plastics | Corp | Total | Agri-cultural Sciences | Consumer Solutions | Infra-structure Solutions | Perf Materials & Chemicals | Perf Plastics | Corp | Total | ||||||||||||||||||||||||||||||||||||||||||
In millions | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales to external customers | $ | 6,174 | $ | 5,455 | $ | 8,621 | $ | 9,225 | $ | 18,404 | $ | 279 | $ | 48,158 | ||||||||||||||||||||||||||||||||||||||||||
Equity in earnings (losses) of nonconsolidated affiliates | 3 | 132 | 215 | (18 | ) | 137 | (27 | ) | 442 | |||||||||||||||||||||||||||||||||||||||||||||||
Restructuring charges (1) | 5 | 29 | 94 | — | 10 | 314 | 452 | |||||||||||||||||||||||||||||||||||||||||||||||||
Asbestos-related charge (2) | — | — | — | — | — | 1,113 | 1,113 | |||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA (3) | 806 | 2,828 | 2,318 | 134 | 4,503 | (2,563 | ) | 8,026 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (4) (5) | 7,015 | 13,946 | 17,644 | 9,747 | 17,832 | 13,327 | 79,511 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in nonconsolidated affiliates (5) | 130 | 329 | 647 | 1,588 | 881 | 172 | 3,747 | |||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 186 | 479 | 776 | 530 | 770 | 121 | 2,862 | |||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | 223 | 157 | 481 | 212 | 2,731 | — | 3,804 | |||||||||||||||||||||||||||||||||||||||||||||||||
2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales to external customers | $ | 6,381 | $ | 4,379 | $ | 7,394 | $ | 11,973 | $ | 18,357 | $ | 294 | $ | 48,778 | $ | 6,381 | $ | 4,379 | $ | 7,394 | $ | 11,973 | $ | 18,357 | $ | 294 | $ | 48,778 | ||||||||||||||||||||||||||||
Intersegment revenues (1) | — | — | — | 24 | — | (24 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity in earnings (losses) of nonconsolidated affiliates | (15 | ) | 91 | 203 | 225 | 220 | (50 | ) | 674 | (15 | ) | 91 | 203 | 225 | 220 | (50 | ) | 674 | ||||||||||||||||||||||||||||||||||||||
Restructuring charges (3) | 16 | 67 | 26 | — | 12 | 294 | 415 | |||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA (5) | 1,432 | 1,048 | 1,021 | 5,479 | 5,399 | (1,053 | ) | 13,326 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (6) | 6,333 | 9,234 | 12,186 | 7,694 | 14,310 | 18,269 | 68,026 | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring charges (1) | 16 | 67 | 26 | — | 12 | 294 | 415 | |||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA (3) | 1,432 | 1,048 | 1,021 | 5,479 | 5,399 | (1,053 | ) | 13,326 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (4) | 6,333 | 9,234 | 12,186 | 7,694 | 14,310 | 18,181 | 67,938 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in nonconsolidated affiliates | 275 | 732 | 986 | 155 | 304 | 1,506 | 3,958 | 275 | 732 | 986 | 155 | 304 | 1,506 | 3,958 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 195 | 354 | 495 | 637 | 746 | 94 | 2,521 | 195 | 354 | 495 | 637 | 746 | 94 | 2,521 | ||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | 308 | 134 | 355 | 223 | 2,683 | — | 3,703 | 308 | 134 | 355 | 223 | 2,683 | — | 3,703 | ||||||||||||||||||||||||||||||||||||||||||
2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales to external customers | $ | 7,290 | $ | 4,639 | $ | 8,429 | $ | 15,114 | $ | 22,386 | $ | 309 | $ | 58,167 | $ | 7,290 | $ | 4,639 | $ | 8,429 | $ | 15,114 | $ | 22,386 | $ | 309 | $ | 58,167 | ||||||||||||||||||||||||||||
Intersegment revenues (1) | — | — | — | 100 | — | (100 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity in earnings (losses) of nonconsolidated affiliates | 4 | 281 | (6 | ) | 322 | 257 | (23 | ) | 835 | 4 | 281 | (6 | ) | 322 | 257 | (23 | ) | 835 | ||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible assets impairment loss (2) | — | 50 | — | — | — | — | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring credits (3) | — | — | — | (3 | ) | — | — | (3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Asbestos-related charge (4) | — | — | — | — | — | 78 | 78 | |||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA (5) | 962 | 1,130 | 817 | 2,193 | 4,422 | (580 | ) | 8,944 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (6) | 7,292 | 9,629 | 12,245 | 12,166 | 13,459 | 13,896 | 68,687 | |||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and other intangible asset impairment losses (6) | — | 50 | — | — | — | — | 50 | |||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring credits (1) | — | — | — | (3 | ) | — | — | (3 | ) | |||||||||||||||||||||||||||||||||||||||||||||||
Asbestos-related charge (2) | — | — | — | — | — | 78 | 78 | |||||||||||||||||||||||||||||||||||||||||||||||||
EBITDA (3) | 962 | 1,130 | 817 | 2,193 | 4,422 | (580 | ) | 8,944 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (4) | 7,292 | 9,629 | 12,245 | 12,166 | 13,459 | 13,848 | 68,639 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in nonconsolidated affiliates | 83 | 691 | 922 | 698 | 705 | 1,102 | 4,201 | 83 | 691 | 922 | 698 | 705 | 1,102 | 4,201 | ||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 208 | 396 | 510 | 780 | 759 | 94 | 2,747 | 208 | 396 | 510 | 780 | 759 | 94 | 2,747 | ||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | 383 | 114 | 269 | 315 | 2,490 | 1 | 3,572 | 383 | 114 | 269 | 315 | 2,490 | 1 | 3,572 | ||||||||||||||||||||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sales to external customers | $ | 7,137 | $ | 4,562 | $ | 8,339 | $ | 14,824 | $ | 21,910 | $ | 308 | $ | 57,080 | ||||||||||||||||||||||||||||||||||||||||||
Intersegment revenues (1) | — | — | — | 137 | — | (137 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Equity in earnings (losses) of nonconsolidated affiliates | 5 | 107 | 126 | 480 | 355 | (39 | ) | 1,034 | ||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring credits (3) | — | — | (1 | ) | (15 | ) | (6 | ) | — | (22 | ) | |||||||||||||||||||||||||||||||||||||||||||||
EBITDA (5) | 894 | 933 | 941 | 1,913 | 4,503 | 1,361 | 10,545 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total assets (6) | 7,059 | 10,171 | 12,844 | 12,071 | 13,788 | 13,469 | 69,402 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment in nonconsolidated affiliates | 88 | 541 | 1,178 | 827 | 772 | 1,095 | 4,501 | |||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization | 189 | 414 | 528 | 743 | 707 | 100 | 2,681 | |||||||||||||||||||||||||||||||||||||||||||||||||
Capital expenditures | 319 | 105 | 198 | 409 | 1,271 | — | 2,302 |
(1) |
(2) |
See Note 15 for information regarding the asbestos-related charge. |
A reconciliation of |
Presented in accordance with newly implemented ASU 2015-17 and ASU 2015-03. See |
(5) | Equity contributions to Sadara, which prior to 2016 were reflected in the Corporate segment, were reallocated to Performance Materials & Chemicals and Performance Plastics in 2016. |
(6) | See Note 12 for information regarding intangible asset impairment losses. |
Reconciliation of EBITDA to “Income Before Income Taxes” In millions | 2015 | 2014 | 2013 | |||||||||
EBITDA | $ | 13,326 | $ | 8,944 | $ | 10,545 | ||||||
- Depreciation and amortization | 2,521 | 2,747 | 2,681 | |||||||||
+ Interest income | 71 | 51 | 41 | |||||||||
- Interest expense and amortization of debt discount | 946 | 983 | 1,101 | |||||||||
Income Before Income Taxes | $ | 9,930 | $ | 5,265 | $ | 6,804 |
Reconciliation of “Income Before Income Taxes” to EBITDA In millions | 2016 | 2015 | 2014 | |||||||||
Income Before Income Taxes | $ | 4,413 | $ | 9,930 | $ | 5,265 | ||||||
+ Interest expense and amortization of debt discount | 858 | 946 | 983 | |||||||||
- Interest income | 107 | 71 | 51 | |||||||||
+ Depreciation and amortization | 2,862 | 2,521 | 2,747 | |||||||||
EBITDA | $ | 8,026 | $ | 13,326 | $ | 8,944 |
The Dow Chemical Company and Subsidiaries |
Selected Quarterly Financial Data |
In millions, except per share amounts (Unaudited) | ||||||||||||||||||||||||||||||||||||||||
2015 | 1st | 2nd | 3rd | 4th | Year | |||||||||||||||||||||||||||||||||||
2016 | 1st | 2nd | 3rd | 4th | Year | |||||||||||||||||||||||||||||||||||
Net sales | $ | 12,370 | $ | 12,910 | $ | 12,036 | $ | 11,462 | $ | 48,778 | $ | 10,703 | $ | 11,952 | $ | 12,483 | $ | 13,020 | $ | 48,158 | ||||||||||||||||||||
Cost of sales | 9,535 | 10,146 | 9,349 | 8,806 | 37,836 | 7,951 | 9,275 | 9,841 | 10,574 | 37,641 | ||||||||||||||||||||||||||||||
Gross margin | 2,835 | 2,764 | 2,687 | 2,656 | 10,942 | 2,752 | 2,677 | 2,642 | 2,446 | 10,517 | ||||||||||||||||||||||||||||||
Restructuring charges | — | 375 | — | 40 | 415 | |||||||||||||||||||||||||||||||||||
Restructuring charges (credits) | (2 | ) | 454 | — | — | 452 | ||||||||||||||||||||||||||||||||||
Asbestos-related charge | — | — | — | 1,113 | 1,113 | |||||||||||||||||||||||||||||||||||
Net income | 1,519 | 1,197 | 1,436 | 3,631 | 7,783 | 275 | 3,227 | 818 | 84 | 4,404 | ||||||||||||||||||||||||||||||
Net income available for common stockholders | 1,393 | 1,135 | 1,290 | 3,527 | 7,345 | |||||||||||||||||||||||||||||||||||
Earnings per common share - basic (1) | 1.22 | 0.99 | 1.12 | 3.17 | 6.45 | |||||||||||||||||||||||||||||||||||
Earnings per common share - diluted (1) (2) | 1.18 | 0.97 | 1.09 | 2.94 | 6.15 | |||||||||||||||||||||||||||||||||||
Net income (loss) available for common stockholders | 169 | 3,123 | 719 | (33 | ) | 3,978 | ||||||||||||||||||||||||||||||||||
Earnings (Loss) per common share - basic (1) (2) | 0.15 | 2.79 | 0.64 | (0.03 | ) | 3.57 | ||||||||||||||||||||||||||||||||||
Earnings (Loss) per common share - diluted (1) (3) (4) | 0.15 | 2.61 | 0.63 | (0.03 | ) | 3.52 | ||||||||||||||||||||||||||||||||||
Dividends declared per share of common stock | 0.42 | 0.42 | 0.42 | 0.46 | 1.72 | 0.46 | 0.46 | 0.46 | 0.46 | 1.84 | ||||||||||||||||||||||||||||||
Market price range of common stock: (3) | ||||||||||||||||||||||||||||||||||||||||
Market price range of common stock: (5) | ||||||||||||||||||||||||||||||||||||||||
High | 50.22 | 53.77 | 53.20 | 57.10 | 57.10 | 52.23 | 53.98 | 54.59 | 59.33 | 59.33 | ||||||||||||||||||||||||||||||
Low | 41.95 | 47.21 | 35.11 | 42.15 | 35.11 | 40.26 | 47.75 | 47.51 | 51.60 | 40.26 |
In millions, except per share amounts (Unaudited) | �� | |||||||||||||||||||||||||||||||||||||||
2014 | 1st | 2nd | 3rd | 4th | Year | |||||||||||||||||||||||||||||||||||
2015 | 1st | 2nd | 3rd | 4th | Year | |||||||||||||||||||||||||||||||||||
Net sales | $ | 14,461 | $ | 14,917 | $ | 14,405 | $ | 14,384 | $ | 58,167 | $ | 12,370 | $ | 12,910 | $ | 12,036 | $ | 11,462 | $ | 48,778 | ||||||||||||||||||||
Cost of sales | 11,733 | 12,344 | 11,776 | 11,611 | 47,464 | 9,535 | 10,146 | 9,349 | 8,806 | 37,836 | ||||||||||||||||||||||||||||||
Gross margin | 2,728 | 2,573 | 2,629 | 2,773 | 10,703 | 2,835 | 2,764 | 2,687 | 2,656 | 10,942 | ||||||||||||||||||||||||||||||
Goodwill and other intangible assets impairment losses | — | — | — | 50 | 50 | |||||||||||||||||||||||||||||||||||
Restructuring credits | — | — | — | (3 | ) | (3 | ) | |||||||||||||||||||||||||||||||||
Asbestos-related charge | — | — | — | 78 | 78 | |||||||||||||||||||||||||||||||||||
Restructuring charges | — | 375 | — | 40 | 415 | |||||||||||||||||||||||||||||||||||
Net income | 1,066 | 970 | 964 | 839 | 3,839 | 1,519 | 1,197 | 1,436 | 3,631 | 7,783 | ||||||||||||||||||||||||||||||
Net income available for common stockholders | 964 | 882 | 852 | 734 | 3,432 | 1,393 | 1,135 | 1,290 | 3,527 | 7,345 | ||||||||||||||||||||||||||||||
Earnings per common share - basic (1) | 0.80 | 0.74 | 0.72 | 0.64 | 2.91 | 1.22 | 0.99 | 1.12 | 3.17 | 6.45 | ||||||||||||||||||||||||||||||
Earnings per common share - diluted (1) | 0.79 | 0.73 | 0.71 | 0.63 | 2.87 | |||||||||||||||||||||||||||||||||||
Earnings per common share - diluted (1) (4) | 1.18 | 0.97 | 1.09 | 2.94 | 6.15 | |||||||||||||||||||||||||||||||||||
Dividends declared per share of common stock | 0.37 | 0.37 | 0.37 | 0.42 | 1.53 | 0.42 | 0.42 | 0.42 | 0.46 | 1.72 | ||||||||||||||||||||||||||||||
Market price range of common stock: (3) | ||||||||||||||||||||||||||||||||||||||||
Market price range of common stock: (5) | ||||||||||||||||||||||||||||||||||||||||
High | 50.96 | 53.35 | 54.97 | 53.80 | 54.97 | 50.22 | 53.77 | 53.20 | 57.10 | 57.10 | ||||||||||||||||||||||||||||||
Low | 41.82 | 46.56 | 50.34 | 41.45 | 41.45 | 41.95 | 47.21 | 35.11 | 42.15 | 35.11 |
(1) | Due to quarterly changes in the share count and the allocation of income to participating securities, the sum of the four quarters does not equal the earnings per share amount calculated for the year. |
(2) | On December 30, 2016, the Company converted 4 million shares of Cumulative Convertible Perpetual Preferred Stock, Series A ("Preferred Stock") into 96.8 million shares of the Company's common stock. As a result, the basic share count reflects a two-day averaging effect for the three- and twelve-month periods ended December 31, 2016. |
(3) | "Earnings (Loss) per common share - diluted" for the three-month period ended December 31, 2016, was calculated using "Weighted average common shares outstanding - basic" due to a net loss reported in the period. |
(4) | For the quarters ended June 30, 2016, March 31, 2015, June 30, 2015, September 30, 2015, and December 31, 2015, and the year ended December 31, 2015, an assumed conversion of |
Composite price as reported by the New York Stock Exchange. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. |
The Dow Chemical Company and Subsidiaries |
PART II, Item 9A. Controls and Procedures. |
/s/ ANDREW N. LIVERIS | /s/ HOWARD I. UNGERLEIDER | |||
Andrew N. Liveris | Howard I. Ungerleider | |||
Chief Executive Officer and | Vice Chairman and | |||
Chairman of the Board | Chief Financial Officer | |||
/s/ RONALD C. EDMONDS | ||||
Ronald C. Edmonds | ||||
Controller and Vice President of Controllers and |
The Dow Chemical Company and Subsidiaries |
PART II |
/S/ DELOITTE & TOUCHE LLP |
Deloitte & Touche LLP |
Midland, Michigan |
February |
The Dow Chemical Company and Subsidiaries |
PART II, Item 9B. Other Information. |
The Dow Chemical Company and Subsidiaries |
PART III |
The Dow Chemical Company and Subsidiaries |
PART IV, Item 15. Exhibits, Financial Statement Schedules. |
(a) | The following documents are filed as part of this report: |
(1) | The Company’s |
(2) | Financial Statement Schedules – The following Financial Statement Schedule should be read in conjunction with the Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm included in Part II, Item 8. Financial Statements and Supplementary Data: |
Schedule II | Valuation and Qualifying Accounts |
(3) | Exhibits – See the Exhibit Index for the exhibits filed with this Annual Report on Form 10-K or incorporated by reference. The following exhibits are filed with this Annual Report on Form 10-K: |
Exhibit No. | Description of Exhibit | |
10(a)(iii) | Amendment to The Dow Chemical Company Executives' Supplemental Retirement Plan. | |
10(dd)(iii) | Amendment to The Dow Chemical Company Elective Deferral Plan (Post 2004). | |
12.1 | Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividend Requirements. | |
21 | Subsidiaries of The Dow Chemical Company. | |
23(a) | Consent of Independent Registered Public Accounting Firm. | |
23(b) | ||
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 | Schedule II | |
Valuation and Qualifying Accounts | ||
In millions | For the Years Ended December 31 |
COLUMN A | COLUMN B | COLUMN C - Additions | COLUMN D | COLUMN E | COLUMN B | COLUMN C - Additions | COLUMN D | COLUMN E | ||||||||||||||||||||||||||||||||||||
Description | Balance at Beginning of Year | Charged to Costs and Expenses | Charged to Other Accounts | Deductions from Reserves | Balance at End of Year | Balance at Beginning of Year | Charged to Costs and Expenses | Charged to Other Accounts | Deductions from Reserves | Balance at End of Year | ||||||||||||||||||||||||||||||||||
2016 | ||||||||||||||||||||||||||||||||||||||||||||
RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY: | RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY: | |||||||||||||||||||||||||||||||||||||||||||
For doubtful receivables | $ | 94 | $ | 31 | $ | — | $ | 15 | (1) | $ | 110 | |||||||||||||||||||||||||||||||||
Other investments and noncurrent receivables | $ | 494 | $ | 153 | (2) | $ | — | $ | 289 | (3) | $ | 358 | ||||||||||||||||||||||||||||||||
Deferred tax assets | $ | 1,000 | $ | 155 | $ | — | $ | 94 | $ | 1,061 | ||||||||||||||||||||||||||||||||||
2015 | RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY: | |||||||||||||||||||||||||||||||||||||||||||
For doubtful receivables | $ | 110 | $ | 24 | $ | 2 | (1) | $ | 42 | (2) | $ | 94 | $ | 110 | $ | 24 | $ | 2 | (4) | $ | 42 | (1) | $ | 94 | ||||||||||||||||||||
Other investments and noncurrent receivables | $ | 477 | $ | 108 | $ | — | $ | 91 | $ | 494 | $ | 477 | $ | 108 | $ | — | $ | 91 | $ | 494 | ||||||||||||||||||||||||
Deferred tax assets | $ | 1,106 | $ | 67 | $ | — | $ | 173 | $ | 1,000 | $ | 1,106 | $ | 67 | $ | — | $ | 173 | $ | 1,000 | ||||||||||||||||||||||||
2014 | RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY: | |||||||||||||||||||||||||||||||||||||||||||
For doubtful receivables | $ | 148 | $ | 53 | $ | 8 | (1) | $ | 99 | (2) | $ | 110 | $ | 148 | $ | 53 | $ | 8 | (4) | $ | 99 | (1) | $ | 110 | ||||||||||||||||||||
Other investments and noncurrent receivables | $ | 454 | $ | 62 | $ | — | $ | 39 | $ | 477 | $ | 454 | $ | 62 | $ | — | $ | 39 | $ | 477 | ||||||||||||||||||||||||
Deferred tax assets | $ | 1,112 | $ | 126 | $ | — | $ | 132 | $ | 1,106 | $ | 1,112 | $ | 126 | $ | — | $ | 132 | $ | 1,106 | ||||||||||||||||||||||||
2013 | ||||||||||||||||||||||||||||||||||||||||||||
RESERVES DEDUCTED FROM ASSETS TO WHICH THEY APPLY: | ||||||||||||||||||||||||||||||||||||||||||||
For doubtful receivables | $ | 121 | $ | 65 | $ | — | $ | 38 | (2) | $ | 148 | |||||||||||||||||||||||||||||||||
Other investments and noncurrent receivables | $ | 467 | $ | 39 | $ | — | $ | 52 | $ | 454 | ||||||||||||||||||||||||||||||||||
Deferred tax assets | $ | 1,399 | $ | 214 | $ | — | $ | 501 | $ | 1,112 | ||||||||||||||||||||||||||||||||||
(1) | Deductions represent notes and accounts receivable written off, credits to profit and loss and other miscellaneous items. |
(2) | Additions to reserves for "Other investments and noncurrent receivables" charged to costs and expenses include $143 million related to the Company's investment in AgroFresh Solutions, Inc. See Note 5 to the Consolidated Financial Statements for further information. |
(3) | Deductions from reserves for "Other investments and noncurrent receivables" include $237 million related to the DCC Transaction. See Note 4 to the Consolidated Financial Statements for further information. |
(4) | Additions to reserves for doubtful receivables charged to other accounts were classified as "Accounts and notes receivable - Other" in the consolidated balance sheets. These reserves relate to the Company's sale of trade accounts receivable. Anticipated credit losses in the portfolio of receivables sold are used to fair value the Company's interests held in trade accounts receivable conduits. See Notes 12 and 16 to the Consolidated Financial Statements for further information. |
The Dow Chemical Company and Subsidiaries | ||||
Signatures |
THE DOW CHEMICAL COMPANY | ||
By | /s/ R. C. EDMONDS | |
R. C. Edmonds, Controller and Vice President of Controllers and | ||
Date | February |
By | /s/ A. BANGA | By | /s/ R. J. MILCHOVICH | |||
A. Banga, Director | R. J. Milchovich, Director | |||||
Date | February | Date | February | |||
By | /s/ J. K. BARTON | By | /s/ R. S. MILLER | |||
J. K. Barton, Director | R. S. Miller, Director | |||||
Date | February | Date | February | |||
By | /s/ J. A. BELL | By | /s/ P. POLMAN | |||
J. A. Bell, Director | P. Polman, Director | |||||
Date | February | Date | February | |||
By | /s/ R. K. DAVIS | By | /s/ D. H. REILLEY | |||
R. K. Davis, Director | D. H. Reilley, Director | |||||
Date | February | Date | February | |||
By | /s/ R. C. EDMONDS | By | /s/ J. M. RINGLER | |||
R. C. Edmonds, Controller and Vice President of Controllers and | J. M. Ringler, Director | |||||
Date | February | Date | February | |||
By | /s/ J. M. FETTIG | By | /s/ R. G. SHAW | |||
J. M. Fettig, Lead Director | R. G. Shaw, Director | |||||
Date | February | Date | February | |||
By | /s/ A. N. LIVERIS | By | /s/ H. I. UNGERLEIDER | |||
A. N. Liveris, Director, Chief Executive Officer and Chairman of the Board | H. I. Ungerleider, Vice Chairman and Chief Financial Officer | |||||
Date | February | Date | February | |||
By | /s/ M. LOUGHRIDGE | |||||
M. Loughridge, Director | ||||||
Date | February |
The Dow Chemical Company and Subsidiaries |
Trademark Listing |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
2(b) | Agreement and Plan of Merger, dated as of July 10, 2008, among The Dow Chemical Company, Ramses Acquisition Corp. and Rohm and Haas Company, incorporated by reference to Exhibit 2.1 to The Dow Chemical Company Current Report on Form 8-K filed on July 10, 2008. |
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. |
2(e)(i) | First Amendment, effective June 1, 2012, to the Shareholders' Agreement, dated as of October 8, 2011, between Performance Chemicals Holding Company, Dow Saudi Arabia Holding B.V., Saudi Arabian Oil Company, Dow Europe Holding B.V. and The Dow Chemical Company, incorporated by reference to Exhibit 99.1 to The Dow Chemical Company Current Report on Form 8-K filed on February 14, 2013. |
2(f) | Agreement and Plan of Merger, dated as of March 26, 2015, among The Dow Chemical Company, Blue Cube Spinco Inc., Olin Corporation and Blue Cube Acquisition Corp., incorporated by reference to Exhibit 2.1 to The Dow Chemical Company Current Report on Form 8-K filed on March 27, 2015. |
2(f)(i) | Separation Agreement, dated as of March 26, 2015, between The Dow Chemical Company and Blue Cube Spinco Inc., incorporated by reference to Exhibit 2.2 to The Dow Chemical Company Current Report on Form 8-K filed on March 27, 2015. |
2(g) | Transaction Agreement, dated as of December 10, 2015, among The Dow Chemical Company, Corning Incorporated, Dow Corning Corporation and HS Upstate Inc., incorporated by reference to Exhibit 2.1 to The Dow Chemical Company Current Report on Form 8-K filed on December 11, 2015. |
2(g)(i) | Tax Matters Agreement, dated as of December 10, 2015, among The Dow Chemical Company, Corning Incorporated, Dow Corning Corporation and HS Upstate Inc., incorporated by reference to Exhibit 2.2 to The Dow Chemical Company Current Report on Form 8-K filed on December 11, 2015. |
2(h) | Agreement and Plan of Merger, dated as of December 11, 2015, among The Dow Chemical Company, E. I. du Pont de Nemours and Company, Diamond Merger Sub, Inc., Orion Merger Sub, Inc. and Diamond-Orion HoldCo Inc., incorporated by reference to Exhibit 2.1 to The Dow Chemical Company Current Report on Form 8-K filed on December 11, 2015. |
3(i) | The Restated Certificate of Incorporation of The Dow Chemical Company as filed with the Secretary of State, State of Delaware on May 17, 2010, incorporated by reference to Exhibit 3(i) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. |
3(i)(a) | Certificate of Designations for the Cumulative Convertible Perpetual Preferred Stock, Series A, as originally filed with the Secretary of State, State of Delaware on March 31, 2009, incorporated by reference to Exhibit 3.1 to The Dow Chemical Company Current Report on Form 8-K filed on April 1, 2009; and as re-filed with the Secretary of State, State of Delaware on May 17, 2010. |
3(ii) | The Bylaws of The Dow Chemical Company, as amended and re-adopted in full on December 15, 2016, effective December 15, 2016, incorporated by reference to Exhibit 3(ii) to The Dow Chemical Company Current Report on Form 8-K filed on December 16, 2016. |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
4 | Indenture, dated as of April 1, 1992, between The Dow Chemical Company and the First National Bank of Chicago, as trustee (incorporated by reference to Exhibit 4.1 to The Dow Chemical Company's Registration Statement on Form S-3, File No. 333-88617 (the "S-3 Registration Statement")), as amended by the Supplemental Indenture, dated as of January 1, 1994, between The Dow Chemical Company and The First National Bank of Chicago, as trustee (incorporated by reference to Exhibit 4.2 to the S-3 Registration Statement), as amended by the Second Supplemental Indenture, dated as of October 1, 1999, between The Dow Chemical Company and Bank One Trust Company, N.A. (formerly The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit 4.3 to the S-3 Registration Statement), as amended by the Third Supplemental Indenture, dated as of May 15, 2001, between The Dow Chemical Company and Bank One Trust Company, N.A. (formerly The First National Bank of Chicago), as trustee (incorporated by reference to Exhibit 4.4 to The Dow Chemical Company's Registration Statement on Form S-4, File No. 333-67368); and all other such indentures that define the rights of holders of long-term debt of The Dow Chemical Company and its consolidated subsidiaries as shall be requested to be furnished to the Securities and Exchange Commission pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K. |
4(a) | Indenture, dated May 1, 2008, between The Dow Chemical Company and The Bank of New York Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to Post-Effective Amendment No. 1 to The Dow Chemical Company's Registration Statement on Form S-3, File No. 333-140859. |
10(a) | The Dow Chemical Company Executives' Supplemental Retirement Plan, as amended, restated and effective as of April 14, 2010, incorporated by reference to Exhibit 10.1 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(a)(i) | An Amendment to The Dow Chemical Company Executives' Supplemental Retirement Plan, effective as of April 14, 2010, incorporated by reference to Exhibit 10.4 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(a)(ii) | An Amendment to The Dow Chemical Company Executives' Supplemental Retirement Plan, effective as of July 19, 2013, incorporated by reference to Exhibit 10(a)(ii) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2013. |
10(a)(iii) | An Amendment to The Dow Chemical Company Executives' Supplemental Retirement Plan, effective as of January 19, 2017, incorporated by reference to Exhibit 10(a)(iii) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2016. |
10(b) | Support Agreement, dated November 20, 2014, by and among The Dow Chemical Company and Third Point LLC, Third Point Partners Qualified L.P., Third Point Partners L.P., Third Point Offshore Master Fund L.P., Third Point Ultra Master Fund L.P. and Third Point Reinsurance Co., Ltd., incorporated by reference to Exhibit 10.1 to the Dow Chemical Company Current Report on Form 8-K filed on November 21, 2014. |
10(c) | The Dow Chemical Company Voluntary Deferred Compensation Plan for Outside Directors (for deferrals made through December 31, 2004), as amended effective as of July 1, 1994, incorporated by reference to Exhibit 10(f) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 1994, as amended in the manner described in the definitive Proxy Statement for the Annual Meeting of Stockholders of The Dow Chemical Company held on May 14, |
10(e) | The Dow Chemical Company Dividend Unit Plan, incorporated by reference to Exhibit 10(e) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
10(f) | The Dow Chemical Company 1988 Award and Option Plan, as amended and restated on December 10, 2008, effective as of January 1, 2009, incorporated by reference to Exhibit 10(f) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(g) | Employment Offer Letter for Joe Harlan, President, Performance Materials and Executive Vice President of The Dow Chemical Company, incorporated by reference to Exhibit 10.3 to The Dow Chemical Company Current Report on Form 8-K filed on February 14, 2012. |
10(h) | The Dow Chemical Company 1994 Executive Performance Plan, as amended and restated on December 10, 2008, effective as of January 1, 2009, incorporated by reference to Exhibit 10(h) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(l) | A written description of compensation for Directors of The Dow Chemical Company, incorporated by reference to the definitive Proxy Statement for the 2017 Annual Meeting of Stockholders of The Dow Chemical |
10(m) | A written description of the manner in which compensation is set for the Executive Officers of The Dow Chemical Company, incorporated by reference to the definitive Proxy Statement for the 2017 Annual Meeting of Stockholders of The Dow Chemical |
10(o) | The template used for The Dow Chemical Company Key Employee Insurance Program (“KEIP”), which provides benefits using insurance policies that replace benefits otherwise payable under The Dow Chemical Company Executives' Supplemental Retirement Plan and Company-Paid Life Insurance Plan, incorporated by reference to Exhibit 10(o) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2002. KEIP is a component of the annual pension benefits listed in and incorporated by reference to the definitive Proxy Statement for the 2017 Annual Meeting of Stockholders of The Dow Chemical |
10(p) | The Dow Chemical Company Elective Deferral Plan (for deferrals made through December 31, 2004), as amended, restated and effective as of April 14, 2010, incorporated by reference to Exhibit 10.2 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(p)(i) | An Amendment to The Dow Chemical Company Elective Deferral Plan (for deferrals made through December 31, 2004), effective as of April 14, 2010, incorporated by reference to Exhibit 10.5 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(s) | The Summary Plan Description for The Dow Chemical Company Company-Paid Life Insurance Plan, Employee-Paid Life Insurance Plan, and Dependent Life Insurance Plan, amended and restated effective as of January 1, 2014, incorporated by reference to Exhibit 10.1 to The Dow Chemical Company Current Report on Form 8-K filed on February 13, 2014. |
10(t) | The Summary Plan Description for The Dow Chemical Company Retiree Company-Paid Life Insurance Plan, Retiree Optional Life Insurance Plan, and Retiree Dependent Life Insurance Plan, amended and restated effective as of January 1, 2014, incorporated by reference to Exhibit 10.2 to The Dow Chemical Company Current Report on Form 8-K filed on February 13, 2014. |
10(u) | Amended and Restated 2003 Non-Employee Directors' Stock Incentive Plan, adopted by the Board of Directors of The Dow Chemical Company on December 10, 2007, incorporated by reference to Exhibit 10(u) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2007. |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
10(w) | Non-Qualified Stock Option Agreement Pursuant to The Dow Chemical Company 2003 Non-Employee Directors' Stock Incentive Plan, incorporated by reference to Exhibit 10(w) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. |
10(x) | The Performance Shares Deferred Stock Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2009, incorporated by reference to Exhibit 10(x) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(y) | The Deferred Stock Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2009, incorporated by reference to Exhibit 10(y) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(z) | The Non-Qualified Stock Option Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2009, incorporated by reference to Exhibit 10(z) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(cc) | The Dow Chemical Company Voluntary Deferred Compensation Plan for Non-Employee Directors, effective for deferrals after January 1, 2005, as amended and restated on December 10, 2008, effective as of January 1, 2009, incorporated by reference to Exhibit 10(cc) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(dd) | The Dow Chemical Company Elective Deferral Plan, effective for deferrals after January 1, 2005, as amended, restated and effective as of April 14, 2010, incorporated by reference to Exhibit 10.3 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(dd)(i) | An Amendment to The Dow Chemical Company Elective Deferral Plan, effective for deferrals after January 1, 2005, effective as of April 14, 2010, incorporated by reference to Exhibit 10.6 to The Dow Chemical Company Current Report on Form 8-K filed on May 3, 2010. |
10(dd)(ii) | An Amendment to The Dow Chemical Company Elective Deferral Plan, effective for deferrals after January 1, 2005,dated December 11, 2014, incorporated by reference to Exhibit 10(dd)(ii) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2014. |
10(dd)(iii) | An Amendment to The Dow Chemical Company Elective Deferral Plan (Post 2004), effective as of January 19, 2017, incorporated by reference to Exhibit 10(dd)(iii) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2016. |
10(ii) | Employment agreement dated February 14, 2006, between Heinz Haller and The Dow Chemical Company, incorporated by reference to Exhibit 10(ii) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2008. |
10(jj) | Change in Control Executive Severance Agreement - Tier 1, incorporated by reference to Exhibit 10(jj) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2007. |
10(kk) | Change in Control Executive Severance Agreement - Tier 2, incorporated by reference to Exhibit 10(kk) to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2007. |
10(nn) | Investment Agreement, dated as of October 27, 2008, between The Dow Chemical Company and Berkshire Hathaway Inc., incorporated by reference to Exhibit 10.1 to The Dow Chemical Company Current Report on Form 8-K filed on October 27, 2008. |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
10(oo) | Investment Agreement, dated as of October 27, 2008, between The Dow Chemical Company and The Kuwait Investment Authority, incorporated by reference to Exhibit 10.2 to The Dow Chemical Company Current Report on Form 8-K filed on October 27, 2008. |
10(ww) | The Deferred Stock Units Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2010, incorporated by reference to Exhibit 10.7 to The Dow Chemical Company Current Report on Form 8-K filed on February 18, 2010. |
10(xx) | The Special Deferred Stock Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2010, incorporated by reference to Exhibit 10.8 to The Dow Chemical Company Current Report on Form 8-K filed on February 18, 2010. |
10(yy) | The Performance Shares Deferred Stock Units Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2010, incorporated by reference to Exhibit 10.9 to The Dow Chemical Company Current Report on Form 8-K filed on February 18, 2010. |
10(zz) | The Special Performance Shares Deferred Stock Agreement Pursuant to The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2010, incorporated by reference to Exhibit 10.10 to The Dow Chemical Company Current Report on Form 8-K filed on February 18, 2010. |
10(aaa) | The Stock Appreciation Rights Agreement Relating to a Stock Option Granted Under The Dow Chemical Company 1988 Award and Option Plan, as amended, restated and effective as of January 1, 2010, incorporated by reference to Exhibit 10.11 to The Dow Chemical Company Current Report on Form 8-K filed on February 18, 2010. |
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) | Performance Shares Deferred Stock Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012, incorporated by reference to Exhibit 10(ccc) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. |
10(ddd) | Deferred Stock Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012, incorporated by reference to Exhibit 10(ddd) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. |
10(eee) | Non-Qualified Stock Option Agreement Pursuant to The Dow Chemical Company 2012 Stock Incentive Plan, effective as of May 10, 2012, incorporated by reference to Exhibit 10(eee) to The Dow Chemical Company Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. |
10(fff) | The Dow Chemical Company Amended and Restated 2012 Stock Incentive Plan, effective as of May 15, 2014, incorporated by reference to Exhibit 10.1 to The Dow Chemical Company Current Report on Form 8-K filed on May 20, 2014. |
12.1 | Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividend Requirements. |
14 | Code of Ethics for Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer, incorporated by reference to Exhibit 14 to The Dow Chemical Company Annual Report on Form 10-K for the year ended December 31, 2003. |
The Dow Chemical Company and Subsidiaries | ||||
Exhibit Index | ||||
EXHIBIT NO. | DESCRIPTION |
21 | Subsidiaries of The Dow Chemical Company. |
23(a) | Consent of Independent Registered Public Accounting Firm. |
23(b) | Ankura Consulting Group, LLC'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. |
Guarantee relating to the 6.00% Notes of Rohm and Haas Company, incorporated by reference to Exhibit 99.5 to The Dow Chemical Company Current Report on Form 8-K filed on April 1, 2009. |
Guarantee relating to the 9.80% Debentures of Rohm and Haas Company, incorporated by reference to Exhibit 99.6 to The Dow Chemical Company Current Report on Form 8-K filed on April 1, 2009. |
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. |