October 5, 2018
James R. Fitterling
Chief Executive Officer
Dow Holdings Inc.
2211 H.H. Dow Way
Midland, Michigan 48674
Re: Dow Holdings Inc.
Form 10-12B
Filed September 7, 2018
File No. 001-38646
Dear Mr. Fitterling:
We have reviewed your filing and have the following comments. In some of
our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by providing
the requested
information or advise us as soon as possible when you will respond. If you do
not believe our
comments apply to your facts and circumstances, please tell us why in your
response.
After reviewing your response to these comments, we may have additional
comments.
Form 10-12B filed September 7, 2018
General
1. We note that you have filed Form 10 to effect the spin-off transaction
of
DowDuPont Inc.'s material science business. Staff Legal Bulletin No. 4
states that with
regard to a spin-off transaction involving a non-reporting subsidiary,
"the parent provides
adequate information if, by the date it spins-off the securities... it
gives its shareholders an
information statement that describes the spin-off and the subsidiary and
that substantially
complies with Regulation 14A or Regulation 14C under the Exchange Act;
and the
subsidiary registers the spun-off securities under the Exchange Act."
Please provide us
with a detailed legal analysis explaining how this requirement was
satisfied.
James R. Fitterling
FirstName LastNameJames R. Fitterling
Dow Holdings Inc.
Comapany 2018
October 5, NameDow Holdings Inc.
October 5, 2018 Page 2
Page 2
FirstName LastName
Exhibit 99.1
Information Statement Summary, page 6
2. We note you present pro forma operating EBIT and pro forma operating
EBITDA on
pages 1 and 65 without presenting the most directly comparable GAAP
measure. The
current presentations give greater prominence to non-GAAP financial
measures and
appear to be inconsistent with Question 102.10 of the updated
Compliance and Disclosure
Interpretations related to Non-GAAP Financial Measures issued on May
17, 2016. To the
extent you present non-GAAP financial measures, please also present
the most directly
comparable GAAP measure, pro forma net income (loss), and provide a
cross-reference to
related reconciliations.
3. Please revise to ensure that the information you include in your
summary is balanced. To
the extent that you cite competitive strengths in your summary, please
review each one
and revise as necessary to provide balanced information. By way of
example and not
limitation, the substantial indebtedness to be incurred in connection
with the spin-off and
the benefits associated with DowDuPont's size, brand, reputation, and
purchasing power
that will be lost following the spin-off should be featured
prominently
Unaudited Pro Forma Combined Financial Information, page 55
4. Please disclose the specific nature of the costs previously assigned
to Dow AgCo and
Dow SpecCo that did not meet the definition of discontinued operations
in accordance
with ASC 205-20 and more fully explain how and why you expect to
significantly reduce
these costs in the future.
5. In prior correspondence you indicated that historical financial
statements of ECP would
not be required under Rule 3-05 of Regulation S-X based on the level
of ECP's
significance. Please tell us how you determined ECP's significance. To
the extent you
determined significance without adjusting Dow's historical financial
statements for the
pending disposals that will be presented as discontinued operations,
please explain how
and why you believe your determination is appropriate.
3. Adjustments to Pro Forma Statements of Income, page 60
6. In regard to Adjustment A, please expand your footnote to quantify and
clarify the
specific costs being eliminated and explain how you determined these
costs are directly
attributable to the transactions being reflected in the pro forma
financial statements.
7. In regard to Adjustment A, please expand your footnote to quantify the
costs associated
with change in control provisions and severance for certain employee
agreements and
explain how you determined these costs are directly attributable to
the transactions being
reflected in the pro forma financial statements.
James R. Fitterling
FirstName LastNameJames R. Fitterling
Dow Holdings Inc.
Comapany 2018
October 5, NameDow Holdings Inc.
October 5, 2018 Page 3
Page 3
FirstName LastName
8. In regard to Adjustment E, please clarify the specific nature of the
other income and
expense related to the Dow Divested Assets.
9. Due to the acquisition of ECP during 2017, please explain why no pro
forma adjustments
to record additional depreciation and amortization related to the
step-up in basis of
property and intangible assets are required for the year ended
December 31, 2017.
Notes to the Unaudited Pro Forma Combined Financial Statements
General, page 60
10. To the extent that you present multiple items in a single pro forma
adjustment, please
revise your footnotes to the pro forma combined statements of income
to reconcile each of
the components comprising the adjustment to the adjustment reflected
in the pro forma
financial statement.
The Business, page 65
11. Please include disclosure regarding the sources and availability of
raw materials required
by your business. Please see Item 101(c)(iii) of Regulation S-K.
Legal Proceedings, page 84
12. Please tell us why you believe a roll-forward of claims data
associated with the breast
implant liability is not required.
Supplemental Pro Forma Segment Results, page 88
13. We note that you intend to have six business units that will be
included in three operating
segments. Please more fully explain to us how you determined that the
six business units
are not operating segments or how you determined it is appropriate to
aggregate the six
business units into three segments. In this regard, it appears to us
that the Coatings
& Performance Monomers and Consumer Solutions business units were in
separate
reportable segments in the Historical Dow Chemical financial
statements prior to the
merger. To the extent operating segments will be aggregated, please
explain how you
meet the criteria under ASC 280-10-50-11.
14. Please reconcile your tabular presentations of Adjusted Significant
Items disclosed here
with related amounts disclosed and discussed in MD&A.
Exclusive Forum, page 155
15. Please revise your risk factors section to discuss the risks related
to your intended
exclusive forum clause.
James R. Fitterling
Dow Holdings Inc.
October 5, 2018
Page 4
Exhibits 99.2 and 99.3
Historical Financial Statements, page F-1
16. We note that Dow Chemical is now a wholly-owned subsidiary of
DowDuPont. Please
explain how you determined that no additional costs are required to be
allocated to the
historical financial statements of Dow Chemical based on the
provisions of SAB Topic
1:B.
17. Refer to Note 13. We note you recorded a goodwill impairment charge
for the Coatings
& Performance Monomers reporting unit of $1,491 million in the fourth
quarter of 2017.
Please more fully disclose and discuss the specific facts and
circumstances that resulted in
the impairment, including the differences between the significant
assumptions and
estimates you used to determine the estimated fair value of this
reporting unit in your 2017
and 2016 annual reviews. Tell us if you performed any interim
impairment tests between
your 2016 and 2017 annual impairment tests and explain why or why not.
18. Refer to Note 25. Based on the planned transactions, it is not clear
to us how you
determined you operate in one segment. It appears to us it would be
meaningful to
shareholders to provide segment disclosures based on product groups.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Dale Welcome, Staff Accountant, at (202) 551-3865 or
Anne
McConnell, Staff Accountant, at (202) 551-3709 if you have questions regarding
comments on
the financial statements and related matters. Please contact Sergio Chinos,
Staff Attorney, at
(202) 551-7844 or Amanda Ravitz, Assistant Director, at (202) 551-3412 with any
other
questions.
Sincerely,
FirstName LastNameJames R. Fitterling
Division of
Corporation Finance
Comapany NameDow Holdings Inc.
Office of
Manufacturing and
October 5, 2018 Page 4 Construction
FirstName LastName