SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
January 25, 1995
THE DOW CHEMICAL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 1-3433 38-1285128
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification
No.)
2030 Dow Center, Midland, Michigan 48674
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (517) 636-1000
Not applicable
(Former name or former address, if changed since last report.)
Page 1 of 15
Item 5. Other Events
The Dow Chemical Company ("Dow") issued a press release
on January 25, 1995, describing the impact of the pending
sale of the Personal Care Business of DowBrands on Dow's
earnings. A second press release was issued on January 26,
1995, constituting Dow's earnings release for the fourth
quarter and full year of 1994. Copies of these press
releases are attached hereto as Exhibits A and B.
Page 2 of 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
THE DOW CHEMICAL COMPANY
Registrant
/s/ Frank P. Popoff
Frank P. Popoff
CEO & Chairman of the Board
Date: January 27, 1995
Page 3 of15
EXHIBIT INDEX
EXHIBIT A Press release dated January 25, 1995.
EXHIBIT B Press release dated January 26, 1995.
Page 4 of15
EXHIBIT A
FOR FURTHER INFORMATION:
The Dow Chemical Company
2030 Dow Center
Midland, MI 48674
517/636-1940
January 25, 1995
PENDING SALE TO IMPACT DOW'S QUARTERLY EARNINGS
The Dow Chemical Company announced today the pending sale of
the Personal Care business of DowBrands and a resulting
pretax charge of $132 million for an impact of 46 cents per
share against Dow's fourth quarter of 1994 earnings.
Negotiations for the sale are yet to be finalized.
Details will be disclosed when negotiations are complete.
Lee A. Shobe, president and chief executive officer of
DowBrands, said, "This transaction will allow us to focus
resources on our core businesses in food protection and
specialty cleaning products."
DowBrands, the consumer products affiliate of Dow
Chemical, currently operates three businesses: Personal
Care, Home Food Management and Specialty Cleaners. Personal
Care consists of a retail business, including Style, Salon
Style and PermaSoft hair care products, and a line of hair
care products offered exclusively to salons.
Page 5 of 15
EXHIBIT B
For Further Information:
The Dow Chemical Company
2030 Dow Center
Midland, MI 48674
517/636-1940
January 26, 1995
THE DOW CHEMICAL COMPANY - 4Q94 EARNINGS RELEASE
Dow Announces Record Sales, Higher Earnings
_______________________________________________________
Fourth Quarter of 1994 Highlights
- -- Sales increased 22 percent to $5.5 billion.
- -- Sales in the quarter (and year) were the highest in
Dow's history.
- -- Operating income improved 100 percent to $637
million.
____________________________________________________________
3 Months Ended 12 Months Ended
(In millions, December 31 December 31
except for share amounts) 1994 1993 1994 1993
____________________________________________________________
Net Sales $5,494 $4,505 $20,015 $18,060
Operating Income 637 318 2,345 1,440
Net Income* 222 (48) 931 637
Earnings Per
Common Share 0.80 (0.18) 3.37 2.33
____________________________________________________________
*Available For Common Stockholders
____________________________________________________________
Review of Quarterly Results
The Dow Chemical Company today announced record sales and
higher earnings in the fourth quarter of 1994 compared to
the same period a year ago. Sales in the fourth quarter
were up 22 percent to $5.5 billion, which is the highest
quarterly sales total in Dow's history. This gain reflected
improvements in volume and prices of 11 percent and 10 percent,
respectively.
Page 6 of 15
Operating income doubled to $637 million compared to $318
million in the fourth quarter a year ago. Earnings in the
quarter were 80 cents per share versus a loss of 18 cents
per share in 1993. In the fourth quarter of 1994, Dow
Corning Corporation, which is partially owned by Dow (50
percent shareholder), took a charge to cover estimated
additional costs related to breast implant litigation. As a
result of Dow Corning's action, Dow recorded a 25 cents per
share after tax loss. In addition, the pending sale of the
DowBrands Personal Care business caused a charge of 46 cents
per share, while Dow realized a gain of 20 cents per share
from its investment in the Magma Power Company. In the fourth
quarter of 1993, Dow recorded an after tax charge of 70 cents
per share related to another Dow Corning charge resulting
from breast implant litigation. In the same quarter, Dow
also reported a 22 cents per share net gain on investments,
which was primarily from the sale of assets. When excluding
the impact of Dow Corning's charges and Dow's gains and
losses on investments, earnings quadrupled to $1.31 per share
in the fourth quarter of 1994 versus 30 cents per share in
the same period of the previous year.
"We achieved record sales in 1994 by focusing on growth
while reengineering the company to become even more
productive," said Frank Popoff, Dow chairman and chief
executive officer. "Our investments made during the
recession are paying off as global economic conditions
improve."
In 1994, sales totaled a record $20 billion, an 11 percent
increase from the $18.1 billion reported for 1993.
Increases of 8 percent in volume and 2 percent in price
resulted in the year's sales gain. Dow's 1994 earnings were
affected by charges related to Dow Corning and DowBrands, a
gain from Dow's investment in Magma Power and a charge of
3 cents per share in the first quarter due to a value decline
in Marion Merrell Dow's short-term investment portfolio.
Earnings in 1993 included a $1.31 per share gain primarily
from the sale of Dow's 50 percent interest in Dowell Schlumberger
and the sale of a portion of the company's equity interests
in Magma Power and Crestar Energy Inc. This gain was partially
offset by a special charge taken by Marion Merrell Dow and Dow's
share of the Dow Corning charge, which together had a negative
impact on Dow's earnings of $1.00 per share. Excluding
these gains and charges, earnings were $3.91 per share in
1994 versus $2.02 per share in 1993.
All of Dow's business segments--Chemicals and Performance
Products, Plastics, Hydrocarbons and Energy, and Consumer
Specialties--reported higher sales in 1994 compared to 1993.
These segments also had improved operating income with the
exception of Consumer Specialties when excluding the impact
of the special charge taken by Marion Merrell Dow in 1993.
Plastics had the most significant increase over the previous
year with improvements of 16 percent in sales and almost 200
percent in operating income, reflecting volume gains and
price recovery in Thermoplastics.
"The company's strong international presence, the success of
our people in enhancing productivity and price recovery lead
us to be optimistic about continuing to achieve earnings
growth in 1995," Popoff said.
Page 7 of 15
CONSOLIDATED STATEMENTS OF INCOME
The Dow Chemical Company and Subsidiaries
(Unaudited)
<TABLE>
Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
In millions, except for 1994 1993 1994 1993
share amts
- ------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Sales $5,494 $4,505 $20,015 $18,060
- ------------------------------------------------------------
Operating Costs and Expenses
Cost of sales 3,652 3,101 13,219 12,195
Insurance and finance co.
operations pretax 6 (24) (40) (98)
(income) expense
Research and development 335 317 1,261 1,256
expenses
Promotion and advertising 170 175 658 678
expenses
Selling and administrative 648 552 2,403 2,230
expenses
Amortization of intangibles 46 66 169 179
Special charge (Note C) 0 0 0 180
- -------------------------------------------------------------
Total operating costs 4,857 4,187 17,670 16,620
and expenses
- ------------------------------------------------------------
Operating Income 637 318 2,345 1,440
- ------------------------------------------------------------
Other Income (Expense)
Equity in earnings
(losses) of 20%-50%
owned companies
(Note D) (47) (185) 63 (111)
Interest income 42 40 131 167
Capitalized interest 15 17 66 66
Interest expense and
amortization of debt
discount (138) (166) (603) (666)
Net gain (loss) on
Foreign currency (1) 20 7 (10)
transactions
Net gain(loss) on (60) 90 (60) 592
investments (Note B)
Sundry income-net 45 (24) 103 47
- ------------------------------------------------------------
Total other income (144) (208) (293) 85
(expense)
- ------------------------------------------------------------
Income before provision
for taxes on income
and minority interests 493 110 2,052 1,525
Provision for taxes on
income 202 82 779 606
Minority interests'
share in income 67 74 335 275
Net income (loss) 224 (46) 938 644
Preferred stock dividends 2 2 7 7
- ------------------------------------------------------------
Page 8 of 15
Net income (loss) available
for common
stockholders $222 ($48) $931 $637
- ------------------------------------------------------------
Average common shares
outstanding 277.3 274.2 276.1 273.6
Earnings (loss) per
common share $0.80 ($0.18) $3.37 $2.33
Common stk dividends
declared per shr $0.65 $0.65 $2.60 $2.60
- ------------------------------------------------------------
Depreciation 378 358 1,321 1,343
Capital expenditures 375 442 1,183 1,397
</TABLE>
Notes to the Financial Statements
Note A: The unaudited interim financial statements reflect
all adjustments (consisting of normal recurring accruals)
which, in the opinion of management, are considered
necessary for a fair presentation of the results for the
period covered. Certain reclassifications of prior year
amounts have been made to conform to current year
presentation. These statements should be read in conjunction
with the financial statements and notes thereto included in
the Company's Form 10-K for the year ended December 31,
1993.
Note B: In January 1995, the Company announced the pending
sale of the Personal Care business of DowBrands and recorded
a pretax charge of $132 million in the fourth quarter of
1994.
In 1994, the Company realized a pretax gain of $90 million
on its common shares of Magma Power Company ("Magma"),
primarily as a result of the merger agreement between Magma
and California Energy Company Inc.
In January 1993, the Company sold its 50 percent holding in
the Dowell Schlumberger group of companies to Schlumberger
Limited. The decision to sell the 50 percent interest was
due to Dowell Schlumberger's business becoming less
chemistry intensive and thus less dependent on Dow's
technology and participation. The sale generated a pretax
gain of $450 million.
In June 1993, the Company sold 3.6 million shares of common
stock in Magma for which it received gross proceeds of $116
million. The sale generated a pretax gain of $62 million in
1993.
In November 1993, Dow Chemical Canada Inc. ("DCCI") sold
shares of Crestar Energy Inc ("Crestar"). The net proceeds
to the Company were $172 million and generated a pretax gain
of $101 million. As a result of the sale, DCCI's common share
holding in Crestar was reduced from 50 percent to 17.5 percent.
Page 9 of 15
Note C: The second quarter of 1993 included a special pretax
charge of $180 million by Marion Merrell Dow Inc. ("MMDI").
The special charge reflected the impact of a number of steps
intended to reduce costs and position MMDI for the future,
including work force reduction and U.S. business
reorganization. The Company holds an interest in MMDI of
approximately 71 percent.
Note D: The 1994 fourth quarter loss of Dow Corning
Corporation, in which the Company is a 50 percent
shareholder, reflected a $152 million after tax charge
against income related to breast implant litigation. The
impact of the charge on the Company's 1994 fourth quarter
net income was $70 million or 25 cents per share. Dow
Corning Corporation's 1993 fourth quarter loss reflected a
$415 million after tax charge against income also related to
breast implant litigation. The impact of the charge on the
Company's 1993 fourth quarter net income was $192 million or
70 cents per share.
CONSOLIDATED BALANCE SHEETS
The Dow Chemical Company and Subsidiaries
(Unaudited)
<TABLE>
Dec. 31 Dec. 31
In millions 1994 1993
- ------------------------------------------------------------
Assets
- ------------------------------------------------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $569 $407
Marketable securities and interest-
bearing deposits 565 430
Accounts and notes receivable:
Trade (less allowance for
doubtful receivables-
1994, $104; 1993, $93) 3,359 2,587
Other 1,099 1,245
Inventories:
Finished and work in process 2,079 1,984
Materials and supplies 633 542
Deferred income taxes receivable -
current 389 457
- ------------------------------------------------------------
Total current assets 8,693 7,652
- ------------------------------------------------------------
Investments
Capital stock at cost plus equity
in accumulated earnings of 20%-50%
owned companies 931 1,019
Other investments 1,529 1,726
Noncurrent receivables 330 369
- ------------------------------------------------------------
Total investments 2,790 3,114
Page 10 of 15
Plant properties 23,210 21,608
Less accumulated depreciation 14,484 13,028
- ------------------------------------------------------------
Net plant properties 8,726 8,580
- ------------------------------------------------------------
Other assets
Goodwill (net of
accumulated amortization-
1994, $676; 1993, $563) 4,365 4,434
Deferred income taxes receivable -
noncurrent 1,132 933
Deferred charges and other assets 839 792
- ------------------------------------------------------------
Total other assets 6,336 6,159
- ------------------------------------------------------------
Total assets $26,545 $25,505
- ------------------------------------------------------------
</TABLE>
<TABLE> Page 11 of 15
Dec. 31 Dec. 31
1994 1993
- ------------------------------------------------------------
Liabilities and Stockholders' Equity
- ------------------------------------------------------------
Current Liabilities
<S> <C> <C>
Notes payable $741 $877
Long-term debt due within one year 534 165
Accounts payable:
Trade 1,928 1,479
Other 634 765
Income taxes payable 664 245
Deferred income taxes payable -
current 56 199
Dividends payable 202 200
Accrued and other current
liabilities 1,859 1,721
- ------------------------------------------------------------
Total current liabilities 6,618 5,651
- ------------------------------------------------------------
Long-term debt 5,303 5,902
- ------------------------------------------------------------
Deferred Taxes and Other
Liabilities Deferred income
taxes payable - noncurrent 644 372
Pension and other postemployment
benefits - noncurrent 1,987 1,918
Other noncurrent obligations 1,253 1,173
- -------------------------------------------------------------
Total deferred taxes and other
liabilities 3,884 3,463
- ------------------------------------------------------------
Minority interests in subsidiary
companies 2,506 2,439
- ------------------------------------------------------------
Temporary Equity
Preferred stock at redemption value 133 135
Less guaranteed ESOP obligation 111 119
- ------------------------------------------------------------
Total temporary equity 22 16
- ------------------------------------------------------------
Stockholders' Equity
Common stock 818 818
Additional paid-in capital 326 366
Retained earnings 8,857 8,645
Unrealized gains (losses)
on investments (21) 105
Cumulative translation adjustments (330) (304)
Treasury stock, at cost (1,438) (1,596)
- ------------------------------------------------------------
Net stockholders' equity 8,212 8,034
Page 12 of 15
Total liabilities and
stockholders' equity $26,545 $25,505
- ------------------------------------------------------------
See Notes to the Financial Statements
</TABLE>
<TABLE>
GEOGRAPHIC AND INDUSTRY SEGMENTS
The Dow Chemical Company and Subsidiaries
(Unaudited)
Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
In millions 1994 1993 1994 1993
- ------------------------------------------------------------
Geographic sales
<S> <C> <C> <C> <C>
United States $2,647 $2,398 $9,942 $9,285
Europe 1,492 1,115 5,320 4,836
Rest of World 1,355 992 4,753 3,939
- ------------------------------------------------------------
Total 5,494 4,505 20,015 18,060
- ------------------------------------------------------------
Geographic operating
income
United States 323 224 1,293 1,036
Europe 30 1 273 (1)
Rest of World 284 93 779 405
- ------------------------------------------------------------
Total $637 $318 $2,345 $1,440
- ------------------------------------------------------------
Industry segment sales
Chemicals &
Performance Products $1,293 $1,042 $4,536 $4,268
Plastic Products 2,125 1,568 7,476 6,459
Hydrocarbons and Energy 598 506 2,043 1,797
Consumer Specialties 1,457 1,359 5,854 5,457
Unallocated 21 30 106 79
- ------------------------------------------------------------
Total 5,494 4,505 20,015 18,060
- ------------------------------------------------------------
Industry segment operating
income Chemicals &
Performance Products 204 18 592 350
Plastic Products 418 69 1,131 380
Hydrocarbons and Energy 25 32 74 43
Consumer Specialties 82 100 762 592
Unallocated (92) 99 (214) 75
- ------------------------------------------------------------
Total $637 $318 $2,345 $1,440
- ------------------------------------------------------------
</TABLE>
Page 13 of 15
<TABLE>
PRODUCT SEGMENT SALES ANALYSIS
The Dow Chemical Company and Subsidiaries
(Unaudited) Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31
In millions 1994 1994
- ------------------------------------------------------------
Sales of Principal Products and Services
- ------------------------------------------------------------
Chemicals and Performance Products
<S> <C> <C>
Chemicals and Metals $811 $2,762
Performance Products 482 1,774
- ------------------------------------------------------------
Total 1,293 4,536
- ------------------------------------------------------------
Plastic Products
Thermoplastics 1,180 3,887
Thermosets 708 2,679
Fabricated Products 237 910
- ------------------------------------------------------------
Total 2,125 7,476
- ------------------------------------------------------------
Hydrocarbons and Energy 598 2,043
- ------------------------------------------------------------
Consumer Specialties
Agricultural Products 378 1,735
Pharmaceuticals 882 3,274
Consumer Products 197 845
- ------------------------------------------------------------
Total 1,457 5,854
- ------------------------------------------------------------
Unallocated 21 106
- ------------------------------------------------------------
Total $5,494 $20,015
- ------------------------------------------------------------
</TABLE>
<TABLE>
STRATEGIC SECTORS
The Dow Chemical Company and Subsidiaries
(Unaudited)
Three Months Ended Twelve Months Ended
Dec. 31 Dec. 31 Dec. 31 Dec. 31
In millions 1994 1993 1994 1993
- ------------------------------------------------------------
Page 14 of 15
Sales
<S> <C> <C> <C> <C>
Basics $2,590 $1,936 $8,693 $7,625
Industrial
Specialties 1,426 1,180 5,362 4,899
Consumer
Specialties 1,457 1,359 5,854 5,457
Unallocated 21 30 106 79
- ------------------------------------------------------------
Total 5,494 4,505 20,015 18,060
- ------------------------------------------------------------
Operating Income
Basics 476 36 993 252
Industrial
Specialties 171 83 804 521
Consumer Specialties 82 100 762 592
Unallocated (92) 99 (214) 75
- ----------------------------------------
Total $637 $318 $2,345 $1,440
- ------------------------------------------------------------
</TABLE>
Results for Dow's strategic sectors are reported above. This
information supplements customary reporting by business
segments to help track the progress of Dow's basics and
specialty businesses.
</Page> Page 15 of 15
