Dow Chemical 2011 Annual Report Download - page 154

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determine if an other-than-temporary impairment has occurred. For debt securities, the credit rating of the issuer, current credit
rating trends and the trends of the issuer’s overall sector are considered in determining whether unrealized losses represent an
other-than-temporary impairment. For equity securities, the Company’s investments are primarily in Standard & Poor’s
(“S&P”) 500 companies; however, the Company also allows investments in companies outside of the S&P 500. The largest
holdings are Exchange Traded Funds that represent the S&P 500 index or an S&P sector or subset; the Company also has
holdings in Exchange Traded Funds that represent emerging markets. The Company considers the evidence to support the
recovery of the cost basis of a security including volatility of the stock, the length of time the security has been in a loss
position, value and growth expectations, and overall market and sector fundamentals, as well as technical analysis, in
determining impairment. In 2011, other-than-temporary impairment write-downs on investments still held by the Company
were $6 million ($5 million in 2010).
Dividends
On December 15, 2011, the Board of Directors declared a quarterly dividend of $0.25 per share, payable January 30, 2012, to
stockholders of record on December 30, 2011. On February 9, 2012, the Board of Directors declared a quarterly dividend of
$0.25 per share, payable April 30, 2012, to stockholders of record on March 30, 2012. Since 1912, the Company has paid a
cash dividend every quarter and, in each instance prior to February 12, 2009, had maintained or increased the amount of the
dividend, adjusted for stock splits. During this 100-year period, Dow has increased the amount of the quarterly dividend
48 times (approximately 12 percent of the time), reduced the dividend once and maintained the amount of the quarterly
dividend approximately 88 percent of the time. The dividend was reduced in February 2009, for the first time in the 100-year
period, due to uncertainty in the credit markets, unprecedented lower demand for chemical products and the ongoing global
recession. The Company declared dividends of $0.90 per share in 2011, $0.60 per share in 2010 and $0.60 per share in 2009.
On December 15, 2011, the Board of Directors declared a quarterly dividend of $85 million to Cumulative Convertible
Perpetual Preferred Stock, Series A shareholders of record on December 15, 2011, which was paid on January 3, 2012. On
February 9, 2012, the Board of Directors declared a quarterly dividend of $85 million to these shareholders, payable on April 1,
2012. Ongoing dividends related to Cumulative Convertible Perpetual Preferred Stock, Series A will accrue at the rate of
$85 million per quarter, and are payable quarterly subject to Board of Directors’ approval.
Outlook for 2012
Dow and the chemical industry as a whole benefited from improvements in the pace of global economic recovery in the first
half of 2011. However, persistent challenges in key regions - a deepening financial crisis in Europe, high unemployment in the
United States and inflationary pressures in emerging geographies - led to deterioration in the pace of global economic growth
during the second half of 2011. As a result, many value chains were impacted by a reduction in consumer confidence and,
consequently, Dow's customers took actions to de-stock inventories as the year ended. In the face of this ongoing economic
volatility, Dow's actions supported its commitment to financial discipline and strategy execution. Among its many
accomplishments in the year, the Company delivered revenue and earnings growth; further expanded its global footprint;
launched new, innovative technologies that address customer and consumer needs; and generated strong cash flow from
operating activities, which enabled a further reduction in net debt to total capitalization.
Looking to 2012, Dow expects volatile economic conditions to persist, and projects that growth in developed geographies,
especially Western Europe, will remain weak well into the first half of the year. Growth rates in emerging geographies are
projected to remain well above developed geographies, driven by a broad range of end-markets such as agriculture, food
packaging and water. However, year-over-year comparisons will be subdued as governments implement policies to balance
economic growth with inflationary pressures.
While low inventory levels at year-end 2011, coupled with stabilizing commodity prices, may provide some demand lift as
2012 unfolds, the Company's plans do not assume an accelerated rebound in business conditions in the near term. Dow will
continue to focus on cost control and productivity and the Company's success will continue to be driven by those factors within
its control: a transformed business portfolio, a balanced geographic presence, investments to leverage cost-advantaged
feedstocks, particularly from shale gas dynamics in the United States, and continued investments in innovations aimed at the
intersection of greatest societal need and business opportunity.