Dow Chemical 2011 Annual Report Download - page 72

38
SEGMENT RESULTS
Beginning in the third quarter of 2011, the Company changed its reportable segments due to recent changes in the Company's
organization. Following are the new segments:
• Electronic and Functional Materials
• Coatings and Infrastructure Solutions
• Agricultural Sciences
• Performance Materials
• Performance Plastics
• Feedstocks and Energy
The reporting changes are retrospectively reflected in the following discussion of segment results for all periods presented.
The reported results by operating segment can be found in Note Y to the Consolidated Financial Statements. The Company
uses EBITDA (which Dow defines as earnings (i.e. "Net Income") before interest, income taxes, depreciation and amortization)
as its measure of profit/loss for segment reporting purposes. EBITDA by operating segment includes all operating items
relating to the businesses, except depreciation and amortization; items that principally apply to the Company as a whole are
assigned to Corporate. Note Y also includes a reconciliation of EBITDA to “Income from Continuing Operations Before
Income Taxes.”
In order to provide the most meaningful comparison of results by operating segment, the following discussion and analysis
compares actual results for 2011 to 2010 as well as actual results for 2010 to actual results for the last nine months of 2009 plus
pro forma historical results for the first quarter of 2009. The unaudited pro forma historical segment information is based on the
historical consolidated financial statements and accompanying notes of both Dow and Rohm and Haas and was prepared to
illustrate the effects of the Company’s acquisition of Rohm and Haas, assuming the acquisition of Rohm and Haas had been
consummated on January 1, 2008. In addition, the unaudited pro forma historical segment information reflects the impact of
increased depreciation and amortization expense resulting from the fair valuation of assets acquired from Rohm and Haas
assuming that the transaction had been consummated on January 1, 2008.
The unaudited pro forma historical segment information, prepared following the April 1, 2009 acquisition of Rohm and
Haas, is not necessarily indicative of the results of operations that would have actually occurred had the acquisition been
completed as of the date indicated, nor is it indicative of the future operating results of the combined company. The unaudited
pro forma historical segment information does not reflect events that occurred after the acquisition of Rohm and Haas,
including the realization of operating cost savings (synergies) or restructuring activities or other costs related to the integration
of Rohm and Haas, and does not consider potential impacts of current market conditions on revenues, expense efficiencies or
asset dispositions (with the exception of the sale of Dow’s Calcium Chloride business).
The following table, which summarizes the pretax impact of certain items recorded by Rohm and Haas prior to the
acquisition, is provided for pro forma comparison purposes.
Certain Items Impacting Rohm and Haas Results
In millions
Impact of Hurricanes Gustav and Ike
Restructuring charges
Transaction and other acquisition costs
Total Rohm and Haas Certain Items
Three months
ended
March 31, 2009
$ (2)
(2)
(80)
$ (84)
In addition, due to the completion of several divestitures (see Note E to the Consolidated Financial Statements), the change
in sales volume from 2010 excluding divestitures is also provided by operating segment, where applicable. Sales excluding
divestitures exclude the sales of the Polypropylene business divested on September 30, 2011, sales of Styron divested on
June 17, 2010, sales of the Powder Coatings business divested on June 1, 2010, and sales of a portion of the acrylic monomer
and specialty latex businesses divested on January 25, 2010.