Dow Chemical 2012 Annual Report Download - page 64

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SEGMENT RESULTS
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. Additional information regarding the Company's operating segments and a reconciliation of
EBITDA to “Income Before Income Taxes” can be found in Note 24 to the Consolidated Financial Statements.
Due to the completion of several divestitures (see Note 5 to the Consolidated Financial Statements), the change in sales
volume from 2011 and 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 Dow Haltermann,
divested during 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.
During September 2012, the Company announced it was eliminating its business division structure and moving to a global
business president structure. This organizational change did not result in a modification to the Company's operating segments in
2012.
ELECTRONIC AND FUNCTIONAL MATERIALS
The Electronic and Functional Materials segment consists of two businesses – Dow Electronic Materials and Functional
Materials – and includes a portion of the Company’s share of the results of Dow Corning Corporation, a joint venture of the
Company. Dow Electronic Materials includes Display Technologies, Growth Technologies, Interconnect Technologies and
Semiconductor Technologies. Functional Materials includes Dow Consumer and Industrial Solutions, Dow Microbial Control
and Dow Wolff Cellulosics.
Electronic and Functional Materials
In millions 2012 2011 2010
Sales $ 4,481 $ 4,599 $ 4,203
Price change from comparative period (2)% 6% —%
Volume change from comparative period (1)% 3% 20%
Equity earnings $ 94 $ 104 $ 106
EBITDA $ 958 $ 1,084 $ 1,052
Certain items impacting EBITDA $ (73) $ — $ (8)
2012 Versus 2011
Electronic and Functional Materials sales were $4,481 million for 2012, down from $4,599 million in 2011. Sales decreased
3 percent from 2011, with price down 2 percent (with more than one-half of the price decline due to currency) and volume
down 1 percent. Price decreased in most geographic areas and across most major business units in response to decreasing raw
material costs. Volume declined as increased demand for chemical mechanical planarization pads and slurries in Asia Pacific
was more than offset by weaker demand for specialty polymers used in home and personal care applications and specialty
cellulosics used in food and pharmaceutical applications, notably in North America. EBITDA for 2012 was $958 million, down
from $1,084 million in 2011. EBITDA decreased from last year as lower selling prices and higher operating costs associated
with planned maintenance turnarounds more than offset lower raw material costs and lower SG&A expenses. EBITDA for 2012
was negatively impacted by $65 million of restructuring charges. The 1Q12 Restructuring program included a $17 million
charge related to the write-off of a capital project. The 4Q12 Restructuring program included a $48 million charge related to
asset write-downs and write-offs and contract cancellation fees. In addition, EBITDA for 2012 included an $8 million charge
related to Dow Corning's restructuring and asset abandonment. See Notes 3 and 8 to the Consolidated Financial Statements for
additional information on these charges.
Dow Electronic Materials sales in 2012 were down 3 percent from 2011, with price down 2 percent and volume down 1
percent. Price decreased in all geographic areas driven by continued competitive pricing pressure, especially in Asia Pacific.
Volume declines in North America and Asia Pacific more than offset improvements in EMEA and Latin America. Volume
declined in Display Technologies primarily due to lower demand for optical filters used in televisions and other displays.
Volume decreased in Interconnect Technologies due to lower demand for printed circuit boards used in personal computers.
Semiconductor foundry utilization rates held steady across the industry in 2012 and higher demand for chemical mechanical
planarization pads and slurries drove volume growth in the Semiconductor Technologies business unit.