Dow Chemical 2012 Annual Report Download - page 78

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As shown in the following table, net debt is equal to total gross debt minus “Cash and cash equivalents” and "Marketable
securities and interest-bearing deposits." As Dow continues to strengthen its balance sheet and increase financial flexibility,
management is principally focused on net debt, as Dow believes this is the best measure of the Company’s financial leverage.
At December 31, 2012, net debt as a percent of total capitalization had increased to 43.1 percent primarily due to unfavorable
changes in total equity related to the Company's defined benefit pension plans. Total equity was also negatively impacted by the
Company's restructuring programs and 34 percent increase in dividends declared in 2012.
Total Debt at December 31
In millions 2012 2011
Notes payable $ 396 $ 541
Long-term debt due within one year 672 2,749
Long-term debt 19,919 18,310
Gross debt $ 20,987 $ 21,600
Cash and cash equivalents $ 4,318 $ 5,444
Marketable securities and interest-bearing deposits — 2
Net debt $ 16,669 $ 16,154
Gross debt as a percent of total capitalization 48.8% 48.0%
Net debt as a percent of total capitalization 43.1% 40.8%
Financing Activities
As part of its ongoing financing activities, Dow has the ability to issue promissory notes under its U.S. and Euromarket
commercial paper programs. At December 31, 2012, the Company had no commercial paper outstanding. Through January
2013, the Company maintained access to the commercial paper market at competitive rates.
In the event Dow has short-term liquidity needs and is unable to issue commercial paper under these programs for any
reason, Dow has the ability to access liquidity through its committed and available $5 billion Five Year Competitive Advance
and Revolving Credit Facility Agreement dated October 18, 2011 (the “Revolving Credit Facility”) with various U.S. and
foreign banks. The Revolving Credit Facility has a maturity date in October 2016 and provides for interest at a LIBOR-plus
rate or Base Rate as defined in the agreement. The Revolving Credit Facility replaces the previous $3 billion facility dated June
4, 2010. At December 31, 2012, the full $5 billion Revolving Credit Facility was available to the Company.
On October 10, 2012, the Company entered into a $170 million Bilateral Revolving Credit Facility Agreement ("Bilateral
Revolving Credit Facility"). The Bilateral Revolving Credit Facility, which is in addition to the existing Revolving Credit
Facility, has a maturity date in October 2016 and provides for interest at a LIBOR-plus rate or Base Rate as defined in the
agreement. At December 31, 2012, the full $170 million Bilateral Revolving Credit Facility was available to the Company.
The Company has access to committed accounts receivable securitization facilities in the United States, Europe and Asia
Pacific, from which amounts available for funding are based upon available and eligible accounts receivable within each of the
facilities. These facilities are renewed annually. See Note 15 to the Consolidated Financial Statements for further information.
As a well-known seasoned issuer, the Company filed an automatic shelf registration for an unspecified amount of mixed
securities with the SEC on February 19, 2010. Under this shelf registration, the Company may offer common stock, preferred
stock, depositary shares, debt securities, warrants, stock purchase contracts and stock purchase units with pricing and
availability dependent on market conditions; and, on February 19, 2010, registered an unlimited amount of securities for
issuance under the Company’s U.S. retail medium-term note program ("InterNotes"). The shelf registration expires on February
19, 2013. The Company expects to renew this shelf registration on or about February 19, 2013. A new prospectus supplement
for the InterNotes program under this shelf registration is also expected to be filed on or about February 19, 2013.