Dow Chemical 2012 Annual Report Download - page 82

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value of the underlying assets and the number of shares owned. The classification of the fund (Level 2 or 3 measurements) is
determined based on the lowest level classification of significant holdings within the fund. For pension or other post retirement
benefit plan assets classified as Level 3, the total fair value is based on significant unobservable inputs including assumptions
where there is little, if any, market activity for the investment. The sensitivity of fair value estimates is immaterial relative to
the assets and liabilities measured at fair value, as well as to the total equity of the Company. See Notes 11 and 17 to the
Consolidated Financial Statements for the Company’s disclosures about fair value measurements.
Portfolio managers and external investment managers regularly review all of the Company’s holdings to determine if any
investments are other-than-temporarily impaired. The analysis includes reviewing the amount of the temporary impairment, as
well as the length of time it has been impaired. In addition, specific guidelines for each instrument type are followed to
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.
Dividends
On December 13, 2012, the Board of Directors declared a quarterly dividend of $0.32 per share, payable December 31, 2012,
to stockholders of record on December 24, 2012. On February 13, 2013, the Board of Directors declared a quarterly dividend of
$0.32 per share, payable April 30, 2013, to stockholders of record on March 28, 2013. 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 101-year period, Dow has increased the amount of the quarterly dividend
49 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 since 1912, due
to uncertainty in the credit markets, unprecedented lower demand for chemical products and the ongoing global recession. The
Company declared dividends of $1.21 per share in 2012, $0.90 per share in 2011 and $0.60 per share in 2010.
On December 13, 2012, 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, 2012, which was paid on January 2, 2013. On
February 13, 2013, the Board of Directors declared a quarterly dividend of $85 million to these shareholders, payable on
April 1, 2013. 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
Dow enters 2013 squarely focused on driving earnings growth, increasing cash flow and rewarding shareholders. The
Company's business plans do not call for material macroeconomic tailwinds. The Company expects global GDP will be
between 2 and 2.5 percent with slight improvement in the United States, continued contraction in Europe and growth in the
emerging geographies - but at a slower pace than in recent years.
The Company will fully leverage our feedstock strength, particularly in Performance Plastics, and further accelerate
growth in our technology-driven Agricultural Sciences segment. The Company has set in motion cost reductions and cash flow
improvements, and is aggressively managing its portfolio - by prioritizing growth programs and driving selective, non-core
divestitures. Collectively these actions demonstrate Dow's firm resolve to control what it can control, and proactively
implement the right strategic decisions to accelerate performance.
Dow has the right catalysts firmly in place. The Company's feedstock advantage, particularly as the ethylene cycle unfolds,
and the commercialization of the technology pipeline, as well as the integration investments in the U.S. Gulf Coast and Sadara
as a whole differentiate Dow, and will continue to propel the Company's strategy to deliver higher earnings growth and
increasingly reward shareholders.