Dow Chemical 2013 Annual Report Download - page 4

2 The Dow Chemical Company
• Westrengthenedouralreadystrongcashposition,
ending2013withcashowfromoperationsof
$7.8billion–arecordevenifwedonotcount
thenearly$2.2billionK-Dowarbitrationaward
wecollectedduringtheyear,whichonitsown
representedamajorachievement.Andwe
deployedthiscashaswestatedwewould–
reducingdebt,investinginorganicgrowth
programsandrewardingshareholders.
• In2013alone,wereducedgrossdebtby$3billion,
achievinga$170milliondeclineininterestexpense
yearoveryear.Todayourkeybalancesheetratios
arewellbelowDow’shistoricaverage.
• Weadvancedkeygrowthinvestments–strategic
projectssuchasthoseontheU.S.GulfCoasttotake
advantageoflow-costfeedstocks,orwithSadara
inSaudiArabia,todoexactlythesame.These
low-costfeedstocksgiveusthebuildingblocksto
addvaluedownstream,withbest-in-classR&D
andapplicationtechnology.
• Weincreasedshareholderremuneration2nearly
30percent,returningmorethan$1.8billioninshare
repurchasesanddividendsdeclaredtoshareholders.
• Finally,andimportantly,wedeliveredthese
accomplishmentswhilemaintainingourhigh
standardsforenvironment,health,safetyand
ethicalbehavior.
Accelerating Our Strategic Focus
Theproactiveportfolioandcapitalstructureactions
wetookin2013representthelatestinaseriesof
ongoingmovesalignedtothestrategyweembarked
uponseveralyearsago.Theseactionsaretheoutcomes
ofan18-monthstrategicreviewthatexploredmore
than30optionsfocusedonacceleratingDow’s
portfoliotransformationtoaddresstheneweconomic
realitiesthatareredeningourworldandgrow
earnings.Ourperseveranceinexecutinguponthis
revitalizedandacceleratedstrategy,eveninthemidst
ofaperpetuallyuncertainenvironment,enabledus
toexit2013withstrengthandmomentum.
Lookingforward,yourBoardandIhavefullcondence
thatDowispursuingastrategywhich,throughmore
focusedandintegratedvaluechainsandbusinessesin
ourportfolio,willcreatetremendousshareholdervalue.
ThissupportwasunderscoredbyourJanuary2014
announcementofa15percentdividendincreaseand
theexpansionofoursharerepurchaseprogramto
$4.5billion,withmorethan$4billionavailableand
allmarkedforexecutionin2014.
Dear Shareholders,
We entered 2013 with a focused and resolute plan
to execute proactive self-help steps to improve
return on capital, grow profitability and generate
cash. We said we would take specific actions across
all aspects of our integrated businesses and value
chains to generate strong financial performance in
an increasingly uncertain and slow-growth world –
and utilize this cash to release more value to you,
our shareholders.
Iampleasedtoreportthatwedidjustthat.Weexecuted
proactively,weinstitutionalizedoperatingdisciplines
and–inwhatremainedavolatilemacroeconomic
environment–wedelivered.Ourresultsreectthe
cumulativebenetofourfocus.Amongthehighlights:
• Adjustedearnings1grewfrom$1.90pershareto$2.48
pershare,up31percentversus2012;adjustedEBITDA1
rose$900milliontoreach$8.4billion;andadjusted
EBITDAmargins1expandednearly150basispoints.
• Ourproactiveactionsacceleratedthroughouttheyear,
exceedingourgoaltodeliver$500millioninEBITDA
fromcostreductionsand$850millionincashproceeds
fromdivestingnon-strategicassetsandbusinesses.
1 See supplemental information located in the Appendix on pages 18 and 19 for a reconciliation of Adjusted Earnings per Share, Adjusted EBITDA
and Adjusted EBITDA margins.
2 Declared dividends equals “Common stock dividends declared per share of common stock” times “Share count – diluted, excluding preferred stock
conversion to common shares” as of December 31, 2013. Share repurchases equals the current period change in “treasury stock at cost.”
Dow Executive Committee pictured left to right:
William H. Weideman, Executive Vice President and Chief Financial Officer;
Howard I. Ungerleider, Executive Vice President; Andrew N. Liveris, President,
Chief Executive Officer and Chairman of the Board; Joe E. Harlan, Executive
Vice President; James R. Fitterling, Executive Vice President