Dow Chemical 2013 Annual Report Download - page 75

53
Shelf Registration - U.S.
The Company renewed an automatic shelf registration for an unspecified amount of mixed securities with the SEC on
February 19, 2013. 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. The Company also filed a new prospectus supplement to register an unlimited amount of securities for issuance
under the Company’s U.S. retail medium-term note program (“InterNotes”) on February 19, 2013.
Shelf Registration - Japan
At December 31, 2013, the Company had Japanese yen 50 billion (approximately $475 million) of securities available for
issuance under a shelf registration renewed with the Kanto Local Finance Bureau of the Ministry of Finance of Japan effective
September 8, 2012, which will expire on September 7, 2014. The Company intends to renew this shelf registration in the third
quarter of 2014.
Accounts Receivable Securitization Facilities
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. The Asia Pacific facilities are renewed annually. The Europe facility was renewed in July 2013 for a term that extends
to July 2015. In February 2014, the Company renewed the United States facility for a term that extends to March 2015. See
Note 15 to the Consolidated Financial Statements for further information.
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. As shown in the following table, net debt is
equal to total gross debt minus "Cash and cash equivalents." At December 31, 2013, net debt as a percent of total capitalization
decreased to 30 percent. This decrease was primarily due to a $3 billion reduction in gross debt; a $1.6 billion increase in cash
and cash equivalents; a significant increase in earnings in 2013, which includes the favorable impact of the K-Dow arbitration
award; and favorable adjustments to the Company's defined benefit pension plans as a result of higher discount rates.
Total Debt at December 31
In millions 2013 2012
Notes payable $ 443 $ 396
Long-term debt due within one year 697 672
Long-term debt 16,820 19,919
Gross debt $ 17,960 $ 20,987
Cash and cash equivalents $ 5,940 $ 4,318
Net debt $ 12,020 $ 16,669
Gross debt as a percent of total capitalization 39.0% 48.8%
Net debt as a percent of total capitalization 30.0% 43.1%
See Note 16 to the Consolidated Financial Statements for information related to the Company’s notes payable and long-term
debt activity, including debt retired and issued during the year ended December 31, 2013.
Dow’s public debt instruments and primary, private credit agreements contain, among other provisions, certain customary
restrictive covenant and default provisions. The Company’s most significant debt covenant with regard to its financial position
is the obligation to maintain the ratio of the Company’s consolidated indebtedness to consolidated capitalization at no greater
than 0.65 to 1.00 at any time the aggregate outstanding amount of loans under the Revolving Credit Facility equals or exceeds
$500 million. The ratio of the Company’s consolidated indebtedness to consolidated capitalization as defined in the Revolving
Credit Facility was 0.38 to 1.00 at December 31, 2013. At December 31, 2013, management believes the Company was in
compliance with all of its covenants and default provisions. For information on Dow’s covenants and default provisions, see
Note 16 to the Consolidated Financial Statements.
Management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its
business obligations.