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EXCERPT:

- Dow generates substantial cash flow in fourth quarter despite lower earnings;
- Dow AgroSciences sets full-year sales and EBIT records

Fourth Quarter 2008 Highlights

The Company reported a loss of $1.68 per share; excluding certain items, the loss was $0.62 per share. Earnings in the fourth quarter of 2007 were $0.49 per share; excluding certain items, earnings in the fourth quarter of 2007 were $0.84 per share. (See Supplemental Information at the end of the release for a description of these items.) In addition, earnings for the quarter were reduced by a much higher effective tax rate, which was unfavorably impacted by several items totaling $295 million, equivalent to $0.32 per share.

The Company delivered on its fourth quarter commitments related to generating cash and controlling costs as outlined in October 2008. Management interventions contributed to cash provided by operating activities of $2.2 billion and free cash flow(1) of $1.2 billion in the quarter.

Sales for the fourth quarter were down 23 percent from the same period last year to $10.9 billion. Volume declined 17 percent, and was down in all operating segments and in all geographic areas, reflecting the global economic downturn as well as the de-stocking that occurred through most value chains.

The Company reduced production to match market conditions. This resulted in historically low operating rates, particularly in December which was 44 percent. For the quarter, the operating rate was 64 percent, a rate not seen in more than 25 years.

Price was down 6 percent in the quarter, as a 4 percent increase in the Performance segments was more than offset by a 15 percent decline in the Basics segments. The decline in Basics was principally due to a 23 percent drop in feedstock and energy costs versus the same quarter last year.

(1) Free cash flow is defined as “Cash provided by operating activities” of $2,249 million less “Capital expenditures” of $692 million less “Dividends paid to stockholders” of $389 million.

2008 Full-Year Highlights

Cash provided by operating activities was $4.7 billion in 2008, an improvement of more than $200 million versus 2007, against deteriorating economic conditions.

Despite the sales decline in the fourth quarter, 2008 sales increased 7 percent compared with 2007, setting another record for the Company of $57.5 billion. Price increased 12 percent, while volume was down 5 percent.

Dow AgroSciences reported full-year sales and EBIT(2) records. Sales grew 20 percent to $4.5 billion, reflecting an 8 percent increase in volume and a 12 percent increase in price, and delivering EBIT of $761 million.

Equity earnings declined to $787 million from $1.1 billion in 2007, reflecting the global demand destruction that took place in the fourth quarter of 2008.

Dow reported full-year earnings of $0.62 per share; excluding certain items, earnings for the year were $1.82 per share. Earnings for 2007 were $2.99 per share; excluding certain items, earnings for 2007 were $3.76 per share. (See Supplemental Information at the end of the release for a description of these items.)

FULL RELEASE: http://www.dow.com/financial/reports/08q4earn.htm

EXCERPT:
 

Agricultural Sciences The Agricultural Sciences segment posted record fourth quarter sales of $885 million, 2 percent higher than the same quarter last year. This marked the tenth consecutive quarter that Dow AgroSciences has recorded a sales record versus the comparative period of the prior year. Volume declined 4 percent, and price increased 6 percent. Price was up in all geographic areas except Asia Pacific, while both price and volume increased in North America. Seed sales increased versus the same quarter last year, led by U.S. corn sales and sunflower sales in Latin America. Sales of agricultural chemicals declined due to product shortages and lack of available credit for farmers in some regions. Continuing its strategic growth agenda, Dow AgroSciences acquired Brodbeck Seeds, Südwestsaat GbR and the corn assets of Coodetec in Brazil, bringing the number of acquisitions since May 2007 to nine. New products aminopyralid, penoxsulam, pyroxsulam and spinetoram continued to ramp-up successfully. Fourth quarter EBIT for Agricultural Sciences was $34 million, which included a charge of $17 million for IPR&D related to a recent acquisition and $3 million in restructuring charges. This compares with a loss of $38 million in the same period last year, which included restructuring charges of $77 million.

FULL RELEASE: http://www.dow.com/financial/reports/08q4earn.htm

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