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DOW ANNOUNCES EARNINGS OF 54 CENTS PER SHARE AFTER MARION MERRELL DOW SPECIAL CHARGE

 MIDLAND, Mich., July 22 /PRNewswire/ -- The Dow Chemical Company (NYSE: DOW) today announced lower earnings in the second quarter of 1993 compared to the same period a year ago despite stronger earnings before a special charge and gain from the sale of an investment. The decline in earnings reflected a pretax special charge of $180 million taken by Marion Merrell Dow, a Dow subsidiary (more than 71 percent owned), to cover expenses related to realignment of the company and other cost- management efforts to position the business for long-term success.
 Sales for the second quarter were $4.8 billion, down 1 percent from $4.9 billion a year ago as the result of flat volume and a price decline of 1 percent. Operating income and earnings per share for 1992 have been restated to reflect accounting changes that year. In the second quarter of 1993, operating income after the special charge was $388 million, down 28 percent from $541 million a year ago. Earnings per share of 54 cents were down 24 percent from 71 cents per share for the second quarter of 1992. Dow's after tax portion of the Marion Merrell Dow special charge reduced earnings by 30 cents per share while the sale of some of the Magma Power Company stock held by Dow raised earnings by 9 cents per share. The result was earnings of 75 cents per share or $205 million before the special charge and gain from the sale of the Magma stock.
 "We are encouraged to see our organization responding to today's economic and competitive environment with lower expenses and interest charges totaling more than $100 million in the second quarter," said Enrique C. Falla, Dow executive vice president. "This effort, combined with a reduction in controllable manufacturing costs, helped us achieve higher earnings from operations in the second quarter compared to the same period a year ago."
 Chemicals and Performance Products had second quarter sales of $1.1 billion, unchanged versus a year ago, while operating income increased 29 percent to $110 million. In Chemicals and Metals, operating income improved due to lower costs, offsetting falling prices for caustic soda. Performance Products had higher sales and operating income in the second quarter resulting from strong demand.
 Plastics had sales of $1.7 billion, down 1 percent for the second quarter compared to the same period in 1992. Operating income increased 12 percent, reflecting productivity improvements, but weak industry fundamentals continued to impact prices particularly for polyethylene in the U.S.
 Hydrocarbons and Energy had sales of $454 million in the second quarter, up 19 percent compared to the same period a year ago. Operating income was also higher with a gain of $5 million in the second quarter of 1993 versus an operating loss of $48 million a year ago related to maintenance turnarounds.
 Consumer Specialties experienced 5 percent lower sales and a 57 percent decline in operating income due to the Marion Merrell Dow special charge. Without the charge, operating income would have declined 9 percent. Second quarter of 1993 sales were $1.6 billion and operating income was $164 million. Consumer Specialties benefited from DowElanco's most profitable quarter and first half since the formation of the agricultural products joint venture in 1989.
 "Business conditions in Europe remain very challenging and the health of other economies is uncertain," Falla said. "While we are confident that we will continue to achieve productivity improvements, we remain cautious about the strength of the business for the rest of the year. We expect 1993 to be a gradual transition to growth for Dow."
 THE DOW CHEMICAL COMPANY AND SUBSIDIARIES
 Consolidated Statements of Income
 (Unaudited)
 In millions, except for share amounts
 Three Months Ended
 June 30, 1993 June 30, 1992
 Net sales $4,822 $4,859
 Operating costs and expenses
 Cost of sales 3,176 3,181
 Insurance and finance company
 operations, pretax income (19) (21)
 Research and development expenses 319 326
 Promotion and advertising expenses 181 195
 Selling and administrative expenses 560 601
 Amortization of intangibles 37 36
 Special charge (Note D) 180 ---
 Total operating costs and expenses 4,434 4,318
 Operating income 388 541
 Other income (expense)
 Equity in earnings of 20-50 percent
 owned companies 26 15
 Interest income 30 25
 Capitalized interest 17 18
 Interest expense (158) (199)
 Gain (loss) on foreign currency
 transactions 8 9
 Gain on sales of investments (Note C) 52 ---
 Sundry income - net 1 25
 Total other income (expense) (24) (107)
 Income before provision for taxes on
 income and minority interests 364 434
 Provision for taxes on income 142 146
 Minority interests' share in income 73 95
 Net income before cumulative effect
 of accounting change 149 193
 Cumulative effect of accounting
 change, net of income taxes (Note B) --- ---
 Net income (loss) 149 193
 Preferred stock dividends 1 1
 Net income (loss) available for
 common stockholders $148 $192
 Average common shares outstanding 273.6 272.1
 Earnings (loss) per common share:
 Before cumulative effect of
 accounting change $0.54 $0.71
 Cumulative effect of accounting change --- ---
 Net earnings (loss) per common share $0.54 $0.71
 Cash dividends declared per common
 share $0.65 $0.65
 Depreciation $332 $324
 Capital expenditures $328 $394
 Six Months Ended
 June 30, 1993 June 30, 1992
 Net sales $9,185 $9,498
 Operating costs and expenses
 Cost of sales 6,106 6,233
 Insurance and finance company
 operations, pretax income (62) (42)
 Research and development expenses 622 638
 Promotion and advertising expenses 350 387
 Selling and administrative expenses 1,139 1,165
 Amortization of intangibles 74 72
 Special charge (Note D) 180 ---
 Total operating costs and expenses 8,409 8,453
 Operating income 776 1,045
 Other income (expense)
 Equity in earnings of 20-50 percent
 owned companies 51 40
 Interest income 77 49
 Capitalized interest 33 37
 Interest expense (334) (383)
 Gain (loss) on foreign currency
 transactions 1 (6)
 Gain on sales of investments (Note C) 502 ---
 Sundry income - net 9 33
 Total other income (expense) 339 (230)
 Income before provision for taxes on
 income and minority interests 1,115 815
 Provision for taxes on income 435 270
 Minority interests' share in income 129 174
 Net income before cumulative effect
 of accounting change 551 371
 Cumulative effect of accounting
 change, net of income taxes (Note B) --- (765)
 Net income (loss) 551 (394)
 Preferred stock dividends 3 3
 Net income (loss) available for
 common stockholders $548 ($397)
 Average common shares outstanding 273.1 271.3
 Earnings (loss) per common share:
 Before cumulative effect of
 accounting change $2.01 $1.36
 Cumulative effect of accounting change --- ($2.82)
 Net earnings (loss) per common share $2.01 ($1.46)
 Cash dividends declared per common
 share $1.30 $1.30
 Depreciation $652 $646
 Capital expenditures $604 $679
 Notes to Financial Statements
 Note A: The unaudited interim financial statements reflect all adjustments (consisting of normal recurring accruals) which, in the opinion of management, are considered necessary for a fair presentation of the results for the period covered. These statements should be read in conjunction with the financial statements and notes thereto included in the company's annual report for the year ended Dec. 31, 1992.
 Note B: The company adopted Financial Accounting Standards Board Statement Numbers 106 ("Employers' Accounting for Postretirement Benefits Other than Pensions") and 109 ("Accounting for Income Taxes") effective Jan. 1, 1992. Earnings for the first three quarters of 1992 have been restated as a result of these accounting changes. The cumulative effect of the accounting change for the adoption of FAS 106 was a charge against 1992 net income of $994 million. The cumulative effect of the accounting change for the adoption of FAS 109 was a credit to 1992 net income of $229 million.
 Note C: In January 1993, the company sold its 50 percent holding in the Dowell Schlumberger group of companies to Schlumberger Limited. The decision to sell the 50 percent equity was due to Dowell Schlumberger's business becoming less chemistry intensive and thus less dependent on Dow's technology and participation. The sale generated a pretax gain of $450 million.
 In June 1993, the company sold 3.6 million shares of Magma Power Company. As a result of the sale of these shares, the company's interest in Magma Power was reduced from about 34 percent to about 18 percent. The sale generated a pretax gain of $52 million.
 Note D: A special pretax charge of $180 million was recorded in the second quarter of 1993 by Marion Merrell Dow Inc. The special charge reflects Marion Merrell Dow's plans to reduce its work force in line with current business conditions and redesign its U.S. business organization. The company holds an interest in Marion Merrell Dow of more than 71 percent.
 -0- 7/22/93 R
 /CONTACT: Doug Draper of The Dow Chemical Company, 517-636-2876/
 (DOW)


CO: The Dow Chemical Company ST: Michigan IN: CHM SU: ERN

KE-JG -- DE002R -- 4555 07/22/93 12:41 EDT
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