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Dow Corning’s Sales and Profits Increase in 2014

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Dow Corning Corp. today announced fourth quarter sales of $1.68 billion, a 5 percent increase compared to the fourth quarter of 2013. Net income decreased 66 percent to $37 million on the quarter. The fourth quarter performance concluded a year in which Dow Corning increased sales and net income by 9 and 36 percent, respectively.

J. Donald Sheets, executive vice president and chief financial officer, Dow Corning Corporation (Pho

J. Donald Sheets, executive vice president and chief financial officer, Dow Corning Corporation (Photo: Business Wire)

Dow Corning’s adjusted net income in 2014 was $522 million, an increase of 72 percent compared to 2013. Adjusted net income for 2014 and 2013, as applicable, excluded the impact of asset charges and restructuring expenses, a reduced implant liability, a foreign tax credit, a derivative contract and gains on long term sales agreements. Additional information about Dow Corning’s financial results:

Fourth Quarter Results

  • Silicone segment sales continued to grow especially in the Americas, Greater China and Europe, and across a variety of market applications, including transportation, construction, electronics, packaging and health care
  • Polysilicon segment performance increased as customers accepted delivery of contracted volumes late in the quarter
Q4 2014 Q4 2013 % Change 2014 2013 % Change
Sales (in billions) $ 1.68 $ 1.59 5 % $ 6.22 $ 5.71 9 %
Net income (in millions) $ 37 $ 110 -66 % $ 513 $ 376 36 %
Adjusted net income* (in millions) $ 205 $ 103 99 % $ 522 $ 304 72 %
*Adjusted net income is a non-GAAP financial measure which excludes certain unusual items. The reconciliation between GAAP and non-GAAP measures is shown in the table following the news release.

Comments from Dow Corning’s Executive Vice President and Chief Financial Officer J. Donald Sheets:

  • “In 2014 Dow Corning demonstrated why we lead the silicon-materials industry, as we returned to a trajectory of sales and profit growth despite operating in an oversupplied industry and a significantly volatile marketplace.”
  • “We grew our Silicones segment sales in 2014 by providing customers not only with quality silicon-based products, but also the most knowledgeable team of experts to help them apply and use our products.”
  • “Dow Corning continues to lead the industry in the development of new formulations and applications for silicon-based technologies. This commitment to long-term growth, as well as our diligence in maintaining and enhancing our cost-leadership has positioned us for continued growth and success.”
  • “Our Polysilicon segment, the Hemlock Semiconductor Group, continued its strong performance in 2014 despite the lack of progress in resolving the U.S. and China trade disputes plaguing the solar industry.”
  • “The fourth quarter decision to permanently close Hemlock Semiconductor’s Clarksville site, while difficult, will ultimately strengthen Dow Corning’s financial performance by eliminating the significant costs associated with maintaining the site.”
  • “Dow Corning’s significant reduction of its implant liability estimate in the fourth quarter was taken based on evidence that the total funding required to fund its breast implant settlement program will be substantially lower than the full funding cap set forth in the program. This revised liability reflects today’s best estimate of Dow Corning’s remaining funding obligations.”

About Dow Corning

Dow Corning (www.dowcorning.com) provides performance-enhancing solutions to serve the diverse needs of more than 25,000 customers worldwide. A global leader in silicones, silicon-based technology and innovation, Dow Corning offers more than 7,000 products and services via the company’s Dow Corning(R) and XIAMETER(R) brands. Dow Corning is equally owned by The Dow Chemical Company and Corning, Incorporated. More than half of Dow Corning’s annual sales are outside the United States.

About Hemlock Semiconductor Group

Hemlock Semiconductor Group (hscpoly.com) is comprised of several joint venture companies owned in majority by Dow Corning Corporation. Hemlock Semiconductor is a leading provider of polycrystalline silicon and other silicon-based products used in the manufacturing of semiconductor devices and solar cells and modules. Hemlock Semiconductor began its operations in 1961.

Dow Corning Corporation
Selected Financial Information
(in millions of U. S. dollars)
(Unaudited)
Consolidated Income Statement Data
Three Months Ended December 31, Twelve Months Ended December 31,
2014 2013 2014 2013
Net Sales $ 1,676.6 $ 1,589.6 $ 6,221.3 $ 5,710.5
Net Income
Attributable to Dow Corning $ 37.2 $ 109.6 $ 512.8 $ 376.3
Adjustment for Asset Charges and Restructuring $ 999.7 $ 1.1 $ 999.7 $ 102.2
Adjustment for Long-Term Sales Agreements $ - $ - $ (17.2 ) $ (134.1 )
Adjustment for Implant Liability $ (844.9 ) $ - $ (844.9 ) $ -
Adjustment for Fair Value of Derivative Contract $ 29.6 $ (7.8 ) $ (29.1 ) $ (40.1 )
Foreign Tax Credit $ (17.0 ) $ - $ (99.0 ) $ -
Adjusted Net Income1 $ 204.6 $ 102.9 $ 522.3 $ 304.3
1Adjusted Net Income is a non-GAAP financial measure which excludes certain unusual items and which reconciles to Net Income as shown.
Consolidated Balance Sheet Data
December 31, 2014 December 31, 2013
Assets
Current Assets $ 4,712.0 $ 3,995.7
Property, Plant and Equipment, Net 5,406.8 7,231.1
Other Assets 1,026.3 1,075.3
$ 11,145.1 $ 12,302.1
Liabilities and Equity
Current Liabilities $ 1,448.2 $ 1,346.0
Other Liabilities 6,070.2 7,177.5
Equity 3,626.7 3,778.6
$ 11,145.1 $ 12,302.1

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