Focus - The Dow Chemical Company

More documents

Recommendations

Info

Consolidated Statements of Stockholders’ Equity (IN MILLIONS) FOR THE YEARS ENDED DECEMBER 31 2002 2001 2000 Common Stock Balance at beginning of year $ 2,453 $2,453 $ 818 3-for-1 stock split – – 1,635 Balance at end of year 2,453 2,453 2,453 Additional Paid-in Capital Balance at beginning of year – – 165 3-for-1 stock split – – (184) Other – – 19 Balance at end of year – – – Unearned ESOP Shares Balance at beginning of year (90) (103) (57) Transfer from temporary equity – – (64) Shares allocated to ESOP participants 29 13 18 Balance at end of year (61) (90) (103) Retained Earnings Balance at beginning of year 11,112 12,675 13,357 Net income (loss) (338) (385) 1,675 3-for-1 stock split – – (1,451) Common stock dividends declared (1,228) (1,162) (906) Other (26) (16) – Balance at end of year 9,520 11,112 12,675 Accumulated Other Comprehensive Income (Loss) Unrealized Gains on Investments at beginning of year 6 325 298 Unrealized gains (losses) (29) (319) 27 Balance at end of year (23) 6 325 Cumulative Translation Adjustments at beginning of year (982) (834) (646) Translation adjustments 333 (148) (188) Balance at end of year (649) (982) (834) Minimum Pension Liability at beginning of year (72) (51) (63) Adjustments (1,307) (21) 12 Balance at end of year (1,379) (72) (51) Accumulated Derivative Loss at beginning of year (22) – – Cumulative transition adjustment – 65 – Net hedging results (23) (45) – Reclassification to earnings (1) (42) – Balance at end of year (46) (22) – Total accumulated other comprehensive loss (2,097) (1,070) (560) Treasury Stock Balance at beginning of year (2,412) (2,625) (2,932) Purchases (6) (5) (4) Issuance to employees and employee plans 229 218 311 Balance at end of year (2,189) (2,412) (2,625) Net Stockholders’ Equity $ 7,626 $9,993 $11,840 See Notes to the Consolidated Financial Statements. > 44 The Dow Chemical Company
Consolidated Statements of Comprehensive Income (IN MILLIONS) FOR THE YEARS ENDED DECEMBER 31 2002 2001 2000 Net Income (Loss) Available for Common Stockholders $ (338) $(385) $1,675 Other Comprehensive Income (Loss), Net of Tax (tax amounts shown below for 2002, 2001, 2000) Unrealized gains (losses) on investments: Unrealized holding gains (losses) during the period (less tax of $(12), $(34), $20) (21) (60) 35 Less: Reclassification adjustments for net amounts included in net income (loss) (less tax of $(5), $(152), $(4)) (8) (259) (8) Cumulative translation adjustments (less tax of $175, $(21), $(33)) 333 (148) (188) Minimum pension liability adjustments (less tax of $(729), $(8), $5) (1,307) (21) 12 Net loss on cash flow hedging derivative instruments (less tax of $(11) for 2002, $(13) for 2001) (24) (22) – Total other comprehensive loss (1,027) (510) (149) Comprehensive Income (Loss) $(1,365) $(895) $1,526 See Notes to the Consolidated Financial Statements. Notes to the Consolidated Financial Statements (dollars in millions, except as noted) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING CHANGES Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements of The Dow Chemical Company and its subsidiaries (“Dow” or the “Company”) include the assets, liabilities, revenues and expenses of all majorityowned subsidiaries over which the Company exercises control. Intercompany transactions and balances are eliminated in consolidation. Investments in nonconsolidated affiliates (20–50 percent owned companies, joint ventures and partnerships, and majorityowned subsidiaries over which the Company does not exercise control) are accounted for on the equity basis. The consolidated financial statements give retroactive effect to the Union Carbide merger, which was completed on February 6, 2001, and accounted for as a pooling of interests. See Note C for additional information. Prior to this annual report, the net results of the Company’s insurance operations were presented on a separate line entitled “Insurance company operations, pretax income” on the income statement. The consolidated financial statements in this annual report reflect a reclassification of these results to “Net sales” and “Cost of sales” for all periods presented. Certain reclassifications of prior years’ amounts have been made to conform to the presentation adopted for 2002. Use of Estimates in Financial Statement Preparation The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The Company’s consolidated financial statements include amounts that are based on management’s best estimates and judgments. Actual results could differ from those estimates. Foreign Currency Translation The local currency has been primarily used as the functional currency throughout the world. Translation gains and losses of those operations that use local currency as the functional currency are included in the consolidated balance sheets as “Accumulated other comprehensive income (loss)” (“AOCI”). Where the U.S. dollar is used as the functional currency, foreign currency gains and losses are reflected in income. Environmental Matters Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. These accruals are adjusted periodically as assessment and remediation efforts progress or as additional technical or legal information becomes available. Accruals for environmental liabilities are included in the consolidated balance sheets as “Other noncurrent obligations” at undiscounted amounts. Accruals for related insurance or other third-party recoveries for environmental liabilities are recorded when it is probable that a recovery will be realized and are included in the consolidated balance sheets as “Noncurrent receivables.” Environmental costs are capitalized if the costs extend the life of the property, increase its capacity, and/or mitigate or prevent contamination from future operations. Costs related to environmental contamination treatment and cleanup are charged to expense. Estimated future incremental operations, maintenance and management costs directly related to remediation are accrued when such costs are probable and estimable. Cash and Cash Equivalents Cash and cash equivalents include time deposits and readily marketable securities with original maturities of three months or less. The Dow Chemical Company 45 >
Page 1 and 2: The Dow Chemical Company 2002 Annua
Page 3 and 4: 2002 Financial Highlights IN MILLIO
Page 5 and 6: • Continued growth in Asia, where
Page 7 and 8: Board of Directors at March 1, 2003
Page 9 and 10: At Dow, we continue to shape, simpl
Page 11 and 12: The key to Dow’s success is being
Page 13 and 14: A steadfast and disciplined approac
Page 15 and 16: Dow is working to conserve water at
Page 17 and 18: Living. Improved daily. Corporate S
Page 19 and 20: Fabricated Products business manufa
Page 21 and 22: Polypropylene business, a major glo
Page 23 and 24: 2002 Financial Report Management’
Page 25 and 26: Management’s Discussion and Analy
Page 43 and 44: Consolidated Statements of Income (
Page 45: Consolidated Statements of Cash Flo
Page 49 and 50: Notes to the Consolidated Financial
Page 75 and 76: Quarterly Statistics IN MILLIONS, E
Page 77 and 78: Eleven-Year Summary of Selected Fin
Page 79 and 80: �Mission To constantly improve wh

Focus - The Dow Chemical Company

Create successful ePaper yourself

Delete template?

Save as template?