Financial Express (Holdings) Limited (“we”, “our”, “us” and derivatives) are committed to protecting and respecting your privacy. This Privacy Policy, together with our Terms of Use, sets out the basis on which any personal data that we collect from you, or that you provide to us, will be processed by us relating to your use of any of the below websites (“sites”).

  • Investegate.co.uk
  • Trustnetoffshore.com
  • Trustnetmiddleeast.com
  • FETransmission.com
  • Trustnet.hk
  • FEAnalytics.com

For the purposes of the Data Protection Act 1998, the data controller is Trustnet Limited of 2nd Floor, Golden House, 30 Great Pulteney Street, London, W1F 9NN. Our nominated representative for the purpose of this Act is Kirsty Witter.

WHAT INFORMATION DO WE COLLECT ABOUT YOU?

We collect information about you when you register with us or use any of our websites / services. Part of the registration process may include entering personal details & details of your investments.

We may collect information about your computer, including where available your operating system, browser version, domain name and IP address and details of the website that you came from, in order to improve this site.

You confirm that all information you supply is accurate.

COOKIES

In order to provide personalised services to and analyse site traffic, we may use a cookie file which is stored on your browser or the hard drive of your computer. Some of the cookies we use are essential for the sites to operate and may be used to deliver you different content, depending on the type of investor you are.

You can block cookies by activating the setting on your browser which allows you to refuse the setting of all or some cookies. However, if you use your browser settings to block all cookies (including essential cookies) you may not be able to access all or part of our sites. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies as soon as you visit our sites.

HOW WE USE INFORMATION

We store and use information you provide as follows:

  • to present content effectively;
  • to provide you with information, products or services that you request from us or which may interest you, tailored to your specific interests, where you have consented to be contacted for such purposes;
  • to carry out our obligations arising from any contracts between you and us;
  • to enable you to participate in interactive features of our service, when you choose to do so;
  • to notify you about changes to our service;
  • to improve our content by tracking group information that describes the habits, usage, patterns and demographics of our customers.

We may also send you emails to provide information and keep you up to date with developments on our sites. It is our policy to have instructions on how to unsubscribe so that you will not receive any future e-mails. You can change your e-mail address at any time.

In order to provide support on the usage of our tools, our support team need access to all information provided in relation to the tool.

We will not disclose your name, email address or postal address or any data that could identify you to any third party without first receiving your permission.

However, you agree that we may disclose to any regulatory authority to which we are subject and to any investment exchange on which we may deal or to its related clearing house (or to investigators, inspectors or agents appointed by them), or to any person empowered to require such information by or under any legal enactment, any information they may request or require relating to you, or if relevant, any of your clients.

You agree that we may pass on information obtained under Money Laundering legislation as we consider necessary to comply with reporting requirements under such legislation.

ACCESS TO YOUR INFORMATION AND CORRECTION

We want to ensure that the personal information we hold about you is accurate and up to date. You may ask us to correct or remove information that is inaccurate.

You have the right under data protection legislation to access information held about you. If you wish to receive a copy of any personal information we hold, please write to us at 3rd Floor, Hollywood House, Church Street East, Woking, GU21 6HJ. Any access request may be subject to a fee of £10 to meet our costs in providing you with details of the information we hold about you.

WHERE WE STORE YOUR PERSONAL DATA

The data that we collect from you may be transferred to, and stored at, a destination outside the European Economic Area (“EEA”). It may be processed by staff operating outside the EEA who work for us or for one of our suppliers. Such staff may be engaged in, amongst other things, the provision of support services. By submitting your personal data, you agree to this transfer, storing and processing. We will take all steps reasonably necessary, including the use of encryption, to ensure that your data is treated securely and in accordance with this privacy policy.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our sites; any transmission is at your own risk. You will not hold us responsible for any breach of security unless we have been negligent or in wilful default.

CHANGES TO OUR PRIVACY POLICY

Any changes we make to our privacy policy in the future will be posted on this page and, where appropriate, notified to you by e-mail.

OTHER WEBSITES

Our sites contain links to other websites. If you follow a link to any of these websites, please note that these websites have their own privacy policies and that we do not accept any responsibility or liability for these policies. Please check these policies before you submit any personal data to these websites.

CONTACT

If you want more information or have any questions or comments relating to our privacy policy please email publishing@financialexpress.net in the first instance.

 Information  X 
Enter a valid email address

Dow Chemical Co (DOW)

  Print      Mail a friend

Friday 26 January, 2007

Dow Chemical Co

Final Results Dow Reports Fourth Quarter Results

FOR MORE INFORMATION:

Media Contact             Analyst Contact
Chris Huntley             Jeff Tate
The Dow Chemical Company  The Dow Chemical Company
2030 Dow Center           2030 Dow Center
Midland, MI 48674         Midland, MI  48674
+1 989-636-2876           +1 989-636-1375

January 25, 2007
                       Dow Reports Fourth Quarter Results
                 Record Fourth Quarter Sales and Strong Earnings
               Second Highest Annual Earnings in Company's History


                        Fourth Quarter of 2006 Highlights
·    Sales set a new fourth quarter record for the Company, rising 3 percent
 from the same period last year to $12.2 billion.
·    Earnings were $1.00 per share, compared with $1.12 per share in the same
period last year.
·    Excluding certain items, earnings for the fourth quarter were down slightly
year over year, from $1.02 per share in 2005 to $0.98 per share in 2006 (see
supplemental table at the end of the release for a description of these items).
·    The Company further reduced debt during the fourth quarter of 2006,
 lowering the Company's debt to capital ratio to 34 percent - five percentage
 points lower than at the end of 2005.

                                 2006 Highlights
·    2006 sales increased by 6 percent compared with 2005, setting a new record
 for the Company of $49.1 billion.
·    Dow reported earnings for 2006 of $3.82 per share, the Company's second
highest earnings on record. Earnings in 2005 were $4.62 per share.
·    Excluding certain items, earnings in 2006 were $4.25 per share, marginally
lower than $4.37 per share in 2005 (see supplemental table at the end of the
release for a description of these items).

                                     Comment
Andrew N. Liveris, Dow's chairman and chief executive officer, stated:
"This was another very strong quarter for Dow, ending a tremendous year for the
Company … our second highest year for earnings and a year that demonstrated the
true value of our strategy to drive earnings growth and consistency. The
diversity we have created across several different dimensions - geographic
regions, businesses, end-use markets and technologies, as well as our stream of
equity earnings - overcame the ups and downs of a volatile year and brought
significant benefits to the Company in 2006."

                             3 Months Ended      12 Months Ended
                                    Dec. 31              Dec. 31
   (In millions, except      2006      2005      2006       2005
 for per share amounts)
              Net Sales   $12,236   $11,917   $49,124    $46,307
             Net Income      $975    $1,096    $3,724     $4,515
    Earnings per Common     $1.00     $1.12     $3.82      $4.62
                  Share


Review of Fourth Quarter Results

The Dow Chemical Company (NYSE: DOW) reported sales of $12.2 billion for the
fourth quarter of 2006, 3 percent higher than in the same period last year, and
a new fourth quarter record.

Year over year, volume was up 2 percent, as solid growth in the Performance
segments and in Basic Plastics more than offset declines in Basic Chemicals and
Hydrocarbons and Energy. Strong demand outside North America, most notably in
Asia Pacific, more than offset continued weakness in both Canada and the United
States. Price edged 1 percent higher, reflecting healthy gains across most of
the Company's Performance businesses, dampened by negative price momentum in
Basic Plastics and Basic Chemicals.

Net income for the quarter was $975 million, 11 percent lower than a year ago,
while earnings per share were $1.00, down from $1.12 in the same period last
year. Excluding certain items in both periods, earnings per share were down
slightly year over year, from $1.02 per share in 2005 to $0.98 per share in 2006
(see supplemental table at the end of the release for a description of these
items).

After 17 consecutive quarters of year-over-year increases, feedstock and energy
costs declined slightly in the fourth quarter of 2006, down 6 percent from the
same period in 2005, supporting margin recovery. Equity earnings were again
strong, contributing $242 million in the quarter, with significant increases
from Dow Corning, MEGlobal, OPTIMAL and Siam Polyethylene more than offsetting
declines from Petromont and Equipolymers and the absence of earnings from UOP
LLC, which was sold in the fourth quarter of 2005.

During the quarter, the Company continued to focus on financial discipline. Debt
was reduced by more than $650 million, bringing Dow's debt to capital ratio to
34 percent by year-end 2006, which is five percentage points lower than the 39
percent reported at the end of 2005. Capital spending was $1.78 billion, inside
the Company's full year target of $1.8 billion, and 7 percent below depreciation
of $1.9 billion. Selling, Administrative and Research and Development expenses
rose compared with the same quarter last year, reflecting a disciplined
investment strategy focused on building markets, expanding product offerings and
establishing brands in several of Dow's high-value, market-facing businesses and
in key geographies.

"This was another very strong quarter for Dow, ending a tremendous year for the
Company …   our second highest year for earnings and a year that demonstrated
the true value of our strategy to drive earnings growth and consistency. The
diversity we have created across several different dimensions - geographic
regions, businesses, end-use markets and technologies, as well as our stream of
equity earnings - overcame the ups and downs of a volatile year and brought
significant benefits to the Company in 2006," said Andrew N. Liveris, Dow's
chairman and chief executive officer.

"As we predicted, in the fourth quarter we saw strong results from Performance
Chemicals and Performance Plastics. The benefits of our geographic balance were
also apparent, with strength in Asia Pacific, Europe and Latin America
offsetting a slowdown in the North American economies.  And results for the
quarter again underscore the value of our investment in joint ventures," he
said.

Performance Plastics

In the Performance Plastics segment, fourth quarter sales of $3.55 billion set a
new quarterly record, up 11 percent from the same period in 2005. Price rose
8 percent and volume increased 3 percent, with strong gains in every geographic
region except North America, where the housing and automotive sectors showed
particular weakness. Dow Epoxy set another quarterly sales record, driven by
strong demand for functional coatings as product differentiation enabled the
business to maintain strong customer support in higher value applications. The
business saw positive price momentum and solid demand growth across all
geographic regions, with double-digit volume increases in every region, except
North America. The Specialty Plastics and Elastomers business also reported
stronger pricing and volume growth, with the Wire and Cable business seeing
healthy demand from the high voltage power distribution industries in Europe and
Asia Pacific, and fiber optic applications. Equity earnings for the Performance
Plastics segment fell in the fourth quarter compared with the same period last
year, largely reflecting the impact of the sale of Union Carbide's interest in
UOP in the fourth quarter of 2005. Fourth quarter EBIT(1) for the Performance
Plastics segment was $347 million, including a charge of $85 million related to
a contingent liability for a fine imposed by the European Commission associated
with synthetic rubber industry matters. EBIT for the fourth quarter of 2005 was
$960 million, including a net gain of $637 million related to the sale of UOP,
partly offset by restructuring charges totaling $28 million.

Performance Chemicals

Sales in Performance Chemicals rose to $2.00 billion for the fourth quarter of
2006, an increase of 8 percent compared with $1.85 billion posted in the same
period last year. Price was up 3 percent while volume increased 5 percent, with
solid volume gains across all geographic regions and particular strength in both
Asia Pacific and Latin America. Designed Polymers reported price gains and
double-digit volume improvement, reflecting recent growth investments in this
business, including the acquisition of Zhejiang Omex Environmental Engineering
last July and a new facility for the production of FILMTEC™ membranes in
Minneapolis, Minnesota, U.S.A. The Specialty Chemicals business also reported
healthy volume gains in all geographic regions, as tight industry supply
conditions and strong demand for gas treating applications in the Middle East
more than offset sliding demand for aircraft de-icing fluids, the consequence of
a mild winter in the northern hemisphere. Equity earnings in the Performance
Chemicals segment rose significantly compared with the same quarter in 2005,
bolstered by a record fourth quarter at Dow Corning and a stronger contribution
from the specialty chemicals business of OPTIMAL. Performance Chemicals reported
EBIT of $293 million for the fourth quarter, which included a restructuring
charge of $1 million. In 2005, fourth quarter EBIT was $227 million, including
restructuring charges totaling $14 million.

Agricultural Sciences

The Agricultural Sciences segment posted record fourth quarter sales of
$814 million, 12 percent higher than the same period in 2005. This improvement
was driven entirely by higher volume, with all geographic regions reporting
year-over-year gains, and particular strength in Latin America and in Europe.
New product launches and robust performance in the Plant Genetics and
Biotechnology business, coupled with strong demand from the corn and sugar cane
sectors in Brazil, bolstered growth in Latin America. Growth in Europe was
primarily driven by demand for insecticides and by increased demand for
herbicides for oil seed rape applications. Sales of spinosad insecticide
products were particularly strong compared with the same quarter in 2005,
reflecting recent registrations for new crops in several geographic regions. But
despite these positives, fourth quarter EBIT for Agricultural Sciences fell from
$74 million in 2005 to $38 million in 2006, principally the result of higher raw
material costs and operating expenses, extremely competitive industry conditions
in Brazil, and a change in product mix. EBIT in the fourth quarter 2005 included
restructuring charges totaling $9 million.

Basic Plastics

Basic Plastics sales rose 1 percent in the fourth quarter, from $2.92 billion in
2005 to $2.94 billion in 2006.  Volume increased 4 percent, with modest growth
in Europe and double-digit improvements in both Latin American and Asia Pacific
more than offsetting some softness in North America. Price fell 3 percent,
despite strong improvements in Europe and Asia Pacific, reflecting a marked
decline in North America. This was particularly evident in the Polyethylene
business, which reported increased demand in every geographic region, but saw
North American prices decline by around 25 percent from the same period last
year. Polyethylene price rose significantly year over year in both Europe and
Asia Pacific, and was up slightly in Latin America. Despite reporting price
improvements for Polystyrene in every geographic region compared with the same
period last year, the overall double-digit increase was not sufficient to keep
pace with the escalating cost of benzene, which continues to present a
significant challenge for the business.  Equity earnings in the fourth quarter
fell from the same period in 2005, as a stronger contribution from the Company's
polyethylene joint venture with Siam Cement largely offset a drop in earnings
from Petromont. Fourth quarter EBIT for the Basic Plastics segment was
$461 million. This was down from $624 million in the same period last year,
which included a restructuring charge of $12 million.

Basic Chemicals

Fourth quarter sales in the Basic Chemicals segment declined 14 percent in 2006
compared with a year ago, from $1.53 billion to $1.32 billion. Price fell
8 percent, while volume declined 6 percent, reflecting lower demand across all
geographic regions. Much of this reduction was attributed to the Chlor-Vinyl
business, reflecting slower demand from the PVC industry in North America as
fabricators drew down inventory in anticipation of lower prices. In Europe,
volume was hit by an unplanned shutdown at the Schkopau plant in Germany. The
plant is now back on stream. Caustic soda volume for the quarter increased
slightly compared with the same period in 2005, with healthy demand from the
alumina industry more than offsetting continued weakness in pulp and paper.
Equity earnings in the Basic Chemicals segment increased markedly in the fourth
quarter of 2006 compared with the same period a year ago, reflecting significant
improvements in the earnings from MEGlobal, and the ethylene glycol businesses of EQUATE and
OPTIMAL.  The segment reported EBIT for the fourth quarter of $194 million,
including restructuring charges of $19 million.  This compares with $268 million
in the fourth quarter 2005, which included a $3 million restructuring charge.

Review of Results for 2006

Dow reported record annual sales of $49.1 billion in 2006, 6 percent higher than
last year's record of $46.3 billion.  Price rose 5 percent, with increases in
every operating segment except Agricultural Sciences, and in all geographic
regions. Volume edged up 1 percent, with particular strength across the
Performance portfolio and in Asia Pacific, which rose 7 percent and 10 percent
respectively.

Net income for the year was $3.7 billion, which included certain items with a
net unfavorable impact of $417 million. This compares with net income for 2005
of $4.5 billion, which included a net favorable impact of $242 million from
certain items during that year. Excluding these items in both periods,
earnings per share were $4.25 in 2006, down slightly from $4.37 in 2005 (see
supplemental table at the end of the release for a description of certain
items).

Commenting on the Company's outlook, Liveris said: "The global economy remains
strong and, as we begin 2007, feedstock and energy costs are trending lower …
creating a positive macroeconomic backdrop that should help ensure healthy
demand for our products and generate solid results through the year ahead. The
strength and resilience of our portfolio will be particularly evident in our
Performance segments, which now have revenues totaling more than $25 billion.

"Our focus on financial discipline will continue as we invest for long-term
growth, delivering innovative products and services to our customers and greater
value to our shareholders. As we have been saying for some time, we believe that
2007 will be another very good year for Dow, and that our transformational
strategy will continue to create an earnings ridge for some time to come."

(1) Earnings before interest, income taxes and minority interests ("EBIT"). A
 reconciliation of EBIT to "Net Income Available for Common Stockholders" is
 provided following the Operating Segments table.
R TM Trademark of The Dow Chemical Company

·    Dow will host a live Webcast of its fourth quarter earnings conference call
     with investors to discuss its results, business outlook and other matters today
     at 10:00 a.m. EDT on www.dow.com.

About Dow

Dow is a diversified chemical company that harnesses the power of innovation,
science and technology to constantly improve what is essential to human progress.
The Company offers a broad range of products and services to customers in more
than 175 countries, helping them to provide everything from fresh water, food and
pharmaceuticals to paints, packaging and personal care products. Built on a
commitment to its principles of sustainability, Dow has annual sales of
$49 billion and employs 43,000 people worldwide. References to "Dow" or the
"Company" mean The Dow Chemical Company and its consolidated subsidiaries unless
otherwise expressly noted. More information about Dow can be found at
www.dow.com.

Use of non-GAAP measures: Dow's management believes that measures of income
excluding certain items ("non-GAAP" information) provide relevant and meaningful
information to investors about the ongoing operating results of the Company.
Such measurements are not recognized in accordance with accounting principles
generally accepted in the United States of America ("GAAP") and should not be
viewed as an alternative to GAAP measures of performance. Reconciliations of non-
GAAP measures to GAAP measures are provided in the Supplemental Information
tables.

Note:  The forward-looking statements contained in this document involve risks
and uncertainties that may affect the Company's operations, markets, products,
services, prices and other factors as discussed in filings with the Securities
and Exchange Commission. These risks and uncertainties include, but are not
limited to, economic, competitive, legal, governmental and technological
factors. Accordingly, there is no assurance that the Company's expectations will
be realized. The Company assumes no obligation to provide revisions to any
forward-looking statements should circumstances change, except as otherwise
required by securities and other applicable laws.
Supplemental Information

Description of Certain Items Affecting Results and
Reconciliation of Earnings Per Share ("EPS")

Fourth Quarters of 2006 and 2005
Earnings in the fourth quarter of 2006 were favorably impacted by a reduction in
Union Carbide's asbestos liability of $177 million (shown as "Asbestos-related
credit" and reflected in Unallocated and Other). Earnings in the fourth quarter
of 2006 were unfavorably impacted by the recognition of a contingent liability
of $85 million for a fine imposed by the European Commission related to
synthetic rubber industry matters (included in "Sundry income - net" and
reflected in Performance Plastics), and a pretax adjustment of $12 million to
the third quarter 2006 "Restructuring charges" described below. The adjustment
included a charge of $1 million against Performance Chemicals, a charge of $19
million against Basic Chemicals, and a credit of $8 million reflected in
Unallocated and Other.

In the fourth quarter of 2005, earnings were favorably impacted by a pretax gain
of $637 million on the sale of Union Carbide's 50 percent interest in UOP LLC
(reflected in "Sundry income - net"). This gain was partially offset by pretax
charges totaling $114 million for various restructuring activities. Earnings in
the fourth quarter 2005 were further reduced by a cash donation of $100 million
to The Dow Chemical Company Foundation (reflected in "Sundry income - net"); a
charge to the "Provision for income taxes" of $137 million related to an
unfavorable tax ruling; and an after-tax charge of $20 million related to asset
retirement obligations required under FIN 47.

A table showing the impact of these items by operating segment is included with
the Operating Segments tables.

Certain Items           Pretax        Impact on     Impact on
Affecting Results     Impact (1)     Net Income      EPS (3)
                                         (2)
                     Three Months       Three         Three
                         Ended         Months        Months
                                        Ended         Ended
In millions, except  Dec.    Dec.    Dec.  Dec.    Dec.   Dec.
per share amounts    31,     31,     31,   31,     31,    31,
                     2006    2005    2006  2005    2006   2005
Restructuring        $(12)  $(114)  $  (7) $(77)  $(0.01) $(0.08)
charges
Asbestos-related      177     -       112    -      0.12    -
credit
Contingent liability (85)     -       (84)   -     (0.09)   -
related to EC fine
Gain on sale of UOP   -       637      -    402      -      0.41
LLC
Cash donation for     -      (100)     -   (65)      -     (0.07)
aid to education and
community
development
Unfavorable tax       -        -       -  (137)      -     (0.14)
ruling
Cumulative effect of  -        -       -   (20)      -     (0.02)
change in accounting
principle
Total             $  80   $  423     $21  $103    $0.02    $0.10


Reconciliation of                                     Three
Earnings Per Share                                   Months
                                                      Ended
                                                   Dec.  Dec.
                                                   31,   31,
                                                   2006  2005
Earnings per share excluding                       $     $
certain items                                      0.98  1.02
Certain    items   affecting                       0.02  0.10
earnings per share
Reported earnings per                              $     $
share                                              1.00  1.12
(1)  Impact on "Income before Income Taxes and Minority Interests"
(2)  Impact on "Net Income Available for Common Stockholders"
(3)  Impact on "Earnings per common share - diluted"

Years ended December 31, 2006 and 2005
In addition to the items described above for the fourth quarter of 2006,
earnings for 2006 included pretax restructuring charges totaling $579 million in
the third quarter associated with plans to shut down a number of assets around
the world as part of the Company's drive to improve the competitiveness of its
global operations. The charges included asset write-downs and write-offs of
$327 million, costs associated with exit or disposal activities of $171 million
and severance costs of $81 million. The impact of these charges is shown as
"Restructuring charges" and is reflected in the results of various segments.

In addition to the items described above for the fourth quarter of 2005,
earnings for 2005 were favorably impacted by a pretax gain of $70 million
related to the sale of a 2.5 percent interest in the EQUATE joint venture
(included in "Sundry income - net"). Earnings for 2005 were also favorably
impacted by a $113 million credit to the "Provision for income taxes" related to
the repatriation of foreign earnings in 2005 under the American Jobs Creation
Act ("AJCA"). Earnings for 2005 were negatively impacted by a loss of $31
million associated with the early extinguishment of debt (included in "Sundry
income - net").

A table showing the impact of these items by operating segment is included with
the Operating Segments tables.

Certain Items                Pretax    Impact on      Impact on
Affecting Results        Impact (1)   Net Income        EPS (3)
                                             (2)
                      Twelve Months  Twelve Months  Twelve Months
                              Ended          Ended          Ended
In millions, except     Dec.   Dec.   Dec.    Dec.   Dec.    Dec.
per share amounts        31,    31,    31,     31,    31,     31,
                        2006   2005   2006    2005   2006    2005
Restructuring         $(591)  $(114)  $(445) $(77) $(0.46) $(0.08)
charges
Asbestos-related        177      -      112    -     0.12     -
credit
Contingent liability   (85)      -      (84)   -    (0.09)    -
related to EC fine
Gain on sale of UOP      -      637      -    402     -      0.41
LLC
Cash donation for        -     (100)     -    (65)    -     (0.07)
aid to education and
community
development
Gain on sale of          -       70      -     46     -      0.05
EQUATE shares
Loss on early            -      (31)     -    (20)    -     (0.02)
extinguishment of
debt
AJCA repatriation of     -        -      -    113     -      0.12
foreign earnings
Unfavorable tax          -        -      -   (137)    -     (0.14)
ruling
Cumulative effect of     -        -      -    (20)    -     (0.02)
change in accounting
principle
Total                 $(499)  $ 462   $(417) $ 242  $(0.43) $0.25


Reconciliation of                                    Twelve
Earnings Per Share                                Months Ended
                                                   Dec.    Dec.
                                                    31,     31,
                                                   2006    2005
Earnings  per share excluding                    $ 4.25  $ 4.37
certain items
Certain    items    affecting                    (0.43)    0.25
earnings per share
Reported earnings per                            $ 3.82  $ 4.62
share
  (1)  Impact on "Income before Income Taxes and Minority Interests"
  (2)  Impact on "Net Income Available for Common Stockholders"
  (3)  Impact on "Earnings per common share - diluted"

Financial Statements (Note A)
                                          The Dow Chemical Company and Subsidiaries
                                                  Consolidated Statements of Income
                                                  Three Months            Twelve
                                                         Ended      Months Ended
                                                 Dec.     Dec.     Dec.     Dec.
                                                  31,      31,      31,      31,
  In millions, except per share amounts          2006     2005     2006     2005
                              (Unaudited)
_________________________________________________________________________________
   Net Sales                                $  12,236 $ 11,917 $ 49,124 $ 46,307
_________________________________________________________________________________                               Cost of
sales                            10,499   10,029   41,526   38,276
      Research and development expenses           308      283    1,164    1,073
      Selling, general and
       administrative expenses                    453      392    1,663    1,545
      Amortization of intangibles                  13       15       50       55
      Restructuring charges (Note B)               12      114      591      114
      Asbestos-related credit (Note C)            177        -      177        -
      Equity in earnings of
       nonconsolidated affiliates                 242      225      959      964
      Sundry income - net (Note D)                 50      577      137      755
      Interest income                              57       40      185      138
      Interest expense and amortization
       of debt discount                           154      159      616      702
_________________________________________________________________________________
   Income before Income Taxes and
    Minority Interests                          1,323    1,767    4,972    6,399
_________________________________________________________________________________
      Provision for income taxes (Note E)         324      629    1,155    1,782
      Minority interests' share in income          24       22       93       82
_________________________________________________________________________________
   Income before Cumulative Effect          $     975 $  1,116 $  3,724 $  4,535
    of Change in Accounting Principle
_________________________________________________________________________________
      Cumulative effect of change in
       accouting principle (Note F)                 -     (20)        -     (20)
_________________________________________________________________________________
   Net Income Available for                 $     975 $  1,096 $  3,724 $  4,515
    Common Stockholders
_________________________________________________________________________________
   Share Data
      Earnings before cumulative effect
       of change in accounting principle
       per common share  - basic            $    1.02 $  1.15  $   3.87 $   4.71

      Earnings per common share - basic     $    1.02  $ 1.13  $   3.87 $   4.69
      Earnings before cumulative effect
       of change in accounting principle
       per common share - diluted           $    1.00  $ 1.14  $   3.82 $   4.64
      Earnings per common share - diluted   $    1.00  $ 1.12  $   3.82 $   4.62
      Common stock dividends declared per
       share of common stock                $   0.375  $0.335  $   1.50 $   1.34
      Weighted-average common shares
       outstanding - basic                      958.5   966.4     962.3    963.2
      Weighted-average common shares
       outstanding - diluted                    971.1   981.3     974.4    976.8
_________________________________________________________________________________
   Depreciation                             $     486  $  526  $  1,904 $  1,904

   Capital Expenditures                     $     657  $  547  $  1,775 $  1,597
_________________________________________________________________________________

     Notes to the Consolidated
     Financial Statements:
     A   The unaudited consolidated financial statements reflect all adjustments
         which, in the opinion of management, are considered necessary for a fair
         presentation of the results for the periods covered.  These statements
         should be read in conjunction with the audited consolidated financial
         statements and notes thereto included in the Company's Annual Report on
         Form 10- K for the year ended December 31, 2005. Except as otherwise
         indicated by the context, the terms "Company" and "Dow" as used herein
         mean The Dow Chemical Company and its consolidated subsidiaries.
     B   In August 2006, Dow's Board of Directors approved a plan to shut down a
         number of assets around the world as the Company continues its
         drive to improve the competitiveness of its global operations. As a
         result, the Company recorded restructuring charges totaling $579 million
         in the third quarter of 2006. The charges included asset write-downs and
         write-offs, severance costs, contract termination fees, costs for asbestos
         abatement and environmental remediation, and pension curtailment costs and
         termination benefits associated with Dow's defined benefit plans.
         In the fourth quarter of 2006, the Company recorded a net $12 million
         adjustment to the third quarter restructuring charges.
         In the fourth quarter of 2005, the Company recorded charges totaling $114
         million related to restructuring activities, including costs related to
         plant closures of $67 million, losses of $12 million on asset sales, the
         write-off of an intangible asset of $10 million and employee-related
         expenses of $25 million.
     C   In December 2006, Union Carbide reduced its asbestos-related liability
         $177 million based on a new study completed in the fourth quarter by
         Analysis, Research & Planning Corporation using historical claims data
         for Union Carbide and Amchem.
     D   In the fourth quarter of 2006, the Company recognized a contingent
         liability of $85 million related to a fine imposed by the European
         Commission ("EC") associated with synthetic rubber industry matters.
         The Company continues to evaluate the EC's decision and its right to appeal.
         In November 2004, Union Carbide Corporation sold a 2.5 percent interest
         in EQUATE to National Bank of Kuwait for $104 million. In March
         2005, the resale of these shares to private Kuwaiti investors was
         completed, reducing Union Carbide's ownership interest from 45 percent
         to 42.5 percent and resulting in a pretax gain of $70 million in the
         first quarter of 2005.
         On November 30, 2005, Union Carbide Corporation completed the sale of its
         indirect 50 percent interest in UOP LLC to Honeywell Specialty
         Materials LLC.  The sale resulted in proceeds of $867 million and a
         pretax gain of $637 million.
         In December 2005, the Company made a cash donation of $100 million to The
         Dow Chemical Company Foundation for aid to education and
         community development.
     E   In the second quarter of 2005, the Company finalized its plan for the
         repatriation of foreign earnings subject to the requirements of the
         American Jobs Creation Act of 2004, resulting in a credit to the "Provision for
         income taxes" of $113 million.
         On January 23, 2006, the Company received an unfavorable tax ruling from
         the United States Court of Appeals for the Sixth Circuit reversing a
         prior U.S. District Court decision relative to corporate owned life
         insurance, resulting in a charge to the provision for income taxes of $137
         million in the fourth quarter of 2005.
      F  On December 31, 2005, the Company adopted FASB Interpretation No. 47,
         "Accounting for Conditional Asset Retirement Obligations." The
         cumulative effect of adoption was a charge of $20 million (net of tax of
         $12 million).


                    The Dow Chemical Company and Subsidiaries
                                  Consolidated Balance Sheets                Dec.      Dec.
                                                                              31,       31,
   In millions (Unaudited)                                                   2006      2005
____________________________________________________________________________________________
   Assets
   Current Assets
     Cash and cash equivalents                                         $    2,757  $  3,806
     Marketable securities and interest-bearing deposits                      153        32
     Accounts and notes receivable:
       Trade (net of allowance for doubtful receivables -
                                     2006: $122; 2005: $169)                4,988     5,124
       Other                                                                3,060     2,802
     Inventories                                                            6,058     5,319
     Deferred income tax assets - current                                     193       321
____________________________________________________________________________________________
   Total current assets                                                    17,209    17,404
____________________________________________________________________________________________
   Investments
     Investment in nonconsolidated affiliates                               2,735     2,285
     Other investments                                                      2,143     2,156
     Noncurrent receivables                                                   288       274
____________________________________________________________________________________________
     Total investments                                                      5,166     4,715
____________________________________________________________________________________________
   Property
     Property                                                              44,381    41,934
     Less accumulated depreciation                                         30,659    28,397
____________________________________________________________________________________________
     Net property                                                          13,722    13,537
____________________________________________________________________________________________
   Other Assets
     Goodwill                                                               3,242     3,140
     Other intangible assets (net of accumulated amortization
                                      - 2006: $620; 2005: $552)               457       443
     Deferred income tax assets - noncurrent                                4,006     3,658
     Asbestos-related insurance receivables - noncurrent                      725       818
     Deferred charges and other  assets                                     1,054     2,219
____________________________________________________________________________________________
     Total other assets                                                     9,484    10,278
____________________________________________________________________________________________
   Total Assets                                                       $    45,581 $  45,934
____________________________________________________________________________________________


   Liabilities and Stockholders' Equity
   Current Liabilities
     Notes payable                                                    $       219  $    241
     Long-term debt due within one year                                     1,291     1,279
     Accounts payable:
        Trade                                                               3,825     3,931
        Other                                                               1,849     1,829
     Income taxes payable                                                     569       493
     Deferred income tax liabilities - current                                251       201
     Dividends payable                                                        382       347
     Accrued and other current liabilities                                  2,215     2,342
____________________________________________________________________________________________
     Total current liabilities                                             10,601    10,663
____________________________________________________________________________________________
   Long-Term Debt                                                           8,036     9,186
____________________________________________________________________________________________
   Other Noncurrent Liabilities
     Deferred income tax liabilities - noncurrent                             999     1,395
     Pension and other postretirement benefits - noncurrent                 3,094     3,308
     Asbestos-related liabilities - noncurrent                              1,079     1,384
     Other noncurrent obligations                                           3,342     3,338
____________________________________________________________________________________________
     Total other noncurrent liabilities                                     8,514     9,425
____________________________________________________________________________________________
   Minority Interest in Subsidiaries                                          365       336
____________________________________________________________________________________________
   Preferred Securities of Subsidiaries                                     1,000     1,000
____________________________________________________________________________________________
   Stockholders' Equity
     Common stock                                                           2,453     2,453
     Additional paid-in capital                                               830       661
     Unearned ESOP shares                                                       -       (1)
     Retained earnings                                                     16,987    14,719
     Accumulated other comprehensive loss                                 (2,235)   (1,949)
     Treasury stock at cost                                                 (970)     (559)
____________________________________________________________________________________________
     Net stockholders' equity                                              17,065    15,324
____________________________________________________________________________________________
   Total Liabilities and Stockholders' Equity                         $    45,581  $ 45,934
____________________________________________________________________________________________
 See Notes to the Consolidated Financial Statements.


                                   The Dow Chemical Company and Subsidiaries
                                                          Operating Segments
                                                Three Months   Twelve Months
                                                       Ended           Ended
                                                 Dec.   Dec.    Dec.    Dec.
                                                  31,    31,     31,     31,
                    In millions (Unaudited)      2006   2005    2006    2005
_____________________________________________________________________________
           Sales by operating segment         $      $       $       $
                 Performance Plastics           3,546  3,183  13,944  12,405
                 Performance Chemicals          1,999  1,854   7,867   7,521
                 Agricultural Sciences            814    729   3,399   3,364
                 Basic Plastics                 2,944  2,919  11,833  11,007
                 Basic Chemicals                1,315  1,529   5,560   5,643
                 Hydrocarbons and Energy        1,562  1,618   6,205   6,061
                 Unallocated and Other             56     85     316     306
_____________________________________________________________________________
                 Total                        $      $       $       $
                                               12,236 11,917  49,124  46,307
_____________________________________________________________________________

           EBIT(1) by operating segment       $      $       $       $
                 Performance Plastics            347     960   1,629   2,507
                 Performance Chemicals           293     227   1,242   1,435
                 Agricultural Sciences            38      74     415     543
                 Basic Plastics                  461     624   2,022   2,398
                 Basic Chemicals                 194     268     689   1,129
                 Hydrocarbons and Energy           -     (1)       -     (1)
                 Unallocated and Other            87   (266)   (594) (1,048)
_____________________________________________________________________________
                      Total                       $       $       $       $
                                               1,420   1,886   5,403   6,963
_____________________________________________________________________________
           Certain items (reducing)/increasing
            EBIT by operating segment(2)     $               $       $
                 Performance Plastics           (85)     609   (327)     609
                 Performance Chemicals           (1)    (14)    (12)    (14)
                 Agricultural Sciences             -     (9)       -     (9)
                 Basic Plastics                    -    (12)    (16)      17
                 Basic Chemicals                (19)     (3)   (184)      38
                 Unallocated and Other           185   (148)      40   (179)
_____________________________________________________________________________
                 Total                       $              $       $
                                                  80    423    (499)     462
_____________________________________________________________________________
           Equity in earnings of nonconsolidated affiliates  by operating
           segment(included in EBIT)         $      $       $       $
                Performance Plastics              8     39        89     198
                Performance Chemicals            93     57       368     294
                Agricultural Sciences             -      1         1       1
                Basic Plastics                   46     57       173     215
                Basic Chemicals                  78     55       241     204
                Hydrocarbons and Energy          17     17        85      52
                Unallocated and Other             -    (1)         2       -
_____________________________________________________________________________
                 Total                       $      $       $       $
                                                242    225       959     964
_____________________________________________________________________________

     (1) The Company uses EBIT (which Dow defines as earnings before
         interest, income taxes and minority interests) as its measure of
         profit/loss for segment reporting purposes.  EBIT includes all
         operating items related to the businesses and excludes items that
         principally apply to the Company as a whole.  A reconciliation of
         EBIT to "Net Income Available for Common Stockholders" is
         provided below:
                                                   Three Months  Twelve Months
                                                          Ended          Ended
                                                   Dec.    Dec.   Dec.    Dec.
                                                    31,     31,    31,     31,
                                                   2006    2005   2006    2005
    ___________________________________________________________________________
                                                      $       $      $       $
                    EBIT                          1,420   1,886  5,403   6,963
                    + Interest income                57      40    185     138
                    - Interest expense and
                       amortization of debt
                        discount                    154     159    616     702
                    - Provision for income taxes    324     629  1,155   1,782
                    - Minority interests'
                       share in income               24      22     93      82
                    + Cumulative effect of change
                       in accounting principle        -    (20)      -    (20)
    ___________________________________________________________________________
             Net Income Available for                 $       $      $       $
                  Common Stockholders               975   1,096  3,724   4,515

     (2) See Supplemental Information for a description of certain
         item affecting results in 2006 and 2005.




                                        The Dow Chemical Company and Subsidiaries

                                      Sales Volume and Price by Operating Segment
                                              Three Months Ended     Twelve Months Ended
                                                   Dec. 31, 2006           Dec. 31, 2006
   Percentage change from prior year       Volume   Price   Total   Volume   Price   Total
  _________________________________________________________________________________________
   Operating segments
               Performance Plastics            3%      8%     11%       7%      5%     12%
              Performance Chemicals            5%      3%      8%       4%      1%      5%
              Agricultural Sciences           12%       -     12%       3%    (2)%      1%
                     Basic Plastics            4%    (3)%      1%       1%      7%      8%
                    Basic Chemicals          (6)%    (8)%   (14)%     (2)%      1%    (1)%
            Hydrocarbons and Energy          (5)%      2%    (3)%     (9)%     11%      2%
  _________________________________________________________________________________________
                              Total            2%      1%      3%       1%      5%      6%
  _________________________________________________________________________________________


                                                    Sales by Geographic Area
                                                        Three Months  Twelve Months
                                                               Ended          Ended
                                                       Dec.     Dec.   Dec.    Dec.
                                                        31,      31,    31,     31,
                In millions (Unaudited)               2006     2005    2006    2005
  ___________________________________________________________________________________
                Sales by geographic area                 $        $      $       $
                United States                        4,269    4,656 18,172  17,524
                Europe                               4,496    3,981 17,846  16,624
                Rest of World                        3,471    3,280 13,106  12,159
  __________________________________________________________________________________
                Total                                    $        $       $      $
                                                    12,236   11,917  49,124 46,307
  __________________________________________________________________________________



                            Sales Volume and Price by Geographic Area
                                              Three Months Ended     Twelve Months Ended
                                                   Dec. 31, 2006           Dec. 31, 2006
     Percentage change from prior year        Volume  Price   Total   Volume   Price  Total
  ___________________________________________________________________________________________
     Geographic areas
                     United States              (1)%   (7)%    (8)%        -     4%      4%
                            Europe                3%    10%     13%       1%     6%      7%
                     Rest of World                6%      -      6%       5%     3%      8%
  ___________________________________________________________________________________________
                             Total                2%     1%      3%       1%      5%     6%
  ___________________________________________________________________________________________