One-Time Charges Cut Dow Corning Net Income

MIDLAND — Dow Corning Corp. announced sharply lower net income for the fourth quarter ended Dec. 31 based on a number of what the company said were one-time events.

Net income was $37 million, down 66 percent from $110 million a year earlier. Revenue was $1.68 billion, up 5 percent from $1.59 billion in the fourth quarter of 2013.

The company also announced “adjusted” net income of $205 million, nearly double $103 million in the fourth quarter of 2013. The adjusted figure excluded a number of one-time events, including asset charges, restructuring expenses, a foreign tax credit, the effects of derivative financial instruments, and gains on long term sales agreements. The biggest changes were a $999.7 million charge for restructuring, and a $844.9 million reduction in the set-aside for liabilities from Dow Corning breast implant lawsuits.

For the full year, net income was $513 million, up from $376 million in 2013. Revenue was $6.22 billion, up from $5.71 billion a year earlier.

Dow Corning said silicone segment sales continued to grow, especially in the Americas, 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.

Said Dow Corning executive vice president and CFO J. Donald Sheets: “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.”

Also, Sheets said, “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.”

Dow Corning provides silicones and silicon-based technology through more than 7,000 products to more than 25,000 customers worldwide. it is jointly owned by Midland-based Dow Chemical Co. and New York-baesd Corning Inc.

Hemlock Semiconductor Group (hscpoly.com) is comprised of several joint venture companies owned in majority by Dow Corning. Hemlock provides 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.

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