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Press release from Business Wire

Dow Corning Reports Increased Sales for the First Half of 2011

Thursday, July 28, 2011

Dow Corning Reports Increased Sales for the First Half of 201108:15 EDT Thursday, July 28, 2011 MIDLAND, Mich. (Business Wire) -- Dow Corning Corp. today announced sales of $3.25 billion and net income of $370 million in the first half of 2011. Sales increased 12 percent as global demand continued to grow for the silicon-based innovator and manufacturer. Additional information about Dow Corning's financial results: Second Quarter Results Sales were $1.67 billion, 8 percent higher than last year. Net income was $191 million, 14 percent lower than last year. Significant demand growth continued in Asia, Latin America, Eastern Europe and in developing geographic regions. Sharp increases in prices for materials and energy, as well as higher levels of operating expenses, negatively impacted net income growth. External factors including slowing global economies, Japan's tsunami and earthquake, and unrest in the Middle East depressed net income results. Year-to-Date Results Sales were $3.25 billion, 12 percent higher than last year. Net income was $370 million, 16 percent lower than last year. Adjusted net income was $363 million, 6 percent lower than last year, which excluded the U.S. Advanced Energy Manufacturing Tax Credits received by Dow Corning and its joint ventures in 2010.   Q2 2011   Q2 2010   % Change   2011   2010   % Change Sales (in billions) $ 1.67   $ 1.54   8%   $ 3.25   $ 2.90   12% Net income (in millions) $ 191   $ 221   -14%   $ 370   $ 439   -16% Adjusted net income* (in millions) $ 188   $ 215   -13%   $ 363   $ 388   -6% *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: “While demand remains solid for Dow Corning's silicon-based materials, we've seen pressure on our profits in the first half of 2011 from sharply rising raw materials and energy prices. We're countering these challenges by focusing on the efficiency of our business and by continuing to invest in innovation to serve high-value growth opportunities.” “Dow Corning's silicones segment continues to see significant growth in emerging economies throughout Asia, Latin America and Eastern Europe, despite the global economic volatility that has challenged all businesses in 2011.” “Dow Corning's polycrystalline silicon segment through our Hemlock Semiconductor Group joint ventures continues to sell all of its production, and remains sold out for the foreseeable future. While there has been some softening in the solar industry in 2011, we believe the solar industry will continue to grow at a rapid pace over the long-term as regions seek clean, renewable, domestically-generated sources of energy.” “The pace of the global economic recovery remains slow due to uncertainty in the current business environment. Political instability throughout the globe, as well as the tragedy of the earthquake and tsunami in Japan earlier this year, added to the challenges businesses like Dow Corning faced in the first half of the year.” 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® and XIAMETER® brands. Dow Corning is equally owned by The Dow Chemical Company (NYSE:DOW) and Corning, Incorporated (NYSE:GLW). More than half of Dow Corning's annual sales are outside the United States. About Hemlock Semiconductor Group Hemlock Semiconductor Group (Hemlock Semiconductor) is comprised of several joint venture companies among Dow Corning Corporation, Shin-Etsu Handotai, and Mitsubishi Materials 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 CorporationSelected Financial Information(in millions of U. S. dollars)(Unaudited)                   Consolidated Income Statement Data   Three Months Ended June 30,Six Months Ended June 30,2011201020112010     Net Sales$1,668.1$1,544.6$3,247.4$2,898.3   Net IncomeAttributable to Dow Corning$190.8$220.7$369.5$439.0   Adjustment for AEMC1, net$(3.2)$(5.8)$(6.5)$(51.5)   Adjusted Net Income2$187.6$214.9$363.0$387.5     1 The three and six month periods ended June 30, 2011 and 2010 included a tax benefit related to Advanced Energy Manufacturing Credits, net of the noncontrolling interests' share.2 Adjusted 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             June 30, 2011December 31, 2010Assets   Current Assets$4,798.4$4,624.6Property, Plant and Equipment, Net6,690.36,120.7Other Assets   1,554.7   1,903.1$13,043.4$12,648.4   Liabilities and Equity   Current Liabilities$1,909.3$2,287.8Other Liabilities7,554.26,862.8Equity   3,579.9   3,497.8$13,043.4$12,648.4 Dow CorningJarrod Erpelding, 989.496.1582Jarrod.Erpelding@dowcorning.com