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Caso Dow
Caso Dow
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Exhibit 1
Dow and Rohm, Income Statement Data, 2006-2008 H1 (as amended, in $ millions)
$5,074
3,537
247
1,290
586
159
32
513
85
90
21
98
441
111
(11)
319
193.7
195.2
$1.65
$0.78
25.4%
6.3%
25.2%
3.1%
$266
Exhibit 2
Dow and Rohm, Balance Sheet Data, 2006-2008 H1 (as amended, in $ millions)
Assets
Cash & Investments $2,910 $1,737 $2,113 $265
Receivables 8,048 9,684 11,356 1,876
Inventories 6,058 6,885 7,690 1,024
Other 193 348 172 261
Total Current Assets 17,209 18,654 21,331 3,426
Liabilities
Accounts Payable 5,674 6,536 7,837 806
Accrued Expenses 2,215 2,512 2,237 613
Short-term Debt 219 1,548 2,225 150
Current Long-term Debt 1,291 586 1,051 8
Other Current Liabilities 1,202 1,263 1,037 192
Total Current Liabilities 10,601 12,445 14,387 1,769
$204
2,141
1,091
307
3,743
2,923
1,737
0
2,084
10,487
908
770
108
0
101
1,887
3,168
239
754
1,087
3,352
10,487
3,276
49.4%
1.98
Exhibit 3
Dow Chemical Company, Slected Financial and Operating Information, 1994-2007 (as amended, in $ millions)
Sources: Adapted from Dow Chemical Company form 10-K (Year end 2004 and 2007); Standard & Poor's Corporation, and Cap
n $ millions)
Total Value of
Stock & Other
Person or Group Options Compensation Total
Number of Value of
Shares Exercisable Shares Exercisable
Person or Group Owned (b) Options Owned Options
Sources: Casewrite estimates, Rohm & Haas Forms DEFM14A (9/29/08) and DEF14A (3/19/08)
Notes:
(a) Alan Barton (formerly EVP) left Rohm and Haas in August 2008.
(b) Includes shares owned directly and indirectly through a savings plan and an ESOP.
(c) Includes stock options, restricted stock, restricted share units, and performance share awards.
Total Value
of Stock
& Options
$72,409,850
$12,523,636
$2,405,676
$13,379,231
$9,110,539
$15,487,566
$66,556,776
$191,873,273
Total Value
of Other
Compensation
$31,383,647
$9,245,321
$1,741,086
$9,551,890
$5,124,344
$18,499,902
$19,475,657
$95,021,847
Exhibit 7A
Rohm and Haas Stand-alone Cash Flow Forecasts, 2009-2010 (in millions)
Assumptions:
Tax Rate = 26% Effective tax rate (average rate)
Growth Rate = 2% For future cash flows and terminal value calculations
Source: Casewriter estimates using forecasts from E.H. Yang and L. Amadeo, Oppenheimer Equity Research on Rohm
and Haas Company, reports dated 7/10/08 and 2/9/09, via Thompson Rsearch/Investex, accessed 9/24/10.
Announcement (7/10/08)
2012
$12,132
$2,223
$521
$1,702
$1,259
$521
($558)
($325)
$897
$9,812 $10,280
$1,583 $1,691
$493 $488
$1,090 $1,203
$807 $890
$493 $488
($451) ($473)
($250) ($250)
$599 $655
Weighted Average
Cost of Capital (WACC) Goldman Sachs Assumptions and Sources
Risk-free Rate (Rf) 4.92% Average 30-year Treasury Yield Over Past 7 Years; Current yield = 4.5
Equity Beta (bE) 1.06 Barra's U.S. Equity Model (forward-looking estimate)
Equity Risk Premium (ERP) 5.07% Ibbotson's Arithmetic Mean (Market - Risk Free Rates) from 1957-20
Cost of Equity (KE) 10.3% Calculated: KE = Rf + (bE * ERP)
Tax Rate 35% Long-term sustainable tax rate (marginal rate)
Cost of Debt (KD) 6.1% Weighted average of rates on Rohm's existing debt as of 12/31/07
Debt / Value Ratio (D/V) 28% Unstated but implied by the resulting WACC
Equity / Value Ratio (E/V) 72% Unstated but implied by the resulting WACC
WACC = 8.5% Calculated: WACC = [KD * (1 - Tax Rate) * (D/V)] + [KE * (E/V) ]
WACC Range 7.5% - 9.5%
Source: Casewriter estimates using data in Rohm & Haas Co., Form DEFM14A, dated 9/29/08, p. 28.
ver Past 7 Years; Current yield = 4.50%
d-looking estimate)
ket - Risk Free Rates) from 1957-2007
arginal rate)
hm's existing debt as of 12/31/07
Net Debt
Long-term Debt (LTD) $8,042 $8,042 $22,830 $22,330 $21,830
Current portion LTD $1,454 $1,454 $1,454 $1,454 $1,454
Notes Payable $2,360 $2,360 $2,460 $2,460 $2,460
Cash ($2,800) ($1,506) ($531) ($879) ($1,945)
Total Net Debt $9,056 $10,350 $26,213 $25,365 $23,799
Net Debt / Total Capitalization (1) 40.1% 44.1% 67.0% 66.5% 65.2%
Source: Casewrite estimates using forecasts from J. Zekauskas et al., J.P. Morgan North America Equity Research,
Dow Chemical Report 2/4/09 (Tables 6, 7, & 8), accessed via Thompson Research/Investex on 9/24/10.
Notes:
a) Assumes the Rohm acquisition closes in the second quarter of 2009.
b) Total equity exludes preferred equity and reflects large hedging and pension losses in 2008.
It also reflects the payment of cash dividends and the repurchase of shares.
Covenants on the Dow Bridge Loan:
1) Net Debt-to-Total Capitalization < 65% (for this covenant, total equity excludes preferred stock)
2) Leverage Ratio < 4.25X
Year-end
2010
$19,830
$1,454
$2,460
($534)
$23,210
$11,790
$35,000
66.3%
3.64
$63,633
$6,372
10.0%
$3,404
$1,532
2.22
1.17
uity Research,