Good day, and welcome to the Dow Chemical Company's Fourth Quarter 2011 Earnings Results Conference Call. [Operator Instructions] Also, today's call is being recorded. I would now like to turn the call over to Mr. Doug May, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Alicia. Good morning, everyone, and welcome. As usual we're making this call available to investors and the media via webcast. This call is the property of the Dow Chemical Company. Any redistribution, retransmission or rebroadcast of this call in any form without Dow's expressed written consent is strictly prohibited. On the call with me today are Andrew Liveris, Dow's Chairman and Chief Executive Officer; Bill Weideman, Executive Vice President and Chief Financial Officer; and Dave Johnson, Director in Investor Relations. Around 7:00 a.m. this morning, February 2, our earnings release went out on Business Wire and was posted on the Internet on dow.com. We have prepared slides to supplement our comments in this conference call. These slides are posted on our website on the Presentations page of the Investor Relations section and through the link to our webcast. Some of our comments today include statements about expectations for the future. Those expectations involve risks and uncertainties. We can't guarantee the accuracy of any forecasts or estimates, and we don't plan to update any forward-looking statements during the quarter. If you'd like more information on the risks involved in forward-looking statements, please see our SEC filings, which are available on the Internet at dow.com. In addition, some of our comments reference non-GAAP financial measures. Presentation of and reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and the prepared slides and on our website. Unless otherwise, specified, all comparisons presented today will be on a year-over-year basis. Sales, price, volume comparisons exclude the impact of divestitures and EBITDA, EBITDA margins and earnings comparisons exclude certain items. The agenda for today's call is on Slide 3. I will now hand the call over to Andrew. Andrew N. Liveris: Thank you, Doug. Good morning, everyone, and thank you for joining us. If you turn to Slide 4, 2011 proved to be yet another successful and strategically important year for Dow. We reached new milestones and drove a focused agenda with clear priorities. As you know, the fourth quarter presented our industry with a challenging operating environment with new uncertainty driven mostly because of the sovereign debt issues in Western Europe, coupled with traditional seasonality, led to substantial destocking across supply chains, as customers reduced inventories prior to year end. We anticipate this volatility and we're prepared. Our company acted swiftly and purposefully, as we said we would. At our Investor Day last fall and during our third quarter earnings announcement, we discussed the levers we could pull and the interventions we would take if necessary. And that's exactly what we did. We cut discretionary spending. We took action to improve operating rates. We tightly managed working capital, and these actions generated cash from operations of $2 billion in the quarter. Over the last several months, we have been very focused on our interventions, which delivered results as follows: earnings per share excluding certain items were $0.25. Note that we had several certain items that impacted our reported EPS and resulted in an effective tax rate of more than 76% in the quarter. The largest of these was a noncash tax charge that reduced earnings by $0.23 per share. Bill will provide more details on this momentarily. Sales increased in all geographic areas. Importantly, we achieved a new quarterly sales record in the emerging geographies. In fact, this quarter our sales in emerging geographies reached 35% of total global sales, hitting our stated medium-term target. The benefits of our broad and growing global footprint were evident in our volume results, as growth in emerging geographies fully offset weakness in developed regions, particularly Western Europe. Price rose in all geographic areas and all operating segments, offsetting a $476 million increase in feedstock and energy costs. And Agricultural Sciences delivered strong results, achieving record fourth quarter sales and EBITDA. Turn to Slide 5. Given these weak market conditions, our operating rate declined to 72% during the quarter, which drove quick interventions to mitigate downside risk mostly to tightly manage volume and inventory. And as you look at Slide 6, as a result, our operating rate reached an inflection point in November and recovered 7 percentage points in December. Importantly, this enabled us to exit the quarter with momentum. In fact, December volume was 10 percentage points higher than December 2010. Turn to Slide 7. As a result of our interventions, we generated solid cash from operations in the quarter and ended the year with a stronger net debt to capital position. As you can see, we did exactly what we said we would do. We intervened to mitigate risks without sacrificing our strategic objectives. This focus served us well throughout 2011 and will continue into 2012, which brings me to our results for the full year on Slide 8. 2011 was a year in which Dow demonstrated the strength of our transformed portfolio and delivered significant top and bottom line growth. Here are the headlines. Earnings per share grew 29% year-over-year, and revenue grew 18%, reaching a new level for the company. Sales in fast-growing emerging regions surpassed $19 billion for the first time in Dow's history, and sales in Asia Pacific were also a record topping $10.5 billion. Equity earnings reached a new milestone of $1.2 billion, and EBITDA rose 12% from 2010. We commercialized a steady stream of new innovations and launched strategic investments and partnerships that will catapult our ability to capture more demand in the world's fastest-growing regions, all from a cost advantage and integrated manufacturing position. We retired $4.8 billion of debt in 2011 and delivered cash from operating activities of nearly $4 billion despite headwinds in the quarter. This places us firmly on track to achieve our cumulative target of $8 billion in 2011 and 2012. And we delivered on our commitment to increasingly reward shareholders, evidenced by 67% dividend increase. All of this enabled us to exit the year with tremendous financial flexibility. Our -- as a result, Dow is stronger and better positioned than we were just a few short years ago. Our results for 2011 are a validation of our scale, our diversity and our resiliency to weather volatile economic conditions better than others and take advantage of opportunities created by the changing times. These results are also a testament to our strong resolve to deliver on our commitments. If you turn to Slide 9, this brings me to our strategic agenda and our earnings growth path. Our EBITDA target of $10 billion is a goal against which our entire organization is aligned. We have what it takes to win and we will. We are confident both in our ability to protect the base when we encounter volatility but more importantly, in our momentum to achieve earnings growth. We are resolutely focused on executing against our strategic priorities, and I'll have more to say later in the call about our plans moving forward. But first, let me now turn it over to Bill for more detail on our financial and operating results in the quarter. William H. Weideman: Thank you, Andrew. I'll be starting on Slide 10. Dow posted sales of $14.1 billion, up 5%, excluding divestitures. On a reported basis, we posted a loss of $0.02 per share. Earnings, excluding certain items, were $0.25 per share with EBITDA of $1.8 billion on the same basis. Certain items in the quarter included a tax charge for setting up a valuation allowance related to losses in Brazil of $264 million, which is equivalent to $0.23 per share. The valuation allowance will not impact our ability to utilize the Brazil tax loss carry forwards in the future for our cash tax rate. Our 2012 global estimated tax rate remained in the 20% to 25% range, as we previously communicated. Now turning to volume trends in the quarter on Slide 11. Overall, volume was flat year-over-year, as our emerging geographies delivered growth of 7%, fully offsetting weak demand in the developed regions. This was led by China, which was up an impressive 12%. Looking across our operating segments, Agricultural Sciences, Performance Plastics and Feedstock and Energy all reported volume growth. Coatings and Infrastructure Solution reported a decline in volume due to persistent headwinds in the construction industry. Electronic and Functional Materials saw a reduction in demanded due to recognized softness in electronics. Now moving to price on Slide 12. We achieved a 5% increase versus the fourth quarter of last year. Increases were broad based and led by Feedstock and Energy, which was up 11%. I'd like to provide some insight on the key drivers of our operating performance this quarter. As we've mentioned, broad-based price increases more than offset the rise in purchased hydrocarbon energy costs. However, our operating rate fell 9%, meaning we recovered less of our fixed costs due to lower demand, customer destocking and working capital management. Equity earnings declined, mainly due to margin contraction in ethylene derivatives as well as start-up costs at our HPPO plant in Thailand. Now turning to our operating segments. On Slide 14, you can see the key drivers behind performance in our operating segments in the quarter. Let me point out just a few highlights. Electronic Materials saw modest volume declines, as strong demands gains in Display Technologies were offset by lower demand in Interconnect and Semiconductor Technologies. Dow Water & Process Solutions reported double-digit demand growth increases across all geographic areas. Results in Dow Coating Materials reflected weak demand in architectural and industrial sectors, as volume declined in all geographic areas. This was offset in part by pricing initiatives. Agricultural Sciences continues to benefit from solid industry fundamentals with record fourth quarter and full year sales as well as record fourth quarter EBITDA. In Performance Materials, sales were up 4%, driven by price. Epoxy sales contracted due to weaker industry fundamentals in phenolics and allylics, as customers reduced inventory levels. Polyurethanes volume increased by more than 10% with double-digit gains in all geographic regions except for Latin America, which was impacted by an extended turnaround. Performance Plastics saw volume growth in all geographies led by Asia Pacific. Dow Elastomers posted strong results due to stable demand in consumer goods, and polyethylene demand grew 4% in the quarter with volume increases in all geographies except EMEA, which was flat. And finally, Feedstock and Energy recorded a double-digit sales gain, driven primarily by price. On Slide 15, I'd like to cover a few additional financial highlights. We continued our tight control of working capital. DSO was steady at 44 days, and DSI was down 8 days versus the prior quarter. Our focused efforts on working capital and discretionary spending generated $2 billion of cash flow from operations. Net debt to total cap improved to 40.8%, and we exceeded our pension contribution goal, contributing over $800 million of cash in 2011. Over the past 2 years, we have made cumulative cash contributions of $1.5 billion to our pension plans. Now for 2012 modeling purposes, here are a few items to consider. We have adjusted our CapEx spending projection for the year to $2.5 billion, in line with current macroeconomic conditions. We expect our R&D spending to be flat with 2011, which given the current economic climate, underscores our ongoing commitment to preserving our innovation agenda. Pension expense will increase approximately $200 million, and we expect cash contributions will rise about $100 million. And we expect first quarter turnaround expenses will be up $60 million sequentially and $40 million year-over-year. Let me close by making a few comments regarding our near-term financial priorities, where we have made substantial progress over the past year. My near-term financial priorities are to generate $8 billion in cash flow from operations in 2011 through 2012, ensure that our operational efficiency and cost reduction measures deliver bottom line results and continue to focus on our 3 priorities for cash: rewarding shareholders, reducing debt and funding organic growth. In summary, we are committed to achieving our financial targets. And now I'd like to turn it back over to Andrew. Andrew N. Liveris: Thank you, Bill. 2011 was a year in which Dow demonstrated its strong resolve, firm financial discipline and focus on operational efficiency. Moving forward, you can expect more of the same. Execution must and will be our #1 priority. Turning to Slide 18. Over the next few minutes, I'd like to provide some granularity on our expectations for 2012, how Dow is prepared to stay the course and deliver on our strategic priorities; leveraging our formidable feedstock advantage, something that will play into our strengths as the year progresses; pivoting integrated technology-rich portfolio and geographic reach to capture growth where it is happening most rapidly; advancing traction of our newly launch innovations with a focus on impact to the bottom line; and continuing to drive our operating and capital efficiency, pulling levers to mitigate risks and ensure we remain firmly on track to reach our near-term targets. So covering each in turn, on Slide 19, first, our unique ability to take advantage of attractive shale gas dynamics and the ethylene cycle. Today, 70% of our global ethylene assets are in cost-advantaged regions, with trapped gas in Canada and Argentina, as well as advantage feedstock positions in the Middle East and of course, the United States, giving Dow a huge advantage. Take for example the U.S. Gulf Coast, where ethane-based assets have fallen dramatically down the cost curve. Dow is at the epicenter of this trend. We invested more than $500 million between 2005 through 2008 to increase our feedstock flexibility, and these investments are driving bottom line results today, yielding margins that are better than the industry average. Now there has recently been a great deal of discussion regarding supply and demand dynamics for ethane in the United States. As a reminder, we were among the first to declare a comprehensive plan to take advantage of the structural change in the U.S. Natural Gas Liquids market. From our perspective, fundamentals have not changed. Through the first half of 2012, we see ethane as essentially balanced with specific supply-demand events, such as industry turnarounds or supply disruptions triggering pricing fluctuations. But we maintained our position that ethane will go long structurally in the second half of 2012, as fractionation and pipeline investments accelerate faster than the ability of petrochemicals producers to consume ethane. Within this framework, the strength of Dow's superior position becomes evident. Given our current annual ethane consumption, every $0.10 per gallon decline in ethane adds nearly $200 million of EBITDA annually. So turning to Slide 20 in looking ahead, we're taking significant and proactive steps to capture further advantage, not only from increasing supplies of U.S. shale gas but also as industry operating rates improve. In fact, it appears the capacity startups are taking longer than anticipated, and this now seems likely to accelerate the industry's ramp-up to 90-plus percent operating rates. Dow's investments are perfectly timed and located. They will increase our ethylene production capabilities by as much as 20% in the U.S. over the next 2 to 3 years and allow us to deliver as much as 90% of our North American ethylene from ethane, increasing our leverage to the ethane advantage at a time when ethane prices are declining as ethylene margins are expanding. Collectively, our investments will deliver additional EBITDA of roughly $2 billion annually by 2017. As a reminder, the next major step of our action plan will come online towards the end of this year, when we restart a cracker in Louisiana. These investments underscored Dow's transformational strategy and action, providing meaningful benefits to our downstream, technology-focused businesses, which brings me to our integrated portfolio on Slide 21. Feedstocks and Energy is taking advantage of fundamentals that played very much in our favor as we just discussed. On the propylene side, while we expect some typical seasonality, prices on the whole should remain more moderate, providing more consistency for our downstream derivatives. And we are taking steps to fully integrate our U.S. propylene chain. In January, we signed a technology licensing agreement for our new propylene production facility, which will be built in Texas and is targeted for start-up in 2015. Again, it is about one thing and one thing alone, enhancing profitability and competitiveness in our downstream businesses. Meanwhile from a chemicals perspective, we believe caustic soda industry fundamentals will remain steady in the near term. As a result, this entire segment is delivering within its normalized margin range of 8% to 12%, and we will continue to optimize margins moving forward. Turning to Slide 22 and Performance Plastics. This portfolio also stands to benefit significantly from the psychodynamics we've discussed. Take our polyethylene franchise, where 90% of our assets are in the first and second quartile of manufacturing costs. Couple this with our superior technology position, and it's clear to see why we have the broadest and most profitable product offering. As you know, Performance Plastics is being retooled, building a market-focused approach and today delivering preeminent technology to attractive end markets such as health and hygiene, food packaging and elastomers. This division is already delivering EBITDA margins within the range of 20%, and we anticipate volume growth and margins in this segment will accelerate significantly in the second quarter and continue into the back half of 2012. On Slide 23, turning to Performance Materials. While this division is managing several specific near-term headwinds, particularly in the services envelope, it has great potential with an incredible number of differentiated technologies. This is reflected in the normalized margin targets we have projected for this division, 15% to 18%. Now margins are currently operating below that target, which is why Performance Materials is squarely focused on diligent price and volume and cost actions, as well as continuing to execute portfolio management to ensure we have the right business mix. Furthermore, as already mentioned, we continue to move forward with our investments in propylene integration on the U.S. Gulf Coast, which will bolster this division's feedstock position over the medium to longer term delivering more substantial and sustainable margin improvements. Turning to Slide 24 and Coatings and Infrastructure, where capacity expansions and technology launches are taking shape. Our Coatings business is working with customers across the entire industry to launch new formulations with our game-changing EVOQUE technology. Our Solar business has launched its award-winning Solar Shingle, already securing customer and authorized dealer relationships in Colorado and moving now into Texas and California. And our Water business continues to outperform with undisputed leadership in RO membranes and growing strength in ion-exchange resins. Weak fundamentals in the construction sector have tempered margins in the near term, demonstrated by our 2011 margin performance of 17% versus a target of 20% to 25%. However, our diverse technology and innovation platforms are enabling us to mitigate headwinds and will drive tremendous earnings power as recovery begins to take hold. Turning to Slide 25 in Electronic and Functional Materials. We see bright spots in handheld devices such as media tablets and smartphones. Our new product introductions in Display Technologies are gaining significant momentum, and our business continues to record customer wins. In fact, nearly 30% of 2011 sales in Electronic Materials were from new innovations. The bottom line is this: our Electronic Materials business continues to outperform its peers even in the midst of temporary headwinds. And with our Functional Materials business serving resilient sectors such as food and pharmaceuticals, this segment is delivering near the range of its 25% EBITDA target at 24% even with short-term headwinds. Turning to Slide 26. And last but not least is our Agricultural Sciences segment, which is delivering outstanding results in part due to strong industry fundamentals. But what really has excited us about this portfolio is the wave of technology innovation we have under way, investments that will continue to support our growth for many years to come. We posted record performance both in the quarter and for the year in this segment. Our sales of new agricultural chemical products grew more than 20% over last year, and with exciting launches coming up in 2012, such as sulfoxaflor, we are squarely on track to exceed our target of $800 million in annual sales from these products by 2013. And our Seeds, Traits and Oils sales grew 35% last year, with significant gains in key crops including corn and cotton. In fact, we are well on our way to achieving our goal of becoming a $1 billion global corn business. This segment has developed more products per dollar invested than any other company in this space. We launched 4 major solutions in the last 3 years, and we are on track to launch 4 more this year. Our current EBITDA margin performance of 16% reflects this focus on our technology pipeline and our forward investments in R&D. And our normalized target range of 25% illustrates the strong potential this segment boasts moving forward, which naturally brings me to innovation on Slide 27. As we committed, 2011 was a year which we commercialized a steady stream of new innovations, innovations that address the needs of our customers, while solving challenges in energy, agriculture and infrastructure as well as the needs of a growing consumer society. Nearly 1/3 of our sales last year were delivered from products launched in the last 5 years, and we're not stopping there. In fact, we filed more than 450 new patents just in 2011. On the whole, our innovations have delivered $400 million of incremental EBITDA in the past 2 years. We are targeting to deliver $500 million in 2012, on our way to a goal of $2 billion of EBITDA from innovation by 2015. Let's turn to Slide 28 and to our vast and growing geographic footprint. The value of our global expansion was on full display, particularly in the second half of 2011, as demand gains captured in emerging regions balanced volume declines in other geographies. The investments we have made over the past few years are serving us well today, as we demonstrated in the fourth quarter with 35% of our sales from emerging regions. Moving forward, our strategic growth investments will further enhance and expand connectivity with our customers and the markets they serve. First and foremost, the Sadara, our game-changing joint venture with Saudi Aramco that will address rapid demand growth across a variety of end markets and regions. Comprised of 26 manufacturing units, this complex will be one of the world's largest integrated chemical facilities and the largest ever built in one single phase. In Eastern Europe, we recently signed a joint venture agreement with Aksa in Turkey to manufacture and globally commercialize carbon fiber, tapping into a large and growing industry. In Asia, we have invested and continue to invest in new capacity, particularly to support growth in our Advanced Materials businesses. Simply stated, Dow's scale and reach give us unique insights into end markets, regions and consumer preferences, insights that position us perfectly to tap into further growth and to do so from a significant world-leading feedstock advantage. So let me turn to Slide 29, and before turning to our outlook, I want to provide you with an update regarding interventions we have put in place to mitigate economic uncertainty. You may recall that at our Investor Day in October, we outlined $2.5 billion of levers we could pull should macro conditions warrant. A number of these interventions are now in motion and are delivering results. For example, as we announced on Investor Day, our efficiency for growth program accelerated, and by year end 2011, it has exceeded our expectations. We said we would deliver $250 million of cash. In fact, this program has delivered more than $500 million of cash since its launch in May 2011 by driving initiatives to improve freight and raw materials costs and reduce back-office expenses, just to name a few examples. As we continue our relentless focus on execution, we will deliver another $750 million of cash from this efficiency for growth initiative in 2012. Let me turn to Slide 30. On top of this commitment, we also initiated new cost-reduction efforts in late 2011, taking actions such as reducing contractor levels and further tightening discretionary spending. These initiatives began to take hold in December, and we will accelerate them in the first quarter. Our goal is to deliver an additional $250 million of cash from cost interventions in 2012. Let's turn to Slide 31. Taken together, these moves place us well on track to reach our target of $1 billion in cash flow and cost interventions this year. And we still have an additional $1.5 billion of levers we can pull if we need to, which is why we will continue to carefully manage growth and CapEx spending, ensuring our investments track closely with macroeconomic conditions. We also continue to look for opportunities to prune our portfolio of non-core and underperforming assets. As a result of all these actions, Dow's financial discipline and foundation is indeed strong. Let's turn to Slide 22 -- 32. We're also on track to achieve our near-term cash-generation goals. Importantly, we made significant progress against our $8 billion target, delivering nearly $4 billion in 2011, which is particularly notable given the significant headwinds our industry faced late in the year. Moving forward, we continue to focus on our 3 priorities for uses of cash: rewarding shareholders, deleveraging and investing in prudent organic growth. Our firm priority is to generate cash and return cash to our shareholders. Allow me to be very clear. We do not need M&A. Our portfolio is in place and it is delivering growth. So let me turn to Slide 33 and our outlook for 2012. In the U.S., we see signs of a gradual recovery. In fact, last week, was the 17th consecutive week of stronger U.S. economic data. This improving sentiment is translating into a healthy demand outlook for Dow's Plastics Packaging and Elastomers businesses and our Performance Materials segment, particularly in transportation and consumer durables as well as energy-related market sectors. However, we do expect the continued pause in Electronics in the first quarter due to excess inventory in conjunction with typically slow seasonality. And although the construction sector appears to have found its bottom, we do not expect a meaningful snap-back in the near term. However, 2 powerful and positive factors will reinforce U.S. recovery: the region's competitive energy position due to low-cost natural gas and increasing demand growth as restocking begins to gain in traction from low inventory levels. The restocking effect will accelerate near-term demand. In Western Europe, volatile conditions due to the sovereign debt issues remain the primary headwind, and demand will continue to be weak at least through the first half of the year. On the positive side, however, growth rates in emerging geographies, regions that represented 35% of Dow's revenues in the fourth quarter, are expected to remain healthy, driven by needs for growing populations, needs such as agriculture, food packaging and water, to name a few. Taken on the whole, we believe demand growth will begin to gain momentum as we move through the second quarter and the remainder of the year. And we see meaningful improvements in Asia, Latin America, Eastern Europe, Middle East and Africa and the United States as well as positive accelerators for growth from restocking in most value chains across the world and improving feedstock dynamics, especially in the U.S. as the year progresses. Let's turn to Slide 34. Within this context, I want to revisit our earnings growth roadmap against which our management team's priorities are squarely focused. We will deliver organic growth and margin expansion by moving quickly to take advantage of growth where it is happening most rapidly, capturing volume as demand recovers and further capitalizing on increasingly favorable feedstock dynamics. Our portfolio of equity companies will continue to drive benefits from the leverage to attractive regions and low-cost feedstocks. And our innovations will continue to deliver real value both to our customers and to Dow. The bottom line is this. We will deliver. Our management team is fully aligned and accountable for protecting our growth path and delivering against the milestones that support our near-term earnings targets, the milestones we reiterated during our October 2011 Investor Day. Our transformation is complete, and it's time to execute and reap the rewards. Our earnings power has shifted higher because of a secular change in the global cost curves and our technology-rich portfolio. Given this increase in earnings and cash flow and a plethora of funded growth projects, we do not see the need for M&A. As such, the smartest use of excess funds will be to distribute this cash to our shareholders. With that, Doug, let's turn to Q&A.

Thank you, Andrew. Now as we move on to your questions, I'd like to remind you that my comments regarding forward-looking statements and non-GAAP financial measures apply both to our prepared remarks and the following Q&A. Alicia, will you please explain the Q&A procedure?

[Operator Instructions] We'll go first to John McNulty from Crédit Suisse. John P. McNulty: A question on the cost-cutting and efficiency improvements, it looks like it should be a decent tailwind for you in 2012. I know originally when you had outlined, I guess, the -- all the potential cuts at your Investor Day, some of them were maybe more extreme for more extreme environments. They also might, at least in the near term, nick some of the growth. Have you started to implement those? Or are these more some of the moderate ones and you still have a lot more levers to pull? Andrew N. Liveris: The latter, John. Clearly, the latter. We have not cut into muscle. We still have lots of funds for growth. We're just being strict to portfolio and prioritization, especially against Western Europe lags. So some of the more commodity-oriented businesses in Western Europe, for example, are being de-resourced. And we will assess as the year goes by how much of that is a structural fix versus; just a temporary fix. John P. McNulty: Great. And maybe just as a follow-up, you'd indicated your December operating rates jumped about 7% if I remember correctly. And I guess I'm wondering what actually drove that. Did you shut facilities down? Or I guess, how do you -- how do -- how should we think about that in terms of the sustainability of those operating rates? Andrew N. Liveris: With notable exception in Plastics where we actually pushed price in the quarter. We, in early November, as a team, put our heads together and pushed volume. We basically made the decision that this was a temporary restocking event, that this wasn't structural, that as a consequence of that, all of our low-cost positions around the world, notably the U.S., should be maximized in terms of operating rate. So we started pushing volume around the world where growth was -- is, and that absolutely, totally helped the operating rate.

We'll go next to Don Carson from Susquehanna International.

Andrew, how quickly can your -- will the ethane benefit flow through to your North American ethylene business. We've seen -- I think yesterday we you saw $0.52 ethane, down significantly. Is there an inventory lag there? And you talk about, on a more structural basis, ethane going long. I mean, where do you see ethane bottoming in terms of maybe not absolute price but percentage of its fuel value? And what kind of advantage does that provide for Dow? Andrew N. Liveris: Yes. So obviously, the margin recovery from the, let's call it, north of $0.90, the ethylene margins are starting to come back quite substantially here in the United States based on the ethane number. I think this morning, it was around $0.54, from memory. Look, Don, this is a little bit of hit and miss in the first half because it's still fairly tight based on demand. But of course with turnarounds, I mentioned in the script, turnarounds are coming in Q2, so we should expect to see some tailwinds on this current margin through the first half. I think the really positive margin expansion will come when structurally all the ethane comes on in the second half, late second half and for sure to 2013. The $6 billion, 2 new pipelines, lots of fractionation coming on. So we believe that this point you're making about where it will start to mimic fuel-value relationships, I think, will be for sure in 2013 but some tailwinds going into second half and some good, good margin expansion in the second half.

And just a follow-on on restocking. You thought you'd -- that restocking would soon occur. Are you -- We're seeing signs of that in North America. Are you seeing any signs in Asia of restocking in the polymer chain? Andrew N. Liveris: Yes, we are. And of course, they've got the extra issue of high naphtha. So they're really struggling in the price increases out there. So there's a price increase environment as well as good demand going on in the order book mostly because of post-Chinese New Year. As we said we would, it's really picking up. Actually, demand was going up going into the holidays this year.

We'll go next to Kevin McCarthy with Bank of America Merrill Lynch. Kevin W. McCarthy: Maybe just a follow-up in a similar vein, Andrew. It sounds as though your outlook is more constructive on 2Q relative to 1Q. You got to bounce in December operating rate. It looks to us like polyethylene got $0.05 in December for the industry and if I look at your ethane sensitivity that you outlined, that should be about $0.5 billion or more on an annualized basis just in January. And so I wonder if you can elaborate. Are there kind of timing issues, lag effects or perhaps hedge positions that would cause a somewhat more delayed positive responses that flows through your financials? Andrew N. Liveris: Well, I think if you stay within the polyethylene envelope, I think is a very similar previous answer to Don. I think you're going to see price power plus good volume demand based on Asian dynamics as well as U.S. dynamics with exports. Probably mid-quarter, we'll see some good tailwind on margin expansion, but you won't see it annualize to usual numbers until Q2. So we -- there are, in fact, some headwinds going on. Clearly, we also, for Dow, we have turnarounds at the industry, so we won't have the full force of the operating rate until Q2, until those turnarounds are done. Q2 is the big spike in turnarounds by the way. But -- so we're cautious on Q1 but a little more bullish on Q2 and strong on back half of the year. Just to remind you, of course, outside of those envelopes, there's a C3 headwind that we're facing, and we're cautious on Electronic Materials recovery in Q1, so that's as a whole company as well as still a weak construction sector. But PE, polyethylene and Performance Plastics should get tailwind starting really probably like December. They'll have price increases in the first quarter, and we should see good tailwinds throughout the year. Kevin W. McCarthy: And just as a follow-up, Andrew, what drove the double-digit increase in polyurethanes volume? Andrew N. Liveris: Well, the previous answer to my previous question, we had to make a structural decision. Do we bring down plants, take that cost? Or do we cover variable costs and move off low-cost positions? So our company went into strong volume year in November.

We'll go next to Hassan Ahmed from Alembic Global. Hassan I. Ahmed: We've obviously chatted a bit about the ethane side of things. Just wanted your views on the propylene side of things. Obviously, propylene prices have come down a fair bit through the course of last year. Where do you see propylene prices going through the course of this year and next? And in terms of your margin expansion as a result of that, where do you see that? Andrew N. Liveris: Yes. So propylene in our view is starting to increase because of its alternative value, and gasoline has risen dramatically since January, effective price settlement for February. In fact, there's a propylene producer out there nominating a $0.22 per pound increase in February. CMAI estimates $0.12. We believe propylene will stay elevated because of these dynamics through the early summer. That adds a lot of emphasis in our Performance Materials group, particularly polyurethanes but beyond that to really get strong pricing increases out there, which is what our mode is. Epoxies will be challenged though because of operating rate and epoxies not supporting strong price increases, especially in allylics and phenolics. So that will be a headwind for us, but PU will be -- is pushing price increases as are all the other propylene derivatives. But it will be tough margin operating territory for the first half. Cost interventions will start taking hold to help margin expansion in the second half. Hassan I. Ahmed: And Andrew, on the polyurethane side of things, which end market in particular are you seeing strength in? Is it auto? Is it -- I mean, obviously housing continues to be decently sluggish. Andrew N. Liveris: But polyols as a whole is doing very well, which is a very strong statement. So that means beyond just automotive. Yes, automotive, as we've seen with our auto companies. The automotive companies are coming off their bottoms and doing well. But we're seeing good use of polyurethanes in polyols in order -- in bedding, in furniture, so that implies good consumption at the consumer level in Asia in particular and the growth regions and some in the United States. In the U.S., we're seeing good use of polyurethanes in energy efficiency end use for our formulated systems.

We'll go next to Peter Butler with Glen Hill Investments.

If you look at the longer term beyond the really bad economic problems we're all facing, it sounds like maybe you're taking another look at the hand of cards that were dealt to you. And you sort of sound like you're liking the longer-term position of Dow a lot more than, say, a year ago, 6 months ago in regard to your raw material position and your emerging geographies. Do you think that is a good observation? And would you like to comment on possible adjustments of your 2015 targets? Andrew N. Liveris: Yes, Peter, that's a great question. Thank you. The 3-legged stool of the company, 2 legs have become very strong. The feedstock advantage position in the United States and Canada, with currently good old Canada, North America and our position in the emerging world, Argentina and soon Saudi Arabia 2015 and beyond gives us a very strong leg there. Second, the integration to downstream businesses whether it be polyurethanes or polyethylene and all the Plastics that will go into packaging, et cetera, very, very strong leg and then the third leg, which is the innovation agenda. But all of that has now given Dow 3 very strong legs. On top of that, our well-known operating efficiency. So this is a little bit of your mother and father's Dow combined with tomorrow's Dow. There was an article in Wall Street Journal today about whispering plastics in someone's ear. I think our type of plastics, high tech solution polyethylene going into high-end use markets and our integrated position down the chain in key markets, in emerging markets, gives Dow very strong 3-legged stool.

So if you had to make the predictions for 2015 today instead of last year, it sounds like those numbers would be going up. Andrew N. Liveris: Yes. So the $2 billion I referred to in just the feedstock advantage alone, we have $2 billion innovation agenda. So that's $4 billion of decline from '10 to '15. So what we're talking about here is we're on track for the '15. We're on track for the '10, and we certainly are on track to deliver, I guess, our commitments this year, resolute focus on that trajectory.

On a sort of separate subject. Why is the Kuwait decision delayed so much? It seems like from the outside that it's a simple legal question that you guys should win. Why is it taking the judges so long? Andrew N. Liveris: The enormity of the case. It's from a legal point of view -- I mean, you saw the Exxon case just recently. This is very much bigger than that case even. So I can't speak to the court system in -- the arbitration panel system in Britain or for that matter, the international court. It's -- this is just a very big case. So there's no speculation here because of any issue on outcome. It's all just the enormity of it. We don't control the time, but it's days and weeks, not months.

We'll go next to Andy Cash with UBS. Andrew W. Cash: Just a couple of questions. First, on the ethane advantage, now this might be around for a few years, maybe longer. But given the horizontal drilling and frac-ing technology could be exported to other regions outside of North America, what is Dow doing? Or what can Dow do to lock in that advantage for the very long term and not just for the next few years? Andrew N. Liveris: Yes. So we talked about this a bit. We certainly aren't going to reveal our own hand, because there's a lot of guys out there in the business production and pipeline to have their views on things. And what we like about all of this, Andy, is that we're by far the largest consumer. So our U.S. Gulf Coast consumption of ethane, for example, is 115,000 barrels a day. So we're not going leave our sales market exposed in case the impossible happens, which in my view, you should never say it never can happen. And that is we get LNG global netback pricing into the United States. If that ever happens, the U.S. has done a very nice job of shooting itself in the foot, we can't rely on politics nor export terminals being built and for that matter, restraint supply. So we are working on ways to hedge and hedge so that we're not exposed to that dynamic. Andrew W. Cash: Okay, my second question is it's not too long ago Dow was emphasizing -- I mean, you're still talking about your specialty businesses, but you used to emphasize them a lot more. And in sitting back then, the Dow was planning on topping its stock price with a specialty chemical multiple, and so now it seems like you guys are more emphasizing the commodity side of the business. You're really excited about that. So as you think about the stock in the next few years, is Dow thinking that the profit improvement over the commodity side will more than offset a lower valuation for the company's commodity business? Andrew N. Liveris: Well, I mean, you heard my 3-legged stool commentary earlier. And so clearly, one big leg of the stool is innovation and downstream and value add. Look, I think this whole commodity versus specialty thing is yesterday's conversation. I think today's conversation is who's got the scale to take the value add of low-cost feedstocks all the way to value add in the marketplace to be a diversified, integrated industrial in the space that takes material science, biological science and chemical science to value add based on low-cost positions and scale that can afford the R&D. In my view, that is new space in the, let's call it, the domain of value add, and the value add comes from 2 big bites: the bite of the feedstock end and the bite at the value-add customer end. That's the company we're creating. I'm not going to chase some multiple, Andy. I'm going to chase results. And we're going to, as I said on the call, deliver all this cash and reward our shareholders handsomely.

We'll go next to Bob Koort from Goldman Sachs.

Andrew, there seems to be some debate on ethane from the suppliers and the producers about the direction of future prices and I guess whether the last 18 months have been an aberration or a new normal. So I had 2 questions for you there. First, based on your experience when these pipelines are constructed or fractionation units built, is there a reasonably quick ramp of supply that comes from them so that you can have some confidence that ethane will show up in the Gulf Coast? And then secondly, obviously the only use for ethane is to make ethylene and the only value-added use. And it seems like there could be an awful lot of ethane swimming around before any greenfields are built. So given that you guys are one of the ones building a greenfield, what is the potential timing when you might actually start opening a valve and using ethane for a new global-scaled cracker? Andrew N. Liveris: Yes. So last question first. Just a little correction, we're not going to build a greenfield, we're going to build a brownfield. It will be a world-scale, ethane-based cracker. And we've announced that we're working on location, most likely Texas. And we are working to consume as much of that excess ethane that you've just talked about as we can. And your first question then, if you look at Alberta, if you look at Conway hub and if you look at what can be in the U.S. Gulf Coast, I think you've got yourself 2 analogs. I think the fractionation of the pipelines will create excess supply. We are by far the biggest demand. And we're going to participate in the distribution. We'll also buy and resell ethane to make your point. So yes, as it's only use, we will expand against -- that's the $4 billion program we announced. We will expand, and you can count on us putting a world-scale cracker in place to use that ethane for value-add uses for Dow. And our view is we can bring that on in the 2016, 2017 timeframe. William H. Weideman: And Andrew, you signed an agreement with Range and they're going to pull some Marcellus ethane down in the Gulf Coast, but you've also got a lot of politicians chasing grassroots plants up in the Marcellus themselves. So is there any risk if Shell and somebody else builds a new cracker that there won't be enough Marcellus ethane to get down to the Gulf Coast? Andrew N. Liveris: Short answer is no.

We'll take the next question from David Begleiter from Deutsche Bank. David L. Begleiter: Andrew, on the same ethane issue, we've seen absolutely low net gas prices result in some shutdowns by drillers. Any concern that these low net gas prices do impact drilling activity and hence, liquids supply going forward? Andrew N. Liveris: Yes, we definitely believe that this new sub-$3 per million Btu natural gas number is not sustainable for that exact reason. So we see -- we still see natural gas in the United States climbing back to the $4 to $6 range through the decade to enable the cost of producing the shale, the natural gas from shale to obviously achieve breakeven and a return to the drillers. It doesn't affect the current stuff that's being put in place for NGLs. NGLs is still a very high return for everybody. In fact, you've got lots of producers who want to produce the gas just for the NGL. So it really comes back to the earlier question that Andy asked, which is how can we lock in the NGL advantage while there's excess NGLs over these next last couple of years. And you can really, really count on us to be working on that. David L. Begleiter: Andrew, just -- and also just your review on propane given that, I think, we're about to double export, propane export capacity this year and the potential for your on purpose propylene that's going forward and what feedstock they might use? Andrew N. Liveris: Yes. Clearly, clearly propane is a completely different dynamic. I -- you're exactly right, propane unlike ethane dynamic. So PDH, for us, is a no brainer. I mean, we have announced the 2 world scales. We are moving on the first one, and we'll move on the second one. We'll become 90% integrated as a result, and all value-add downstreams and propane will be exported from the United States for a long time.

We'll go next to P.J. Juvekar with Citi. P.J. Juvekar: You were expanding most of your ethylene on the Gulf Coast. Can you review your Canada strategy, given your advantage ethylene and ethylene glycol capacity there? Andrew N. Liveris: Yes. So any global has the ethylene glycol capacity, as you know. We have our polyethylene plants up there, solution polyethylene as well as couple of swing trains. And we clearly, clearly have a advantaged position as I mentioned on an earlier question, the lowest cost, actually, in North America. We're working with MEGlobal on exactly your question. So they are keen on expanding. We are too and for the same reason, which is exports to Asia. And so we will have more to say on that in the next 6 to 12 months, but you can count on us having that same view on Canada as we do on the U.S. Gulf Coast. P.J. Juvekar: Okay, and then...

Great. Operator -- sorry, go ahead P.J., one more follow-up? P.J. Juvekar: Sorry. I would just have a quick question that, Andrew, you have a stated goal of reducing debt and no M&A. But there are other companies in the industry you were saying that rates are extremely low [indiscernible] , so it's not a bad time to do M&A. So how do you sort of balance that debt grade down losses any potential M&A? Andrew N. Liveris: I'll let Bill chime in here, give him a chance to say something. We look -- yes, I mean, we understand the dynamic around the financial -- the compelling reason from a financial point of view of doing M&A. But the cheapest M&A I have is in-house. We have so much organic growth opportunities. I don't need to go pay a premium for someone else's position. We have all the positions we need. So clearly, clearly we are very focused on growing organically and returning excess cash to our shareholders. And that's the march and the drumbeat from Dow. Bill? William H. Weideman: I would just echo the same comment, P.J., is that we have significant amount of opportunities in-house, and so we don't need to go outside to get growth. So it's really different from that perspective.

Operator -- Andrew, would you like to make a few comments? Andrew N. Liveris: Yes, so look, I look forward to follow-up questions, and, of course, thank you for the ones that did get in. We had a very good year in 2011. And the drumbeat of Dow is to continue to grow earnings and to grow our EBITDA. We have some tailwinds with the line of questions on ethane and hydrocarbons in our U.S. Gulf Coast position, our Canadian position and of course our Argentinian position. But we also have a diversified portfolio that is growing in the emerging world. 35% of our revenues coming from the emerging world is something for you guys to pick as -- to take notice of. That's $19 billion of revenue and growing at double-digit rates. So we believe that 2012 will be yet another year in our march to $15 billion. And we thank you for your great interest and support, and we look forward to more conversations and of course, rewarding our shareholders.

Thank you, everyone, for your questions and for joining us this morning. We appreciate your interest in the Dow Chemical Company. For your reference, a copy of our prepared comments will be posted on Dow's website later today. This concludes our call today, and we look forward to speaking with you again. Thank you.

That does conclude today's conference. We thank you for your participation.