Good day and welcome to The Dow Chemical Company's Third Quarter 2013 Earnings Results Conference Call. (Operator Instructions) Also today’s call is being recorded. I’d now like to turn the call over to Doug May, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Lauren. Good morning, everyone, and welcome. As usual, we are 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 Dale Winger, Associate Director, Investor Relations. Around 7 AM this morning, October 24, 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 and through the link to our webcast. Now, some of our comments today include statements about our expectations for the future. Those expectations involve risks and uncertainties. We cannot guarantee the accuracy of any forecast or estimates and we don’t plan to update any forward-looking statements during the quarter. If you would like to see more information on the risks involved in forward-looking statements, please see our SEC filings. In addition, some of our comments reference non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measure and other associated disclosures are contained in our earnings release and on our website. Unless otherwise specified, all comparisons presented today will be on a year-over-year basis. EBITDA, EBITDA margins, and earnings comparisons exclude certain items. The agenda for today's call is on Slide three. And I’ll now hand it – hand the call over to Andrew.

Thank you, Doug and good morning everyone and thank you for joining us. Turning to Slide 4, this quarter was another solid proved point in Dow’s earnings growth momentum and our focus on executing self help measures. Both strategic moves as well as tactical interventions to achieve top and bottom line gains in a perpetually slow-growth world. Here are the highlights, adjusted earnings per share grew 19% year-over-year, representing our fourth consecutive quarter of EPS growth. We delivered $1.4 billion of cash flow from operations, a 27% increase year-over-year. year-to-date we’ve generated an additional $3.1 billion of cash flow from operations versus the prior year. As strong cash flow and strategic actions are allowing us to fund our organic growth and additional shareholder remuneration. I’ll focus on debt reduction, $200 million in the quarter and $2.4 billion year-to-date droves our net debt to capital ratio down to 34.7% below the low-end of our historical range. We delivered solid EBITDA improvement led by our Performance Plastics franchise, where high margin market focus and cost advantage enable us to deliver EBITDA growth of more than 30% and notably our Coatings and Infrastructure, and Electronics and Functional Materials businesses also delivered EBITDA gains up 15% and 5% respectively. We continued to be proactive and as you’ve seen through our consistent and persistent actions over the last 12 months. Dow has a number of key catalysts in place that are fueling momentum, enhancing return on capital and driving higher returns for our shareholders. We've a number of strategic business transitions in motion, including the signed transaction on your Polypropylene Licensing and Catalysts business. Today, we announced additional financial milestones aligned with further actions we are taking to go narrower and deeper into attractive markets and proper pools and deselecting portions of value chains that are no longer core to our business. But first, I will turn it over to Bill for more detail on our financial and operating results in the quarter.

Thank you, Andrew. Turning to Slide 6, sales increased 1% or 2% on an adjusted basis to $13.7 billion. EBITDA was $1.8 billion and earnings was $0.49 per share or $0.50 per share on an adjusted basis. This compares with earnings of $0.42 per share in the same period last year. Now moving to Slide 7, we will see the key drivers of our results this quarter. We drove aggressive price actions across all businesses. However, the full benefit of these actions was offset by higher and volatile raw material costs. Equity earnings grew $147 million year-over-year led by our joint ventures in Kuwait. Further, our cost reduction actions continue to gain traction, reaching $320 million year-to-date and remain on track to deliver $500 million in EBITDA by the year-end and $1 billion on a run rate basis by year end 2014. Now, let me take a moment to dive deeper into price and volume trends on Page 8. We saw a strong performance in emerging geographies, where both price and volume increases drove revenue gains of 5%. We also delivered strong revenue gains in key end used markets including Electronic and Functional Materials, Coatings and Infrastructure, Performance Packaging and Agricultural Sciences. Volume grew 5% in Latin America and 3% in Asia Pacific, offsetting currency headwinds in both regions. Developed geographies volume declined, primarily due to previously announced shutdowns, weak chlorine chain industry fundamentals and a lighter feedstock slate in Europe. Now turning to the operating segments, starting with Electronic and Functional Materials on Slide 9. Sales in Electronic and Functional Materials were up 5% as volume growth of 6% more than offset a 1% decline in price. Ongoing strong demand for functional films and OLED materials and mobile devices grew volume increases in Dow Electronic Materials. Functional Materials delivered…

Thank you, Bill. Dow delivered another solid quarter and remains in a strong path forward. Our earnings and cash performance demonstrate our ability to execute in the phase of uncertainty and the debt reduction, cost control and divestiture progress Bill just discussed, are further proof we’re deploying every tool without disposal to effectively control the controllable. However the reality remains. We are operating within a global business environment that still is not stabilized. We have volatility and uncertainty cleared the new norm. So if you turn to Slide 14, we anticipated this ongoing volatility which has fundamentally changed the way global markets behave and the way our business must be prepared to respond. This is why over the previous twelve months, we’ve maintained a steady focus on driving improvements in return on capital to release value and we have consistently provided progress reports on this plan, for example at our Investor Forum in 2012 using ROC as our lens, we shared our view on segment specific plans to enhance value. We then follow this for the closer look and how our focus on ROC was driving our investment decisions and as a result in the first quarter of this year announced plans to divest $1.5 billion of non-strategic assets. In the second quarter we reviewed additional work we had undertaken on underperforming units unveiling plans for broader portfolio optimization activities, mostly in the Performance Materials segment. And just last month, I shared specific next steps with respect to these actions including anticipated transactions with portions of our point change and our commodity derivatives. As a result of this steady ongoing focus and our deeper drill into ROC challenge business, we turn to Slide 15, today we are announcing that we will accelerate our intermediate divestiture financial goal moving from our…

Great. Thank you, Andrew. Now we move on to your questions. First, I would like to remind you that my comments earlier regarding forward-looking statements and non-GAAP financial measures apply to both, our prepared remarks and the following Q&A. Lauren, would you please explain the Q&A procedure.

Thank you. (Operator Instructions) Our first question comes from John McNulty with Credit Suisse.

Good morning and thanks for taking my question. With regard to the debt load that you’re carrying, you’ve dropped that pretty significantly with all the cash flow that you’ve been generating and now you are talking about divesting $3 billion to $4 billion. So I guess can you walk us through how much far do you expect to bring down the debt load? And then, at what point might we start to see cash getting returned to the shareholder in a different way whether it’s share buybacks or bigger dividends or what have you?

Sure. Hi, John, this is Bill. You are exactly right. As you know that our net debt to total capital has come down significantly due to the permissible actions we’ve taken over the last four or five years, reducing debt by $5 billion, and you’re right. The entry point of that is comment [ph]. With both our expectation and strong cash flow generation plus the proceed we’ll have a lot of flexibility going forward. As I think of debt, John, we think that this is a way that – I think of it. It’s not so much as uncertainty for a specific target, our net debt to total cap. We will continue to reduce debt, but it’s primarily to reduce interest cost, which will increase our earnings and will give us the flexibility return than more to shareholders. So as you think about our debt, we will continue to bring down debt. You’ll be focused on our highest cost percentage debt. It is primarily to liberate more earnings. At the same time we will also fund our growth projects that we’ve laid out, but clearly as you pointed out we’re going to have a lot more cash to return to shareholders both in terms of increased dividend and share repurchase. So we’re at a very good position and the key message is we have a lot of flexibility going forward.

Just to add on, John, I mean accelerating share repurchase and address the dividend.

Great, thanks. And then just give us as a quick follow-up. On the $3 billion to $4 billion of divestitures coming, it sound like some of the businesses are really struggling right now, some are maybe doing at least okay. How should we think about the earnings power of those businesses and the potential loss of that as you sell in over the next 12 to 18 months or 18 to 24 months?

So John, the scoping here matters a lot. And as you know from our previous conversations with many of you, the electrochemical unit, the chlorine part of that unit feeds a lot of our value, add businesses downstream, so decoupling the commodity pieces such as [indiscernible], such as chlorinated organics, such as vinyls. If you decouple it and think about those, we don’t actually loose a lot of EBITDA because we would not spend this far comment on my prepared remarks, we are not going to leave any stranded cost. The value chain is quite well up here in the United States. PVC guys are enjoying good domestic market as well exports based on low cost natural gas. So between caustic soda, Chlorinated Organics and Epoxy, these are basically single-digit EBITDA in the Dow context and frankly, we will basically see an improvement in our more because there will be less commodity and frankly the EBITDA on our second quarter earnings call therefore you to see and is basically $5 billion of revenue and roughly $450 million of EBITDA.

Our next question comes from John Roberts with UBS.

Good morning, can you hear me?

Yes.

Could you decompose the volume decline in North America a little bit for us, you were down 2% and again that’s your most cost advantage region, you shouldn’t have had as much impact perhaps from margin pressure from higher feedstock, but maybe decompose that a little bit in terms of where the volume weakness and was it up excluding chlorinated products in North America?

So look, price volume in North America for plastics was at its max, so the unit that did very well, plastics was up by about 9% on price and down a little bit on volume and that actually tells you a North America story, that on the seed return in Ag, which was commented on our prepared remarks. If you look across most of the units that was strong, E&FM were up 8%, driven by functional materials, C&I was up 5%. So really the one you’ve highlighted which was the performance materials chlorine chain specifically Epoxy was the line that was most affected plus a little bit of the feedstock and energy unit because of the caustic turnaround.

Okay. And why would you expect a normal seasonal decline in the fourth quarter when you seemed to be entering it with a little bit weaker trends than the normal?

You mean the performance plastics or in general, the volumes?

I think it was a general comment about expecting a normal seasonal decline in the fourth quarter.

Yes, well, Q4 for Dow has always been on our mix, the slowest of our four quarters, that’s because of the December month, factory shutdown and not just in the United States but around the world. That comes to the comment on exports out of China. If the Chinese go into December running, then that comment will change, but typically what we see is a slow December, in fact the second two weeks of December almost non-existent.

Our next question comes from Peter Butler with Glenn Hill Investments.

Good morning.

Hi, Peter.

Good morning, good morning.

Good morning.

Bunch of us who have been following you guys for a long time and we know where Dow is now and we think we know where it’s going, but it sounds like your outlook for the 2015-2016 period is a lot different than what Wall Street has incorporated in their earnings estimates and you have been talking this $10 billion EBITDA target, how much better could it be in 2015, 2016, because there got be a lot of pluses coming out of the bad period that we’re going through?

Yes, so the slide that refers to your point, 2015 is literally around the corner. I think the closer 2015 gets to you the startup of Sadara and the startup of our U.S. Gulf Coast PVH unit. As well as of course the second project we have down in the U.S. Gulf Coast post St. Charles; St. Charles is up and running and doing great as Slide 20 indicates. But Louisiana Ethane Flexibility project which is the conversion down there of the naphtha cracker to crack more ethane. Those are all going to hit 2015 timeframe without much of a global economy tailwind behind it. If you say that global economy is around 3%, 3.5% number, all things being equal. There is also our polyethylene plastic cycle in front of us as well, which is one of the things on Slide 20. So we believe quite confidently in the $10 billion number 2015 and on and between now and then, it's really a bridging over by being aggressive portfolio managers on commoditized underperforming units therefore John McNulty’s question, taking out low ROC will improve the ROC of the company, well least value as the 2015 capital is hit. Sadara starts up, US. Gulf Coast starts up, and then ethylene cycle occurs as well as they are bad and list launch this is north of $10 billion space.

You didn't mention Ag in this. From the outside it looks like you could have a heck of a good ramp-up in your Ag Chemical earnings over the next couple of years.

Yes. So I mentioned in the list just but I can definitely tell you that we believe Ag will double its value from EMEA in these next several years based on those launches. It's doubling value in the last 3 to 5 years. It's got the Seeds, Traits and Oils business is about to approach breakeven, we will release a lot more value once that is no longer in negative territory. Enlist itself is an accelerator, SmartStax has done really terrifically, and then all the Ag chem launches that we put out there which are being, whether that’d be herbicides or insecticides have been knocking it out of the park. The Dow’s earning power is greater than $1.4 billion in 2015.

Our next question comes from David Begleiter with Deutsche Bank.

Thank you. Andrew, of that $10 billion in EBITDA, how would you breakdown between commodity sensitive earnings and more value add earnings in that number.

So I was just at the Plastics Exhibition at K. every three years we have big participation that is most plastics guys do. What's very notable about our plastic mix today versus a three year ago K is the disappearance of all the commodity plastics. And our customer base there that was there in droves, when they looked at Dow they saw packaging, specialty plastics, specialty elastomers, all high-value plastics which are wireless commodity sensitive. And the way we think about plastics today is value-add and the low cost feedstock piece where lock in through U.S. Gulf Coast and Sadara has way less volatility. We are de-emphasizing the naphtha and oil molecule in the plastics mix. As a consequence of that way more reliable earnings and way less sensitivity to volatility in the $10 billion, the increment from $8 million to $10 million north of 10 has way less volatility, a way low of data than the previous Dow of three or four years, five years ago. And the way I also view that is we're riding at a very high EBITDA number right now equivalent to what we had in 2005. We have the Rohm and Haas businesses all performing well, Coatings and Infrastructure has hit it stride [ph]. We have E&FM doing great, and so the Rohm and Haas businesses have really brought down our volatility. Our Ag business has brought down our volatility and we’ve changed plastics so it is less volatile. And we are getting out of the volatile pieces like in Epoxy, like commodity chlorine. So that answers your question I hope.

It does. And just lastly on Q3 and Performance Plastics, sequentially what was the delta on maintenance and turnaround costs in Q3 versus Q2 Performance Plastics?

Do you have the number, Jeff?

It was down, I don’t have the exact number in front of me, but the turnaround third versus second was in the update $20 million to $30 million kind of range.

Our next question comes from Duffy Fischer with Barclays Capital.

Good morning, Duffy.

Good morning. I wondered if you can flush out a little bit more Andrew, you talked about $5 billion in sales from the stuff that could be separated, $450 million in EBITDA and we increased the potential proceeds about $1.5 billion to $2.5 billion. On a sales multiple that looks like 0.3 times to 0.5 times which feels pretty light for those businesses. Can you just walk through what’s some of those might look like if those numbers are right and if that $3 billion to $4 billion is selling everything or if there are some JVs built into that as well.

Yes, part of that, hi, Duffy, you probably answered your own question, I mean certainly that is not, you should not equate that $5.5 billion of revenue roughly with the $3 billion to $4 billion at all. Because firstly, $3 billion to $4 billion includes $1.5 billion, we had already talked about. The increase of roughly $1.5 billion to $2 billion is probably part of the scope of that $5.5 billion and frankly includes joint ventures. And so there are structural topics in there like MLPs, there is some infrastructure, there is some energy assets. We are not done. That 3 to 4 is today’s number. We don’t know what to do. This is not a simple carve out, we are working hard on that, huge service to Styron. When we finally formed Styron, separated it and then have a lot to say about what we wanted to do with Styron. It obviously consists of a lot of businesses that you’ve already been expecting. So you should us continue to go down that path. We are working on modules, modules within that $5.5 billion and other time you will expect to get more updates from us.

Okay, thank you. And then on DAS [ph], it seems like some more cost running through some returns. How much of the returns was actual DAS seed versus how much of that would have been may license seeds that came back and you had to eat some of that? And how healthy do you think your seed business is set up for next year, with some increased cost running through, the corn seed business in the U.S.

And definitely answer that. So from the seed return standpoint that was really driven from the wet and cold weather in the northern hemisphere primarily the U.S., there wasn’t any specific I mean license or anything like that. It was really best suited to return to smaller acreage in terms of plantation.

Mostly our seeds.

Yes, exactly our seeds. So going forward we expect actually the seeds in the Ag business to bounce back in the fourth quarter and actually we believe we are going to have a strong 2014. So this is just little bit of anomaly actually this quarter to the seed returns again due to the wet weather and cold weather we had.

And I would say we see Q3 therefore as an anomaly, the bottom line and you should take nothing from what happened in that quarter vis-à-vis Q4 or 2014?

Our next question comes from P.J. Juvekar with Citigroup.

Good morning, PJ.

Good morning. Andrew some of this chlorine derivatives are under performing and you up here divestiture target advocated and how do you think about the chlorine longer term? Do you think Dow wants to be in the chlorine business?

It’s a terrific question P.J. When you consider the context of your question for many people on this phone like all of us, we have 117 years of history in chlorine. This management team is very driven to put financial strategic criteria against every part of that portfolio. And the strategic criterion around chlorine has been now for the last 5 years to 7 years around value-add chlorine for our downstream businesses like for example Ag chemicals. As we did the Mitsui deal down the Mitsui Chlor-Alkali, it was indicative to us that there were a lot of people out there that really wanted to play in the vinyls chain or PVC, particularly when they saw the low cost shale gas. So we consider it a valuable asset, but no longer may be valuable to us because of the other criteria, which is to decommoditize our earnings and really invest in IP and the value add. So therefore we can move some of that capital up of our boots. And frankly, that is driving us now to actually achieve in essence the de-volatilization of our earnings, as well as taking down some capital and reallocating that capital to better market choices. Commodity chlorine, others can do that, they can play in PVC. For us we will use our chlorine and competitive cost for our value-adds, but we have market choices for example the plastics packaging business, for example the Ag business, for example the electronic materials business where we would rather put Dow's precious capital for greater shareholder return. So it's frankly withdrawing the line higher up on ROC and higher up on a lower beta in terms of volatility of earnings and then going deeper in certain markets.

And just quickly on these divestitures, you have several being lined up?

Yes.

Do you have the deals to handle that? And then secondly, how do you maximize value? Do you have a standardized auction process that you will run through? Thank you.

Yes, Styron is a great indicator. We've done $8 billion of divestments in these last five years remember we did some of them in the middle of the crisis. We have an incredibly good team on the carve out side, very focused teams, for example Epoxy right now. Epoxy has a very focused group of people. We brought in one of our leaders from the Pacific, Pat Dawson, brought him back and have given him that full time job to run Epoxy, run it for cash, run it for maximized value and then over the time we will transact. And this is the sourcing we've got in place, Bill's got his M&A team, we've got our joint venture teams and we can parallel process this and execute against these divestments without interrupting our value growth activities.

I’ll just add to that, PJ as Andrew mentioned, each one of these, we have a different team working on those. So we have a team completing and exceeding the $1.5 billion. We have a team specifically focused on the chlorine derivatives, specifically focused on Epoxy. So we’ve done very much a divide and conquer approach here.

One more add, by the way sorry to beat on about this, but it's a powerful question. As you saw with plastic additives, we also are going to pull things off the market if we don't get the value that we believe they’re worth. This is not a fire sale, this is not a need for liquidity, this is not a need even for the balance sheet. This is a decision to allocate capital its highest value to our long-term profitable growth.

Thank you.

Our next question comes from Robert Koort with Goldman Sachs.

Hey, good morning, guys.

Good morning.

Andrew, I wanted to ask a little bit about the cost savings initiatives. It sounds like they’re really going to ramp up in the fourth quarter. I think your slides suggests going from a 320 million delivered to a 500 million achievement, which means a big chunk in the fourth quarter. So I want to make sure that math seems right here and maybe give a granularity on how it ramps that much? And when I look at the corporate expense line, in the last several quarters it's been down nicely every quarter and this quarter, it didn't move down nearly as much, that was more flattish. So was there something unique and specific to this quarter there?

Hi, Bob, this is Bill. So your math is right. So year-to-date our cost savings is $320 million and at the end of the year we spent $500 million. So you do your math there, we'd expect in $180 million kind of range. And the reason is that that continues to ramp up. As far as the people reduction, where we've eliminated about 70% of those positions and so that will – that additional reduction is coming in the fourth quarter plus the full impact of the work force reduction we've done, but your math is exactly right. So you could expect that to ramp in the order of magnitude of another $180 million in the fourth quarter. As far as the corporate segments, there is lots of different things in the corporate segment. You've got insurance and other things in there, but actually it's right within the range that we have provided there. You're right, it's about flat for the year ago, as I recall it is like $218 million this quarter, which is really inline with. And going forward you should expect that to be in that $200 million to $250 million, but more on the lower side. And as we go forward, in 2014 you will continue to see more cost reductions that will impact quarter.

And then Andrew, I think you mentioned Epoxy was once upon a time a pretty bright star with nearly 20% EBITDA margins. To try and figure out how much you might get if you were to monetize that? Can you give us a sense where margins are today?

Yes, so there is single-digit EBITDA percent margin and so we really have seen overcapacity. And if you look at China they have built a lot of their conversions of – settlement plants, the epichlorohydrin plants really was doubled out market dynamics which is not a typical of Chinese state-owned enterprises. So whether it's Asian producers, an Epoxy like the Taiwanese or the Chinese in epy [ph] and, they have oversupplied that, and the wind energy business disappearing because of loss of subsidies particularly in the Europe and U.S. I mean these have been big dynamics, so they come in a hurry. By the way this slide 18 on the second quarter deck has the specific EBITDA number, that is high single-digits. So the consequence of all this, Bob, is really you really don't want to put a lot of R&D against the commoditizing business. Dow has really good assets in epichlorohydrin, the two low cost assets in the world, one in Germany, one in Texas. Those assets can be run for cash as long as you don't burden them with extra cost structures downstream. There are other producers out there or way more downstream than us that choose to do the value-add downstream. I believe those businesses will commoditize with time. So in terms of getting valued, I think there is also an equal chance that this will be a combination with someone else because of these – these industries hurting as much as a pure sale. Having said that, our focus is to run it for cash, improve the value and then take it from there.

Our next question comes from Frank Mitsch with Wells Fargo Securities.

Well. Good morning, gentlemen just talking about cost savings, I really like the ad that Accenture took out on your behalf in terms of using the chemical symbols and so forth, so very eye catching. On the Epoxy side, Andrew you are saying that it could very well be a JV as well, but that would still leave you vulnerable to the volatility of that business. Would you be thinking that if you were to do a JV that the amount of synergies that could be taken out would be such that the overall negative part that Epoxy is playing in the Dow portfolio would be mitigated somewhat?

Yes, I mean, I think the way you should think about JV, Frank is not unlike the Dow-Mitsui Chlor-Alkali JV. That was a pure 50/50, but that was a big synergy play based on Brownfield investments we had that we could incrementalize the new bill. In this case, the synergy is we have two very low cost upstream assets. So somebody else has a lot of downstream assets. So that could be restructuring. So I don't want to foreshadow the actual deal off course, but in the essence there would be synergies available and then over time we don't have to be even a 50% owner. We could even start out on a low ownership. This thing could be a beautiful part of somebody’s private equity portfolio. This could be even a spin out as a standalone Epoxy business. These niche specialty chemical companies that run with a very low cost base and with some value add, but very focused, I mean this could be very attractive to some small portfolio somewhere. So, long story short. As I said, it was a great business. It can be a good business, but for us it’s way too volatile and given where we are in terms of our portfolio allocation process it’s a good time to look at better owners.

All right, terrific. That’s helpful. And I guess I wanted to ask the question obviously with the balance sheet getting healthier and healthier and getting even more healthy with these asset disposals and so forth. So what are your thoughts about possibly going on the other side of the isle and doing some acquisitions in more specialty types businesses and bolstering strategic parts of Dow?

So, I’ll let Bill maybe chime in, but I think I’m probably going to make it redundant by saying, look, Frank we’re going to focus all of this balance sheet work on our shareholder. We have built a portfolio that has been tremendously hard to build on these last five to seven years. Our shareholders have been extremely patient. We’re going to release value and Bill is going to take down interest cost for releasing earnings. So that’s decent value. And we’re going to give this to our shareholder. It’s very important that we keep getting better not bigger and I think this is the march on ROC. Do you want to add anything?

Yes, Andrew. We didn’t feel there is need to go out and do any M&A. We need to have clear balance, reinforced doing more tax. We have a net growth thing that we’ve laid out U.S. Gulf Coast et cetera that will fund, that we think will do much better returns than we could ever get in a M&A deal.

Our next question comes from Laurence Alexander with Jefferies.

Good morning. This is actually Rob Walker on for Laurence.

Hi.

Hi, guys. I guess what was your global operating rate in the quarter? And I guess post your divestment target, what would that rate increase to?

Yes, the operating rate in the quarter was 82%. And I’m not sure I understood the second question.

Looking a few years out, how much could that operating rate be higher say you...

I don’t know, Rob. Obviously up from where it is today. It’s always been on the scope and obviously the economy itself, but I would say definitely higher than it was today and then third quarter was 82%.

Yes, and notably by the way the plastics chain is running in the early 90s and the crackers are all running in the low 90s. So, different parts of the outfield [ph] are running below obviously 80%. So where we’re taking our capacity and where we’re divesting is in the parts that are running below 80%. So therefore Bill’s mathematical answer is correct. It should go higher than 82%. ah and notably by the way, the plastics chain is running in the early 90s, so the crackers are all running in the low 90s, so different path of the ops that are running below obviously 80. So here we are taking our capacity and while our divesting is in the cost of better running below 80%, so therefore Bill’s mathematical answer is correct. It should go on higher than 82%

We have time for one or two more questions, Lauren?

Yes. I guess just excluding the businesses that you’re targeting for divestiture, any sense how the remainder of the business performed in the quarter and what would be the return on capital of that business roughly versus your current level say it, by year-end 2015?

Just real quick at, I mean, as far as how the business is operating at quarter, I mean, we made a comment, but I think that Electronic and Functional Materials had a good quarter up year-over-year, very solid EBITDA returns, Coatings and Infrastructure as Andrew mentioned. We’re starting to see that business improve and so year-over-year improvement and we believe that trend will continue. We believe we’ll here start to see now an year-over-year improvements there. Ag was a little bit of an anomaly this quarter, we expect this is going to bounce back forward. Performance Materials delivered very strong earnings, and we expect that will continue and Performance Materials as we have highlighted that ones where we’re really focused on improving returns there. And then Feedstock and Energy was down a little bit, but that was all really related to the feedstocks slate in Europe. So most all of our businesses with exception of Performance Materials did actually quite well in year-over-year comparison.

Lauren, sorry maybe one or two more questions.

Our next question comes from Mark Connelly with CLSA.

Good morning, Mark.

Good morning, Mark.

Just a clarification and a real quick question. Is this less value in this derivative businesses, I am trying to get a sense of how that impacts all the work you’ve been doing on this integrated strategy. I mean, I am thinking of this as sort of a natural evolution of the existing integrated strategy, first is that right. And second does pulling out these pieces sort of set you back in getting to where you wanted to go operationally in that process.

That’s a great question. So Mark, if you go back to Dow’s integration strategy over the decades, chlorine, ethylene, propylene and then benzyne and aromatics all formed the foundation molecules. We took a big decision five, seven years ago around the aromatics part, right. So you can see that were Styron and that was not an easy carve out, but one that we could pull off without stranding at the negative cost and hurting our strategy going forward on value-add. So now you’re correctly addressing the chlorine piece, because we’ve got ethylene, we’ve got propylene and we believe those are essential molecules for our value-add. That integration will never change based on the current portfolio, but certainly on this portfolio piece without looking at, which our chlorine derivatives that are commoditizing, remember this is not our evolution, we are basically seeing over booming going on. If there was a medium term structural fix, we probably would have recommended it by now. But in essence the chlorine violence [ph] piece of this has not been our strategy for some years ever since we basically have the ShipTek, SynTec contract goes away a bit. Why? Because we wanted PVC, they were, so other companies are in PVC. So that always made sense. We could pull that off without really hurting our chlorine integration strategy. So now we are doing the next layer on it which is there Epoxy Resin and Chlorinated Organics, these are commoditizing. We believe we can pull it off without changing the integration strategy.

Perfect and then, just one last one thing, are we still using the 10% seed market strategy for corn target?

Yes.

And our final question comes from Kevin Mckarty with Bank of America Merrill Lynch.

Yes, good morning. Thanks for squeezing me in.

Good morning.

Andrew it looks like exports are starting to exhort a bit more pressure on propane, can you speak to that market and how it's influenced your feed mix, propylene derivatives and whether or not it’s had any impact on your Performance Plastics’ profitability?

Certainly in the quarter and in this next quarter the propane run up is a mismatch between fractionation capacity coming on and export capacity being built. So the exports may try to factor into the rising propane. But at the end of the day it doesn’t change the direction arrow [ph] Kevin, in terms of the market being long globally for as far as I can see. So if you export it globally along market it will kick the domestic number down. We believe the long-term process will trend higher well with WTI, but at a lower ratio, probably around 50% to 55% than in the past because these new supplies out of fractionations will come and over a meaningful timeframe will outpace the exports and other demand.

And a quick follow-up, if I may, for Bill. How much might your pension expense decline in 2014?

Yes, so every 100 basis point increase in interest rate, which is about where we are today is relevant, reduces our interest expense about $250 million. I think it was based on the discount. If interest rates stay about where they are today you could expect our interest expense to be down roughly $250 million next year and could be up and could be a little bit more. It also has a significant impact on our funding ratio. Every 100 basis point changes our funding balance about $2 billion. So it’s another data point.

Great, thank you.

Andrew, maybe before we close do you have any final comments?

Yes, I mean I would also like to highlight some of the questions we’re being asked. Our commitment to get to north of $10 billion is absolutely resolute. We have a medium-term catalyst for 2015. 2015 is not a far timeframe. In this short timeframe the cost and cash interventions that we’re asked about appearing in Q4, I mean against some of the volatility that’s out there we believe the market is getting better. So 2014 should be better than 2013 and we believe that by making the decisions we have on the bottom part of the portfolio in terms of ROC will liberate value and liberate value to earnings off the balance sheet and then keep raising if you like our shareholder remuneration. So that’s the storyline. We had September volatility on hydrocarbons. So didn’t get the price increases, but frankly we believe that the year-on-year was very strong and we’ll continue to execute against the same.

Thank you, Andrew. 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 for today and we look forward to speaking with you soon. Thank you.

This concludes today’s conference. Thank you for your participation.