In this section
			Local, Regional Economic Impact Financial Results of the Triple Bottom Line   Facts and Figures   Return on Equity   Return on Capital   Six Sigma

• Earnings increased from $0.34 per share in 2002 to $1.38 per share in 2003, excluding all special items.

• Our free cash flow (cash from operations minus capital expenditures and dividends paid to stockholders) for 2003 was a positive $1.45 billion, a turnaround of $2.2 billion from 2002 – all beyond our turnaround target of $1 billion.

• Dow’s stock rose 40 percent during the year. As measured by total shareholder return, Dow has outperformed the Standard & Poor’s (S&P) 500 and the S&P Chemicals Index both in 2003 and over the past five years.

• Achieve 20 percent return on equity (ROE) across the cycle.
• Return at least 3 percent over the cost of capital across the cycle.
• Earn at least the cost of capital at the trough in the business cycle.
• Achieve annual growth of 10 percent in earnings per share across the cycle.

Building Our Financial Strength
The economic expansion now underway is gaining momentum, and in 2004 we have reason to expect an increase in volume and an improvement in the overall supply/demand balance. But feedstock costs remain stubbornly high and volatile. If the past three years have proven anything, it is that difficult conditions can have remarkable staying power, and we must prepare ourselves to do well despite them.

So, just as last year, we will continue to be frugal in our capital spending; and we will sustain the gains we have made on structural cost reduction. We will focus on our customers and on managing price and volume. We will continue to sell assets that are not a strategic fit and shut down plants that are not competitive. And, we will work safely.

Shareholders and Stakeholders
Since 1912, The Dow Chemical Company has paid its shareholders cash dividends each quarter and has either maintained or increased the quarterly dividend amount throughout that period. We believe that this kind of data, normally a highlight of financial reports, nevertheless has an important place in this Public Report.

We believe that the dividends are a key component of the Triple Bottom Line. Capital is, after all, the "fuel" for all that we do. So we must be zealous in pursuing the innovations and efficiencies that support the dividends that will attract capital when needed. However, it is the careful attention that is paid to all stakeholder interests that enhances the prospects for profitability. Today, more than even a few years ago, stock price is increasingly being influenced by a host of intangible factors: employee relations, environmental sensitivity, and product reliability among them. We have moved from the 20th century “linear” corporate model in which the shareholder was predominant to a 21st century "circular" model where the shareholder and other stakeholders are mutually dependent.

Despite these admittedly difficult times, we are learning to make sustainability a way of business at Dow. Our economic imperative is clear. But equally clear is our continued focus on environmental stewardship, workplace safety, and corporate responsibility. We simply do not view economic growth in isolation from social and environmental issues.

On Track For Long-Term Profitability
As mentioned earlier, 2003 was a year of substantial progress for our Company. But we are well aware that it can be considered a good year only when set against the backdrop of difficult industry conditions. The task now before us is to build on our progress and continue to improve our financial performance. Our ultimate objective remains what it has always been: to maximize long-term shareholder value.

So we are approaching 2004 in the same way we approached 2003 – taking it one quarter at a time and continuing to improve earnings and increase our financial strength. We are confident that Dow people will once again rise to the occasion and meet our objectives.

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