UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from           to
 Commission file number 1-3507
 ROHM AND HAAS COMPANY
  DELAWARE
    
    23-1028370(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)100 INDEPENDENCE MALL WEST, PHILADELPHIA, PA
    
    19106(Address of principal executive offices)
    
    (Zip Code)
 (215) 592-3000
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of each exchange on which registeredCommon Stock of $2.50 par value
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
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 o þ
 þ o
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  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
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DOCUMENTS INCORPORATED BY REFERENCE




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Rohm and Haas Company 2008 Form 10-K
Table of Contents
 Item
    
    PagePART IItem 1 Business
    
    
    1Item 1A Cautionary Statements and Risk Factors
    
    
    19Item 1B Unresolved Staff Comments
    
    
    21Item 2 Properties
    
    
    22Item 3 Legal Proceedings
    
    
    24Item 4 Submission of Matters to a Vote of Security Holders
    
    
    24PART IIItem 5 Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    25Item 6 Selected Financial Data
    
    
    28Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    29Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    61Item 8 Financial Statements and Supplementary Data
    
    
    64Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    129Item 9A Controls and Procedures
    
    
    129Item 9B Other Information
    
    
    129PART IIIItem 10 Directors, Executive Officers and Corporate Governance
    
    
    130Item 11 Executive Compensation
    
    
    133Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    133Item 13 Certain Relationships and Related Transactions, and Director Independence
    
    
    133Item 14 Principal Accountant Fees and Services
    
    
    133PART IVItem 15 Exhibits and Financial Statement Schedules
    
    
    134SIGNATURES
    
    
    138




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PART I
 
 Item 1. Business
 The Company
   Net Sales (in millions)
 
 1




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Annual Net Sales by Region ( in millions )
 
 Automotive Coatings
  Our Strategic Focus
  
    
    Position Our Portfolio For Accelerated Growth by leveraging our integrated acrylic
monomer and polymer chain; accelerating investment in Electronic Materials; creating or
expanding platforms that address the growing needs in food, health, water, energy, and
other areas in the developed and developing worlds; and supplementing our organic growth
with highly selective acquisitions which bring a growth platform technology or geographic
supplement to our core businesses.
 
    
    Build Value-Creating Business Models in Rapidly Developing Economies by tailoring
products to specific local or regional needs; finding solutions that are affordable and
meet local requirements; organizing in a manner that enables rapid decision-making;
investing in local talent; and building plant facilities that can compete effectively with
local and regional players as well as multinational players.
 2




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
    
    Innovate with a Market / Customer Focus by increasingly shifting the focus and delivery of
technology programs closer to the customer, driving to faster and more tailored output.
 
    
    Operational Excellence / Continuous Improvement- by maintaining flat conversion costs
over the next three years; building more capital-efficient plants in emerging markets;
continuing to optimize our global footprint; and increasing global sourcing, especially
from low-cost countries.
 
    
    Deploy Right Talent in Right Places- by ensuring that leadership talent with the right
depth and breadth is in place to drive the profitable growth of our businesses through
shifting deployment of more key leaders to locations outside the U.S.; and continuing to
drive the nurturing and development of our global workforce.
   Cash Generation
  Corporate Governance
  
    
    Ethical and legal behavior at all times;
 
    
    Integrity in all business interactions; and
 
    
    Trust by doing what we promise.
  3




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Our Businesses
 .
 Net Sales by Business Segment (in millions)
 
 ELECTRONIC MATERIALS GROUP
  Semiconductor Technologies Circuit Board Technologies, Packaging and Finishing
Technologies Semiconductor Technologies
 4




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ELECTRONIC TECHNOLOGIES
 Net Sales (in millions)
 
 Net Sales by Business Unit (in millions)
 
 Electronic Technologies
 5




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Circuit Board Technologies
 Business
    
    Markets
    
    Products
    
    End UsesCircuit Board Technologies
    
    
    
    Electronic devices
    
    
    
    Enabling technology for all
    
    
    
    Cellular phones
    
    Communication
    
    
    
    aspects of the manufacture
    
    
    
    Personal computers
    
    Computers
    
    
    
    of printed circuit boards
    
    
    
    Cars and trucks
    
    Transportation
    
    
    
    Products such as:
    
    
    
    Electronic games
    
    Recreation
    
    
    
    photoresists,
solder mask, electroless and
electrolytic copper
 Packaging and Finishing Technologies
 Business
    
    Markets
    
    Products
    
    End UsesPackaging and Finishing
    
    
    
    Electronic devices
    
    
    
    Materials and technology for
    
    
    
    Cellular phonesTechnologies
    
    
    
    Connector finishing
    
    
    
    integrated circuit packaging,
    
    
    
    Personal computers
    
    Semiconductor packaging
    
    
    
    connectors and industrial
    
    
    
    Cars and trucksfinishing
    
    
    
    Home appliances
    
    Surface finishing
    
    
    
    
    
    
    
    Office equipment
    
    Electronic games
 Semiconductor Technologies
 Business
    
    Markets
    
    Products
    
    End UsesSemiconductor Technologies
    
    
    
    Electronics and communication
    
    
    
    Essential technology for
    
    
    
    Cellular phonesdevices
    
    
    
    creating state-of-the-art
    
    
    
    Personal computersintegrated circuits:
    
    
    
    Cars and trucks
    
    Transportation
    
    
    
    photoresists, developers,
    
    
    
    Home appliances
    
    Home and office goods
    
    
    
    removers, anti-reflective
    
    
    
    Office equipment
    
    Recreation
    
    
    
    coatings, chemical
mechanical planarization
(CMP) pads and slurries
    
    
    
    Electronic games
 6




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DISPLAY TECHNOLOGIES
 Net Sales (in millions)
 
    Display Technologies
 Business
    
    Markets
    
    Products
    
    End UsesDisplay Technologies
    
         Electronics and
communication
devices
    
         Films for LCD displays
     Films for plasma displays
     Process chemicals for LCD
displays
     OLED materials
    
         Television monitors
     Computer monitors
     Electronic device
displays
 SPECIALTY MATERIALS BUSINESS GROUP
    7




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PAINT AND COATINGS MATERIALS
 Net Sales (in millions)
 
     8




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Business
    
    Markets
    
    Products
    
    End UsesPaint and Coatings
Materials
    
         Building and
construction
     Home improvement
     Industrial
coatings
    
         An array of versatile
acrylic
emulsion polymers and other
technologies
     A range of additives, such
as
thickeners, extenders and
opacifiers
    
         House paints
     Traffic
paints
     Metal
coatings
     Concrete
     Roof coatings
     Insulation
 PACKAGING AND BUILDING MATERIALS
 Net Sales (in millions)
 
   
    
    Formulated adhesives and adhesive polymers used in flexible packaging, tape and
label, transportation, and other applications
 
    
    Performance enhancing additives for plastics used in a broad array of applications,
especially construction materials (e.g. vinyl siding, vinyl windows, vinyl fencing) and
packaging
 
    
    Processing aids for plastic production
 
    
    Specialty polymers and coatings for use in leather, textile, graphic arts, paper, and
packaging applications
 Business
    
    Markets
    
    Products
    
    End UsesPackaging and Building Materials
    
    
    
    Packaging
    
    
    
    Packaging adhesives
    
    
    
    Flexible and rigid
    
    Paper
    
    
    
    Plastic additives
    
    
    
    packaging
    
    Construction
    
    
    
    Pressure sensitive adhesives
    
    
    
    Vinyl construction materials
    
    Durables
    
    
    
    Specialty polymers
    
    
    
    (siding, windows,fencing,
    
    Transporation
    
    
    
    Specialty coatings
    
    
    
    decks)
    
    Graphic arts
    
    
    
    Rubber-to-metal bonding
    
    
    
    Paper and film labels and
    
    Leather
    
    
    
    adhesives
    
    
    
    decals
    
    Textiles
    
    
    
    Flocking agents
    
    
    
    Consumer, industrial and
specialty tapes
    
    Anti-vibration components
    
    PVC pipe
    
    Appliances and business
machines
 9




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PRIMARY MATERIALS
 Net Sales (in millions)
 
 Internal and External Net Sales (in millions)
 
  Business
    
    Markets
    
    Products
    
    End UsesPrimary Materials
    
    
    
    Building and construction
    
    
    
    Methyl methacrylate
    
    
    
    Adhesives
    
    Personal care
    
    
    
    Acrylic acid
    
    
    
    Paints and coatings
    
    Packaging
    
    
    
    Associated esters
    
    
    
    Floor polishes
    
    Household products
    
    
    
    Specialty monomers
    
    
    
    Hair sprays
    
    Chemicals
    
    
    
    Polyacrylic acid
dispersants
    
    
    
    Laundry and dishwasher detergents
    
    Super absorbent products
 10




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PERFORMANCE MATERIALS GROUP
 Process Chemicals and Biocides Powder Coatings,
 Net Sales (in millions)
 
 Net Sales by Business Unit (in millions)
 
  Process Chemicals and Biocides .
 11




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Business
    
    Markets
    
    Products
    
    End UsesProcess Chemicals and Biocides
    
        Paper
    

    Anion and cation ion exchange resins
    
        Newspaper    Industrial and chemical
processing
    
        Sodium borohydride and related
technologies
    
        Corrosion inhibitors    Lubricants and fuels
    
        Salt-forming bases
    
        Pharmaceutical processes    Water processing
    
        Adsorbents
    
        Dyes    Food processing
    
        Antimicrobials
    
        Soft drinks and juices    Electronics
    
    
    
        Ultra pure water    Bioprocessing
    
    
    
        Catalysis    Household products
    
    
    
        Electricity production    Personal care
    
    
    
        Paints    Building and construction
    
    
    
        Wood preservation    Biofuels
    
    
    
        Biodiesel catalysis and purification
 Powder Coatings
 Business
    
    Markets
    
    Products
    
    End UsesPowder Coatings
    
        Home and office goods
    
        Epoxy, polyester, silicone and
acrylic powder coatings
    
        Architectural aluminum    Recreation
    

    Lamineer  a low temperature
curing coating
    
        Shelving    Lawn and garden
    
    
    
        Tables and chairs    Transportation
    
    
    
        Office furniture    Building and construction
    
    
    
        Cabinetry    Machinery    Gas grills
 TM
 12




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SALT   TM ®
 Net Sales (in millions)
 
  Business
    
    Markets
    
    Product
    
    End UsesSalt
    
    
    
    Consumer
    
    
    
    Salt
    
    
    
    Table salt
    
    Food processing
    
    
    
    
    
    
    
    Home and industrial water conditioning salt
    
    Industrial processing
    
    
    
    
    
    
    
    Ice control salt (highway de-icing and consumer)
    
    Chemical processing
    
    
    
    
    
    
    
    Chemical/industrial processing salt
    
    Water conditioning
    
    
    
    
    
    
    
    Industrial food processing
    
    Agricultural
 13




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Raw Materials
   Competition and Seasonality
 Environmental   Contingent Liabilities,
Guarantees and Commitments
 Research and Development
 
    
    Silvadur ETTM for protecting non-woven textiles from microbial attack
    
    BD50 and BD19, our latest catalysts for the bio-diesel market
    
    HydrotechTM , an advanced polymer emulsion launched in Europe for use in high gloss
coatings
    
    EZ-100TM, an innovative polymer emulsion launched in China for improved stain
resistant coatings
    
    Several new products for use in low VOC paint formulations, including a new line of
urethane rheology modifiers, RM-895, and a new binder, Rhoplex VSR-2015
    
    New state-of-the-art 193 immersion lithography tool, enabling continued
materials innovation for our semiconductor customers
    
    ACuPLANE Copper (Cu) Barrier CMP Solution for advanced Cu/low-k
interconnect applications
    
    A new line of EnLight products for photovoltaic manufacturing, which
improve traditional solar cell processing by increasing cell efficiency and increasing
manufacturing yields
 14




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Directors and Executive Officers of the Registrant
 DIRECTORS
 William J. Avery
 Raj L. Gupta
 David W. Haas
 Thomas W. Haas
 Richard L. Keyser
 Rick J. Mills
 Sandra O. Moose
 Gilbert
S. Omenn
 Gary L. Rogers
 15




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Ronaldo H. Schmitz
 George M. Whitesides
 Marna C. Whittington
 Committees
      EXECUTIVE OFFICERS
  Patrice Barthelmes
 Pierre R. Brondeau
 Ruby R. Chandy
 Jacques M. Croisetiere
 Mark Dougla
 Carol S. Eicher
 Luis Fernandez-Moreno
 Raj L. Gupta
 16




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Robert A. Lonergan
 Richard R. Lovely
 Guillermo Novo
 Yi Hyon Paik
 Anne M. Wilms
 17




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Where Can You Find More Information About Rohm and Haas Company?
  Corporate Office:
 
 Phone Numbers:
 Main line:  Investors line:
 Website: www.rohmhaas.com (intended to be an inactive textual reference only)
 Copies of our corporate governance policies, charters of the Board of Directors and
the Board committees and our Code of Business Conduct and Ethics can be obtained free
of charge by accessing the Governance section of our website or by writing to the
address listed below:
 Address:
  Copies of our annual reports on Form 10-K , quarterly reports on Form 10-Q , current
reports on Form 8-K and amendments to those reports filed with the U.S. Securities and
Exchange Commission (SEC) can be obtained free of charge, by accessing the Investors
page on our website. Hard copies may be obtained free of charge, excluding exhibits,
by writing to the address listed below:
 Address:
 www.sec.gov (intended to be an inactive textual reference only).
 18




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Item 1A. Risk Factors
  Ø
    
    Changes in global economic, political and social conditions may adversely affect our
financial results.We are active participants in the markets of North America, Europe, Asia-Pacific, and Latin
America. Economic and political conditions and social unrest can cause fluctuations in demand
and volatility in the price of raw materials and other costs that can adversely affect our
financial results. In addition, economic conditions affecting the building and construction,
electronics, packaging and paper, industrial and other, transportation, household and personal
care, water and food markets could adversely affect our financial results.Ø
    
    Changes in foreign currencies may adversely affect our financial results.Approximately 59% of our sales are derived from outside the United States, a significant portion
of which are denominated in foreign currencies. We have significant production facilities which
are located outside of the United States. Our financial results therefore will be affected by
changes in foreign currency rates. We use certain financial instruments to mitigate these
effects, but it is not cost effective to hedge our foreign currency exposure in a manner that
would entirely eliminate the effects of changes in foreign exchange rates on our earnings, cash
flows and fair values of assets and liabilities. Accordingly, reported sales, net earnings,
cash flows and fair values have been and in the future will be affected by changes in foreign
exchange rates.Ø
    
    As a multinational company, changes in foreign laws and regulatory requirements, export
controls or international tax treaties could adversely affect our financial results.We may have to comply with unexpected changes in foreign laws and regulatory requirements which
could negatively impact our operations and ability to manage our global resources. Export
controls or other regulatory restrictions could prevent us from shipping our products into and
from some markets. Changes in tax regulation and international tax treaties could reduce the
financial performance of our foreign operations.Ø
    
    Deliberate, malicious acts, including terrorism, could damage our facilities, disrupt our
operations or injure employees, contractors, customers or the public and adversely affect our
financial results.Intentional acts of destruction could hinder our sales or production and disrupt our supply
chain. Our facilities could be damaged or destroyed, reducing our operational production
capacity and requiring us to repair or replace our facilities at a substantial cost. Employees,
contractors and the public could suffer substantial physical injury for which we could be
liable. Governmental authorities may impose security or other requirements that could make our
operations more difficult or costly. The consequences of any such actions could adversely
affect our financial results.Ø
    
    Actions by our competitors may adversely affect our financial results.Our products are sold in a competitive, global economy. Competitors include many large
multinational chemical firms based in Europe, Asia and the United States. New competitive
products or pricing policies of our competitors can materially affect demand for and pricing of
our products.Ø
    
    Changes in demand may adversely affect our financial results.Our financial results are subject to fluctuations in demand, the effective forecasting of
customer demand, the seasonal activity of certain of our businesses and weather conditions,
particularly for the Salt segment. We also manufacture and sell our products to customers in
industries and countries that are experiencing periods of rapid change, most notably countries
in Central and Eastern Europe, Turkey, Russia, Latin America and the Asia-Pacific region. These
factors can affect demand for our products and therefore may have a significant impact on
financial results.Ø
    
    Restrictions on, and increased costs of, raw material supplies and energy may adversely
affect our financial results.We purchase large amounts of raw materials and energy for our businesses. The costs of these
materials and energy, in the aggregate, represent a substantial portion of our operating
expenses. From time to time, certain raw materials we require become limited. It is likely
this will occur again in the future. Should such limitations arise, disruptions of our supply
chain may lead to higher prices and/or shortages. Also, the costs of these raw materials and
energy vary with market conditions and may be highly volatile. While we try to increase the
prices of our products to cover increases in our costs, we may not be able to raise our prices
as quickly as the costs rise, if at all, as our customers may not accept these increases.
Ultimately, our ability to pass on increases in the cost of raw materials or energy to customers
is greatly dependent upon market conditions and raising prices could result in a loss of sales
volume. Further, increases in energy prices may increase our shipping
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costs. These limitations and increased costs could adversely affect our financial results.
(See additional discussion of raw materials in Item 1.)Ø
    
    Production facilities are subject to operating risks and capacity limitations that may
adversely affect our financial condition or results of operations.We are dependent on the continued operation of our production facilities. Production
facilities are subject to hazards associated with the manufacturing, handling, storage, and
transportation of chemical materials and products, including pipeline leaks and ruptures,
explosions, fires, inclement weather and natural disasters, mechanical failure, unscheduled
downtime, labor difficulties, transportation interruptions, and environmental risks. Further,
from time to time, we may experience capacity limitations in our manufacturing operations. In
addition, if we are unable to effectively forecast our customers demand, it could affect our
ability to successfully manage operating capacity limitations. These hazards, limitations,
disruptions in supply and capacity constraints could adversely affect financial results.Ø
    
    An incident affecting the Houston ship channel area may adversely affect our financial
results.An incident affecting the Houston ship channel area could materially impact our financial
results as it could significantly affect both our operations because our largest plant is
located there; and our sources of supply, as a large portion of our petrochemical supply is from
this area.Ø
    
    Failure to develop new technology or the development and successful implementation of new,
competing technologies by our competitors could adversely affect future financial results.If we fail to develop new technology or if our competitors successfully develop and implement
new, competing technologies in the market place, our future financial results could be
significantly impacted.Ø
    
    Failure of our intellectual property protections could adversely affect future financial
results.We have invested significant resources in intellectual properties such as patents, trademarks,
copyrights and trade secrets. Since we depend on these intellectual resources for our financial
stability and future growth, we rely on the protection that these intellectual property rights
provide. With a significant portion of our operations outside the U.S., we could face
challenges in protecting our intellectual property and we may not be able to adequately protect
our trademarks and other intellectual property overseas due to uncertainty of laws and
enforcement in a number of countries relating to the protection of intellectual property rights.
A loss of intellectual property protections could enhance the ability of our competitors to
develop competitive products, thereby adversely affecting our financial results.We also rely on unpatented proprietary know-how and continuing technological innovation and
other trade secrets to develop and maintain our competitive position. While it is our policy to
enter into confidentiality agreements with our employees and third parties to restrict the use
and disclosure of our trade secrets and proprietary know-how, those confidentiality agreements
may be breached. In addition, adequate remedies may not be available in the event of an
unauthorized use or disclosure of such trade secrets and know-how, and others could obtain
knowledge of such trade secrets through independent development or other access by legal means.
A breach of these trade secrets and know-how could adversely affect our financial results.Ø
    
    Failure to realize benefits from joint ventures, alliances or acquisitions could adversely
affect future financial results.We have entered, and in the future may enter, into arrangements with other companies to expand
product offerings and to enhance our own capabilities. We may continue to make strategic
acquisitions and divestitures. In certain of these ventures, we share control with third
parties and run the risk of encountering differences of opinion or having difficulty in reaching
consensus with respect to certain business issues. In addition, the success of acquisitions of
new technologies, companies and products, or arrangements with third parties, is not predictable
and there can be no assurance that we will be successful in realizing our objectives, or that
realization may not take longer than anticipated, or that there will not be unintended adverse
consequences from these actions. These complications and issues arising from our participation
in joint ventures, alliances and acquisitions could adversely affect our financial results.Ø
    
    Environmental costs could adversely affect our financial results.We are subject to extensive federal, state, local and foreign environmental, safety and health
laws, and regulations concerning, among other things, emissions in the air, discharges to land
and water, and the generation, handling, treatment, and disposal of hazardous waste and other
materials. We take our environmental responsibilities very seriously, but there is a risk of
environmental impact inherent in chemical manufacturing operations. Future developments and
more stringent environmental regulations may require us to make additional unforeseen
environmental expenditures. In addition, laws and regulations require significant
 20




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expenditures for environmental protection equipment, compliance and remediation. These
additional costs may adversely affect our financial results.Ø
    
    Litigation results could adversely affect our financial results.We are subject to litigation in the normal course of business. In addition, we could become
subject to additional claims in the future. An adverse outcome of one or more of these
litigation matters, both current and those that may affect us in the future, could adversely
affect our financial results.Ø
    
    Inability to attract, develop or retain quality employees could adversely impact our
ability to achieve our objectives.We have objectives in our businesses and regions to sustain and grow the company. Continued
success in achieving the objectives of the company depends on the recruitment, development and
retention of qualified employees. Without these employees, we may not be able to achieve these
objectives.Ø
    
    Any damage to our reputation could adversely affect our financial results.Maintaining a good reputation globally is critical to selling our branded products. If we fail
to maintain high standards for product quality, safety and integrity, our reputation could be
jeopardized. Adverse publicity, whether or not valid, may reduce demand for our products or
cause production and delivery disruptions. Damage to our reputation or loss of confidence in our
products for any of these reasons could adversely affect our financial results.Ø
    
    Uncertainty related to our pending merger and contractual restrictions while the merger is
pending could adversely affect our business.As previously disclosed, on July 10, 2008, we entered into a definitive merger agreement with
The Dow Chemical Company and Ramses Acquisition Corporation (Dow). Uncertainty about when and whether
the merger will be completed and about the effects of the merger may have a material adverse
effect on our business. In addition, the merger agreement restricts us from taking specified
actions without Dows approval. These restrictions could prevent us from pursing attractive
business opportunities that may arise prior to the completion of the merger and could otherwise
have a material adverse impact on our company.Ø
    
    Failure to complete the transaction with Dow could negatively impact our stock price,
future business and financial results.As previously disclosed, on January 26, 2009, we filed suit in the Delaware Court of Chancery
against Dow alleging that, even though all conditions to Dows obligation to close the merger
have been satisfied, Dow, in breach of its obligations under the Merger Agreement, has refused
to consummate the transaction. The suit seeks an order of specific performance requiring Dow to
close the merger immediately. If we do not obtain the relief we are seeking in the law suit,
there is possibility that the merger will not be completed in a timely manner or at all. If the
merger is not completed, we will be subject to certain risks including the following:
 
    
    because the current price of our common stock may reflect a market assumption that
we will complete the merger, a failure to complete the merger could result in a decline in the price of our common stock; and
    
    the pending merger and related matters may distract our
employees from day-to-day
operations and require substantial commitments of time and resources, and may also
impair our relations with our employees, customers, suppliers and other constituencies.
 
 Item 1B. Unresolved Staff Comments
 21




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Item 2. Properties
  Research andReportable
    
    Manufacturing
    
    TechnicalCountry
    
    Location
    
    Segment
    
    Locations
    
    FacilitiesNon-U.S.
    
    Argentina
    
    Zarate
    
    
    (3,4,5
    )
    
    XAustralia
    
    Geelong
    
    
    (3,4
    )
    
    X
    
    XBahamas
    
    Inagua
    
    
    (7
    )
    
    XBrazil
    
    Jacarei
    
    
    (3,4,5,6
    )
    
    X
    
    XCanada
    
    Iles-De-La-Madeleine
    
    
    (7
    )
    
    XLindbergh
    
    
    (7
    )
    
    XOjibway
    
    
    (7
    )
    
    XPugwash
    
    
    (7
    )
    
    XRegina
    
    
    (7
    )
    
    XWest Hill
    
    
    (3,4
    )
    
    XWindsor
    
    
    (7
    )
    
    XChina
    
    Beijing
    
    
    (3,4
    )
    
    XDongGuan
    
    
    (1
    )
    
    X
    
    XHong Kong
    
    
    (1
    )
    
    X
    
    XSanshui
    
    
    (3,4,5
    )
    
    XShanghai
    
    
    (1,3,4,6
    )
    
    X
    
    XSuzhou
    
    
    (2
    )
    
    XWeihai
    
    
    (4
    )
    
    XColombia
    
    Barranquilla
    
    
    (3,4,5
    )
    
    XFinland
    
    Hanko
    
    
    (3
    )
    
    XFrance
    
    Chauny
    
    
    (6
    )
    
    XLauterbourg
    
    
    (1,3,4,6
    )
    
    XSemoy
    
    
    (4
    )
    
    XValbonne
    
    
    (3,4,6
    )
    
    
    
    XVillers-Saint-Paul
    
    
    (3,5,6
    )
    
    XGermany
    
    Arnsberg
    
    
    (6
    )
    
    X
    
    XBremen
    
    
    (4
    )
    
    
    
    XFrankfurt
    
    
    (4
    )
    
    
    
    XIndia
    
    Taloja
    
    
    (3,4
    )
    
    X
    
    XChennai
    
    
    (3
    )
    
    XIndonesia
    
    Cilegon
    
    
    (3,4,5
    )
    
    XItaly
    
    Mozzanica
    
    
    (3,4
    )
    
    XMozzate
    
    
    (4
    )
    
    X
    
    XParona
    
    
    (4
    )
    
    XRomano dEzzelino
    
    
    (6
    )
    
    X
    
    XJapan
    
    Kyoto
    
    
    (1
    )
    
    XMie
    
    
    (1
    )
    
    XNagoya
    
    
    (3,4
    )
    
    XOhmiya
    
    
    (1
    )
    
    
    
    XSasakami
    
    
    (1,2
    )
    
    X
    
    XSoma
    
    
    (6
    )
    
    XMexico
    
    Queretaro
    
    
    (3,4,5,6
    )
    
    XToluca
    
    
    (4
    )
    
    XNetherlands
    
    Delfzijl
    
    
    (6
    )
    
    XNew Zealand
    
    Auckland
    
    
    (3,4
    )
    
    XPhilippines
    
    Las Pinas
    
    
    (3,4
    )
    
    XRussia
    
    Ramenskoye
    
    
    (3
    )
    
    XSingapore
    
    Singapore
    
    
    (3,4,6
    )
    
    X
    
    XSouth Africa
    
    New Germany
    
    
    (3,4,6
    )
    
    XSouth Korea
    
    Cheonan
    
    
    (1,2
    )
    
    X
    
    XSpain
    
    Castellón
    
    
    (6
    )
    
    X
    
    XSweden
    
    Landskrona
    
    
    (3,4
    )
    
    XSwitzerland
    
    Littau/Lucerne
    
    
    (1
    )
    
    X
    
    XBuchs/Acima
    
    
    (6
    )
    
    X
    
    XTaiwan
    
    Chunan
    
    
    (1
    )
    
    X
    
    XMin-Hsiung
    
    
    (3,4,5,6
    )
    
    XTaoyuan Hsien
    
    
    (1
    )
    
    X
    
    XThailand
    
    Maptaphut
    
    
    (3,4,5
    )
    
    XTurkey
    
    Gebze
    
    
    (4
    )
    
    X
 22




---



##### 



Research andReportable
    
    Manufacturing
    
    TechnicalCountry
    
    Location
    
    Segment
    
    Locations
    
    FacilitiesNon-U.S.
    
    United Kingdom
    
    Coventry
    
    
    (1
    )
    
    XDewsbury
    
    
    (3,4
    )
    
    XGrangemouth
    
    
    (4
    )
    
    XJarrow
    
    
    (6
    )
    
    X
 Reportable
    
    Manufacturing
    
    Research andState
    
    Location
    
    Segment
    
    Locations
    
    Technical FacilitiesU.S.
    
    Arizona
    
    Glendale
    
    
    (7
    )
    
    XCalifornia
    
    Davis
    
    
    (6
    )
    
    
    
    XHayward
    
    
    (3,4
    )
    
    XLa Mirada
    
    
    (3,4
    )
    
    XLong Beach
    
    
    (7
    )
    
    XNewark
    
    
    (7
    )
    
    XDelaware
    
    Newark
    
    
    (1
    )
    
    X
    
    XFlorida
    
    Cape Canaveral
    
    
    (7
    )
    
    XIllinois
    
    Kilbourn
    
    
    (6
    )
    
    XElston Dock
    
    
    (7
    )
    
    XElgin
    
    
    (4,7
    )
    
    
    
    XElk Grove
    
    
    (4
    )
    
    XKankakee
    
    
    (3,4
    )
    
    XRingwood
    
    
    (3,4
    )
    
    XIndiana
    
    Warsaw
    
    
    (6
    )
    
    XKansas
    
    Hutchinson
    
    
    (7
    )
    
    XKentucky
    
    Louisville
    
    
    (3,4,5
    )
    
    XLouisiana
    
    Weeks Island
    
    
    (6,7
    )
    
    XMassachusetts
    
    Marlborough
    
    
    (1
    )
    
    X
    
    XNorth Andover
    
    
    (1
    )
    
    X
    
    XWoburn
    
    
    (6
    )
    
    X
    
    XMichigan
    
    Manistee
    
    
    (7
    )
    
    XNew Jersey
    
    Perth Amboy
    
    
    (7
    )
    
    XNew York
    
    Freeport
    
    
    (1
    )
    
    X
    
    XRochester
    
    
    (2
    )
    
    X
    
    XSilver Springs
    
    
    (7
    )
    
    XNorth Carolina
    
    Charlotte
    
    
    (3,4
    )
    
    X
    
    XOhio
    
    Cincinnati
    
    
    (4,6
    )
    
    XFairport
    
    
    (7
    )
    
    XRittman
    
    
    (7
    )
    
    XWest Alexandria
    
    
    (4
    )
    
    X
    
    XPennsylvania
    
    Bristol
    
    
    (3,4,5,6
    )
    
    XPhiladelphia
    
    
    (6
    )
    
    XReading
    
    
    (6
    )
    
    X
    
    XSpring House
    
    
    (3,4,5,6
    )
    
    
    
    XTennessee
    
    Knoxville
    
    
    (3,4,5,6
    )
    
    XTexas
    
    Bayport
    
    
    (5,6
    )
    
    XDeer Park
    
    
    (5,6
    )
    
    X
    
    XLone Star
    
    
    (3,4
    )
    
    XGrand Saline
    
    
    (7
    )
    
    XUtah
    
    Grantsville
    
    
    (7
    )
    
    XWashington
    
    Elma
    
    
    (6
    )
    
    X
 
 (1)
    
    Electronic Technologies(2)
    
    Display Technologies(3)
    
    Paint and Coatings Materials(4)
    
    Packaging and Building Materials(5)
    
    Primary Materials(6)
    
    Performance Materials Group(7)
    
    Salt, including mines and evaporation facilities 23




---



##### 



Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  24




---



##### 



PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
  Period
    
    High
    
    Low
    
    Cash Dividend20061st Quarter
    
    $
    51.56
    
    
    $
    49.96
    
    
    $
    0.292nd Quarter
    
    
    52.60
    
    
    
    45.24
    
    
    
    0.333rd Quarter
    
    
    50.56
    
    
    
    42.77
    
    
    
    0.334th Quarter
    
    
    53.86
    
    
    
    46.71
    
    
    
    0.3320071st Quarter
    
    $
    57.54
    
    
    $
    49.68
    
    
    $
    0.332nd Quarter
    
    
    55.59
    
    
    
    49.81
    
    
    
    0.373rd Quarter
    
    
    62.68
    
    
    
    52.15
    
    
    
    0.374th Quarter
    
    
    57.85
    
    
    
    47.05
    
    
    
    0.3720081st Quarter
    
    $
    55.52
    
    
    $
    47.81
    
    
    $
    0.372nd Quarter
    
    
    60.60
    
    
    
    46.44
    
    
    
    0.413rd Quarter
    
    
    75.68
    
    
    
    44.83
    
    
    
    0.414th Quarter
    
    
    73.75
    
    
    
    53.34
    
    
    
    0.41
 Stock Price Highs and Lows
 
 25




---



##### 



Total Number of Shares
    
    Approximate Dollar ValueTotal Number
    
    Average Price
    
    Purchased as Part of
    
    of Shares that May Yet Beof Shares
    
    Paid per
    
    Publicly Announced
    
    Purchased Under the Plans orPeriod
    
    Purchased(1)
    
    Share
    
    Plans or Programs(2)
    
    Programs(2)October 1, 2008 -
October 31, 2008
    
    
    10,183
    
    
    
    68.33
    
    
    
    
    
    
    $
    1,000,000,000November 1, 2008 -
November 30, 2008
    
    
    43
    
    
    
    70.18
    
    
    
    
    
    
    
    1,000,000,000December 1, 2008 -
December 31, 2008
    
    
    2,162
    
    
    
    59.03
    
    
    
    
    
    
    
    1,000,000,000Total
    
    
    12,388
    
    
    
    66.71
    
    
    
    
    
    
    $
    1,000,000,000
 
 Notes:(1)
    
    Zero shares were purchased as a result of employee stock option exercises
(stock swaps) and 12,388 shares were acquired as a result of employees electing
to withhold shares to cover taxes for the vesting of restricted stock.(2)
    
    On July 16, 2007, our Board of Directors authorized the repurchase of up to
$2 billion of our common stock, the first $1 billion of which was financed with
debt. For the debt financed portion of this authorization, we entered into an
accelerated share repurchase agreement (ASR) with Goldman, Sachs & Co.
(Goldman Sachs) on September 10, 2007. Under the ASR, we paid $1 billion to
Goldman Sachs and initially received approximately 16.2 million of shares of
our common stock on September 11, 2007. In June 2008, upon closing of the
ASR, we received an additional 3.1 million shares. The average share price for
the 19.3 million total shares repurchased was $51.56, approximately 3% below
the average market price of our stock during the repurchase period. We have
discontinued repurchasing our shares. 26




---



##### 



FIVE-YEAR CUMULATIVE TOTAL RETURN TO STOCKHOLDERS
 Rohm and Haas, S&P 500 Composite Index, S&P 500 Chemicals Index and
S&P 500 Specialty Chemicals Index
 % Return to Shareholders 2004 to 2008
 
   27




---



##### 



Item 6. Selected Financial Data
  Five-Year Summary of Selected Financial Data  (in millions, except per share, stockholders and employees)
 For the Year Ended December 31,See notes
    
    2008
    
    2007
    
    2006
    
    2005(1)
    
    2004(1)Statement of Operating InformationNet sales
    
    $
    9,575
    
    
    $
    8,897
    
    
    $
    8,230
    
    
    $
    7,885
    
    
    $
    7,186Gross profit (4)
    
    
    2,410
    
    
    
    2,467
    
    
    
    2,483
    
    
    
    2,373
    
    
    
    2,116Earnings from continuing operations
before income taxes and minority interest
    
    
    561
    
    
    
    880
    
    
    
    1,042
    
    
    
    868
    
    
    
    698Earnings from continuing operations
    
    
    480
    
    
    
    660
    
    
    
    755
    
    
    
    616
    
    
    
    484Discontinued operations:Income (loss) from discontinued line of
business, net of income tax
    
    
    2
    
    
    
    1
    
    
    
    (4
    )
    
    
    22
    
    
    
    12(Loss) gain on disposal of discontinued
line of
business, net of income tax
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    (1
    )
    
    
    1Net earnings
    
    $
    482
    
    
    $
    661
    
    
    
    735
    
    
    $
    637
    
    
    $
    497As a % of Net Sales(4)Gross profit
    
    
    25.2
    %
    
    
    27.7
    %
    
    
    30.2
    %
    
    
    30.1
    %
    
    
    29.4
    %Selling and administrative expense
    
    
    11.9
    %
    
    
    12.3
    %
    
    
    12.6
    %
    
    
    12.8
    %
    
    
    13.9
    %Research and development expense
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    3.5
    %
    
    
    3.3
    %
    
    
    3.5
    %Earnings from continuing operationsBasic
    
    $
    2.48
    
    
    $
    3.17
    
    
    $
    3.45
    
    
    $
    2.78
    
    
    $
    2.17Diluted
    
    
    2.44
    
    
    
    3.12
    
    
    
    3.41
    
    
    
    2.75
    
    
    
    2.16Cash dividends per common share
    
    $
    1.60
    
    
    $
    1.44
    
    
    $
    1.28
    
    
    $
    1.12
    
    
    $
    0.97Common stock price:High
    
    $
    75.68
    
    
    $
    62.68
    
    
    $
    53.86
    
    
    $
    50.00
    
    
    $
    45.41Low
    
    
    44.83
    
    
    
    47.05
    
    
    
    42.77
    
    
    
    39.47
    
    
    
    35.90Year-end close
    
    
    61.79
    
    
    
    53.07
    
    
    
    51.12
    
    
    
    48.42
    
    
    
    44.23Weighted average number of common shares
outstanding  basic
    
    
    193.6
    
    
    
    207.8
    
    
    
    218.9
    
    
    
    221.9
    
    
    
    222.9Weighted average number of common shares
outstanding  diluted
    
    
    196.5
    
    
    
    211.0
    
    
    
    221.2
    
    
    
    223.9
    
    
    
    224.2Balance Sheet Data(4)Land, buildings and equipment, gross
    
    $
    8,893
    
    
    $
    8,779
    
    
    $
    8,150
    
    
    $
    7,850
    
    
    $
    7,940Total assets
    
    
    9,909
    
    
    
    10,107
    
    
    
    9,553
    
    
    
    9,695
    
    
    
    10,095Current portion of long-term debt
    
    
    38
    
    
    
    8
    
    
    
    281
    
    
    
    11
    
    
    
    11Other short-term borrowings
    
    
    139
    
    
    
    150
    
    
    
    112
    
    
    
    110
    
    
    
    66Long-term debt
    
    
    3,210
    
    
    
    3,139
    
    
    
    1,688
    
    
    
    2,074
    
    
    
    2,563Total debt
    
    
    3,387
    
    
    
    3,297
    
    
    
    2,081
    
    
    
    2,195
    
    
    
    2,640Stockholders equity(2), (3)
    
    
    2,976
    
    
    
    3,146
    
    
    
    4,031
    
    
    
    3,917
    
    
    
    3,697Number of registered stockholders
    
    
    7,891
    
    
    
    8,584
    
    
    
    8,957
    
    
    
    8,406
    
    
    
    8,726Number of employees
    
    
    15,490
    
    
    
    15,710
    
    
    
    15,815
    
    
    
    15,924
    
    
    
    16,067
 
 Notes:(1)
    
    The results of the years ended December 31, 2004 and 2005 have been
reclassified to reflect Automotive Coatings as a discontinued operation (see Note 2
to the Consolidated Financial Statements).(2)
    
    As a result of the implementation of SFAS No. 158, Employers Accounting for
Defined Benefit Pension and Other Postretirement Plans, we recorded a $245 million
charge to stockholders equity in 2006.(3)
    
    The primary reason for the reduction in Stockholders equity in 2007 is due to
a $1 billion accelerated share repurchase (see Consolidated Statements of
Stockholders Equity and Note 22 Stockholders Equity).(4)
    
    Reclassified to conform to current year presentation. 28




---



##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-looking Statements
  Ø
    
    Global Economic and Political Climate:
 
    
    Changes in foreign currency rates
    
    Changes in worldwide economic conditions
    
    Changes in trade policies or tariffs
    
    Changes in interest rates
    
    Changes in stock prices
    
    Changes in discount rates affecting the measurement of our pension and retiree medical liabilities
    
    Political unrest
    
    Possible disruption in commercial activities due to terrorist activity or armed conflict
 Ø
    
    Competition and Demand:
 
    
    Introduction of new products/technologies by competitors
    
    Changes in the pricing policies of our competitors
    
    Fluctuations in demand
    
    Ability to maintain sales volume in the event of increased selling prices
    
    Seasonal activity of certain of our businesses and weather conditions, particularly
for the Salt segment
 Ø
    
    Raw Material Supplies and Energy:
 
    
    Limited resources for raw materials, potential for shortage
    
    Volatility in raw material and energy prices
    
    Ability to obtain increases in selling prices to offset increases in raw material and energy costs
 Ø
    
    Capacity Limitations:
 
    
    Capacity limitations in our manufacturing operations
    
    Inefficiencies in the running of our manufacturing facilities
    
    An incident affecting the Houston ship channel area, as it could significantly
affect both our operations and our sources of supply
    
    Disruptions in supply and capacity constraints
 Ø
    
    Intellectual Property and Other Technology Issues:
 
    
    Ability to protect intellectual properties such as patents, trademarks,
copyrights and trade secrets, especially in regions where intellectual property rights
are not as strong as in the U.S.
    
    Changes in customer requirements
    
    Ability to develop new technology
    
    Acceptance of new products/technologies in the marketplace
 Ø
    
    Joint Ventures, Acquisitions, and other Alliances:
 
    
    Ability to realize expected benefits from joint ventures, acquisitions or alliances
 29




---



##### 



Ø
    
    The Dow Transaction:
 
    
    The results of our court action against The Dow Chemical Company seeking specific
performance of the merger agreement
    
    Uncertainty about when and whether the Dow transaction will be completed
 Ø
    
    Environmental Costs and Litigation Results:
 
    
    Future developments and new environmental regulations
    
    Litigation outcomes
 Ø
    
    Cost Savings:
 
    
    Ability to realize expected savings related to restructurings and other cost saving initiatives
 Ø
    
    Talent:
 
    
    Ability to attract, develop or retain quality employees
 Ø
    
    Other risks and uncertainties detailed in Item 1A. Risk Factors or in our filings with the SEC
   2008  A Year in Review
     30




---



##### 



Critical Accounting Estimates
  
    
    the estimate is complex in nature or requires a high degree
of judgment; and
    
    the use of different estimates and assumptions could have a material impact on
the Consolidated Financial Statements.
  Ø
    
    Litigation and Environmental Reserves
     31




---



##### 



Ø
    
    Income Taxes
      Ø
    
    Restructuring
  Ø
    
    Long-Lived Assets
  32




---



##### 




    
    Estimated future cash flowsThe key variables that we must estimate to determine future cash flows include assumptions
for sales volume, selling prices, raw material prices, labor and other employee benefit
costs, capital additions and other economic or market-related factors. Significant
management judgment is involved in estimating these variables, and they include inherent
uncertainties since they are forecasting future events. For example, unanticipated changes
in competition, customer sourcing requirements and product maturity would all have a
significant impact on these estimates.
    
    Discount rateWe employ a Weighted Average Cost of Capital (WACC) approach to determine our discount
rate for goodwill recoverability testing. Our WACC calculation includes factors such as the
risk-free rate of return, cost of debt and expected equity premiums. The factors in this
calculation are largely external to our company, and therefore are beyond our control. The
average WACC utilized in our annual test of goodwill recoverability as of May 31, 2008 was
9.32%, which was based upon average business enterprise values. A 1% increase in the WACC
will result in an approximate 13% decrease in the computed fair value of our reporting
units. A 1% decrease in the WACC will result in an approximate 18% increase in the computed
fair value of our reporting units. The following table summarizes the major factors that
influenced the rate:
 2008
    
    2007Risk free rate of return
    
    
    4.7
    %
    
    
    5.1
    %Cost of debt
    
    
    7.6
    %
    
    
    6.7
    %Market risk premium
    
    
    4.0
    %
    
    
    4.0
    %
   33




---



##### 



Ø Pension and Other Employee Benefits
      Weighted-average assumptionsused to determine benefitobligation for years endedDecember 31,
    
    2008
    
    2007U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Discount rate
    
    
    6.50
    %
    
    
    5.83
    %
    
    
    6.21
    %
    
    
    5.66
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    3.94
    %
    
    
    4.00
    %
    
    
    4.24
    %
  34




---



##### 



Weighted-average assumptionsused to determine net pensionexpense for years endedDecember 31,
    
    2008
    
    2007
    
    2006U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Discount rate
    
    
    6.21
    %
    
    
    5.66
    %
    
    
    5.90
    %
    
    
    5.05
    %
    
    
    5.70
    %
    
    
    4.77
    %Estimated return on plan assets
    
    
    8.50
    %
    
    
    6.68
    %
    
    
    8.50
    %
    
    
    6.72
    %
    
    
    8.50
    %
    
    
    6.97
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.24
    %
    
    
    4.00
    %
    
    
    3.91
    %
    
    
    4.00
    %
    
    
    3.88
    %
  CombinedWeighted-Average
    
    Estimated Return on
    
    Increase/(Decrease)Discount Rate
    
    Plan Assets
    
    
    
    
    Pension Expense(in millions)
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.100 basis point increase
    
    $
    (10
    )
    
    $
    (9
    )
    
    $
    (18
    )
    
    $
    (7
    )
    
    $
    (28
    )
    
    $
    (16
    )100 basis point decrease
    
    
    25
    
    
    
    10
    
    
    
    18
    
    
    
    7
    
    
    
    43
    
    
    
    17
  Weighted-Average Discount Rate(in millions)
    
    U.S.
    
    Non-U.S.100 basis point increase
    
    $
    1
    
    
    $
    (1
    )100 basis point decrease
    
    
    (2
    )
    
    
    1
 Ø Share-Based Compensation
 Share-Based Payments.
 35




---



##### 



Ø Fair Value Measurements of Financial Instruments
  Level    1
 Level    2
 Level    3
 36




---



##### 



Reportable Segments at December 31, 2008
  Net SalesNorth
    
    
    
    
    
    
    
    
    
    
    
    
    
    Segment(in millions)
    
    America
    
    Europe
    
    Asia-Pacific
    
    Latin America
    
    Eliminations
    
    TotalElectronic Technologies2008
    
    $
    390
    
    
    $
    210
    
    
    $
    1,053
    
    
    $
    1
    
    
    $
    
    
    
    $
    1,6542007
    
    
    407
    
    
    
    230
    
    
    
    1,029
    
    
    
    
    
    
    
    
    
    
    
    1,6662006
    
    
    436
    
    
    
    226
    
    
    
    889
    
    
    
    
    
    
    
    
    
    
    
    1,551Display Technologies2008
    
    $
    3
    
    
    $
    17
    
    
    $
    264
    
    
    $
    
    
    
    $
    
    
    
    $
    2842007
    
    
    1
    
    
    
    
    
    
    
    44
    
    
    
    
    
    
    
    
    
    
    
    452006
    
    
    1
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    13Electronic Materials
Group2008
    
    $
    393
    
    
    $
    227
    
    
    $
    1,317
    
    
    $
    1
    
    
    $
    
    
    
    $
    1,9382007
    
    
    408
    
    
    
    230
    
    
    
    1,073
    
    
    
    
    
    
    
    
    
    
    
    1,7112006
    
    
    437
    
    
    
    226
    
    
    
    901
    
    
    
    
    
    
    
    
    
    
    
    1,564Paint and Coatings
Materials2008
    
    $
    1,238
    
    
    $
    457
    
    
    $
    371
    
    
    $
    151
    
    
    $
    
    
    
    $
    2,2172007
    
    
    1,258
    
    
    
    396
    
    
    
    326
    
    
    
    140
    
    
    
    
    
    
    
    2,1202006
    
    
    1,324
    
    
    
    355
    
    
    
    252
    
    
    
    119
    
    
    
    
    
    
    
    2,050Packaging and Building
Materials2008
    
    $
    654
    
    
    $
    681
    
    
    $
    337
    
    
    $
    135
    
    
    $
    
    
    
    $
    1,8072007
    
    
    701
    
    
    
    681
    
    
    
    320
    
    
    
    124
    
    
    
    
    
    
    
    1,8262006
    
    
    733
    
    
    
    649
    
    
    
    282
    
    
    
    112
    
    
    
    
    
    
    
    1,776Primary Materials2008
    
    $
    501
    
    
    $
    496
    
    
    $
    56
    
    
    $
    92
    
    
    $
    1,222
    
    
    $
    2,3672007
    
    
    460
    
    
    
    407
    
    
    
    45
    
    
    
    63
    
    
    
    1,103
    
    
    
    2,0782006
    
    
    456
    
    
    
    327
    
    
    
    40
    
    
    
    54
    
    
    
    1,102
    
    
    
    1,979Segment Eliminations2008
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,222
    )
    
    $
    (1,222
    )2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,103
    )
    
    
    (1,103
    )2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,102
    )
    
    
    (1,102
    )Specialty Materials
Group2008
    
    $
    2,393
    
    
    $
    1,634
    
    
    $
    764
    
    
    $
    378
    
    
    $
    
    
    
    $
    5,1692007
    
    
    2,419
    
    
    
    1,484
    
    
    
    691
    
    
    
    327
    
    
    
    
    
    
    
    4,9212006
    
    
    2,513
    
    
    
    1,331
    
    
    
    574
    
    
    
    285
    
    
    
    
    
    
    
    4,703Performance Materials
Group2008
    
    $
    396
    
    
    $
    547
    
    
    $
    232
    
    
    $
    73
    
    
    $
    
    
    
    $
    1,2482007
    
    
    410
    
    
    
    527
    
    
    
    209
    
    
    
    59
    
    
    
    
    
    
    
    1,2052006
    
    
    420
    
    
    
    473
    
    
    
    184
    
    
    
    57
    
    
    
    
    
    
    
    1,134Salt2008
    
    $
    1,220
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,2202007
    
    
    1,060
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,0602006
    
    
    829
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    829Total2008
    
    $
    4,402
    
    
    $
    2,408
    
    
    $
    2,313
    
    
    $
    452
    
    
    $
    
    
    
    $
    9,5752007
    
    
    4,297
    
    
    
    2,241
    
    
    
    1,973
    
    
    
    386
    
    
    
    
    
    
    
    8,8972006
    
    
    4,199
    
    
    
    2,030
    
    
    
    1,659
    
    
    
    342
    
    
    
    
    
    
    
    8,230
 37




---



##### 



(in millions)
    
    2008
    
    
    2007
    
    
    2006Pretax Earnings from Continuing OperationsElectronic Technologies
    
    $
    390
    
    
    $
    410
    
    
    $
    345Display Technologies
    
    
    (40
    )
    
    
    (23
    )
    
    
    1Electronic Materials Group
    
    $
    350
    
    
    $
    387
    
    
    $
    346Paint and Coatings Materials
    
    
    169
    
    
    
    323
    
    
    
    353Packaging and Building Materials
    
    
    55
    
    
    
    161
    
    
    
    186Primary Materials
    
    
    82
    
    
    
    108
    
    
    
    215Specialty Materials Group
    
    $
    306
    
    
    $
    592
    
    
    $
    754Performance Materials Group
    
    
    117
    
    
    
    132
    
    
    
    103Salt
    
    
    177
    
    
    
    115
    
    
    
    54Corporate
    
    
    (389
    )
    
    
    (346
    )
    
    
    (215
    )Total
    
    $
    561
    
    
    $
    880
    
    
    $
    1,042
 Consolidated Results of Operations for the Years Ended December 31, 2006 through December 31, 2008
 Net Sales and Gross Profits
   2008 from 2007
    
    2007 from 2006Sales Change
    
    %
    
    %Demand/Volume
    
    
    (3
    )
    
    
    4Currency
    
    
    3
    
    
    
    3Selling price
    
    
    5
    
    
    
    1Other*
    
    
    3
    
    
    
    Total Change
    
    
    8
    %
    
    
    8
    %
 
 *
    
    Other includes items such as the acquisitions, divestitures and rounding. 38




---



##### 



(in millions)
    
    2008
    
    2007
    
    2006Gross profit
    
    $
    2,410
    
    
    $
    2,467
    
    
    $
    2,483As a percentage of sales
    
    
    25.2
    %
    
    
    27.7
    %
    
    
    30.2
    %
    Selling and Administrative Expense
 (in millions)
    
    2008
    
    2007
    
    2006Selling and administrative expense
    
    $
    1,138
    
    
    $
    1,091
    
    
    $
    1,041As a percentage of sales
    
    
    11.9
    %
    
    
    12.3
    %
    
    
    12.7
    %
    Research and Development Expense
 (in millions)
    
    2008
    
    2007
    
    2006Research and development expense
    
    $
    327
    
    
    $
    296
    
    
    $
    286As a percentage of sales
    
    
    3.4
    %
    
    
    3.3
    %
    
    
    3.5
    %
   39




---



##### 



Interest Expense
   Amortization of Finite-lived Intangible Assets
   Restructuring and Asset Impairments
 (in millions)
    
    2008
    
    2007
    
    2006Severance and employee benefits (net)
    
    $
    157
    
    
    $
    10
    
    
    $
    23Asset impairments, net of gains on sales
    
    
    42
    
    
    
    18
    
    
    
    2Other, including contract lease termination penalties
    
    
    
    
    
    
    
    
    
    
    2Amount charged to earnings
    
    $
    199
    
    
    $
    28
    
    
    $
    27
 Restructuring and Asset Impairments by Business Segment
 (in millions)Business Segment
    
    2008
    
    
    2007
    
    
    2006Electronic Technologies
    
    $
    27
    
    
    $
    (2
    )
    
    $
    (1
    )Display Technologies
    
    
    8
    
    
    
    4
    
    
    
    Electronic Materials Group
    
    $
    35
    
    
    $
    2
    
    
    $
    (1
    )Paint and Coatings Materials
    
    
    67
    
    
    
    1
    
    
    
    4Packaging and Building Materials
    
    
    39
    
    
    
    2
    
    
    
    5Primary Materials
    
    
    1
    
    
    
    
    
    
    
    2Specialty Materials Group
    
    $
    107
    
    
    $
    3
    
    
    $
    11Performance Materials Group
    
    
    29
    
    
    
    9
    
    
    
    8Salt
    
    
    3
    
    
    
    
    
    
    
    5Corporate
    
    
    25
    
    
    
    14
    
    
    
    4Total
    
    $
    199
    
    
    $
    28
    
    
    $
    27
 Severance and Employee Benefits
 2008 Actions
  
    
    An adjustment of production schedules in some manufacturing facilities to reflect
current market softness;
    
    A realignment of our manufacturing footprint to better utilize assets, including idling
or closing underutilized plants;
    
    Reducing commercial-related positions that have been directly impacted by lower market
demand;
    
    A 30 percent reduction of installed capacity in our emulsions network in North America,
reflecting the cumulative impact of productivity improvement efforts and reduced market
demand;
    
    Significant reductions included selling and administrative costs for the Specialty
Materials Group in mature markets;
 40




---



##### 




    
    An adjustment of our infrastructure for the Electronic Materials Group, reflecting the
continued shift of the business to Asia;
    
    Cost reductions related to productivity improvements for various other businesses and
regions; and
    
    The termination of toll manufacturing support arrangements at two facilities related to
a prior divestiture.
  2007 Actions
  2006 Actions
  Asset Impairments
 2008 Impairments
  41




---



##### 



2007 Impairments
  2006 Impairments
   Pension Judgment
  Share of Affiliate Earnings, net
   42




---



##### 



Other Expense (Income), net
   Minority Interest
  Income Taxes
  Accounting for Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109.
 Results of Operations for the Years Ended December 31, 2006 through December 31, 2008
 By Business Segment
 ELECTRONIC MATERIALS GROUP
   43




---



##### 



ELECTRONIC TECHNOLOGIES
 Semiconductor Technologies Circuit Board Technologies Packaging and Finishing Technologies
  Semiconductor Technologies Circuit Board Technologies Packaging and Finishing
Technologies
  DISPLAY TECHNOLOGIES
 Semiconductor
Technologies
  44




---



##### 



SPECIALTY MATERIALS GROUP
      PAINT AND COATINGS MATERIALS
  45




---



##### 



PACKAGING AND BUILDING MATERIALS
     46




---



##### 



PRIMARY MATERIALS
 Year Ended December 31,(in millions)
    
    2008
    
    2007
    
    2006Total Sales
    
    $
    2,367
    
    
    $
    2,078
    
    
    $
    1,979Elimination of Inter-segment Sales
    
    
    (1,222
    )
    
    
    (1,103
    )
    
    
    (1,102
    )Third Party Sales
    
    $
    1,145
    
    
    $
    975
    
    
    $
    877
 Paint and Coatings Materials Packaging and Building Materials
  Paint and Coatings Materials Packaging and Building Materials
   PERFORMANCE MATERIALS GROUP
  Process Chemicals and Biocides Powder Coatings
 47




---



##### 



AgroFresh Advanced Materials AgroFresh
 Digital Imaging
  Process Chemicals and Biocides Powder Coatings AgroFresh, Advanced Materials Digital Imaging, AgroFresh
 Digital Imaging Powder Coatings AgroFresh
 SALT
   48




---



##### 



CORPORATE
   49




---



##### 



LIQUIDITY AND CAPITAL RESOURCES
 Overview
    Year EndedDecember 31,(in millions)
    
    2008
    
    2007Cash provided by operating activities
    
    $
    1,040
    
    
    $
    963Issuance of long-term debt
    
    
    2
    
    
    
    1,394Stock repurchases
    
    
    (15
    )
    
    
    (1,462
    )Stock option exercise proceeds
    
    
    104
    
    
    
    46Repayments of long-term debt
    
    
    (8
    )
    
    
    (441
    )Capital expenditures
    
    
    (520
    )
    
    
    (417
    )Acquisitions
    
    
    (164
    )
    
    
    (117
    )Dividends
    
    
    (314
    )
    
    
    (303
    )
  Cash Provided by Operating Activities
  50




---



##### 



Pension Plan and Postretirement Benefit Plan Funding and Liability
        51




---



##### 



Capital Expenditures
  Ø
     Ø
     Ø
       (in millions)
    
    2008
    
    
    2007
    
    
    2006Cost savings and infrastructure
    
    $
    287
    
    
    $
    276
    
    
    $
    263Capacity additions and new products
    
    
    193
    
    
    
    102
    
    
    
    65Research facilities and equipment
    
    
    25
    
    
    
    27
    
    
    
    65Capitalized interest cost
    
    
    15
    
    
    
    12
    
    
    
    11Total
    
    $
    520
    
    
    $
    417
    
    
    $
    404
  52




---



##### 



Dividends
  Dividend Paid
    
    AmountYear
    
    (Per common share)
    
    (In millions)2006
    
    $
    1.28
    
    
    $
    2832007
    
    $
    1.44
    
    
    $
    3032008
    
    $
    1.60
    
    
    $
    314
 
 Share Repurchase Program
  53




---



##### 



Liquidity and Debt
  December 31,
    
    December 31,(in millions)
    
    2008
    
    2007Short-term obligations
    
    $
    177
    
    
    $
    158Long-term debt
    
    
    3,210
    
    
    
    3,139Total debt
    
    $
    3,387
    
    
    $
    3,297Cash and cash equivalents
    
    $
    335
    
    
    $
    265Restricted cash
    
    
    
    
    
    
    3Total cash
    
    $
    335
    
    
    $
    268
  Credit Ratings
  Short-term Debt
  54




---



##### 



Long-term Debt
    Use of Derivative Instruments to Manage Market Risk
   55




---



##### 



Contractual Obligations
  (in millions)
    
    Payments due by periodContractual obligations
    
    Total(4)
    
    Within 1 year
    
    2-3 years
    
    4-5 years
    
    Over 5 yearsOperating Activities:Operating leases
    
    $
    235
    
    
    $
    67
    
    
    $
    104
    
    
    $
    64
    
    
    $
    Interest on long-term debt
    
    
    2,398
    
    
    
    181
    
    
    
    362
    
    
    
    334
    
    
    
    1,521Raw material purchase obligations(1,2)
    
    
    1,799
    
    
    
    607
    
    
    
    475
    
    
    
    320
    
    
    
    397Purchase obligations, other (1,2)
    
    
    251
    
    
    
    124
    
    
    
    121
    
    
    
    5
    
    
    
    1Pension and other employee benefit funding
(3)
    
    
    623
    
    
    
    81
    
    
    
    157
    
    
    
    156
    
    
    
    229FIN 48 liabilities(4)
    
    
    109Environmental liabilities(5)
    
    
    160
    
    
    
    50
    
    
    
    60
    
    
    
    22
    
    
    
    28Deferred revenue
    
    
    33
    
    
    
    7
    
    
    
    13
    
    
    
    11
    
    
    
    2Financing Activities:Long-term debt, including current portion
    
    
    3,210
    
    
    
    38
    
    
    
    
    
    
    
    681
    
    
    
    2,491Investing Activities:Construction commitments
    
    
    50
    
    
    
    47
    
    
    
    3
    
    
    
    
    
    
    
    Other Activities:ESOP loan guarantees
    
    
    134
    
    
    
    7
    
    
    
    16
    
    
    
    19
    
    
    
    92Interest on ESOP loan guarantees
    
    
    90
    
    
    
    13
    
    
    
    24
    
    
    
    21
    
    
    
    32Total contractual cash obligations(4)
    
    $
    9,090
    
    
    $
    1,222
    
    
    $
    1,335
    
    
    $
    1,633
    
    
    $
    4,793
 Notes :
 
 (1)
    
    For our requirements contracts, we have assumed that our existing business segments will
require materials and services generally consistent with prior years. The amount of the
obligation is based upon either projected requirements or historical spend. Our purchase
obligations include raw materials, indirect materials, traffic and logistics, utilities and
energy, information technology and communications contracts.(2)
    
    These obligations include evergreen contracts that renew automatically until specifically
cancelled by either party. We have assumed that our evergreen contracts will continue
through 2009.(3)
    
    Qualified pension plan contributions depend upon changes in assumptions used to calculate
plan funding levels, the actual return on plan assets, changes in employee groups covered by
the plans, and any legislative or regulatory changes affecting plan funding requirements;
therefore we have only forecasted funding requirements for 5 years due to the fact that
significant assumptions are required. As such, the funding requirements disclosed are
subject to change. The non-qualified plan and other employee benefits reflect expected
future benefit payments, which are forecasted out through 2018. See Note 9 to our
Consolidated Financial Statements.(4)
    
    On January 1, 2007, we adopted the provisions of FIN 48. See Note 7 Income Taxes. As of
December 31, 2008, we had approximately $109 million of tax liabilities, including interest
and penalties, related to uncertain tax positions. Because of the high degree of uncertainty
regarding the timing of future cash outflows associated with these liabilities, we are
unable to estimate the years in which settlement will occur with the respective taxing
authorities.(5)
    
    These obligations include liabilities expected to be paid out within 10 years. See Note
26 to our Consolidated Financial Statements for additional information. Trading Activities
  Unconsolidated Entities
  56




---



##### 



Litigation Against The Dow Chemical Company
  Environmental Matters and Litigation
   Accruals
  (in millions)
    
    BalanceDecember 31, 2006
    
    $
    141Amounts charged to earnings
    
    
    37Amounts spent
    
    
    (28
    )December 31, 2007
    
    $
    150Amounts charged to earnings
    
    
    45Amounts spent
    
    
    (35
    )December 31, 2008
    
    $
    160
 57




---



##### 



Wood-Ridge/Berrys Creek
   Other Environmental Expenditures
    Climate Change
 Massachusetts v. EPA 2
 58




---



##### 



2
 2 2 2 2
 Chemical
Company Regulations
    Litigation
  59




---



##### 



Acquisitions and Divestitures
  Working Capital
   (millions)
    
    2008
    
    2007InventoriesYear-end balance
    
    $
    1,099
    
    
    $
    1,024Annual turnover
    
    
    6.75
    
    
    
    6.40Days cost of sales in ending inventory
    
    
    66
    
    
    
    54Customer receivables, netYear-end balance
    
    $
    1,360
    
    
    $
    1,610Annual turnover
    
    
    6.45
    
    
    
    6.00Days sales outstanding
    
    
    59
    
    
    
    60
 Notes:
 
    
    Days sales outstanding were calculated by dividing ending net customer receivables by
daily sales for the fourth quarter.
    
    Days cost of sales in ending inventory was calculated by dividing ending inventory by
daily cost of sales for the fourth quarter.
    
    For customer receivables, annual turnover figures are calculated by dividing annual sales
by the average customer receivables balance.
    
    For inventories, annual turnover figures are calculated by dividing cost of goods sold by
the average inventory balance.
 Asset Turnover
 60




---



##### 



ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET ADOPTED
 Employers Disclosures about Postretirement Benefit Plan Assets
 Employers Disclosures about Postretirement Benefit Plan Assets
 Determining Whether Share Based Payment Transactions are Participating Securities
 Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities
 Accounting for Collaborative Arrangements
 Accounting for Collaborative
Arrangements,
 Non-controlling Interests
 Non-controlling Interests in Consolidated
Financial Statements
 
 Item 7A: Quantitative and Qualitative Disclosures about Market Risk
  61




---



##### 



Foreign Exchange Rate Risk
   Interest Rate Risk
  62




---



##### 



Commodity Price Risk
  63




---



##### 



Item 8: Financial Statements and Supplementary Data
 PageManagements Report on Internal Control Over Financial Reporting
    
    
    65Report of Independent Registered Public Accounting Firm
    
    
    66Consolidated Financial Statements:Consolidated Statements of Operations for the years ended
December 31, 2008, 2007, and 2006
    
    
    67Consolidated Statements of Cash Flows for the years ended
December 31, 2008, 2007, and 2006
    
    
    68Consolidated Balance Sheets as of December 31, 2008 and 2007
    
    
    69Consolidated Statements of Stockholders Equity for the years
ended December 31, 2008, 2007, and 2006
    
    
    70Notes to Consolidated Financial Statements
    
    
    71
 64




---



##### 



Managements Report on Internal Control Over Financial Reporting
     /s/ Raj L. Gupta
    
    /s/ Jacques M. CroisetiereRaj L. Gupta
    
    Jacques M. CroisetiereChairman and Chief Executive Officer
    
    Executive Vice President, Chief Financial Officerand Chief Strategy Officer
  65




---



##### 



Report of Independent Registered Public Accounting Firm
  Internal Control  Integrated Framework Managements Report on Internal Control Over Financial Reporting
    
 66




---



##### 



Rohm and Haas Company and Subsidiaries
 
 Consolidated Statements of Operations
 For the years ended December 31,
    
    2008
    
    
    2007
    
    
    2006(in millions, except per share amounts)Net sales
    
    $
    9,575
    
    
    $
    8,897
    
    
    $
    8,230Cost of goods sold
    
    
    7,165
    
    
    
    6,430
    
    
    
    5,747Gross profit
    
    
    2,410
    
    
    
    2,467
    
    
    
    2,483Selling and administrative expense
    
    
    1,138
    
    
    
    1,091
    
    
    
    1,041Research and development expense
    
    
    327
    
    
    
    296
    
    
    
    286Interest expense
    
    
    164
    
    
    
    120
    
    
    
    94Amortization of intangibles
    
    
    63
    
    
    
    57
    
    
    
    56Restructuring and asset impairments
    
    
    199
    
    
    
    28
    
    
    
    27Pension judgment
    
    
    
    
    
    
    65
    
    
    
    Share of affiliate earnings, net
    
    
    97
    
    
    
    22
    
    
    
    10Other
expense (income), net
    
    
    55
    
    
    
    (48
    )
    
    
    (53
    )Earnings from continuing operations before income taxes,
and minority interest
    
    
    561
    
    
    
    880
    
    
    
    1,042Income tax expense
    
    
    77
    
    
    
    206
    
    
    
    274Minority interest
    
    
    4
    
    
    
    14
    
    
    
    13Earnings from continuing operations
    
    
    480
    
    
    
    660
    
    
    
    755Discontinued operations:Net earnings (loss) of discontinued lines of business, net of income tax
(benefit) expense of $(1), $(2), and $14 in 2008, 2007 and 2006,
respectively
    
    
    2
    
    
    
    1
    
    
    
    (20
    )Net earnings
    
    $
    482
    
    
    $
    661
    
    
    $
    735Basic earnings per share (in dollars):From continuing operations
    
    $
    2.48
    
    
    $
    3.17
    
    
    $
    3.45Income (loss) from discontinued operation
    
    
    0.01
    
    
    
    0.01
    
    
    
    (0.09
    )Net earnings per share
    
    $
    2.49
    
    
    $
    3.18
    
    
    $
    3.36Diluted earnings per share (in dollars):From continuing operations
    
    $
    2.44
    
    
    $
    3.12
    
    
    $
    3.41Income (loss) from discontinued operation
    
    
    0.01
    
    
    
    0.01
    
    
    
    (0.09
    )Net earnings per share
    
    $
    2.45
    
    
    $
    3.13
    
    
    $
    3.32Weighted average common shares outstanding  basic
    
    
    193.6
    
    
    
    207.8
    
    
    
    218.9Weighted average common shares outstanding  diluted
    
    
    196.5
    
    
    
    211.0
    
    
    
    221.2
  67




---



##### 



Rohm and Haas Company and Subsidiaries
 
 Consolidated Statements of Cash Flows
 For the years ended December 31,
    
    2008
    
    
    2007
    
    
    2006(in millions)Cash Flows from Operating ActivitiesNet earnings
    
    $
    482
    
    
    $
    661
    
    
    $
    735Adjustments to reconcile net earnings to net cash provided by operating activities:(Gain) loss on disposal of business and equity affilitates
    
    
    (86
    )
    
    
    (1
    )
    
    
    16Income taxes related
to disposal of business and equity affiliates
    
    
    39
    
    
    
    
    
    
    
    (Gain) loss on sale of assets
    
    
    (4
    )
    
    
    3
    
    
    
    7Provision for allowance for doubtful accounts
    
    
    16
    
    
    
    5
    
    
    
    6Provision for LIFO reserve
    
    
    (23
    )
    
    
    43
    
    
    
    7Benefit from deferred taxes
    
    
    (152
    )
    
    
    (75
    )
    
    
    (37
    )Asset impairments
    
    
    42
    
    
    
    18
    
    
    
    2Depreciation
    
    
    467
    
    
    
    412
    
    
    
    407Amortization of finite-lived intangibles
    
    
    63
    
    
    
    57
    
    
    
    58Pension judgment
    
    
    
    
    
    
    65
    
    
    
    Share-based compensation
    
    
    49
    
    
    
    49
    
    
    
    48Premium paid on debt retirement
    
    
    
    
    
    
    
    
    
    
    (6
    )Changes in assets and liabilitiesAccounts receivable
    
    
    397
    
    
    
    (266
    )
    
    
    (30
    )Inventories
    
    
    (79
    )
    
    
    18
    
    
    
    (161
    )Prepaid expenses and other current assets
    
    
    (49
    )
    
    
    (36
    )
    
    
    3Accounts payable and accrued liabilities
    
    
    (129
    )
    
    
    22
    
    
    
    (12
    )Federal, foreign and other income taxes payable
    
    
    (98
    )
    
    
    23
    
    
    
    (96
    )Payments to fund US pension plans
    
    
    
    
    
    
    
    
    
    
    (137
    )Swap termination proceeds
    
    
    69
    
    
    
    
    
    
    
    Other, net
    
    
    36
    
    
    
    (35
    )
    
    
    30Net cash provided by operating activities
    
    
    1,040
    
    
    
    963
    
    
    
    840Cash Flows from Investing ActivitiesAcquisitions of businesses affiliates and intangibles, net of cash received
    
    
    (164
    )
    
    
    (117
    )
    
    
    (46
    )Proceeds from disposal of businesses and equity affiliates, net
    
    
    119
    
    
    
    15
    
    
    
    256Decrease in restricted cash
    
    
    3
    
    
    
    
    
    
    
    1Investments in Rabbi Trust
    
    
    (200
    )
    
    
    
    
    
    
    Proceeds from the sale of land, buildings and equipment
    
    
    15
    
    
    
    17
    
    
    
    12Capital expenditures for land, buildings and equipment
    
    
    (520
    )
    
    
    (417
    )
    
    
    (404
    )Payments to settle derivative contracts
    
    
    (25
    )
    
    
    (67
    )
    
    
    (22
    )Net cash used in investing activities
    
    
    (772
    )
    
    
    (569
    )
    
    
    (203
    )Cash Flows from Financing ActivitiesProceeds from issuance of long-term debt
    
    
    2
    
    
    
    1,394
    
    
    
    23Repayments of long-term debt
    
    
    (8
    )
    
    
    (441
    )
    
    
    (182
    )Contribution from minority shareholder in consolidated joint venture
    
    
    22
    
    
    
    
    
    
    
    Purchase of common stock
    
    
    (15
    )
    
    
    (1,462
    )
    
    
    (264
    )Tax benefit on stock options
    
    
    32
    
    
    
    8
    
    
    
    8Proceeds from exercise of stock options
    
    
    104
    
    
    
    46
    
    
    
    74Net change in short-term borrowings
    
    
    12
    
    
    
    11
    
    
    
    (8
    )Payment of dividends
    
    
    (314
    )
    
    
    (303
    )
    
    
    (283
    )Net cash used in financing activities
    
    
    (165
    )
    
    
    (747
    )
    
    
    (632
    )Net increase (decrease) in cash and cash equivalents
    
    
    103
    
    
    
    (353
    )
    
    
    5Effect of exchange rate changes on cash and cash equivalents
    
    
    (33
    )
    
    
    25
    
    
    
    22Cash and cash equivalents at the beginning of the year
    
    
    265
    
    
    
    593
    
    
    
    566Cash and cash equivalents at the end of the year
    
    $
    335
    
    
    $
    265
    
    
    $
    593Supplemental Cash Flow InformationCash paid during the year for:Interest, net of amounts capitalized
    
    $
    165
    
    
    $
    117
    
    
    $
    109Income taxes, net of refunds received
    
    
    206
    
    
    
    230
    
    
    
    381
  68




---



##### 



Rohm and Haas Company and Subsidiaries
 
 Consolidated Balance Sheets
 December 31,
    
    2008
    
    
    2007(in millions, except share data)AssetsCash and cash equivalents
    
    $
    335
    
    
    $
    265Restricted cash
    
    
    
    
    
    
    3Receivables, net
    
    
    1,538
    
    
    
    1,876Inventories
    
    
    1,099
    
    
    
    1,024Prepaid expenses and other current assets
    
    
    386
    
    
    
    258Total current assets
    
    
    3,358
    
    
    
    3,426Land, buildings and equipment, net of accumulated depreciation
    
    
    2,853
    
    
    
    2,871Investments in and advances to affiliates
    
    
    176
    
    
    
    195Goodwill, net of accumulated amortization
    
    
    1,666
    
    
    
    1,668Other intangible assets, net of accumulated amortization
    
    
    1,418
    
    
    
    1,492Other assets
    
    
    438
    
    
    
    455Total Assets
    
    $
    9,909
    
    
    $
    10,107Liabilities and Stockholders EquityLiabilities:Short-term obligations
    
    $
    177
    
    
    $
    158Trade and other payables
    
    
    633
    
    
    
    806Accrued liabilities
    
    
    859
    
    
    
    788Income taxes payable
    
    
    
    
    
    
    17Total current liabilities
    
    
    1,669
    
    
    
    1,769Long-term debt
    
    
    3,210
    
    
    
    3,139Employee benefits
    
    
    1,138
    
    
    
    760Deferred income taxes
    
    
    413
    
    
    
    766Other liabilities
    
    
    290
    
    
    
    312Total Liabilities
    
    
    6,720
    
    
    
    6,746Minority Interest
    
    
    213
    
    
    
    215Commitments and contingenciesStockholders Equity:Preferred stock; par value - $1.00; authorized - 25,000,000 shares;
issued - no shares
    
    
    
    
    
    
    Common stock; par value - $2.50; authorized - 400,000,000 shares;
issued - 242,078,349 shares
    
    
    605
    
    
    
    605Additional paid-in capital
    
    
    2,307
    
    
    
    2,147Retained earnings
    
    
    2,742
    
    
    
    2,5695,654
    
    
    
    5,321Treasury stock at cost (2008 - 46,844,623, shares;
2007 - 46,227,211 shares)
    
    
    (1,921
    )
    
    
    (1,918
    )ESOP shares (2008 - 7,311,125 shares; 2007 - 7,995,877 shares)
    
    
    (70
    )
    
    
    (75
    )Accumulated other comprehensive loss
    
    
    (687
    )
    
    
    (182
    )Total Stockholders Equity
    
    
    2,976
    
    
    
    3,146Total Liabilities and Stockholders Equity
    
    $
    9,909
    
    
    $
    10,107
  69




---



##### 



Number of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Number ofShares of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares of
    
    
    
    
    
    
    
    
    
    
    AccumulatedCommon
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Treasury
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    Total
    
    
    
    TotalStock
    
    
    Common
    
    
    Paid-in
    
    
    Retained
    
    
    Stock
    
    
    Treasury
    
    
    
    
    
    
    Comprehensive
    
    
    Stockholders
    
    
    
    Comprehensive(in millions, except share amounts in thousands)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Outstanding
    
    
    Stock
    
    
    ESOP
    
    
    Income (Loss)
    
    
    Equity
    
    
    
    Income2006Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    735
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    735
    
    
    
    $
    735Reclassification
of derivatives to earnings, net of taxes of $(6)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    (11
    )
    
    
    
    (11
    )Changes in
fair value of derivatives, net of taxes of $5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    
    10Cumulative
translation adjustment, net of taxes of $(8)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    
    (2
    )Change in minimum pension liability, net of taxes of $11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    35
    
    
    
    
    35Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    767Adjustment to initially apply FASB Statement No. 158, net of
tax of $(127)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (243
    )
    
    
    (243
    )Repurchase of common stock
    
    
    (5,697
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,697
    
    
    
    (264
    )
    
    
    
    
    
    
    
    
    
    
    (264
    )Common stock issued:Stock-based compensation
    
    
    2,573
    
    
    
    
    
    
    
    62
    
    
    
    
    
    
    
    (2,573
    )
    
    
    65
    
    
    
    
    
    
    
    
    
    
    
    127ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    6Tax benefit on ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Common dividends ($1.28 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (283
    )Balance December 31, 2006
    
    
    218,839
    
    
    $
    605
    
    
    $
    2,214
    
    
    $
    2,218
    
    
    
    23,240
    
    
    $
    (608
    )
    
    $
    (82
    )
    
    $
    (316
    )
    
    $
    4,0312007Cumulative Transition Adjustment for FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    661
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    661
    
    
    
    $
    661Cumulative translation adjustment, net of taxes of $(21)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    17
    
    
    
    
    17Reclassification of derivatives to earnings, net of taxes of $(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (5
    )Changes in fair value of derivatives, net of taxes of $1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    1Prior service credit, net, from pension plan amendments
arising during period, net of taxes of $18
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    41
    
    
    
    
    41Amortization of net actuarial loss for pension and
postretirement plans, net of taxes of $8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    18
    
    
    
    
    18Net actuarial gain on pension and postretirement plans arising
during period, net of taxes of $28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    62
    
    
    
    
    62Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    795Repurchase of common stock
    
    
    (24,747
    )
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    24,747
    
    
    
    (1,363
    )
    
    
    
    
    
    
    
    
    
    
    (1,462
    )Common stock issued:Stock-based compensation
    
    
    1,760
    
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    (1,760
    )
    
    
    53
    
    
    
    
    
    
    
    
    
    
    
    85ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Tax benefit on ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Common dividends ($1.44 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303
    )Balance December 31, 2007
    
    
    195,852
    
    
    $
    605
    
    
    $
    2,147
    
    
    $
    2,569
    
    
    
    46,227
    
    
    $
    (1,918
    )
    
    $
    (75
    )
    
    $
    (182
    )
    
    $
    3,1462008Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    482
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    482
    
    
    
    $
    482Cumulative translation adjustment, net of taxes of $(38)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (104
    )
    
    
    (104
    )
    
    
    
    (104
    )Reclassification of derivatives to earnings, net of taxes of $2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    3Changes in
fair value of derivatives, net of taxes of $1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    1Net gain (loss) on marketable securities, net of taxes of $0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    (1
    )Prior service cost, net, from pension plan amendments arising
during period, net of taxes of $(1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    (1
    )Amortization of prior service credit, net of taxes of $(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    
    (3
    )Net actuarial loss on pension and postretirement plans arising
during period, net of taxes of $(200)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (408
    )
    
    
    (408
    )
    
    
    
    (408
    )Amortization of net actuarial loss for pension and
postretirement plans, net of taxes of $5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    8
    
    
    
    
    8Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (23
    )Repurchase of common stock
    
    
    (3,296
    )
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    3,296
    
    
    
    (114
    )
    
    
    
    
    
    
    
    
    
    
    (15
    )Common stock issued:Stock-based compensation
    
    
    2,678
    
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    (2,678
    )
    
    
    111
    
    
    
    
    
    
    
    
    
    
    
    172ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Tax benefit on ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5Common dividends ($1.60 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (314
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (314
    )Balance December 31, 2008
    
    
    195,234
    
    
    $
    605
    
    
    $
    2,307
    
    
    $
    2,742
    
    
    
    46,845
    
    
    $
    (1,921
    )
    
    $
    (70
    )
    
    $
    (687
    )
    
    $
    2,976
  70




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1: Organization and Summary of Significant Accounting Policies
 Nature of Business
  Use of Estimates
  Reclassifications
  Principles of Consolidation
 Consolidation of Variable Interest Entities
  71




---



##### 



(in millions)
    
    2008
    
    2007Cash and cash equivalents
    
    $
    27
    
    
    $
    31Receivables, net
    
    
    56
    
    
    
    62Inventory
    
    
    13
    
    
    
    11Land, buildings and equipment, net of accumulated
depreciation
    
    
    86
    
    
    
    66Investments in and advances to affiliates
    
    
    23
    
    
    
    1Other
    
    
    7
    
    
    
    6Total assets
    
    $
    212
    
    
    $
    177Short-term obligations
    
    $
    10
    
    
    $
    9Trade and other payables
    
    
    19
    
    
    
    23Accrued liabilities
    
    
    9
    
    
    
    11Income taxes payable
    
    
    9
    
    
    
    10Other
    
    
    8
    
    
    
    4Total liabilities
    
    $
    55
    
    
    $
    57
     Foreign Currency Translation
   72




---



##### 



Cost of Goods Sold
  Revenue Recognition
    Accounts Receivable and Allowance for Doubtful Accounts
  Earnings Per Share
  Cash and Cash Equivalents
  Inventories
 Inventory Costs, an amendment of ARB No.
43, Chapter 4
 Land, Buildings and Equipment, and Accumulated Depreciation
  73




---



##### 



Capitalized Software
 Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use.
 Goodwill and Indefinite-Lived Intangible Assets
  Goodwill and Other
Intangible Assets
  Impairment of Long-Lived Assets
   74




---



##### 



Research and Development
  Litigation and Environmental Contingencies and Reserves
     75




---



##### 



Income Taxes
   Retirement Benefits
  Employers Accounting for Defined Benefit
Pension and Other Postretirement Plans
 Treasury Stock
  Share-Based Compensation
 Accounting for Stock Issued to Employees
 Accounting for Stock-Based Compensation
 Accounting for Stock Issued to Employees, Accounting for Stock-Based Compensation  Transition and Disclosure,
 76




---



##### 



Fair Value Measurements of Financial Instruments
  Level 1
 Level 2
 Level 3
 Accounting for Derivative Instruments and Hedging Activities
 Accounting
for Derivative Instruments and Hedging Activities,
      77




---



##### 



Note 2: Acquisitions and Dispositions of Assets
 Acquisitions
 2008
  ®
   (in millions)
    
    April 1, 2008Current assets, including cash acquired of $1 millionAccounts receivable
    
    $
    14Inventories
    
    
    8Land, buildings and equipment
    
    
    42Goodwill
    
    
    23Intangible assets
    
    
    14Other, including cash acquired of $1 million
    
    
    1Total assets acquired
    
    $
    102Current liabilitiesAccounts payable
    
    $
    6Accrued expenses
    
    
    1Notes payable
    
    
    16Total liabilities assumed
    
    $
    23Net assets
    
    $
    79
  78




---



##### 



(in millions)
    
    April 4, 2008Current assets, including cash acquired of $6 millionGoodwill
    
    
    28Intangible assets
    
    
    5In-process research and development
    
    
    1Other, including cash acquired of $6 million
    
    
    10Total assets acquired
    
    $
    44Total liabilities assumed
    
    $
    3Net assets
    
    $
    41
  Twelve months endedDecember 31,(in millions, except per share amounts)
    
    2008
    
    2007Pro forma net sales
    
    $
    9,589
    
    
    $
    8,940Pro forma net earnings
    
    
    483
    
    
    
    664Pro forma earnings per share -Basic
    
    $
    2.49
    
    
    $
    3.20Diluted
    
    
    2.46
    
    
    
    3.15
   2007
 ,
 79




---



##### 



November 30,(in millions)
    
    2007Current assets, including cash acquired of $2 million
    
    $
    289Land, buildings and equipment, net
    
    
    72Goodwill
    
    
    95Intangible assets
    
    
    22In-process research and development
    
    
    1Deferred tax benefits
    
    
    11Other
    
    
    2Total assets acquired
    
    $
    492Current liabilities
    
    $
    194Deferred tax liabilities
    
    
    10Other long-term liabilities
    
    
    11Other liabilities
    
    
    21Total liabilities acquired
    
    $
    215Minority interest acquired
    
    $
    81
   (in millions, except per share amounts)
    
    2007
    
    2006Net sales
    
    $
    9,112
    
    
    $
    8,437Net (loss) earnings
    
    
    655
    
    
    
    738Earnings per share -Basic
    
    
    3.15
    
    
    
    3.37Diluted
    
    $
    3.10
    
    
    $
    3.34
    80




---



##### 



2006
 ®
 Dispositions
 2008
 2007
  2006
 Automotive Coatings Automotive Coatings Automotive
Coatings
 Recognition of Deferred Tax Assets for a Parent Companys
Excess Tax Basis in the Stock of a Subsidiary That is Accounted for as a Discontinued Operation,
 Accounting for the Impairment or Disposal of Long-Lived Assets,
 Automotive Coatings
 (in millions)
    
    2007
    
    2006Net sales from discontinued operation
    
    $
    14
    
    
    $
    78(Loss) earnings from discontinued line of business
    
    
    (1
    )
    
    
    (6
    )Income tax benefit (provision)
    
    
    2
    
    
    
    (20
    )Net earnings (loss) from discontinued operation
    
    $
    1
    
    
    $
    (26
    )
 81




---



##### 



Note 3: Provision for Restructuring and Asset Impairments
 Employers Accounting for Postemployment Benefits. Accounting for the
Impairment or Disposal of Long-lived Assets.
 Restructuring and Asset Impairments
 (in millions)
    
    2008
    
    2007
    
    2006Severance and employee benefits (net)
    
    $
    157
    
    
    $
    10
    
    
    $
    23Asset impairments, net of gains on sales
    
    
    42
    
    
    
    18
    
    
    
    2Other, including contract lease termination penalties
    
    
    
    
    
    
    
    
    
    
    2Amount charged to earnings
    
    $
    199
    
    
    $
    28
    
    
    $
    27
 Restructuring by Initiative
 Severance Employee Benefits
    
    Headcount(in millions, except headcount)
    
    2008
    
    2007
    
    2006
    
    2008
    
    2007
    
    2006Initial ChargeElectronic Technologies
    
    $
    20
    
    
    $
    3
    
    
    $
    1
    
    
    
    430
    
    
    
    51
    
    
    
    9Display Technologies
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    Electronic Materials Group
    
    $
    26
    
    
    $
    3
    
    
    $
    1
    
    
    
    525
    
    
    
    51
    
    
    
    9Paint and Coatings Materials
    
    
    53
    
    
    
    2
    
    
    
    6
    
    
    
    575
    
    
    
    15
    
    
    
    75Packaging and Building Materials
    
    
    28
    
    
    
    1
    
    
    
    1
    
    
    
    298
    
    
    
    14
    
    
    
    18Primary Materials
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    9
    
    
    
    
    
    
    
    17Specialty Materials Group
    
    $
    83
    
    
    $
    3
    
    
    $
    9
    
    
    
    882
    
    
    
    29
    
    
    
    110Performance Materials Group
    
    
    29
    
    
    
    7
    
    
    
    6
    
    
    
    338
    
    
    
    82
    
    
    
    37Salt
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    9
    
    
    
    114Corporate
    
    
    15
    
    
    
    2
    
    
    
    5
    
    
    
    165
    
    
    
    30
    
    
    
    59Total
    
    $
    153
    
    
    $
    15
    
    
    $
    26
    
    
    
    1,910
    
    
    
    201
    
    
    
    329Activity during 2006
    
    
    
    
    
    
    
    
    
    $
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (68
    )Changes in estimate
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    December 31, 2006 ending balance
    
    
    
    
    

    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    261Activity during 2007
    
    
    
    
    
    $
    (4
    )
    
    
    (17
    )
    
    
    
    
    
    
    (72
    )
    
    
    (182
    )Changes in estimate
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    
    
    
    
    (9
    )
    
    
    (47
    )December 31, 2007 ending balance
    
    
    
    
    
    
    11
    
    
    
    2
    
    
    
    
    
    
    
    120
    
    
    
    32Activity during 2008
    
    $
    (14
    )
    
    
    (7
    )
    
    
    (1
    )
    
    
    (344
    )
    
    
    (61
    )
    
    
    (15
    )Changes in estimate
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    3
    
    
    
    (9
    )
    
    
    (17
    )Currency effects
    
    
    2
    
    
    
    (1
    )
    
    
    (3
    )Balance at December 31, 2008
    
    $
    143
    
    
    $
    3
    
    
    $
    
    
    
    
    1,569
    
    
    
    50
    
    
    
    
  82




---



##### 



2008 Actions
  
    
    An adjustment of production schedules in some manufacturing facilities to reflect
current market softness;
    
    A realignment of our manufacturing footprint to better utilize assets, including idling
or closing underutilized plants;
    
    Reducing commercial-related positions that have been directly impacted by lower market
demand;
    
    A 30 percent reduction of installed capacity in our emulsions network in North America,
reflecting the cumulative impact of productivity improvement efforts and reduced market
demand;
    
    Significant reductions in selling and administrative costs for the Specialty Materials
Group in mature markets;
    
    An adjustment of our infrastructure for the Electronic Materials Group, reflecting the
continued shift of the business to Asia;
    
    Cost reductions related to productivity improvements for various other businesses and
regions; and
    
    The termination of toll manufacturing support arrangements at two facilities related to
a prior divestiture.
    2007 Actions
     2006 Actions
   83




---



##### 



Asset Impairments
 2008 Impairments
  2007 Impairments
  2006 Impairments
   84




---



##### 



Note 4: Other Expense (Income), net
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Royalty income
    
    $
    (3
    )
    
    $
    (4
    )
    
    $
    (4
    )Foreign exchange losses (gains) and related hedging
    
    
    19
    
    
    
    (5
    )
    
    
    16Interest and investment (income) loss
    
    
    2
    
    
    
    (18
    )
    
    
    (27
    )Sales of real estate
    
    
    (7
    )
    
    
    ( 3
    )
    
    
    (3
    )Tolling
    
    
    (6
    )
    
    
    (6
    )
    
    
    (4
    )Investment gains
    
    
    
    
    
    
    
    
    
    
    (4
    )Dow acquisition related expenses
    
    
    40
    
    
    
    
    
    
    
    Non-designated commodity hedges
    
    
    18
    
    
    
    
    
    
    
    Other, net
    
    
    (8
    )
    
    
    (12
    )
    
    
    (27
    )Total
    
    $
    55
    
    
    $
    (48
    )
    
    $
    (53
    )
 Note 5: Fair Value Measurements
 Fair Value Measurements,
 
    
    Level 1:
    
    Observable inputs such as quoted prices (unadjusted) in active markets for
identical assets or liabilities.
    
    Level 2:
    
    Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or
liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active.
    
    Level 3:
    
    Unobservable inputs that reflect our own assumptions.The following describes the valuation methodologies used to measure fair value and key inputs:
    
    Cash equivalents: We classify highly liquid investments with a maturity date of
90 days or less at the date of purchase including U.S. Treasury bills, federal agency
securities and commercial paper as cash equivalents. We use quoted prices where available
to determine fair value for U.S. Treasury notes, and industry standard valuation models
using market based inputs when quoted prices are unavailable such as for corporate
obligations.
    
    Receivables, net, short term borrowings and trade and other payables: Given the
short-term nature of these items the estimated fair value approximates its carrying value.
    
    Long-term investments: These investments are quoted at market prices from
various stock and bond exchanges.
    
    Derivative instruments and long-term debt: As part of our risk management
strategy, we enter into derivative transactions to mitigate exposures. Our derivative
instruments include interest rate swaps on long-term debt, currency swaps and currency
forwards and options. Commodity derivative instruments are used to reduce portions of our
commodity price risks, especially energy. The fair values for our derivatives and related
long-term debt are based on quoted market prices from various banking institutions or an
independent third party provider for similar instruments.
 85




---



##### 



Fair Value Asof
    
    Fair Value Measurements at December 31,December 31,
    
    2008 using Fair Value Hierarchy(in millions)
    
    2008
    
    Level 1
    
    Level 2
    
    Level 3AssetsCash and cash equivalents
    
    $
    335
    
    
    $
    335
    
    
    $
    
    
    
    $
    Receivables, net
    
    
    1,538
    
    
    
    1,538
    
    
    
    
    
    
    
    Foreign exchange derivatives
    
    
    47
    
    
    
    
    
    
    
    47
    
    
    
    Long-term investments
    
    
    258
    
    
    
    258
    
    
    
    
    
    
    
    Total assets at fair value
    
    $
    2,178
    
    
    $
    2,131
    
    
    $
    47
    
    
    $
    LiabilitiesShort term borrowings
    
    $
    139
    
    
    $
    139
    
    
    $
    
    
    
    $
    Trade and other payables
    
    
    633
    
    
    
    633
    
    
    
    
    
    
    
    Long-term debt
    
    
    3,005
    
    
    
    
    
    
    
    3,005
    
    
    
    Foreign exchange derivatives
    
    
    14
    
    
    
    
    
    
    
    14
    
    
    
    Commodity derivatives
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    Total liabilities at fair
value
    
    $
    3,802
    
    
    $
    772
    
    
    $
    3,030
    
    
    $
    
 Counter-party Risk
  Note 6: Financial Instruments
  Currency Hedges
  (1)
    
    To preserve the U.S. dollar values of anticipated non-U.S. dollar cash flows
and earnings, primarily with respect to transactions forecast to occur within a
one-year period;(2)
    
    To prevent changes in the values of assets and liabilities denominated in
currencies other than the legal entitys functional currency which may create undue
earnings volatility (we refer to this hedging activity as asset and liability
hedging); and(3)
    
    To hedge the dollar values of our net investments in operations outside the
U.S.
  86




---



##### 



Hedges entered to preserve the U.S. dollar values of anticipated non-U.S. dollar cash flows and
earnings
   Asset and liability hedging
  Net investment hedging
    87




---



##### 



Cumulative
    
    ForeignChange of
    
    CurrencyValue of Hedges
    
    Translation
    
    Cumulative(in millions)
    
    of Net
    
    Impact on Net
    
    TranslationGains/(Losses)
    
    Investment
    
    Investment
    
    AdjustmentBalance as of December 31, 2006
    
    $
    (134
    )
    
    $
    144
    
    
    $
    10Changes in fair value
    
    
    (94
    )
    
    
    111
    
    
    
    17Balance as of December 31, 2007
    
    $
    (228
    )
    
    $
    255
    
    
    $
    27Changes in fair value
    
    
    5
    
    
    
    (109
    )
    
    
    (104
    )Balance as of December 31, 2008
    
    $
    (223
    )
    
    
    146
    
    
    
    (77
    )
  Commodity Hedges
    Interest Rate Hedges
    88




---



##### 



(in millions)
 Derivatives-designated as
    
    December 31, 2008
    
    
    December 31, 2007hedging instruments under
    
    Balance Sheet
    
    Fair
    
    
    Balance Sheet
    
    FairStatement 133
    
    Location
    
    Value
    
    
    Location
    
    ValueInterest Rate Contracts
    
    Other assets
    
    $
    
    
    
    Other assets
    
    $
    7Foreign Exchange Contracts
    
    Prepaid expenses and other current assets
    
    
    16
    
    
    Prepaid expenses and other current assets
    
    
    13Commodity Contracts
    
    Prepaid expenses and other current assets
    
    
    
    
    
    Prepaid expenses and other current assets
    
    
    1Total derivative assets
    
    
    
    $
    16
    
    
    
    
    $
    21Foreign Exchange Contracts
    
    Accrued liabilities
    
    $
    
    
    
    Accrued liabilities
    
    $
    34Commodity Contracts
    
    Accrued liabilities
    
    
    2
    
    
    Accrued liabilities
    
    
    Total derivative liabilities
    
    
    
    $
    2
    
    
    
    
    $
    34Net derivative assets/(liabilities)
    
    
    
    $
    14
    
    
    
    
    $
    (13
    )
 (in millions)
 Derivatives-not designated as
    
    December 31, 2008
    
    
    December 31, 2007hedging instruments under
    
    Balance Sheet
    
    Fair
    
    
    Balance Sheet
    
    FairStatement 133
    
    Location
    
    Value
    
    
    Location
    
    ValueForeign Exchange Contracts
    
    Prepaid expenses and other current assets
    
    $
    31
    
    
    Prepaid expenses and other current assets
    
    $
    12Commodity Contracts
    
    Prepaid expenses and other current assets
    
    
    
    
    
    Prepaid expenses and other current assets
    
    
    Total derivative assets
    
    
    
    $
    31
    
    
    
    
    $
    12Foreign Exchange Contracts
    
    Accrued liabilities
    
    $
    14
    
    
    Accrued liabilities
    
    $
    33Commodity Contracts
    
    Accrued liabilities
    
    
    9
    
    
    Accrued liabilities
    
    
    Total derivative liabilities
    
    
    
    $
    23
    
    
    
    
    $
    33Net derivative assets/(liabilities)
    
    
    
    $
    8
    
    
    
    
    $
    (21
    )
 89




---



##### 



(in millions)
 Derivatives-in Statement 133
    
    Location of Gain (Loss)
    
    Amount of Gain (Loss) Recognized in Income onFair Value
    
    Recognized in Income
    
    DerivativeHedging Relationships
    
    on Derivative
    
    2008
    
    2007
    
    2006Interest Rate Contracts
    
    Interest expense
    
    $
    12
    
    
    $
    1
    
    
    $
    
 (in millions)
 Hedged Items in Statement
    
    Location of Gain (Loss)
    
    Amount of Gain (Loss) Recognized in Income on133 Fair Value Hedge
    
    Recognized in Income
    
    DerivativeRelationships
    
    on Derivative
    
    2008
    
    2007
    
    2006Long-term debt
    
    Interest expense
    
    $
    (12
    )
    
    $
    (1
    )
    
    $
    
 (in millions)
 Derivatives-in Statement 133
    
    
    
    Amount of Gain (Loss) Recognized in OCI onCash Flow
    
    
    
    Derivative (Effective Portion)Hedging Relationships
    
    
    
    2008
    
    
    2007
    
    
    2006Interest Rate Contracts
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7Foreign Exchange Contracts
    
    
    
    
    6
    
    
    
    
    
    
    
    (2
    )Commodity Contracts
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (1
    )Total
    
    $
    4
    
    
    $
    
    
    
    $
    4
 (in millions)
 Location of Gain (Loss)Derivatives-in Statement 133
    
    Reclassified from
    
    Amount of Gain (Loss) Reclassified fromCash Flow
    
    Accumulated OCI into
    
    Accumulated OCI into Income (Effective Portion)Hedging Relationships
    
    Income (Effective Portion)
    
    2008
    
    
    2007
    
    
    2006Interest Rate Contracts
    
    Interest expense
    
    $
    
    
    
    $
    1
    
    
    $
    Foreign Exchange Contracts
    
    Other income, net
    
    
    (5
    )
    
    
    4
    
    
    
    3Commodity Contracts
    
    Cost of goods sold
    
    
    
    
    
    
    3
    
    
    
    14Total
    
    $
    (5
    )
    
    $
    8
    
    
    $
    17
 (in millions)
 Location of Gain (Loss)Recognized in Income onDerivative (Ineffective
    
    Amount of Gain (Loss) Recognized in Income onDerivatives-in Statement 133
    
    Portion and Amount
    
    Derivative (Ineffective Portion and AmountCash Flow
    
    Excluded from
    
    Excluded from Effectiveness Testing)Hedging Relationships
    
    Effectiveness Testing)
    
    2008
    
    
    2007
    
    
    2006Interest Rate Contracts
    
    Interest expense
    
    $
    
    
    
    $
    (1
    )
    
    $
    Foreign Exchange Contracts
    
    Other income, net
    
    
    
    
    
    
    
    
    
    
    Commodity Contracts
    
    Other income, net
    
    
    (1
    )
    
    
    1
    
    
    
    Total
    
    $
    (1
    )
    
    $
    
    
    
    $
    
 90




---



##### 



(in millions)
 Amount of Gain (Loss) Recognized in OCI onDerivatives-in Statement 133
    
    
    
    Derivative (Effective Portion)Net Hedging Relationships
    
    
    
    2008
    
    2007
    
    2006Foreign Exchange
Contracts
    
    
    
    $
    (130
    )
    
    $
    (130
    )
    
    $
    (82
    )
 (in millions)
 Location of Gain (Loss)Reclassified from
    
    Amount of Gain (Loss) Reclassified fromDerivatives-in Statement 133
    
    Accumulated OCI into
    
    Accumulated OCI into Income (Effective Portion)Net Hedging Relationships
    
    Income (Effective Portion)
    
    2008
    
    2007
    
    2006Foreign Exchange
Contracts
    
    (None)
    
    $
    
    
    
    $
    
    
    
    $
    
 (in millions)
 Location of Gain (Loss)Recognized in Income onDerivative (Ineffective
    
    Amount of Gain (Loss) Recognized in Income onPortion and Amount
    
    Derivative (Ineffective Portion and AmountDerivatives-in Statement 133
    
    Excluded from
    
    Excluded from Effectiveness Testing)Net Hedging Relationships
    
    Effectiveness Testing)
    
    2008
    
    2007
    
    2006Foreign Exchange
Contracts
    
    Interest expense
    
    $
    
    
    
    $
    9
    
    
    $
    19
 (in millions)
 Derivatives Not Designated as
    
    Location of Gain (Loss)
    
    Amount of Gain (Loss) Recognized in Income onHedging Instruments under
    
    Recognized in Income on
    
    DerivativeStatement 133
    
    Derivative
    
    2008
    
    
    2007
    
    
    2006Foreign Exchange Contracts
    
    Other income, net
    
    $
    14
    
    
    $
    (9
    )
    
    $
    (5
    )Commodity Contracts
    
    Other income, net
    
    
    (18
    )
    
    
    
    
    
    
    Total
    
    $
    (4
    )
    
    $
    (9
    )
    
    $
    5
 91




---



##### 



Note 7: Income Taxes
  (in millions)
    
    2008
    
    
    2007
    
    
    2006United StatesParent and Subsidiaries
    
    $
    78
    
    
    $
    486
    
    
    $
    688Affiliates
    
    
    95
    
    
    
    11
    
    
    
    ForeignSubsidiaries
    
    
    387
    
    
    
    372
    
    
    
    344Affiliates
    
    
    1
    
    
    
    11
    
    
    
    10Earnings from continuing
operations before income taxes and
minority interest
    
    $
    561
    
    
    $
    880
    
    
    $
    1,042
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Income taxes on U.S. earningsFederalCurrent
    
    $
    99
    
    
    $
    137
    
    
    $
    208Deferred
    
    
    (80
    )
    
    
    3
    
    
    
    (18
    )State and other
    
    
    2
    
    
    
    8
    
    
    
    8Total taxes on U.S. earnings
    
    
    21
    
    
    
    148
    
    
    
    198Taxes on foreign earningsCurrent
    
    
    127
    
    
    
    134
    
    
    
    99Deferred
    
    
    (71
    )
    
    
    (76
    )
    
    
    (23
    )Total taxes on foreign earnings
    
    
    56
    
    
    
    58
    
    
    
    76Total Income Taxes
    
    $
    77
    
    
    $
    206
    
    
    $
    274
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Discontinued lines of business
    
    $
    (1
    )
    
    $
    (2
    )
    
    $
    14
  (in millions)
    
    2008
    
    
    2007Deferred tax assets related to:Compensation and benefit programs
    
    $
    271
    
    
    $
    262Pension programs
    
    
    224
    
    
    
    30Asset impairments and restructuring reserves
    
    
    45
    
    
    
    7Accruals for waste disposal site remediation
    
    
    44
    
    
    
    37Foreign Earnings
    
    
    67
    
    
    
    All other
    
    
    117
    
    
    
    89Total deferred tax assets
    
    
    768
    
    
    
    425Deferred tax liabilities related to:Intangible assets
    
    
    491
    
    
    
    525Depreciation and amortization
    
    
    372
    
    
    
    363Foreign Earnings
    
    
    
    
    
    
    53All other
    
    
    33
    
    
    
    34Total deferred tax liabilities
    
    
    896
    
    
    
    975Net deferred tax liability
    
    $
    128
    
    
    $
    550
 92




---



##### 



(in millions)
    
    2008
    
    
    2007Prepaid expenses and other current assets
    
    $
    217
    
    
    $
    136Other assets
    
    
    71
    
    
    
    83Accrued liabilities
    
    
    3
    
    
    
    3Deferred income taxes
    
    
    413
    
    
    
    766Net deferred tax liability
    
    $
    128
    
    
    $
    550
  2008
    
    2007
    
    2006%
    
    %
    
    %Statutory tax rate
    
    
    35.0
    
    
    
    35.0
    
    
    
    35.0U.S. business credits
    
    
    (4.4
    )
    
    
    (2.5
    )
    
    
    (2.7
    )Foreign, including credits
    
    
    (20.1
    )
    
    
    (9.5
    )
    
    
    (5.4
    )Restructuring
    
    
    2.6
    
    
    
    0.2
    
    
    
    (0.2
    )UP Chemical Sale
    
    
    1.6
    
    
    
    
    
    
    
    Other, net
    
    
    (1.0
    )
    
    
    0.2
    
    
    
    (0.4
    )Effective tax rate
    
    
    13.7
    
    
    
    23.4
    
    
    
    26.3
  93




---



##### 



(in millions)
    
    2007Balance at January 1, 2007
    
    $
    75Additions based on tax positions related to the current year
    
    
    17Additions for positions of prior years
    
    
    18Reductions for tax positions of prior years
    
    
    (11
    )Settlements
    
    
    (5
    )Translation impacts
    
    
    3Balance at December 31, 2007
    
    $
    97
 (in millions)
    
    2008Balance at December 31, 2007
    
    $
    97Additions based on tax positions related to the current year
    
    
    13Additions for positions of prior years
    
    
    7Reductions for tax positions of prior years
    
    
    (6
    )Settlements
    
    
    (16
    )Translation impacts
    
    
    (2
    )Balance at December 31, 2008
    
    $
    93
    MajorJurisdictions
    
    Open YearsCanada
    
    1999 through 2001, 2003 through 2008China
    
    2001 through 2008France
    
    2004 through 2008Germany
    
    2004 through 2008Italy
    
    2003 through 2008Japan
    
    2001 through 2008Korea
    
    2002 through 2008Switzerland
    
    2005 through 2008Taiwan
    
    2002 through 2008United Kingdom
    
    2003 through 2008United States
    
    2005 through 2008
 94




---



##### 



Note 8: Segment Information
  Ø
    
    Electronic TechnologiesThis group of businesses provides cutting-edge technology for use in telecommunications,
consumer electronics and household appliances. It is comprised of three aggregated businesses:
Semiconductor Technologies, Circuit Board Technologies, and Packaging and Finishing
Technologies. The Semiconductor Technologiesbusiness develops and supplies integrated products
and technologies on a global basis enabling our customers to drive leading-edge semiconductor
design to boost performance of semiconductor devices powered by smaller and faster chips. This
business also develops and delivers materials used for chemical mechanical planarization, the
process used to create the flawless surfaces required to allow manufacturers to make faster and
more powerful integrated circuits and electronic substrates. The Circuit Board Technologies
business develops and delivers the technology, materials and fabrication services for
increasingly powerful, high-density circuit boards in computers, cell phones, automobiles and
many other electronic devices. The Packaging and Finishing Technologiesbusiness develops and
delivers innovative materials and processes that boost the performance of a diverse range of
electronic, optoelectronic and industrial packaging and finishing applications.Ø
    
    Display TechnologiesThis business develops, manufactures and markets materials used in the production of electronic
displays. This business includes our joint venture with SKC Co. Ltd. of South Korea, SKC Haas
Display Films (SKC Haas), which develops, manufactures, and markets advanced specialty films
and materials used in LCD and plasma displays. These include light diffuser films, micro lens
films, optical protection films, release protection films, reflectors, technology for touch
panels, Plasma Display Panel filters, and process chemicals used to manufacture LCD color
filters. This business also includes the leading-edge light management film technology acquired
from Eastman Kodak in 2007, as well as process chemicals used in LCD production originally
developed by Rohm and Haas. On April 4, 2008, we acquired Gracel Display, Inc., a leading
developer and manufacturer of Organic Light Emitting Diode materials for approximately $41
million. In July 2008, we acquired the operations of SKC Euro Display for approximately $28
million. See Note 2 for further discussion on this acquisition. The results of these
acquisitions have been included in Display Technologies since their respective acquisition
dates.Ø
    
    Paint and Coatings MaterialsThis business produces acrylic emulsions and additives that are used primarily to make
decorative and industrial coatings. Its products are critical components used in the
manufacture of architectural paints used by do-it-yourself consumers and professional
contractors. Paint and Coatings Materials products are also used in the production of
industrial coatings (for use on wood and metal, and in traffic paint); in construction
applications (for use in roofing materials, insulation, and cement modification); and floor care
products. On April 1, 2008, we acquired the FINNDISP former division of OY Forcit AB, a Finnish
paint emulsions operation for approximately 52 million Euros or approximately U.S. $79 million.
Beginning on April 1, 2008, the results of this operation are included in Paint and Coatings
Materials. See Note 2 for further discussion on this acquisition.Ø
    
    Packaging and Building MaterialsThis business offers a broad range of polymers, additives, and formulated value-added products
(which utilize a broad range of chemistries and technologies, including our world-class acrylic
technology). Its products are used in a wide range of markets, including: packaging and paper,
building and construction, durables and transportation, and other industrial markets. Product
lines include: additives for the manufacture of plastic and vinyl products,
 95




---



##### 



packaging, pressure sensitive, construction, and transportation adhesives, as well as polymers
and additives used in textile, graphic arts, nonwoven, paper and leather applications.Ø
    
    Primary MaterialsThis business produces methyl methacrylate, acrylic acid and associated esters as well as
specialty monomer products which are building blocks used in our downstream polymer businesses
and which are also sold externally. Internal consumption of Primary Materials products is
principally in the Paint and Coatings Materials and Packaging and Building Materials businesses.
Primary Materials also provides polyacrylic acid dispersants, opacifiers and rheology
modifiers/thickeners to the global household and industrial markets.Ø
    
    Performance Materials GroupThis business group includes our other businesses that facilitate the use of technologies to
meet growing societal needs in the areas of water, food, personal care and energy. It is
comprised of the operating results of Process Chemicals and Biocidesand Powder Coatings. Also
included in the results of our Performance Materials Group are several small businesses,
including AgroFresh and Advanced Materials, that are building positions based on technology
areas outside of the core of the companys operations. Its products include: ion exchange
resins, sodium borohydride, biocides, polymers and additives used in personal care applications
and other niche technologies.Ø
    
    SaltThe Salt business houses the Morton Salt name, including the well-known image of the Morton Salt
Umbrella Girl and the familiar slogan, when it rains it pours. This business also encompasses
the leading table salt brand in Canada, Windsor Salt. Salts product offerings extend well
beyond the consumer market to include salts used for food processing, agriculture, water
conditioning, highway ice-control and industrial processing applications. On July 31, 2008, we
acquired the Season-All® brand from McCormick & Company for approximately $15
million. Beginning on July 31, 2008, the results of this business were included in the Salt
segment. See Note 2 for further discussion on this acquisition.
 96




---



##### 



(in millions)
    
    2008
    
    
    2007
    
    
    2006Electronic Technologies
    
    $
    1,654
    
    
    $
    1,666
    
    
    $
    1,551Display Technologies
    
    
    284
    
    
    
    45
    
    
    
    13Electronic Materials Group
    
    $
    1,938
    
    
    $
    1,711
    
    
    $
    1,564Paint and Coatings Materials
    
    
    2,217
    
    
    
    2,120
    
    
    
    2,050Packaging and Building Materials
    
    
    1,807
    
    
    
    1,826
    
    
    
    1,776Primary Materials
    
    
    2,367
    
    
    
    2,078
    
    
    
    1,979Elimination of Inter-segment Sales
    
    
    (1,222
    )
    
    
    (1,103
    )
    
    
    (1,102
    )Specialty Materials Group
    
    $
    5,169
    
    
    $
    4,921
    
    
    $
    4,703Performance Materials Group
    
    
    1,248
    
    
    
    1,205
    
    
    
    1,134Salt
    
    
    1,220
    
    
    
    1,060
    
    
    
    829Total
    
    $
    9,575
    
    
    $
    8,897
    
    
    $
    8,230
  Pre-taxEarnings(loss)from
    
    Share of2008
    
    continuing
    
    affiliate
    
    
    
    
    
    
    
    
    
    Segment
    
    Capital(in millions)
    
    operations
    
    earnings, net
    
    Depreciation
    
    Amortization
    
    assets
    
    additionsElectronic Technologies
    
    $
    390
    
    
    $
    87
    
    
    $
    70
    
    
    $
    17
    
    
    $
    1,635
    
    
    $
    111Display Technologies
    
    
    (40
    )
    
    
    
    
    
    
    12
    
    
    
    5
    
    
    
    376
    
    
    
    49Electronic Materials Group
    
    $
    350
    
    
    $
    87
    
    
    $
    82
    
    
    $
    22
    
    
    $
    2,011
    
    
    $
    160Paint and Coatings Materials
    
    
    169
    
    
    
    
    
    
    
    81
    
    
    
    2
    
    
    
    885
    
    
    
    82Packaging and Building Materials
    
    
    55
    
    
    
    1
    
    
    
    66
    
    
    
    10
    
    
    
    1,602
    
    
    
    40Primary Materials
    
    
    82
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    1,039
    
    
    
    83Specialty Materials Group
    
    $
    306
    
    
    $
    1
    
    
    $
    223
    
    
    $
    12
    
    
    $
    3,526
    
    
    $
    205Performance Materials Group
    
    
    117
    
    
    
    9
    
    
    
    50
    
    
    
    20
    
    
    
    1,420
    
    
    
    26Salt
    
    
    177
    
    
    
    
    
    
    
    82
    
    
    
    8
    
    
    
    1,618
    
    
    
    54Corporate(1)
    
    
    (389
    )
    
    
    
    
    
    
    30
    
    
    
    1
    
    
    
    1,334
    
    
    
    75Total
    
    $
    561
    
    
    $
    97
    
    
    $
    467
    
    
    $
    63
    
    
    $
    9,909
    
    
    $
    520
 Pre-taxEarnings (loss)from
    
    Share of2007
    
    continuing
    
    affiliate
    
    
    
    
    
    
    
    
    
    Segment
    
    Capital(in millions)
    
    operations
    
    earnings, net
    
    Depreciation
    
    Amortization
    
    assets
    
    additionsElectronic Technologies
    
    $
    410
    
    
    $
    10
    
    
    $
    59
    
    
    $
    17
    
    
    $
    1,688
    
    
    $
    82Display Technologies
    
    
    (23
    )
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    376
    
    
    
    18Electronic Materials Group
    
    $
    387
    
    
    $
    10
    
    
    $
    61
    
    
    $
    18
    
    
    $
    2,064
    
    
    $
    100Paint and Coatings Materials
    
    
    323
    
    
    
    
    
    
    
    58
    
    
    
    1
    
    
    
    930
    
    
    
    95Packaging and Building Materials
    
    
    161
    
    
    
    1
    
    
    
    59
    
    
    
    10
    
    
    
    1,667
    
    
    
    34Primary Materials
    
    
    108
    
    
    
    
    
    
    
    82
    
    
    
    
    
    
    
    1,030
    
    
    
    74Specialty Materials Group
    
    $
    592
    
    
    $
    1
    
    
    $
    199
    
    
    $
    11
    
    
    $
    3,627
    
    
    $
    203Performance Materials Group
    
    
    132
    
    
    
    11
    
    
    
    50
    
    
    
    19
    
    
    
    1,463
    
    
    
    34Salt
    
    
    115
    
    
    
    
    
    
    
    81
    
    
    
    8
    
    
    
    1,691
    
    
    
    58Corporate(1)
    
    
    (346
    )
    
    
    
    
    
    
    21
    
    
    
    1
    
    
    
    1,262
    
    
    
    59Total
    
    $
    880
    
    
    $
    22
    
    
    $
    412
    
    
    $
    57
    
    
    $
    10,107
    
    
    $
    454
 97




---



##### 



Pre-taxEarnings (loss)from
    
    Share of2006
    
    continuing
    
    affiliate
    
    
    
    
    
    
    
    
    
    Segment
    
    Capital(in millions)
    
    operations
    
    earnings, net
    
    Depreciation
    
    Amortization
    
    assets
    
    additionsElectronic Technologies
    
    $
    345
    
    
    $
    9
    
    
    $
    56
    
    
    $
    17
    
    
    $
    1,616
    
    
    $
    82Display Technologies
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    Electronic Materials Group
    
    $
    346
    
    
    $
    9
    
    
    $
    56
    
    
    $
    17
    
    
    $
    1,627
    
    
    $
    82Paint and Coatings Materials
    
    
    353
    
    
    
    
    
    
    
    55
    
    
    
    1
    
    
    
    848
    
    
    
    70Packaging and Building Materials
    
    
    186
    
    
    
    1
    
    
    
    57
    
    
    
    9
    
    
    
    1,667
    
    
    
    28Primary Materials
    
    
    215
    
    
    
    
    
    
    
    87
    
    
    
    1
    
    
    
    976
    
    
    
    69Specialty Materials Group
    
    $
    754
    
    
    $
    1
    
    
    $
    199
    
    
    $
    11
    
    
    $
    3,491
    
    
    $
    167Performance Materials Group
    
    
    103
    
    
    
    
    
    
    
    50
    
    
    
    20
    
    
    
    1,395
    
    
    
    41Salt
    
    
    54
    
    
    
    
    
    
    
    77
    
    
    
    7
    
    
    
    1,607
    
    
    
    48Corporate(1)
    
    
    (215
    )
    
    
    
    
    
    
    21
    
    
    
    1
    
    
    
    1,417
    
    
    
    66Total
    
    $
    1,042
    
    
    $
    10
    
    
    $
    403
    
    
    $
    56
    
    
    $
    9,537
    
    
    $
    404
 
 Notes:(1)
    
    Corporate includes items such as corporate governance costs, interest income and
expense, environmental remediation expense, Dow acquisition costs, insurance recoveries,
exploratory research and development expense, balance sheet currency translation gains and
losses, any unallocated portion of shared services and certain discrete period tax items.  Asia-European
    
    Pacific(in millions)
    
    U.S.
    
    Region
    
    Region
    
    Other
    
    Total2008Net sales
    
    $
    3,928
    
    
    $
    2,408
    
    
    $
    2,313
    
    
    $
    926
    
    
    $
    9,575Long-lived assets
    
    
    1,614
    
    
    
    437
    
    
    
    597
    
    
    
    205
    
    
    
    2,8532007Net sales
    
    $
    3,893
    
    
    $
    2,241
    
    
    $
    1,973
    
    
    $
    790
    
    
    $
    8,897Long-lived assets
    
    
    1,644
    
    
    
    427
    
    
    
    547
    
    
    
    253
    
    
    
    2,8712006Net sales
    
    $
    3,845
    
    
    $
    2,030
    
    
    $
    1,659
    
    
    $
    696
    
    
    $
    8,230Long-lived assets
    
    
    1,639
    
    
    
    415
    
    
    
    384
    
    
    
    231
    
    
    
    2,669
 
 Notes:(1)
    
    Certain prior year reclassifications have been made to conform to current year
presentations. Note 9: Retirement Benefits
    98




---



##### 



Qualified Pension Plans
  (in millions)
    
    2008
    
    2007
    
    2006Components of net periodic pension expense:
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Service cost
    
    $
    53
    
    
    $
    23
    
    
    $
    59
    
    
    $
    22
    
    
    $
    57
    
    
    $
    20Interest cost
    
    
    99
    
    
    
    45
    
    
    
    95
    
    
    
    39
    
    
    
    95
    
    
    
    34Expected return on plan assets
    
    
    (150
    )
    
    
    (47
    )
    
    
    (142
    )
    
    
    (45
    )
    
    
    (122
    )
    
    
    (39
    )Unrecognized prior service (credit) cost
    
    
    (4
    )
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    Unrecognized net actuarial loss
    
    
    1
    
    
    
    7
    
    
    
    11
    
    
    
    9
    
    
    
    28
    
    
    
    10Pension judgment
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    
    
    
    
    Net settlement and curtailment gain
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    Net periodic pension (credit) expense
    
    $
    (1
    )
    
    $
    27
    
    
    $
    90
    
    
    $
    24
    
    
    $
    60
    
    
    $
    25
   Weighted-average assumptionsused to determine net periodicpension expense for the periodJanuary 1, - December 31,
    
    2008
    
    2007
    
    2006U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Discount rate
    
    
    6.21
    %
    
    
    5.66
    %
    
    
    5.90
    %
    
    
    5.05
    %
    
    
    5.70
    %
    
    
    4.77
    %Expected return on plan assets
    
    
    8.50
    %
    
    
    6.68
    %
    
    
    8.50
    %
    
    
    6.72
    %
    
    
    8.50
    %
    
    
    6.97
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.24
    %
    
    
    4.00
    %
    
    
    3.91
    %
    
    
    4.00
    %
    
    
    3.88
    %
   99




---



##### 



Weighted-average assumptions used to determine the projectedbenefit obligation for years ended December 31,
    
    2008
    
    2007U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Discount rate
    
    
    6.50
    %
    
    
    5.83
    %
    
    
    6.21
    %
    
    
    5.66
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    3.94
    %
    
    
    4.00
    %
    
    
    4.24
    %
  2008
    
    2007U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Change in pension benefit obligation:Pension benefit obligation at beginning of year
    
    $
    1,644
    
    
    $
    849
    
    
    $
    1,683
    
    
    $
    745Service cost, excluding expenses
    
    
    53
    
    
    
    23
    
    
    
    59
    
    
    
    22Interest cost
    
    
    99
    
    
    
    45
    
    
    
    95
    
    
    
    39Participant contributions
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    5Plan amendments
    
    
    
    
    
    
    2
    
    
    
    (53
    )
    
    
    (1
    )Actuarial gain
    
    
    (72
    )
    
    
    (63
    )
    
    
    (100
    )
    
    
    (15
    )Benefits paid
    
    
    (131
    )
    
    
    (35
    )
    
    
    (105
    )
    
    
    (34
    )Acquisitions and plan transfers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34Curtailments
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    (2
    )Settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Pension judgment
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    Foreign currency translation adjustment
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    60Pension benefit obligation at end of year
    
    $
    1,593
    
    
    $
    658
    
    
    $
    1,644
    
    
    $
    849Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    1,807
    
    
    $
    751
    
    
    $
    1,787
    
    
    $
    667Actual (loss) return on plan assets
    
    
    (471
    )
    
    
    (75
    )
    
    
    125
    
    
    
    15Employer contribution
    
    
    
    
    
    
    32
    
    
    
    
    
    
    
    30Participant contributions
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    5Acquisitions and plan transfers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Settlements
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Benefits paid
    
    
    (131
    )
    
    
    (35
    )
    
    
    (105
    )
    
    
    (34
    )Foreign currency translation adjustment
    
    
    
    
    
    
    (144
    )
    
    
    
    
    
    
    60Fair value of plan assets at end of year
    
    $
    1,205
    
    
    $
    533
    
    
    $
    1,807
    
    
    $
    751Funded status at end of year
    
    $
    (388
    )
    
    $
    (125
    )
    
    $
    163
    
    
    $
    (98
    )Amounts recognized in the consolidated balance sheets:Other assets
    
    $
    
    
    
    $
    8
    
    
    $
    163
    
    
    $
    20Accrued liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Employee benefits
    
    
    (388
    )
    
    
    (133
    )
    
    
    
    
    
    
    (117
    )Net amounts recognized
    
    $
    (388
    )
    
    $
    (125
    )
    
    $
    163
    
    
    $
    (98
    )
 100




---



##### 



(in millions)
    
    2008
    
    2007Other changes in plan assets and benefitobligation recognized in Accumulatedother comprehensive loss
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Net actuarial loss (gain)
    
    $
    548
    
    
    $
    50
    
    
    $
    (83
    )
    
    $
    21Recognized actuarial loss
    
    
    (1
    )
    
    
    (7
    )
    
    
    (11
    )
    
    
    (8
    )Prior service cost (credit)
    
    
    
    
    
    
    2
    
    
    
    (53
    )
    
    
    (1
    )Recognized prior service credit (cost)
    
    
    4
    
    
    
    
    
    
    
    (2
    )
    
    
    Total recognized in Accumulated other
comprehensive loss, before tax
    
    $
    551
    
    
    $
    45
    
    
    $
    (149
    )
    
    $
    12
      (in millions)
    
    2008
    
    2007Amounts recognized in accumulated othercomprehensive loss, before tax
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Net actuarial loss
    
    $
    709
    
    
    $
    197
    
    
    $
    162
    
    
    $
    154Prior service credit
    
    
    (40
    )
    
    
    
    
    
    
    (44
    )
    
    
    (2
    )Total
    
    $
    669
    
    
    $
    197
    
    
    $
    118
    
    
    $
    152
  (in millions)
    
    PensionU.S.
    
    
    Non-U.S.Net actuarial loss
    
    $
    13
    
    
    $
    3Prior service credit
    
    
    (4
    )
    
    
    Total
    
    $
    (9
    )
    
    $
    3
 101




---



##### 



Percentage of Plan AssetsTargeted %
    
    Actual %
    
    Targeted %
    
    Actual %2008
    
    2008
    
    2007
    
    2007Asset Category
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.
    
    U.S.
    
    Non-U.S.Equity securities
    
    
    54
    
    
    
    49
    
    
    
    47
    
    
    
    42
    
    
    
    65
    
    
    
    49
    
    
    
    64
    
    
    
    49Debt securities
    
    
    24
    
    
    
    36
    
    
    
    29
    
    
    
    39
    
    
    
    23
    
    
    
    36
    
    
    
    23
    
    
    
    35Insurance contracts
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    14
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    9Real estate
    
    
    10
    
    
    
    5
    
    
    
    12
    
    
    
    4
    
    
    
    7
    
    
    
    5
    
    
    
    7
    
    
    
    5Hedge funds
    
    
    7
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5
    
    
    
    Other
    
    
    5
    
    
    
    2
    
    
    
    4
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    2Total
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
    
    
    
    100
   (in millions)
    
    U.S.
    
    
    Non-U.S.2009
    
    $
    110
    
    
    $
    272010
    
    
    117
    
    
    
    292011
    
    
    124
    
    
    
    322012
    
    
    125
    
    
    
    332013
    
    
    136
    
    
    
    372014-2018
    
    
    778
    
    
    
    223
    102




---



##### 



(in millions)
    
    2008
    
    
    2007Plans for which accumulated benefit obligation exceeds assets:
    
    U.S.
    
    
    Non-U.S.
    
    
    U.S.
    
    
    Non-U.S.Projected benefit obligation
    
    $
    1,593
    
    
    $
    418
    
    
    $
    
    
    
    $
    529Accumulated benefit obligation
    
    
    1,409
    
    
    
    377
    
    
    
    
    
    
    
    478Fair value of plan assets
    
    
    1,205
    
    
    
    307
    
    
    
    
    
    
    
    413
 Non-Qualified Pension Plans
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Components of net periodic pension expense:Service cost
    
    $
    2
    
    
    $
    3
    
    
    $
    2Interest cost
    
    
    9
    
    
    
    9
    
    
    
    9Unrecognized prior service cost
    
    
    
    
    
    
    
    
    
    
    1Other amortization, net
    
    
    3
    
    
    
    3
    
    
    
    4Net periodic pension expense
    
    $
    14
    
    
    $
    15
    
    
    $
    16
  Weighted-average assumptions used to determine netexpense for the period January 1, - December 31,
    
    2008
    
    
    2007
    
    
    2006Discount rate
    
    
    6.19
    %
    
    
    5.90
    %
    
    
    5.70
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
  Weighted-average assumptions used to determinebenefit obligation for years ended December 31,
    
    2008
    
    
    2007Discount rate
    
    
    6.50
    %
    
    
    6.20
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
 103




---



##### 



(in millions)
    
    2008
    
    
    2007Change in pension benefit obligation:Pension benefit obligation at beginning of year
    
    $
    151
    
    
    $
    155Service cost, excluding expenses
    
    
    2
    
    
    
    3Interest cost
    
    
    9
    
    
    
    9Amendments
    
    
    
    
    
    
    (1
    )Actuarial loss (gain)
    
    
    6
    
    
    
    (3
    )Benefits paid
    
    
    (16
    )
    
    
    (12
    )Currency translation adjustment
    
    
    (1
    )
    
    
    Pension benefit obligation at end of year
    
    $
    151
    
    
    $
    151Change in plan assets:Fair value of plan assets at beginning of year
    
    $
    
    
    
    $
    Employer contribution
    
    
    16
    
    
    
    12Benefits paid
    
    
    (16
    )
    
    
    (12
    )Fair value of plan assets at end of year
    
    $
    
    
    
    $
    Funded status at end of year
    
    $
    (151
    )
    
    $
    (151
    )Amounts recognized in the consolidated balance
sheets:Accrued liabilities
    
    $
    (11
    )
    
    $
    (11
    )Employee benefits
    
    
    (140
    )
    
    
    (140
    )Net amounts recognized
    
    $
    (151
    )
    
    $
    (151
    )
  (in millions)
    
    2008
    
    
    2007Other changes in plan assets and benefit
obligation recognized in Accumulated other
comprehensive lossNet actuarial loss (gain)
    
    $
    6
    
    
    $
    (3
    )Recognized actuarial loss
    
    
    (3
    )
    
    
    (4
    )Prior service credit
    
    
    
    
    
    
    (1
    )Total recognized in Accumulated other comprehensive loss,
before tax
    
    $
    3
    
    
    $
    (8
    )
   (in millions)
    
    Total2009
    
    $
    122010
    
    
    122011
    
    
    122012
    
    
    122013
    
    
    122014-2018
    
    
    62
  104




---



##### 



Defined Contribution Plans
 Employee Stock Ownership and Savings Plan
  Non-qualified Savings Plan
  Non-qualified Trust
  Other Postretirement Benefits
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Components of net periodic postretirement cost:Service cost
    
    $
    4
    
    
    $
    5
    
    
    $
    5Interest cost
    
    
    25
    
    
    
    26
    
    
    
    25Expected Return on Plan Assets
    
    
    (2
    )
    
    
    (2
    )
    
    
    (1
    )Net amortization
    
    
    1
    
    
    
    
    
    
    
    Net periodic postretirement cost
    
    $
    28
    
    
    $
    29
    
    
    $
    29
  2008
    
    
    2007
    
    
    2006Weighted-average discount rate for annual expense:
    
    
    6.10
    %
    
    
    5.90
    %
    
    
    5.60
    %
 105




---



##### 



(in millions)
    
    2008
    
    
    2007Change in postretirement benefit obligation:Benefit obligation at beginning of year
    
    $
    441
    
    
    $
    458Service cost
    
    
    4
    
    
    
    5Interest cost
    
    
    25
    
    
    
    26Contributions
    
    
    19
    
    
    
    15Actuarial gain
    
    
    (6
    )
    
    
    (18
    )Medicare Part D payments received
    
    
    7
    
    
    
    3Benefits paid
    
    
    (58
    )
    
    
    (60
    )Foreign currency translation adjustment
    
    
    (15
    )
    
    
    12Benefit obligation at end of year
    
    $
    417
    
    
    $
    441Change in plan assets:Fair value of plan assets at beginning of year
    
    
    28
    
    
    
    25Actual (loss) return on plan assets
    
    
    (8
    )
    
    
    3Employer contribution
    
    
    33
    
    
    
    42Participant contributions
    
    
    18
    
    
    
    15Benefits paid (net of Medicare Part D subsidy)
    
    
    (51
    )
    
    
    (57
    )Fair value of plan assets at end of year
    
    $
    20
    
    
    $
    28Funded status at end of year
    
    $
    (397
    )
    
    $
    (413
    )Amounts recognized in the consolidated
balance sheets:Accrued liabilities
    
    $
    (23
    )
    
    $
    (11
    )Employee benefits
    
    
    (374
    )
    
    
    (402
    )Net amounts recognized
    
    $
    (397
    )
    
    $
    (413
    )
   (in millions)
    
    2008
    
    
    2007Other changes in plan assets and benefit
obligation recognized in Accumulated other
comprehensive lossNet actuarial loss (gain)
    
    $
    4
    
    
    $
    (18
    )Recognized actuarial loss
    
    
    (2
    )
    
    
    (2
    )Recognized prior service credit
    
    
    1
    
    
    
    2Total recognized in Accumulated other comprehensive loss,
before tax
    
    $
    3
    
    
    $
    (18
    )
 106




---



##### 



(in millions)
    
    2008
    
    
    2007Amounts recognized in Accumulated other comprehensive loss,
before tax:Net actuarial loss
    
    $
    22
    
    
    $
    20Prior service credit
    
    
    (6
    )
    
    
    (7
    )Total
    
    $
    16
    
    
    $
    13
   2008
    
    
    2007
    
    
    2006Weighted-average discount rate for year-end
APBO:
    
    
    6.50
    %
    
    
    6.10
    %
    
    
    5.90
    %
    EstimatedBenefit payments
    
    amount ofbefore Medicare
    
    Medicare Part D
    
    Net benefit(in millions)
    
    Part D subsidy
    
    subsidy
    
    payments2009
    
    $
    44
    
    
    $
    4
    
    
    $
    402010
    
    
    43
    
    
    
    4
    
    
    
    392011
    
    
    43
    
    
    
    5
    
    
    
    382012
    
    
    42
    
    
    
    5
    
    
    
    372013
    
    
    41
    
    
    
    5
    
    
    
    362014-2018
    
    
    194
    
    
    
    27
    
    
    
    167
 Note 10: Employee Benefits
 (in millions)
    
    2008
    
    
    2007Postretirement health care and life insurance benefits
    
    $
    374
    
    
    $
    402Supplemental pension plan
    
    
    140
    
    
    
    140Long-term disability benefit costs
    
    
    45
    
    
    
    43Pension liabilities
    
    
    521
    
    
    
    117Other
    
    
    58
    
    
    
    58Total
    
    $
    1,138
    
    
    $
    760
  107




---



##### 



Note 11: Restricted Cash
  Note 12: Receivable, net
 (in millions)
    
    2008
    
    
    2007Customers
    
    $
    1,360
    
    
    $
    1,610Value added tax
    
    
    106
    
    
    
    160Affiliates
    
    
    6
    
    
    
    24Employees
    
    
    9
    
    
    
    7Other
    
    
    101
    
    
    
    111Receivables, gross
    
    $
    1,582
    
    
    $
    1,912Less: allowance for doubtful accounts
    
    
    44
    
    
    
    36Total
    
    $
    1,538
    
    
    $
    1,876
  Note 13: Inventories
  (in millions)
    
    2008
    
    
    2007Finished products
    
    $
    565
    
    
    $
    479Work in process
    
    
    325
    
    
    
    345Raw materials
    
    
    157
    
    
    
    151Supplies
    
    
    52
    
    
    
    49Total
    
    $
    1,099
    
    
    $
    1,024
  Note 14: Prepaid Expenses and Other Current Assets
 (in millions)
    
    2008
    
    
    2007Deferred tax assets
    
    $
    217
    
    
    $
    136Prepaid expenses
    
    
    94
    
    
    
    78Income tax receivable
    
    
    31
    
    
    
    Other current assets
    
    
    44
    
    
    
    44Total
    
    $
    386
    
    
    $
    258
 108




---



##### 



Note 15: Land Buildings and Equipment, net
 Estimated(in millions)
    
    2008
    
    2007
    
    LifeLand
    
    $
    154
    
    
    $
    146Buildings and improvements
    
    
    1,863
    
    
    
    1,855
    
    
    
    10-50Machinery and equipment
    
    
    6,278
    
    
    
    6,155
    
    
    
    3-20Capitalized interest
    
    
    367
    
    
    
    352
    
    
    
    11Construction in progress
    
    
    231
    
    
    
    271Land, buildings, and equipment, gross
    
    
    8,893
    
    
    
    8,779Less: Accumulated depreciation
    
    
    6,040
    
    
    
    5,908Total
    
    $
    2,853
    
    
    $
    2,871
   Note 16: Goodwill and Other Intangible Assets, net
 Goodwill
  PackagingElectronic
    
    Paint and
    
    and
    
    
    
    
    
    Specialty
    
    Performance2008
    
    Electronic
    
    Display
    
    Materials
    
    Coatings
    
    Building
    
    Primary
    
    Materials
    
    Materials(in millions)
    
    Technologies
    
    Technologies
    
    Group
    
    Materials
    
    Materials
    
    Materials
    
    Group
    
    Group
    
    Salt
    
    TotalBalance as of
January
1, 2007(1)
    
    $
    368
    
    
    $
    
    
    
    $
    368
    
    
    $
    63
    
    
    $
    517
    
    
    $
    29
    
    
    $
    609
    
    
    $
    241
    
    
    $
    323
    
    
    $
    1,541Goodwill related to
acquisitions(2)
    
    
    6
    
    
    
    95
    
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101Currency effects and
other (3 & 4)
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )
    
    
    3
    
    
    
    10
    
    
    
    
    
    
    
    13
    
    
    
    10
    
    
    
    4
    
    
    
    26Balance as of December 31,
2007
    
    $
    374
    
    
    $
    94
    
    
    $
    468
    
    
    $
    66
    
    
    $
    527
    
    
    $
    29
    
    
    $
    622
    
    
    $
    251
    
    
    $
    327
    
    
    $
    1,668Goodwill related to
acquisitions
(2)
    
    
    1
    
    
    
    28
    
    
    
    29
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    52Currency effects and other
(4&5)
    
    
    (1
    )
    
    
    (30
    )
    
    
    (31
    )
    
    
    (5
    )
    
    
    (12
    )
    
    
    
    
    
    
    (17
    )
    
    
    (2
    )
    
    
    (4
    )
    
    
    (54
    )Balance as of December 31,
2008
    
    $
    374
    
    
    $
    92
    
    
    $
    466
    
    
    $
    84
    
    
    $
    515
    
    
    $
    29
    
    
    $
    628
    
    
    $
    249
    
    
    $
    323
    
    
    $
    1,666
 
 Notes:(1)
    
    Certain prior year balances have been reclassified to conform to the current year
presentation.(2)
    
    Goodwill related to acquisitions is due to the following: $1 million and $6 million, 2008
and 2007, respectively, Electronic Technologies  buyback of additional shares of CMPT; $28
million and $95 million, respectively, Display Technologies- the 2008 acquisition of Gracel
Display, Inc., and the 2007 acquisition of our controlling interest in SKC Haas Display Film
Co. Ltd.; and $23 million, Paint and Coatings Materials  related to the 2008 acquisition of
FINNDISP.(3)
    
    Goodwill related to divestitures is due to the following: $4 million-Performance
Materials-related to the 2007 sale of Floralife®, Inc.(4)
    
    Certain goodwill amounts are denominated in foreign currencies and are translated using
the appropriate U.S. dollar exchange rate. 109




---



##### 



(5)
    
    Relates to adjustments to opening balance sheet liabilities due to the favorable
resolution of tax audits resulting in the reduction of tax reserves and valuation
allowances. Intangible Assets
   Gross Asset Value
 Finite Lived
    
    Indefinite LivedPatents,Developed
    
    Customer
    
    
    
    
    
    Licenses &(in millions)
    
    Technology
    
    Lists
    
    Tradename
    
    Other
    
    Strategic
    
    Tradename
    
    TotalBalance as of
January 1, 2007
    
    $
    398
    
    
    $
    881
    
    
    $
    141
    
    
    $
    172
    
    
    $
    75
    
    
    $
    329
    
    
    $
    1,996Currency(1)
    
    
    8
    
    
    
    26
    
    
    
    3
    
    
    
    
    
    
    
    9
    
    
    
    7
    
    
    
    53Acquisitions(2)
    
    
    14
    
    
    
    16
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    31Divestures(3)
    
    
    (2
    )
    
    
    (12
    )
    
    
    (2
    )
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    (18
    )Balance as of
December 31, 2007
    
    $
    418
    
    
    $
    911
    
    
    $
    142
    
    
    $
    172
    
    
    $
    84
    
    
    $
    335
    
    
    $
    2,062Currency(1)
    
    
    (7
    )
    
    
    (31
    )
    
    
    
    
    
    
    1
    
    
    
    (12
    )
    
    
    (9
    )
    
    
    (58
    )Acquisitions(2)
    
    
    1
    
    
    
    21
    
    
    
    11
    
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    37Divestures(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )Balance as of December
31, 2008
    
    $
    412
    
    
    $
    901
    
    
    $
    153
    
    
    $
    174
    
    
    $
    72
    
    
    $
    328
    
    
    $
    2,040
 Accumulated Amortization
 Finite Lived
    
    Indefinite LivedPatents,Developed
    
    Customer
    
    
    
    
    
    Licenses &(in millions)
    
    Technology
    
    Lists
    
    Tradename
    
    Other
    
    Strategic
    
    Tradename
    
    TotalBalance as of
January 1, 2007
    
    $
    (176
    )
    
    $
    (175
    )
    
    $
    (28
    )
    
    $
    (104
    )
    
    $
    (5
    )
    
    $
    (21
    )
    
    $
    (509
    )Additions
    
    
    (25
    )
    
    
    (19
    )
    
    
    (7
    )
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    (57
    )Currency(1)
    
    
    (3
    )
    
    
    (7
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )Divestures(3)
    
    
    1
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7Balance as of
December 31, 2007
    
    $
    (203
    )
    
    $
    (198
    )
    
    $
    (33
    )
    
    $
    (110
    )
    
    $
    (5
    )
    
    $
    (21
    )
    
    $
    (570
    )Additions
    
    
    (26
    )
    
    
    (23
    )
    
    
    (9
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (63
    )Currency(1)
    
    
    2
    
    
    
    5
    
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    10Divestures(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Balance as of
December 31, 2008
    
    $
    (227
    )
    
    $
    (216
    )
    
    $
    (41
    )
    
    $
    (114
    )
    
    $
    (4
    )
    
    $
    (20
    )
    
    $
    (622
    )Net Book Value
    
    $
    185
    
    
    $
    685
    
    
    $
    112
    
    
    $
    60
    
    
    $
    68
    
    
    $
    308
    
    
    $
    1,418
 
 Notes:(1)
    
    Certain intangible assets are denominated in foreign currencies and are translated
using the appropriate U.S. dollar exchange rate.(2)
    
    In 2008, finite-lived intangible assets increased by $14 million as a result of our
acquisition of the FINNDISP division of OY Forcit AB, $5 million as a result of the
acquisition of Gracel Display, Inc., both in April 2008. In addition, $4 million of
finite-lived Customer Lists were acquired in relation to our Performance Materials Group
and $14 million as a
result of the acquisition of the Season-All® brand seasoned salt product line
from McCormick & Company. In 2007, finite-lived 110




---



##### 



intangible assets increased by $9 million as a result of our acquisition of the Kodak Light
Management Films technology business, and $22 million as a result of our controlling
interesting in SKC Haas Display Film Co. Ltd.(3)
    
    Divestitures resulted from exiting select business lines relating to the Packaging and
Finishing Technologies business at our Blacksburg, VA plant.
   Annual SFAS No. 142 Impairment Review
 Goodwill and Other Intangible Assets,
 SFAS No. 144 Impairment Review
 Accounting for the Impairment or Disposal of Long-Lived Assets.
 Note 17: Other Assets
 (in millions)
    
    2008
    
    
    2007Prepaid pension cost (see Note 9)
    
    $
    8
    
    
    $
    183Rabbi trust assets (see Note 9)
    
    
    257
    
    
    
    76Insurance receivables
    
    
    28
    
    
    
    28Deferred tax assets (see Note 7)
    
    
    71
    
    
    
    83Other employee benefit assets
    
    
    17
    
    
    
    17Fair market value of interest rate swaps (see Note 6)
    
    
    
    
    
    
    7Lease deposits
    
    
    34
    
    
    
    34Other non-current assets
    
    
    23
    
    
    
    27Total
    
    $
    438
    
    
    $
    455
 Note 18: Borrowings
 Short-Term Obligations
 (in millions)
    
    2008
    
    
    2007Other short-term borrowings
    
    $
    139
    
    
    $
    150Current portion of long-term debt
    
    
    38
    
    
    
    8Total
    
    $
    177
    
    
    $
    158
   111




---



##### 



Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.
 Long-Term Debt and Other Financing Arrangements
  (in millions)
    
    Currency
    
    Maturities
    
    2008
    
    
    2007TIBOR1 plus 0.45% notes
    
    Japanese Yen
    
    2009
    
    $
    30
    
    
    $
    241.57% notes
    
    Japanese Yen
    
    2012
    
    
    4
    
    
    
    41.57% notes
    
    Japanese Yen
    
    2012
    
    
    11
    
    
    
    91.54% notes
    
    Japanese Yen
    
    2012
    
    
    77
    
    
    
    623.50% notes
    
    Euro
    
    2012
    
    
    348
    
    
    
    3535.60% notes
    
    U.S. Dollar
    
    2013
    
    
    250
    
    
    
    2504.50% notes
    
    Euro
    
    2014
    
    
    247
    
    
    
    2576.00% notes
    
    U.S. Dollar
    
    2017
    
    
    850
    
    
    
    8509.75% debentures
    
    U.S. Dollar
    
    2020
    
    
    145
    
    
    
    1459.80% debentures
    
    U.S. Dollar
    
    2020
    
    
    77
    
    
    
    847.85% notes
    
    U.S. Dollar
    
    2029
    
    
    882
    
    
    
    8823.50% notes
    
    Japanese Yen
    
    2032
    
    
    221
    
    
    
    177Fair market value adjustments
    
    
    
    
    
    
    83
    
    
    
    22Other
    
    
    
    
    
    
    23
    
    
    
    28Total debt
    
    
    
    
    
    
    3,248
    
    
    
    3,147Less: current portion
    
    
    
    
    
    
    38
    
    
    
    8Total long-term debt
    
    
    
    
    
    $
    3,210
    
    
    $
    3,139
 
 1
    
    Six-month Tokyo Interbank Offered Rate    112




---



##### 



113




---



##### 



Note 19: Accrued Liabilities
 (in millions)
    
    2008
    
    
    2007Salaries and wages
    
    $
    162
    
    
    $
    181Interest
    
    
    63
    
    
    
    65Sales incentive programs and other selling accruals
    
    
    63
    
    
    
    57Taxes, other than income taxes
    
    
    60
    
    
    
    57Employee benefits
    
    
    85
    
    
    
    70Derivative instruments
    
    
    25
    
    
    
    67Reserve for restructuring (see Note 3)
    
    
    146
    
    
    
    15Deferred revenue on supply contracts
    
    
    10
    
    
    
    8Insurance and legal contingencies
    
    
    9
    
    
    
    6Capital Spending
    
    
    10
    
    
    
    37Marketing and sales promotion
    
    
    14
    
    
    
    16Reserve for environmental remediation (see Note 26)
    
    
    47
    
    
    
    48Other
    
    
    165
    
    
    
    161Total
    
    $
    859
    
    
    $
    788
 Note 20: Other Liabilities
 (in millions)
    
    2008
    
    
    2007Reserves for environmental remediation (see Note 26)
    
    $
    113
    
    
    $
    102Deferred revenue on supply contracts
    
    
    47
    
    
    
    36Legal contingencies
    
    
    38
    
    
    
    40Asset retirement obligations
    
    
    18
    
    
    
    19Taxes
    
    
    40
    
    
    
    83Other
    
    
    34
    
    
    
    38Total
    
    $
    290
    
    
    $
    312
  Asset Retirement(in millions)
    
    ObligationsBalance as of December 31, 2005
    
    $
    14Liabilities settled
    
    
    (1
    )Accretion expense
    
    
    1Currency effects
    
    
    1Revisions in estimated cash flows
    
    
    Balance as of December 31, 2006
    
    $
    15Additions
    
    
    1Liabilities settled
    
    
    Accretion expense
    
    
    1Currency effects
    
    
    2Revisions in estimated cash flows
    
    
    Balance as of December 31, 2007
    
    $
    19Liabilities settled
    
    
    Accretion expense
    
    
    1Currency effects
    
    
    (2
    )Revisions in estimated cash flows
    
    
    Balance as of December 31, 2008
    
    $
    18
 114




---



##### 



Note 21: Earnings Per Share
  2008
    
    2007
    
    2006(in millions, except per share amounts)
    
    Diluted
    
    Basic
    
    Diluted
    
    Basic
    
    Diluted
    
    BasicConsolidated
Earnings from continuing operations
    
    $
    480
    
    
    $
    480
    
    
    $
    660
    
    
    $
    660
    
    
    $
    755
    
    
    $
    755Earnings (loss) from discontinued
operation
    
    
    2
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    (20
    )
    
    
    (20
    )Net earnings
    
    $
    482
    
    
    $
    482
    
    
    $
    661
    
    
    $
    661
    
    
    $
    735
    
    
    $
    735Average Equivalent Shares
Common stock outstanding
    
    
    193.6
    
    
    
    193.6
    
    
    
    207.8
    
    
    
    207.8
    
    
    
    218.9
    
    
    
    218.9Employee compensation-related shares,
including stock options(1)
    
    
    2.9
    
    
    
    
    
    
    
    3.2
    
    
    
    
    
    
    
    2.3
    
    
    
    Total average equivalent shares
    
    
    196.5
    
    
    
    193.6
    
    
    
    211.0
    
    
    
    207.8
    
    
    
    221.2
    
    
    
    218.9Per-Share Amounts
Earnings from continuing operations
    
    $
    2.44
    
    
    $
    2.48
    
    
    $
    3.12
    
    
    $
    3.17
    
    
    $
    3.41
    
    
    $
    3.45Earnings (loss) from discontinued
operation
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    0.01
    
    
    
    (0.09
    )
    
    
    (0.09
    )Net earnings per share
    
    $
    2.45
    
    
    $
    2.49
    
    
    $
    3.13
    
    
    $
    3.18
    
    
    $
    3.32
    
    
    $
    3.36
 
 Note:(1)
    
    There were approximately 0.7 million shares in 2006, attributable
to stock options that were excluded from the calculation of diluted
earnings per share as the exercise price of the stock options was greater
than the average market price. Note 22: Stockholders Equity
 Accounting Practices for Certain Employee Stock Ownership Plans Employers Accounting for Employee Stock Ownership Plans.
   115




---



##### 



Stockholders Rights Plan
  Share Repurchase Program
   Note 23: Share-Based Compensation Plans
  1999 Stock Plan
  Non-Employee Directors Stock Plans of 1997 and 2005
  116




---



##### 



American Jobs Creation Act of 2004,
 Rohm and Haas Company Non-Qualified Savings Plan
  Share-Based Compensation Overview
   Share-Based Payment. Accounting for Stock-Based Compensation,
 
    
    Forfeiture rate  SFAS No. 123R requires the recognition of expense only for awards that
will eventually vest. The provision requires pre-vesting forfeitures to be estimated at the
time of grant and modified, if necessary, if actual forfeitures differ from estimated
forfeitures. Our forfeiture rates are based upon historical share-based compensation
cancellations. The estimated forfeiture rates resulted in an immaterial adjustment to current
unvested awards.
    
    Tax benefits  SFAS No. 123R requires tax benefits resulting from share-based compensation
in excess of compensation cost recognized to be classified as financing cash flows in the
Consolidated Statements of Cash Flows.
    
    Tax windfall pool  SFAS No. 123R requires companies to calculate a cumulative pool of tax
windfalls, offset by tax shortfalls, using historical data from the original implementation
date of SFAS No. 123. We have calculated a tax windfall pool as of December 31, 2008;
therefore, any future tax shortfalls related to share-based compensation should be charged
against additional paid-in capital up to the amount of our windfall pool.
 117




---



##### 



Stock Options
   Weighted-AverageWeighted-
    
    Remaining
    
    AggregateShares
    
    Average
    
    Contractual
    
    Intrinsic(000s)
    
    Exercise Price
    
    Term
    
    Value (000s)Outstanding at January 1, 2006
    
    
    8,424
    
    
    $
    36.73Granted
    
    
    791
    
    
    
    50.37Forfeited
    
    
    (97
    )
    
    
    47.65Exercised
    
    
    (2,205
    )
    
    
    34.16Outstanding at December 31,
2006
    
    
    6,913
    
    
    $
    38.96Granted
    
    
    448
    
    
    
    52.72Forfeited
    
    
    (33
    )
    
    
    44.60Exercised
    
    
    (1,283
    )
    
    
    35.74Outstanding at December 31,
2007
    
    
    6,045
    
    
    $
    40.63Granted
    
    
    445
    
    
    
    54.38Forfeited
    
    
    (85
    )
    
    
    50.31Exercised
    
    
    (2,621
    )
    
    
    39.37
    
    
    
    
    
    
    $
    87,123Outstanding at December 31,
2008
    
    
    3,784
    
    
    $
    42.90
    
    
    
    5.07
    
    
    $
    71,471Options exercisable at
December 31, 2008
    
    
    2,928
    
    
    $
    39.96
    
    
    
    4.09
    
    
    $
    63,921
    2008
    
    2007
    
    2006Volatility
    
    
    20.83
    
    
    
    22.10
    
    
    
    28.83Risk-free interest rate
    
    
    2.86
    %
    
    
    4.47
    %
    
    
    4.67
    %Dividend yield
    
    
    2.71
    %
    
    
    3.50
    %
    
    
    3.26
    %Expected life (in years)
    
    
    6
    
    
    
    6
    
    
    
    6
 
    
    The volatility rate is based upon the historical stock price over the expected life of the
option.
    
    The risk-free interest rate assumption is based upon observed interest rates appropriate
for the expected life of the option.
    
    The dividend yield rate was based upon historical information as well as estimated future
dividend payouts.
    
    The expected life is based upon the simplified method, which is defined in Staff
Accounting Bulletin No. 107.
 118




---



##### 



Restricted Stock
   Weighted-Average Fair
    
    AggregateValue Per
    
    Intrinsic ValueShares (000s)
    
    Share
    

    (000s)Nonvested at January 1, 2006
    
    
    2,199
    
    
    $
    37.25Granted
    
    
    614
    
    
    
    50.16Forfeited
    
    
    (130
    )
    
    
    40.24Vested
    
    
    (133
    )
    
    
    36.82Nonvested at December 31, 2006
    
    
    2,550
    
    
    $
    40.23Granted
    
    
    692
    
    
    
    52.73Forfeited
    
    
    (148
    )
    
    
    43.05Vested
    
    
    (166
    )
    
    
    39.50Nonvested at December 31, 2007
    
    
    2,928
    
    
    $
    43.14Granted
    
    
    526
    
    
    
    52.78Forfeited
    
    
    (109
    )
    
    
    46.79Vested
    
    
    (912
    )
    
    
    36.83
    
    
    $
    20,279Nonvested at December 31, 2008
    
    
    2,433
    
    
    $
    48.35
  Long-term Performance Share Plan (LTPSP)
   Note 24: Accumulated Other Comprehensive Loss
  (in millions)
    
    2008
    
    
    2007
    
    
    2006Cumulative translation adjustments
    
    $
    (77
    )
    
    $
    27
    
    
    $
    10Unrecognized losses and prior service cost,
net, on pension and postretirement
obligations
    
    
    (614
    )
    
    
    (209
    )
    
    
    (330
    )Net gain (loss) on derivative instruments
    
    
    4
    
    
    
    
    
    
    
    4Accumulated other comprehensive loss
    
    $
    (687
    )
    
    $
    (182
    )
    
    $
    (316
    )
 119




---



##### 



Note 25: Leases
   FutureMinimum Lease(in millions)
    
    Payments2009
    
    $
    672010
    
    
    572011
    
    
    472012
    
    
    342013
    
    
    30
 Note 26: Contingent Liabilities, Guarantees and Commitments
 Litigation Against The Dow Chemical Company
  Environmental Matters
   120




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##### 



Ø Remediation Reserves and Reasonably Possible Amounts
  (in millions)
    
    BalanceDecember 31, 2006
    
    $
    141Amounts charged to earnings
    
    
    37Amounts spent
    
    
    (28
    )December 31, 2007
    
    $
    150Amounts charged to earnings
    
    
    45Amounts spent
    
    
    (35
    )December 31, 2008
    
    $
    160
     Ø Wood-Ridge/Berrys Creek
   121




---



##### 



Ø Paterson
  Ø Martin Aaron Superfund Site
  Ø Groundwater Treatment and Monitoring
  Ø Manufacturing Sites
  Insurance Litigation
  Self-Insurance
  Other Litigation
  122




---



##### 



Accounting for Contingencies,
  123




---



##### 



124




---



##### 



Indemnifications
  Note 27: New Accounting Pronouncements
 Disclosures about Transfers of Financial Assets and Interests in Variable Interest Entities
  Employers Disclosures about Postretirement Benefit Plan Assets
 Employers Disclosures about
Postretirement Benefit Plan Assets
 Accounting for Defensive Intangible Assets
 Accounting for
Defensive Intangible Assets
 Determining
Whether Share-Based Payment Transactions are Participating Securities
 Determining Whether Instruments Granted in
Share-Based Payment Transactions are Participating Securities Earnings Per Share
 125




---



##### 



Determination of the Useful Life of Intangible Assets
 Determination of the Useful Life of Intangible
Assets. Goodwill and Other Intangible Assets. Business Combinations,
 Disclosures about Derivative Instruments and Hedging Activities
 Disclosures about Derivatives and Hedging
Activities Accounting for
Derivatives and Hedging Activities
 Accounting for Collaborative Arrangements
 Accounting for Collaborative
Arrangements,
 Non-controlling Interests
 Non-controlling Interests in Consolidated
Financial Statements
 Business Combinations
 Business Combinations,
 Fair Value Option for Financial Assets and Financial Liabilities
 The Fair Value Option for Financial Assets and
Financial Liabilities,
 126




---



##### 



Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards
 Accounting for Income
Tax Benefits of Dividends on Share-Based Payment Awards
 Fair Value Measurements
 Fair Value Measurements
 127




---



##### 



Note 28: Summarized Quarterly Data (unaudited)
 First Quarter
    
    Second Quarter
    
    Third Quarter
    
    Fourth Quarter(in millions, except pershare amounts)
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007
    
    2008
    
    2007Net sales
    
    $
    2,507
    
    
    $
    2,160
    
    
    $
    2,567
    
    
    $
    2,190
    
    
    $
    2,471
    
    
    $
    2,204
    
    
    $
    2,030
    
    
    $
    2,343Gross profit
    
    
    660
    
    
    
    609
    
    
    
    630
    
    
    
    604
    
    
    
    597
    
    
    
    614
    
    
    
    523
    
    
    
    640Provision for
restructuring and
asset impairments
    
    
    12
    
    
    
    (1
    )
    
    
    86
    
    
    
    11
    
    
    
    4
    
    
    
    18
    
    
    
    97
    
    
    
    Pension judgment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    Net earnings from
continuing
operations
    
    
    172
    
    
    
    190
    
    
    
    147
    
    
    
    161
    
    
    
    129
    
    
    
    129
    
    
    
    32
    
    
    
    180Net earnings
    
    
    172
    
    
    
    192
    
    
    
    147
    
    
    
    160
    
    
    
    131
    
    
    
    129
    
    
    
    32
    
    
    
    180Basic earnings per
share, in dollars:From continuing
operations
    
    
    0.89
    
    
    
    0.87
    
    
    
    0.76
    
    
    
    0.76
    
    
    
    0.67
    
    
    
    0.62
    
    
    
    0.17
    
    
    
    0.93Net earnings per
share
    
    
    0.89
    
    
    
    0.88
    
    
    
    0.76
    
    
    
    0.75
    
    
    
    0.68
    
    
    
    0.62
    
    
    
    0.17
    
    
    
    0.93Diluted earnings
per share, in
dollars:From continuing
operations
    
    
    0.87
    
    
    
    0.86
    
    
    
    0.75
    
    
    
    0.75
    
    
    
    0.66
    
    
    
    0.61
    
    
    
    0.17
    
    
    
    0.91Net earnings per
share
    
    
    0.87
    
    
    
    0.87
    
    
    
    0.75
    
    
    
    0.74
    
    
    
    0.67
    
    
    
    0.61
    
    
    
    0.17
    
    
    
    0.91
 Note 29: Subsequent Events
   128




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##### 



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 a)
    
    Conclusion Regarding the Effectiveness of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we conducted an evaluation of our disclosure
controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the
Securities Exchange Act of 1934, as amended (the Exchange Act). Based on this evaluation, our
principal executive officer and our principal financial officer concluded that our disclosure
controls and procedures were effective as of the end of the period covered by this annual
report. There were no changes made that materially affected or are reasonably likely to
materially affect our internal controls over financial reporting. During 2008, our principal
executive officer and our principal financial officer have signed their certifications as
required by the Sarbanes-Oxley Act of 2002. In 2008, our CEO also certified, without
qualification, to the New York Stock Exchange (NYSE) that he was not aware of any violation by
the Company of NYSE corporate governance standards.b)
    
    Managements Report on Internal Control Over Financial ReportingOur managements report on Internal Control Over Financial Reporting is set forth in Item 8 and
incorporated herein by reference.The Companys independent registered public accounting firm, PricewaterhouseCoopers LLP, has
issued an attestation report on the Companys internal controls over financial reporting, which
is included in this Annual Report on Form 10-K.c)
    
    Changes in Internal Controls Over Financial ReportingThere have been no changes in our internal control over financial reporting that occurred
during the year ended December 31, 2008 that have materially affected, or are likely to
materially effect, our internal control over financial reporting.
 
 Item 9B. Other Information
  129




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##### 



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  DIRECTORS
 William
J. Avery
 Raj L. Gupta
 David W. Haas
 Thomas W. Haas
 Richard L. Keyser
 Rick J. Mills
 Sandra O. Moose
 Gilbert
S. Omenn
 Gary L. Rogers
 130




---



##### 



Ronaldo H. Schmitz
 George M. Whitesides
 Marna C. Whittington
 Committees
 1.
    
    Audit2.
    
    Executive3.
    
    Executive Compensation4.
    
    Nominating5.
    
    Sustainable Development
 EXECUTIVE OFFICERS
  Patrice Barthelmes
 Pierre R. Brondeau
 Ruby R. Chandy
 Jacques M. Croisetiere
 Mark Douglas
 Carol S. Eicher
 Luis Fernandez-Moreno
 131




---



##### 



Raj L.
Gupta
 Robert A. Lonergan
 Richard R. Lovely
 Guillermo Novo
 Yi Hyon Paik
 Anne M. Wilms
 132




---



##### 



Item 11. Executive Compensation
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Equity Compensation Plan Information (1)
  Number of securitiesremaining available forNumber of securities to be
    
    
    
    future issuance under equityissued upon exercise of
    
    Weighted-average exercise
    
    compensation plansoutstanding options,
    
    price of outstanding options,
    
    (excluding securitiesPlan category
    
    warrants and rights
    
    warrants and rights
    
    reflected in column (a)) (2,3,4)(in thousands)
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    6,950
    
    
    $
    26.13
    
    
    
    13,312
    (3)Equity compensation
plans not approved
by security holders
    
    
    299
    
    
    
    
    
    
    
    28
    (4)Total
    
    
    7,249
    
    
    $
    26.13
    
    
    
    13,340
 
 Note:(1)
    
    Refer to Note 23 to the Consolidated Financial Statements for a description of the
plans.(2)
    
    Excludes shares that will be issued pursuant to the Companys matching contributions
under the Non-Qualified Savings Plan.(3)
    
    Includes shares available for issuance under the 2004 Amended and Restated Stock Plan
and the 2005 Non-Employee Directors Stock Plan.(4)
    
    Includes shares available for issuance under the 1997 Non-Employee Directors Stock
Plan. 
 Item 13. Certain Relationships and Related Transactions, and Director Independence
  
 Item 14. Principal Accountant Fees and Services
  133




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##### 



PART IV
 
 Item 15. Exhibits and Financial Statement Schedule
  1.
    
    All Financial Statements:Managements Report on Internal Control Over Financial Reporting
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the years ended December 31, 2008, 2007
and 2006
Consolidated Balance Sheets as of December 31, 2008 and 2007
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007
and 2006
Consolidated Statements of Stockholders Equity for the years ended December 31,
2008, 2007 and
2006
Notes to Consolidated Financial Statements2.
    
    Financial Statements ScheduleThe following supplementary financial information is filed in this Form 10-K:
 Financial Statement Schedule
    
    Page #§ II  Valuation and qualifying accounts for the years 2008, 2007 and 2006
    
    139
 The schedules not included herein are omitted because they are not applicable or
the required information is presented in the financial statements or related notes.
  EXHIBITNUMBER
    
    DESCRIPTION3.01
    
    Certificate of Incorporation of Rohm and Haas Company (incorporated
by reference to Exhibit 3 to Rohm and Haas Companys report on Form
10-K/A filed March 29, 2001 (the 2000 10-K/A)).3.02
    
    Bylaws of Rohm and Haas Company (incorporated by reference to
Exhibit 3 to Rohm and Haas Companys report on Form 10-Q filed May
5, 2002).4.01
    
    Description of Rohm and Haas Common Stock (incorporated by
reference to Item 5 of Rohm and Haas Companys report on Form 10-Q
filed September 30, 1996).4.02
    
    Indenture, dated as of June 1, 1990, between Morton International,
Inc. and Continental Bank, National Association, as Trustee
(incorporated by reference to Exhibit 4(c) to Morton International,
Inc.s Registration Statement on Form S-1 filed May 9, 1990).4.03
    
    Indenture, dated as of May 1, 1992, between Rohm and Haas Company
and Wachovia Bank, N.A., successor in interest to CoreStates Bank,
N.A. (formerly, The Philadelphia National Bank), as Trustee
(incorporated by reference to Exhibit 4 to Rohm and Haas Companys
report on Form 10-K filed March 29, 1993).4.04
    
    First Supplemental Indenture, dated as of April 28, 1997, among
Morton International, Inc., New Morton International, Inc., and
First Trust, National Association, as Trustee (incorporated by
reference to Exhibit 10.01 to New Morton International, Inc.s
Current Report on Form 8-K dated May 2, 1997).
 134




---



##### 



EXHIBITNUMBER
    
    DESCRIPTION4.05
    
    Indenture, dated as of July 1, 1999, between Rohm and Haas Company
and Chase Manhattan Trust Company, National Association, as Trustee
(incorporated by reference to Exhibit 4.1 to Rohm and Haas
Companys Registration Statement on Form S-4 filed July 30, 1999).4.06
    
    Rights Agreement, dated as of October 26, 2000, between Rohm and
Haas Company and EquiServe Trust Company, N.A., as Rights Agent
(incorporated by reference to Exhibit 4 to Rohm and Haas Companys
Registration Statement on Form 8-A dated October 26, 2000).4.07
    
    Certificate of Designation of Series A Junior Participating
Preferred Stock of Rohm and Haas Company dated October 31, 2000
(incorporated by reference to Exhibit 4 to the 2000 10-K/A).4.08
    
    Fiscal Agency Agreement, dated September 19, 2005, (incorporated by
reference to Exhibit 4.1 to Rohm and Haas Companys current report
on Form 8-K dated September 22, 2005).4.09
    
    Indenture, dated as of September 2007, between Rohm and Haas
Company and The Bank of New York, as Trustee (incorporated by
reference to Exhibit 4.1 to Rohm and Haas Company Registration
Statement on Form S-3 filed September 5, 2007).4.10
    
    Note Purchase Agreement, dated March 9, 2007 between Rohm and Haas
Company and Great West Life and Annuity et al (incorporated by
reference to Exhibit 4.1 to Rohm and Haas Company Form 8-K filed
March 14, 2007).4.11
    
    Specimen of 5.60% Notes due 20134.12
    
    Specimen of 6% Notes due 201710.01*
    
    1997 Non-Employee Directors Stock Plan (incorporated by reference
to Exhibit 10.2 to Rohm and Haas Companys report on Form 10-K
filed March 21, 1997).10.02*
    
    Amended and Restated Rohm and Haas Stock Plan (incorporated by
reference to Appendix C to Rohm and Haas Companys Definitive Proxy
Statement on Schedule 14A filed March 26, 2001).10.03*
    
    2004 Amended and Restated Stock Plan (incorporated by reference to
Appendix D to Rohm and Haas Companys Definitive Proxy Statement on
Schedule 14A filed March 19, 2004).10.04*
    
    Form of Continuity Agreement, dated as of July 1, 2001, between
Rohm and Haas Company and key executives (incorporated by reference
to Exhibit 10 to Rohm and Haas Companys report on Form 10-Q filed
August 14, 2001).10.04a*
    
    Form of Amendment No. 1, dated as of January 8, 2009, to the
Continuity Agreements between Rohm and Haas Company and key
executives10.05*
    
    Rohm and Haas Company Non-Qualified Savings Plan, as Amended and
Restated effective January 1, 2003 (incorporated by reference to
Exhibit 10.04 to Rohm and Haas Companys report on Form 10-K filed
March 8, 2004).10.06*
    
    2004 Rohm and Haas Company Annual Incentive Plan (incorporated by
reference to Appendix B to Rohm and Haas Companys Definitive Proxy
Statement on Schedule 14A filed March 19, 2004).10.07*
    
    2004 Rohm and Haas Company Long-Term Performance Plan (incorporated
by reference to Appendix C to Rohm and Haas Companys Definitive
Proxy Statement on Schedule 14A
 135




---



##### 



EXHIBITNUMBER
    
    DESCRIPTIONfiled March 19, 2004).10.8
    
    Five-year Credit Agreement (incorporated by reference from Exhibit
10.1 to Rohm and Haas Companys Current Report on Form 8-K dated
December 21, 2005).10.09
    
    Amendment to the Five-year Credit Agreement (incorporated by
reference to Exhibit 10.1 of Rohm and Haas Companys Form 8-K filed
December 19, 2006).10.10*
    
    2005 Rohm and Haas Company Non-Employee Directors Stock Plan
(incorporated by reference to Exhibit 10.1 of Rohm and Haas
Companys Form 8-K filed May 11, 2005).10.11*
    
    2005 Rohm and Haas Company Non-Qualified Savings Plan (incorporated
by reference to Exhibit 10.2 of Rohm and Haas Companys Form 8-K
filed May 11, 2005).12.01
    
    Statements regarding Computation of Ratios of Rohm and Haas Company.14.00
    
    Rohm and Haas Company Code of Business Conduct and Ethics
(incorporated by reference to Companys website) www.rohmhaas.com
 (intended to be an inactive textual reference only).21.01
    
    Subsidiaries of Rohm and Haas Company.23.01
    
    Consent of PricewaterhouseCoopers LLP.31.01
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a).31.02
    
    Certification Pursuant to Rule 13a-14(a)/15d-14(a).32
    
    Certification furnished pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Management contract or compensatory plan or arrangement filed pursuant to Item 601(b) (10)
(iii) of Regulation S-K. 136




---



##### 



STOCKHOLDER INFORMATION
 Stock Exchange Listing
 Transfer Agent and Registrar      Shareholder Inquiries:
 Annual Meeting of Stockholders
  Independent Registered Public Accounting Firm
 137




---



##### 



SIGNATURES
  ROHM AND HAAS COMPANY/s/ Jacques M. Croisetiere
Jacques M. Croisetiere
Executive Vice President, Chief Financial Officer,
and Chief Strategy Officer
   /s/ Raj L. Gupta
Raj L. Gupta 
Director, Chairman and 
Chief Executive Officer
(Principal Executive Officer)
    
    /s/ Sandra O. Moose
Sandra O. Moose
Director/s/ Jacques M. Croisetiere
Jacques M. Croisetiere 
Executive Vice President, Chief Financial Officer 
and Chief Strategy Officer
(Principal Financial and Accounting Officer)
    
    /s/ Gilbert S. Omenn
Gilbert S. Omenn
Director/s/ William J. Avery
William J. Avery 
Director
    
    /s/ Gary L. Rogers
Gary L. Rogers
Director/s/ David W. Haas
David W. Haas 
Director
    
    /s/ Ronaldo H. Schmitz
Ronaldo H. Schmitz
Director/s/ Thomas W. Haas
Thomas W. Haas 
Director
    
    /s/ George M. Whitesides
George M. Whitesides
Director/s/ Richard L. Keyser
Richard L. Keyser 
Director
    
    /s/ Marna C. Whittington
Marna C. Whittington
Director/s/ Rick J. Mills
Rick J. Mills 
Director
 138




---



##### 



SCHEDULE II
   Bad Debts:
 Year Ended December 31,(in millions)
    
    2008
    
    
    2007
    
    
    2006Deducted from Accounts Receivable 
Allowances for losses:Balance at beginning of year
    
    $
    36
    
    
    $
    40
    
    
    $
    43Additions charged to earnings
    
    
    16
    
    
    
    5
    
    
    
    6Charge-offs, net of recoveries
    
    
    (6
    )
    
    
    (11
    )
    
    
    (11
    )Currency impact
    
    
    (2
    )
    
    
    2
    
    
    
    2Balance at end of year
    
    $
    44
    
    
    $
    36
    
    
    $
    40
 LIFO Reserve:
 Year Ended December 31,(in millions)
    
    2008
    
    
    2007
    
    
    2006Deducted from Inventories 
Allowances for reserves:Balance at beginning of year
    
    $
    170
    
    
    $
    127
    
    
    $
    120Additions (released) charged to earnings
    
    
    (23
    )
    
    
    43
    
    
    
    7Balance at end of year
    
    $
    147
    
    
    $
    170
    
    
    $
    127
 139