XML 69 R54.htm IDEA: XBRL DOCUMENT v3.8.0.1
FINANCIAL INSTRUMENTS (Tables)
 12 Months Ended
Dec. 31, 2017
Investments, All Other Investments [Abstract]  
Fair Value of Financial Instruments
The following table summarizes the fair value of financial instruments at December 31, 2017 and 2016:

Fair Value of Financial Instruments at Dec 31
2017
2016
Cost
Gain
Loss
Fair
Value
Cost
Gain
Loss
Fair
Value
In millions
Marketable securities 1
$
4

$
—

$
—

$
4

$
—

$
—

$
—

$
—

Other investments:
 
 
 
 
 
 
 
 
Debt securities:
 
 
 
 
 
 
 
 
Government debt 2
$
637

$
13

$
(11
)
$
639

$
607

$
13

$
(12
)
$
608

Corporate bonds
704

32

(3
)
733

623

27

(5
)
645

Total debt securities
$
1,341

$
45

$
(14
)
$
1,372

$
1,230

$
40

$
(17
)
$
1,253

Equity securities
164

2

(26
)
140

658

98

(50
)
706

Total marketable securities and other investments
$
1,509

$
47

$
(40
)
$
1,516

$
1,888

$
138

$
(67
)
$
1,959

Long-term debt including debt due within one year 3
$
(20,517
)
$
6

$
(2,104
)
$
(22,615
)
$
(21,091
)
$
129

$
(1,845
)
$
(22,807
)
Derivatives relating to:
 
 
 
 
 
 
 
 
Interest rates
$
—

$
—

$
(4
)
$
(4
)
$
—

$
—

$
(5
)
$
(5
)
Commodities 4
$
—

$
130

$
(256
)
$
(126
)
$
—

$
56

$
(213
)
$
(157
)
Foreign currency
$
—

$
22

$
(112
)
$
(90
)
$
—

$
84

$
(30
)
$
54


1.
Debt securities with maturities of less than one year at the time of acquisition.
2.
U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.
3.
Cost includes fair value adjustments of $19 million at December 31, 2017 and $18 million at December 31, 2016.
4.
Presented net of cash collateral
Investing Results
The following table provides the investing results from available-for-sale securities for the years ended December 31, 2017, 2016 and 2015.

Investing Results
 
 
 
In millions
2017
2016
2015
Proceeds from sales of available-for-sale securities
$
1,078

$
535

$
565

Gross realized gains
$
120

$
58

$
96

Gross realized losses
$
(10
)
$
(2
)
$
(14
)
Contractual Maturities of Debt Securities
The following table summarizes the contractual maturities of the Company’s investments in debt securities:

Contractual Maturities of Debt Securities at Dec 31, 2017 1
Amortized Cost
Fair Value
In millions
Within one year
$
7

$
7

One to five years
370

378

Six to ten years
680

682

After ten years
284

305

Total
$
1,341

$
1,372

1. Includes marketable securities with maturities of less than one year.
Fair Value and Gross Unrealized Losses of Investments Temporarily Impaired
The following tables provide the fair value and gross unrealized losses of the Company’s investments that were deemed to be temporarily impaired at December 31, 2017 and 2016, aggregated by investment category:

Temporarily Impaired Securities at
Dec 31, 2017
Less than 12 months
12 months or more
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair Value
Unrealized Losses
In millions
Government debt 1
$
295

$
(4
)
$
151

$
(7
)
$
446

$
(11
)
Corporate bonds
163

(2
)
19

(1
)
182

(3
)
Equity securities
7

(2
)
63

(24
)
70

(26
)
Total temporarily impaired securities
$
465

$
(8
)
$
233

$
(32
)
$
698

$
(40
)

1.
U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities' obligations.

Temporarily Impaired Securities at
Dec 31, 2016
Less than 12 months
12 months or more
Total
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair Value
Unrealized Losses
In millions
Government debt 1
$
351

$
(12
)
$
—

$
—

$
351

$
(12
)
Corporate bonds
193

(4
)
16

(1
)
209

(5
)
Equity securities
48

(6
)
163

(44
)
211

(50
)
Total temporarily impaired securities
$
592

$
(22
)
$
179

$
(45
)
$
771

$
(67
)
1.
U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities' obligations.
Schedule of Notional Amounts of Outstanding Derivative Positions [Table Text Block]
The notional amounts of the Company's derivative instruments at December 31, 2017 and 2016, were as follows:

Notional Amounts

Dec 31, 2017
Dec 31, 2016
In millions
Derivatives designated as hedging instruments:
 
 
Interest rate swaps
$
185

$
245

Foreign currency contracts
$
8,414

$
4,053

Derivatives not designated as hedging instruments:
 
 
Foreign currency contracts
$
14,231

$
12,388


The notional amounts of the Company's commodity derivatives at December 31, 2017 and 2016, were as follows:

Commodity Gross Aggregate Notionals
Dec 31, 2017
Dec 31, 2016
Notional Volume Unit
 
Derivatives designated as hedging instruments:
 
 
 
Corn
2.8

0.4

million bushels
Crude Oil
4.2

0.6

million barrels
Ethane
10.4

3.6

million barrels
Natural Gas
363.3

78.6

million British thermal units
Propane
8.9

1.5

million barrels
Soybeans
1.1

—

million bushels
Derivatives not designated as hedging instruments:
 
 
 
Ethane
1.9

2.6

million barrels
Gasoline
0
30
kilotons
Naptha Price Spread
60
50
kilotons
Normal Butane
0.2

—

million barrels
Propane
1.8

2.7

million barrels
Schedule Fair Values of Derivative Instruments
The following tables provide the fair value and gross balance sheet classification of derivative instruments at December 31, 2017 and 2016:

Fair Value of Derivative Instruments

Dec 31, 2017
In millions
Balance Sheet Classification
Gross
Counterparty and Cash Collateral Netting 1
Net Amounts Included in the Consolidated Balance Sheets
Asset derivatives:
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Other current assets
$
51

$
(46
)
$
5

Commodity contracts
Other current assets
20

(4
)
16

Commodity contracts
Deferred charges and other assets
70

(5
)
65

Total
 
$
141

$
(55
)
$
86

Derivatives not designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Other current assets
$
75

$
(58
)
$
17

Commodity contracts
Other current assets
50

(5
)
45

Commodity contracts
Deferred charges and other assets
7

(3
)
4

Total
 
$
132

$
(66
)
$
66

Total asset derivatives
 
$
273

$
(121
)
$
152

 
 
 
 
 
Liability derivatives:
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
Interest rate swaps
Other noncurrent obligations
$
4

$
—

$
4

Foreign currency contracts
Accrued and other current liabilities
109

(46
)
63

Commodity contracts
Accrued and other current liabilities
96

(15
)
81

Commodity contracts
Other noncurrent obligations
143

(12
)
131

Total
 
$
352

$
(73
)
$
279

Derivatives not designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Accrued and other current liabilities
$
107

$
(58
)
$
49

Commodity contracts
Accrued and other current liabilities
45

(6
)
39

Commodity contracts
Other noncurrent obligations
8

(3
)
5

Total
 
$
160

$
(67
)
$
93

Total liability derivatives
 
$
512

$
(140
)
$
372


1.
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between Dow and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

Fair Value of Derivative Instruments

Dec 31, 2016
In millions
Balance Sheet Classification 1
Gross
Counterparty and Cash Collateral Netting 2
Net Amounts Included in the Consolidated Balance Sheets
Asset derivatives:
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Other current assets
$
90

$
(47
)
$
43

Commodity contracts
Other current assets
42

(14
)
28

Commodity contracts
Deferred charges and other assets
10

(3
)
7

Total
 
$
142

$
(64
)
$
78

Derivatives not designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Other current assets
$
103

$
(62
)
$
41

Commodity contracts
Other current assets
13

(2
)
11

Commodity contracts
Deferred charges and other assets
12

(2
)
10

Total
 
$
128

$
(66
)
$
62

Total asset derivatives
 
$
270

$
(130
)
$
140

 
 
 
 
 
Liability derivatives:
 
 
 
 
Derivatives designated as hedging instruments:
 
 
 
 
Interest rate swaps
Accrued and other current liabilities
$
3

$
—

$
3

Interest rate swaps
Other noncurrent obligations
2

—

2

Foreign currency contracts
Accrued and other current liabilities
55

(47
)
8

Commodity contracts
Accrued and other current liabilities
32

(14
)
18

Commodity contracts
Other noncurrent obligations
196

(3
)
193

Total
 
$
288

$
(64
)
$
224

Derivatives not designated as hedging instruments:
 
 
 
 
Foreign currency contracts
Accrued and other current liabilities
$
84

$
(62
)
$
22

Commodity contracts
Accrued and other current liabilities
4

(2
)
2

Commodity contracts
Other noncurrent obligations
2

(2
)
—

Total
 
$
90

$
(66
)
$
24

Total liability derivatives
 
$
378

$
(130
)
$
248


1. Updated to conform with the current year presentation.
2.
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between Dow and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

Derivative Instruments, Gain (Loss) [Table Text Block]

Effect of Derivative Instruments
Amount of gain (loss) recognized in OCI 1 (Effective portion)
Amount of gain (loss) recognized in income 2, 3
 
In millions
2017
2016
2015
2017
2016
2015
Income Statement Classification
Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
Fair value hedges:
 
 
 
 
 
 
 
Interest rate swaps
$
—

$
—

$
—

$
(2
)
$
—

$
—

Interest expense and amortization of debt discount
Cash flow hedges:
 
 
 
 
 
 
 
Interest rate swaps
2

2

2

4

6

9

Interest expense and amortization of debt discount
Foreign currency contracts
(30
)
8

123

7

(5
)
68

Cost of sales
Foreign currency contracts
(5
)
25

—

(17
)
(13
)
—

Sundry income (expense) - net
Commodity contracts
35

55

(247
)
7

(28
)
(91
)
Cost of sales
Net investment hedges:
 
 
 
 
 
 
 
Foreign currency contracts
(73
)
5

—

—

—

—

 
Total derivatives designated as hedging instruments
$
(71
)
$
95

$
(122
)
$
(1
)
$
(40
)
$
(14
)
 
Derivatives not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign currency contracts
$
—

$
—

$
—

$
(289
)
$
(180
)
$
(318
)
Sundry income (expense) - net
Commodity contracts
—

—

—

(9
)
6

4

Cost of sales
Total derivatives not designated as hedging instruments
$
—

$
—

$
—

$
(298
)
$
(174
)
$
(314
)
 
Total derivatives
$
(71
)
$
95

$
(122
)
$
(299
)
$
(214
)
$
(328
)
 
1.
OCI is defined as other comprehensive income (loss).
2. For cash flow hedges, this represents the effective portion of the gain (loss) reclassified from AOCL into income during the period. For the years ended December 31, 2017, 2016 and 2015, there was no material ineffectiveness with regard to the Company's cash flow hedges.
3. Pretax amounts.