FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2019

FAIR VALUE MEASUREMENTS

A summary of the Company's recurring and nonrecurring fair value measurements can be found in Note 24 to the Consolidated Financial Statements included in Dow Inc. and TDCC's 2018 10-K Recast filed with the SEC on July 25, 2019. If applicable, updates have been included in the respective sections below.

Fair Value Measurements on a Recurring Basis

The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis:



Basis of Fair Value Measurements on a Recurring Basis	Sep 30, 2019						Dec 31, 2018
	Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Total		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Total
In millions
Assets at fair value:
Cash equivalents ¹	$	—	$	501	$	501	$	—	$	566	$	566
Marketable securities	—		11		11		—		100		100
Equity securities ²	19		—		19		16		—		16
Debt securities: ²
Government debt ³	—		539		539		—		700		700
Corporate bonds	26		1,125		1,151		—		983		983
Derivatives relating to: ⁴
Interest rates	—		86		86		—		—		—
Foreign currency	—		257		257		—		226		226
Commodities	23		72		95		17		93		110
Total assets at fair value	$	68	$	2,591	$	2,659	$	33	$	2,668	$	2,701
Liabilities at fair value:
Long-term debt including debt due within one year ⁵	$	—	$	19,675	$	19,675	$	—	$	20,212	$	20,212
Derivatives relating to: ⁴
Interest rates	—		399		399		—		64		64
Foreign currency	—		144		144		—		149		149
Commodities	17		186		203		23		189		212
Total liabilities at fair value	$	17	$	20,404	$	20,421	$	23	$	20,614	$	20,637


1.	Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value.


2.	The Company’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.


3.	U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.


4.	See Note 19 for the classification of derivatives in the consolidated balance sheets.


5.	See Note 19 for information on fair value measurements of long-term debt.

For equity securities calculated at net asset value per share (or its equivalent), the Company had $123 million in private market securities and $29 million in real estate at September 30, 2019 ($120 million in private market securities and $29 million in real estate at December 31, 2018). There are no redemption restrictions and the unfunded commitments on these investments were $83 million at September 30, 2019 ($89 million at December 31, 2018).

Fair Value Measurements on a Nonrecurring Basis

As part of the Synergy Program, the Company has or will shut down a number of manufacturing and corporate facilities around the world. In the first nine months of 2019, manufacturing facilities associated with this plan were written down to zero. In addition, impairments of leased, non-manufacturing facilities, which were classified as Level 3 measurements, resulted in a write-down of right-of-use assets to a fair value of $114 million using unobservable inputs. The impairment charges related to the Synergy Program, totaling $110 million, were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings ($23 million) and Corporate ($87 million).

In the first nine months of 2019, the Company recognized additional pretax impairment charges of $25 million related to capital additions made to the biopolymers manufacturing facility in Santa Vitoria, Minas Gerais, Brazil, which was impaired in 2017. The assets were written down to zero in 2019. The impairment charge was included in “Restructuring and asset related charges - net” in the consolidated statements of income and related to the Packaging & Specialty Plastics segment.

In the third quarter of 2019, the Company recognized an impairment charge of $9 million related to non-manufacturing assets. The assets, classified as Level 3 measurements, were valued at $5 million using unobservable inputs. The impairment charge was included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to the Performance Materials & Coatings segment.

In the third quarter of 2019, the Company recognized an impairment charge of $75 million resulting from the planned divestiture of its acetone derivatives business to ALTIVIA Ketones & Additives, LLC. The divestiture includes the Company's acetone derivatives related inventory and production assets, located in Institute, West Virginia, in addition to the site infrastructure, land and utilities. The assets, classified as Level 3 measurements and valued using unobservable inputs, were written down to zero in the third quarter of 2019, except for inventory, which will be sold at the lower of cost or market. The impairment charge was included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($24 million) and Corporate ($51 million). See Note 5 for additional information on the Company's restructuring activities.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details