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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Dow Inc | NYSE:DOW | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.21 | 0.37% | 57.04 | 57.43 | 56.75 | 57.19 | 2,544,396 | 01:00:00 |
Delaware
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38-1285128
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State or other jurisdiction of
incorporation or organization
|
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(I.R.S. Employer Identification No.)
|
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Large accelerated filer
|
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þ
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Accelerated filer
|
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¨
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Non-accelerated filer
|
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¨
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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PAGE
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The Dow Chemical Company and Subsidiaries
|
|
Remaining Life of Patents Owned at Dec 31, 2017
|
United States
|
Foreign
|
||
Within 5 years
|
1,400
|
|
5,400
|
|
6 to 10 years
|
1,300
|
|
9,200
|
|
11 to 15 years
|
2,700
|
|
13,300
|
|
16 to 20 years
|
700
|
|
1,200
|
|
Total
|
6,100
|
|
29,100
|
|
Principal Nonconsolidated Affiliate
|
Ownership Interest
|
Business Description
|
|
EQUATE Petrochemical Company K.S.C.
|
42.50
|
%
|
A Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins
|
The HSC Group:
|
|
|
|
DC HSC Holdings LLC
1
|
50.00
|
%
|
A U.S.-based group of companies that manufactures polycrystalline silicon products
|
Hemlock Semiconductor L.L.C.
|
50.10
|
%
|
A U.S. company that sells polycrystalline silicon products
|
The Kuwait Olefins Company K.S.C.
|
42.50
|
%
|
A Kuwait-based company that manufactures ethylene and ethylene glycol
|
The Kuwait Styrene Company K.S.C.
|
42.50
|
%
|
A Kuwait-based company that manufactures styrene monomer
|
Map Ta Phut Olefins Company Limited
2
|
32.77
|
%
|
A Thailand-based company that manufactures propylene and ethylene
|
Sadara Chemical Company
3
|
35.00
|
%
|
A Saudi Arabian company that manufactures chlorine, ethylene, propylene and aromatics for internal consumption and manufactures and sells polyethylene, ethylene oxide and propylene oxide derivative products and isocyanates
|
The SCG-Dow Group:
|
|
|
|
Siam Polyethylene Company Limited
|
50.00
|
%
|
A Thailand-based company that manufactures polyethylene
|
Siam Polystyrene Company Limited
|
50.00
|
%
|
A Thailand-based company that manufactures polystyrene
|
Siam Styrene Monomer Co., Ltd.
|
50.00
|
%
|
A Thailand-based company that manufactures styrene
|
Siam Synthetic Latex Company Limited
|
50.00
|
%
|
A Thailand-based company that manufactures latex
|
1.
|
DC HSC Holdings LLC holds an
80.5 percent
indirect ownership interest in Hemlock Semiconductor Operations LLC.
|
2.
|
The Company's effective ownership of Map Ta Phut Olefins Company Limited is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited.
|
3.
|
Dow is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company's established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee.
|
Sales Variances by Geographic Region
|
Local Price & Product Mix
|
Currency
|
Volume
|
Portfolio & Other
|
Total
|
|||||
Percentage change from prior year
|
||||||||||
2017
|
|
|
|
|
|
|||||
U.S. & Canada
|
6
|
%
|
—
|
%
|
5
|
%
|
4
|
%
|
15
|
%
|
EMEA
|
10
|
|
1
|
|
6
|
|
3
|
|
20
|
|
Asia Pacific
|
4
|
|
—
|
|
7
|
|
7
|
|
18
|
|
Latin America
|
2
|
|
—
|
|
(1
|
)
|
—
|
|
1
|
|
Total
|
6
|
%
|
—
|
%
|
5
|
%
|
4
|
%
|
15
|
%
|
|
|
|
|
|
|
|||||
2016
|
|
|
|
|
|
|||||
U.S. & Canada
|
(7
|
)%
|
—
|
%
|
3
|
%
|
2
|
%
|
(2
|
)%
|
EMEA
|
(6
|
)
|
(1
|
)
|
4
|
|
(1
|
)
|
(4
|
)
|
Asia Pacific
|
(6
|
)
|
—
|
|
6
|
|
9
|
|
9
|
|
Latin America
|
(6
|
)
|
—
|
|
—
|
|
(1
|
)
|
(7
|
)
|
Total
|
(6
|
)%
|
—
|
%
|
3
|
%
|
2
|
%
|
(1
|
)%
|
|
|
|
|
|
|
|||||
2015
|
|
|
|
|
|
|||||
U.S. & Canada
|
(13
|
)%
|
(1
|
)%
|
2
|
%
|
(2
|
)%
|
(14
|
)%
|
EMEA
|
(10
|
)
|
(13
|
)
|
2
|
|
(2
|
)
|
(23
|
)
|
Asia Pacific
|
(9
|
)
|
(3
|
)
|
5
|
|
(2
|
)
|
(9
|
)
|
Latin America
|
(15
|
)
|
—
|
|
1
|
|
(1
|
)
|
(15
|
)
|
Total
|
(12
|
)%
|
(5
|
)%
|
2
|
%
|
(1
|
)%
|
(16
|
)%
|
Cash Flow Summary
|
2017
|
2016
|
2015
|
||||||
In millions
|
|||||||||
Cash provided by (used for):
|
|
|
|
||||||
Operating activities
|
$
|
4,502
|
|
$
|
5,600
|
|
$
|
7,607
|
|
Investing activities
|
(1,941
|
)
|
(3,479
|
)
|
(1,350
|
)
|
|||
Financing activities
|
(3,300
|
)
|
(4,014
|
)
|
(3,132
|
)
|
|||
Effect of exchange rate changes on cash
|
320
|
|
(77
|
)
|
(202
|
)
|
|||
Summary
|
|
|
|
||||||
Increase (decrease) in cash and cash equivalents
|
$
|
(419
|
)
|
$
|
(1,970
|
)
|
$
|
2,923
|
|
Cash and cash equivalents at beginning of year
|
6,607
|
|
8,577
|
|
5,654
|
|
|||
Cash and cash equivalents at end of year
|
$
|
6,188
|
|
$
|
6,607
|
|
$
|
8,577
|
|
Total Debt at Dec 31
|
|
|
||||
In millions
|
2017
|
2016
|
||||
Notes payable
|
$
|
484
|
|
$
|
272
|
|
Long-term debt due within one year
|
752
|
|
635
|
|
||
Long-term debt
|
19,765
|
|
20,456
|
|
||
Gross debt
|
$
|
21,001
|
|
$
|
21,363
|
|
- Cash and cash equivalents
|
$
|
6,188
|
|
$
|
6,607
|
|
- Marketable securities
|
4
|
|
—
|
|
||
Net debt
|
$
|
14,809
|
|
$
|
14,756
|
|
Gross debt as a percent of total capitalization
|
43.7
|
%
|
44.0
|
%
|
||
Net debt as a percent of total capitalization
|
35.4
|
%
|
35.1
|
%
|
Credit Ratings
|
Long-Term Rating
|
Short-Term Rating
|
Outlook
|
Standard & Poor’s
|
BBB
|
A-2
|
Stable
|
Moody’s Investors Service
|
Baa2
|
P-2
|
Stable
|
Fitch Ratings
|
BBB
|
F2
|
Watch Positive
|
Dividends Paid for the years ended Dec 31
|
2017
|
2016
|
2015
|
||||||
In millions, except per share amounts
|
|||||||||
Dividends paid, per common share
|
$
|
1.84
|
|
$
|
1.84
|
|
$
|
1.68
|
|
Dividends paid to common stockholders
|
$
|
2,179
|
|
$
|
2,037
|
|
$
|
1,913
|
|
Dividends paid to preferred shareholders
1
|
$
|
—
|
|
$
|
425
|
|
$
|
340
|
|
1.
|
Dividends paid to preferred shareholders in 2016 includes payment of the fourth quarter 2016 declared dividend.
|
Contractual Obligations at Dec 31, 2017
|
Payments Due In
|
|
|||||||||||||
In millions
|
2018
|
2019-2020
|
2021-2022
|
2023 and beyond
|
Total
|
||||||||||
Long-term debt obligations
1
|
$
|
752
|
|
$
|
8,766
|
|
$
|
3,070
|
|
$
|
8,275
|
|
$
|
20,863
|
|
Expected cash requirements for interest
2
|
1,002
|
|
1,553
|
|
1,129
|
|
6,115
|
|
9,799
|
|
|||||
Pension and other postretirement benefits
3
|
626
|
|
962
|
|
1,804
|
|
7,553
|
|
10,945
|
|
|||||
Operating leases
|
350
|
|
576
|
|
445
|
|
918
|
|
2,289
|
|
|||||
Purchase obligations
4
|
3,031
|
|
4,749
|
|
3,732
|
|
7,088
|
|
18,600
|
|
|||||
Other noncurrent obligations
5
|
—
|
|
1,320
|
|
645
|
|
2,020
|
|
3,985
|
|
|||||
Total
|
$
|
5,761
|
|
$
|
17,926
|
|
$
|
10,825
|
|
$
|
31,969
|
|
$
|
66,481
|
|
1.
|
Excludes unamortized debt discount and issuance costs of
$346 million
. Includes capital lease obligations of
$282 million
. Assumes the option to extend the DCC Term Loan facility will be exercised.
|
2.
|
Cash requirements for interest on long-term debt was calculated using current interest rates at
December 31, 2017
, and includes $5,056 million of various floating rate notes.
|
3.
|
Includes obligations to contribute to overfunded pension plans through 2023.
|
4.
|
Includes outstanding purchase orders and other commitments greater than $1 million obtained through a survey conducted within the Company.
|
5.
|
Includes liabilities related to asbestos litigation, environmental remediation, legal settlements and other noncurrent liabilities. The table excludes uncertain tax positions due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities and deferred tax liabilities as it is impractical to determine whether there will be a cash impact related to these liabilities. The table also excludes deferred revenue as it does not represent future cash requirements arising from contractual payment obligations.
|
Net Increase in Market-Related Asset Value Due to Recognition of Prior Gains (Losses)
|
|||
In millions
|
|||
2018
|
$
|
39
|
|
2019
|
(64
|
)
|
|
2020
|
142
|
|
|
2021
|
176
|
|
|
Total
|
$
|
293
|
|
•
|
Conserve - aggressively pursue energy efficiency and conservation
|
•
|
Optimize - increase and diversify energy resources
|
•
|
Accelerate - develop cost-effective, clean, renewable and alternative energy sources
|
•
|
Transition - to a sustainable energy future
|
Environmental Sites
|
Dow-owned Sites
1
|
Superfund Sites
2
|
||||||
|
2017
|
2016
|
2017
|
2016
|
||||
Number of sites at Jan 1
|
189
|
|
180
|
|
131
|
|
124
|
|
Sites added during year
|
60
|
|
16
|
|
2
|
|
10
|
|
Sites closed during year
|
(5
|
)
|
(7
|
)
|
(2
|
)
|
(3
|
)
|
Number of sites at Dec 31
|
244
|
|
189
|
|
131
|
|
131
|
|
1.
|
Dow-owned sites are sites currently or formerly owned by Dow. In the United States, remediation obligations are imposed by the Resource Conservation and Recovery Act or analogous state law. At December 31, 2017,
35
of these sites (
38
sites at December 31, 2016) were formerly owned by Dowell Schlumberger, Inc., a group of companies in which the Company previously owned a 50 percent interest. Dow sold its interest in Dowell Schlumberger in 1992.
|
2.
|
Superfund sites are sites, including sites not owned by Dow, where remediation obligations are imposed by Superfund Law.
|
Asbestos-Related Claim Activity
|
2017
|
2016
|
2015
|
|||
Claims unresolved at Jan 1
|
16,141
|
|
18,778
|
|
26,116
|
|
Claims filed
|
7,010
|
|
7,813
|
|
7,544
|
|
Claims settled, dismissed or otherwise resolved
|
(7,724
|
)
|
(10,450
|
)
|
(14,882
|
)
|
Claims unresolved at Dec 31
|
15,427
|
|
16,141
|
|
18,778
|
|
Claimants with claims against both Union Carbide and Amchem
|
(5,530
|
)
|
(5,741
|
)
|
(6,804
|
)
|
Individual claimants at Dec 31
|
9,897
|
|
10,400
|
|
11,974
|
|
Total Daily VAR by Exposure Type at Dec 31
|
2017
|
2016
|
||||||||||
In millions
|
Year-end
|
Average
|
Year-end
|
Average
|
||||||||
Commodities
|
$
|
32
|
|
$
|
35
|
|
$
|
24
|
|
$
|
23
|
|
Equity securities
|
4
|
|
9
|
|
17
|
|
16
|
|
||||
Foreign exchange
|
26
|
|
38
|
|
28
|
|
9
|
|
||||
Interest rate
|
70
|
|
76
|
|
82
|
|
90
|
|
||||
Composite
|
$
|
132
|
|
$
|
158
|
|
$
|
151
|
|
$
|
138
|
|
/s/ DELOITTE & TOUCHE
LLP
|
(In millions) For the years ended Dec 31,
|
2017
|
2016
|
2015
|
||||||
Net Sales
|
$
|
55,508
|
|
$
|
48,158
|
|
$
|
48,778
|
|
Cost of sales
|
44,308
|
|
37,640
|
|
37,745
|
|
|||
Research and development expenses
|
1,637
|
|
1,584
|
|
1,598
|
|
|||
Selling, general and administrative expenses
|
2,917
|
|
2,956
|
|
2,948
|
|
|||
Amortization of intangibles
|
624
|
|
544
|
|
419
|
|
|||
Restructuring, goodwill impairment and asset related charges - net
|
3,100
|
|
595
|
|
559
|
|
|||
Integration and separation costs
|
786
|
|
349
|
|
23
|
|
|||
Asbestos-related charge
|
—
|
|
1,113
|
|
—
|
|
|||
Equity in earnings of nonconsolidated affiliates
|
762
|
|
442
|
|
674
|
|
|||
Sundry income (expense) - net
|
877
|
|
1,452
|
|
4,716
|
|
|||
Interest expense and amortization of debt discount
|
976
|
|
858
|
|
946
|
|
|||
Income Before Income Taxes
|
2,799
|
|
4,413
|
|
9,930
|
|
|||
Provision for income taxes
|
2,204
|
|
9
|
|
2,147
|
|
|||
Net Income
|
595
|
|
4,404
|
|
7,783
|
|
|||
Net income attributable to noncontrolling interests
|
129
|
|
86
|
|
98
|
|
|||
Net Income Attributable to The Dow Chemical Company
|
466
|
|
4,318
|
|
7,685
|
|
|||
Preferred stock dividends
|
—
|
|
340
|
|
340
|
|
|||
Net Income Available for The Dow Chemical Company Common Stockholder
|
$
|
466
|
|
$
|
3,978
|
|
$
|
7,345
|
|
(In millions) For the years ended Dec 31,
|
2017
|
2016
|
2015
|
||||||
Net Income
|
$
|
595
|
|
$
|
4,404
|
|
$
|
7,783
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
||||||
Unrealized losses on investments
|
(46
|
)
|
(4
|
)
|
(94
|
)
|
|||
Cumulative translation adjustments
|
900
|
|
(644
|
)
|
(986
|
)
|
|||
Pension and other postretirement benefit plans
|
391
|
|
(620
|
)
|
552
|
|
|||
Derivative instruments
|
(14
|
)
|
113
|
|
(122
|
)
|
|||
Total other comprehensive income (loss)
|
1,231
|
|
(1,155
|
)
|
(650
|
)
|
|||
Comprehensive Income
|
1,826
|
|
3,249
|
|
7,133
|
|
|||
Comprehensive income attributable to noncontrolling interests, net of tax
|
172
|
|
83
|
|
65
|
|
|||
Comprehensive Income Attributable to The Dow Chemical Company
|
$
|
1,654
|
|
$
|
3,166
|
|
$
|
7,068
|
|
(In millions, except share amounts) At Dec 31,
|
2017
|
2016
|
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and cash equivalents (variable interest entities restricted - 2017: $107; 2016: $75)
|
$
|
6,188
|
|
$
|
6,607
|
|
Marketable securities
|
4
|
|
—
|
|
||
Accounts and notes receivable:
|
|
|
||||
Trade (net of allowance for doubtful receivables - 2017: $117; 2016: $110)
|
7,338
|
|
4,666
|
|
||
Other
|
4,711
|
|
4,312
|
|
||
Inventories
|
8,376
|
|
7,363
|
|
||
Other current assets
|
627
|
|
711
|
|
||
Total current assets
|
27,244
|
|
23,659
|
|
||
Investments
|
|
|
||||
Investment in nonconsolidated affiliates
|
3,742
|
|
3,747
|
|
||
Other investments (investments carried at fair value - 2017: $1,512; 2016: $1,959)
|
2,510
|
|
2,969
|
|
||
Noncurrent receivables
|
594
|
|
708
|
|
||
Total investments
|
6,846
|
|
7,424
|
|
||
Property
|
|
|
||||
Property
|
60,426
|
|
57,438
|
|
||
Less accumulated depreciation
|
36,614
|
|
33,952
|
|
||
Net property (variable interest entities restricted - 2017: $907; 2016: $961)
|
23,812
|
|
23,486
|
|
||
Other Assets
|
|
|
||||
Goodwill
|
13,938
|
|
15,272
|
|
||
Other intangible assets (net of accumulated amortization - 2017: $5,161; 2016: $4,295)
|
5,549
|
|
6,026
|
|
||
Deferred income tax assets
|
1,722
|
|
3,079
|
|
||
Deferred charges and other assets
|
829
|
|
565
|
|
||
Total other assets
|
22,038
|
|
24,942
|
|
||
Total Assets
|
$
|
79,940
|
|
$
|
79,511
|
|
Liabilities and Equity
|
|
|
||||
Current Liabilities
|
|
|
||||
Notes payable
|
$
|
484
|
|
$
|
272
|
|
Long-term debt due within one year
|
752
|
|
635
|
|
||
Accounts payable:
|
|
|
||||
Trade
|
5,360
|
|
4,519
|
|
||
Other
|
3,062
|
|
2,097
|
|
||
Income taxes payable
|
694
|
|
600
|
|
||
Accrued and other current liabilities
|
4,025
|
|
4,481
|
|
||
Total current liabilities
|
14,377
|
|
12,604
|
|
||
Long-Term Debt (variable interest entities nonrecourse - 2017: $249; 2016: $330)
|
19,765
|
|
20,456
|
|
||
Other Noncurrent Liabilities
|
|
|
||||
Deferred income tax liabilities
|
764
|
|
923
|
|
||
Pension and other postretirement benefits - noncurrent
|
10,794
|
|
11,375
|
|
||
Asbestos-related liabilities - noncurrent
|
1,237
|
|
1,364
|
|
||
Other noncurrent obligations
|
5,994
|
|
5,560
|
|
||
Total other noncurrent liabilities
|
18,789
|
|
19,222
|
|
||
Stockholders’ Equity
|
|
|
||||
Common stock (2017: authorized and issued 100 shares of $0.01 par value each; 2016: authorized 1,500,000,000 shares of $2.50 par value each; issued: 1,242,794,836 shares)
|
—
|
|
3,107
|
|
||
Additional paid-in capital
|
6,553
|
|
4,262
|
|
||
Retained earnings
|
28,050
|
|
30,338
|
|
||
Accumulated other comprehensive loss
|
(8,591
|
)
|
(9,822
|
)
|
||
Unearned ESOP shares
|
(189
|
)
|
(239
|
)
|
||
Treasury stock at cost (2017: zero shares; 2016: 31,661,501 shares)
|
—
|
|
(1,659
|
)
|
||
The Dow Chemical Company’s stockholders’ equity
|
25,823
|
|
25,987
|
|
||
Noncontrolling interests
|
1,186
|
|
1,242
|
|
||
Total equity
|
27,009
|
|
27,229
|
|
||
Total Liabilities and Equity
|
$
|
79,940
|
|
$
|
79,511
|
|
(In millions) For the years ended Dec 31,
|
2017
|
2016
|
2015
|
||||||
Operating Activities
|
|
|
|
||||||
Net income
|
$
|
595
|
|
$
|
4,404
|
|
$
|
7,783
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
3,155
|
|
2,862
|
|
2,521
|
|
|||
Provision (Credit) for deferred income tax
|
933
|
|
(1,259
|
)
|
305
|
|
|||
Earnings of nonconsolidated affiliates less than dividends received
|
95
|
|
243
|
|
142
|
|
|||
Net periodic pension benefit cost
|
1,137
|
|
389
|
|
755
|
|
|||
Pension contributions
|
(1,676
|
)
|
(629
|
)
|
(844
|
)
|
|||
Net gain on sales of assets, businesses and investments
|
(1,156
|
)
|
(214
|
)
|
(4,655
|
)
|
|||
Net gain on step acquisition of nonconsolidated affiliates
|
—
|
|
(2,445
|
)
|
(361
|
)
|
|||
Restructuring, goodwill impairment and asset related charges - net
|
3,100
|
|
595
|
|
559
|
|
|||
Asbestos-related charge
|
—
|
|
1,113
|
|
—
|
|
|||
Other net loss
|
378
|
|
361
|
|
437
|
|
|||
Changes in assets and liabilities, net of effects of acquired and divested companies:
|
|
|
|
||||||
Accounts and notes receivable
|
(4,734
|
)
|
(1,539
|
)
|
(84
|
)
|
|||
Proceeds from interests in trade accounts receivable conduits
|
2,269
|
|
1,257
|
|
1,034
|
|
|||
Inventories
|
(1,225
|
)
|
610
|
|
780
|
|
|||
Accounts payable
|
1,735
|
|
569
|
|
(717
|
)
|
|||
Other assets and liabilities, net
|
(104
|
)
|
(717
|
)
|
(48
|
)
|
|||
Cash provided by operating activities
|
4,502
|
|
5,600
|
|
7,607
|
|
|||
Investing Activities
|
|
|
|
||||||
Capital expenditures
|
(3,144
|
)
|
(3,804
|
)
|
(3,703
|
)
|
|||
Investment in gas field developments
|
(121
|
)
|
(113
|
)
|
—
|
|
|||
Construction of assets pending sale / leaseback
|
—
|
|
(63
|
)
|
—
|
|
|||
Proceeds from sale / leaseback of assets
|
—
|
|
87
|
|
3
|
|
|||
Purchases of previously leased assets
|
(187
|
)
|
—
|
|
(46
|
)
|
|||
Payment into escrow account
|
(130
|
)
|
(835
|
)
|
—
|
|
|||
Distribution from escrow account
|
130
|
|
835
|
|
—
|
|
|||
Proceeds from sales of property and businesses, net of cash divested
|
1,691
|
|
284
|
|
2,383
|
|
|||
Acquisitions of property and businesses, net of cash acquired
|
16
|
|
(187
|
)
|
(123
|
)
|
|||
Cash acquired in step acquisition of nonconsolidated affiliate
|
—
|
|
1,050
|
|
—
|
|
|||
Investments in and loans to nonconsolidated affiliates
|
(749
|
)
|
(1,020
|
)
|
(803
|
)
|
|||
Distributions and loan repayments from nonconsolidated affiliates
|
69
|
|
109
|
|
17
|
|
|||
Proceeds from sales of ownership interests in nonconsolidated affiliates
|
64
|
|
22
|
|
1,528
|
|
|||
Purchases of investments
|
(643
|
)
|
(577
|
)
|
(1,246
|
)
|
|||
Proceeds from sales and maturities of investments
|
1,163
|
|
733
|
|
640
|
|
|||
Other investing activities, net
|
(100
|
)
|
—
|
|
—
|
|
|||
Cash used for investing activities
|
(1,941
|
)
|
(3,479
|
)
|
(1,350
|
)
|
|||
Financing Activities
|
|
|
|
||||||
Changes in short-term notes payable
|
293
|
|
(33
|
)
|
(82
|
)
|
|||
Proceeds from issuance of long-term debt
|
—
|
|
32
|
|
1,383
|
|
|||
Payments on long-term debt
|
(621
|
)
|
(588
|
)
|
(1,114
|
)
|
|||
Purchases of treasury stock
|
—
|
|
(916
|
)
|
(1,166
|
)
|
|||
Proceeds from issuance of parent company stock
|
66
|
|
—
|
|
—
|
|
|||
Proceeds from sales of common stock
|
423
|
|
398
|
|
508
|
|
|||
Employee taxes paid for share-based payment arrangements
|
(93
|
)
|
(65
|
)
|
(50
|
)
|
|||
Distributions to noncontrolling interests
|
(129
|
)
|
(176
|
)
|
(112
|
)
|
|||
Purchases of noncontrolling interests
|
—
|
|
(202
|
)
|
(175
|
)
|
|||
Contributions from noncontrolling interests
|
—
|
|
—
|
|
17
|
|
|||
Dividends paid to stockholders
|
(2,179
|
)
|
(2,462
|
)
|
(2,253
|
)
|
|||
Dividends paid to parent
|
(1,056
|
)
|
—
|
|
—
|
|
|||
Other financing activities, net
|
(4
|
)
|
(2
|
)
|
(88
|
)
|
|||
Cash used for financing activities
|
(3,300
|
)
|
(4,014
|
)
|
(3,132
|
)
|
|||
Effect of exchange rate changes on cash
|
320
|
|
(77
|
)
|
(202
|
)
|
|||
Summary
|
|
|
|
||||||
Increase (decrease) in cash and cash equivalents
|
(419
|
)
|
(1,970
|
)
|
2,923
|
|
|||
Cash and cash equivalents at beginning of year
|
6,607
|
|
8,577
|
|
5,654
|
|
|||
Cash and cash equivalents at end of year
|
$
|
6,188
|
|
$
|
6,607
|
|
$
|
8,577
|
|
|
|
|
|
||||||
Supplemental cash flow information
|
|
|
|
||||||
Cash paid during year for:
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
1,178
|
|
$
|
1,192
|
|
$
|
1,137
|
|
Income taxes
|
$
|
1,805
|
|
$
|
1,592
|
|
$
|
1,405
|
|
(In millions)
|
Preferred Stock
|
Common Stock
|
Add'l Paid in Capital
|
Retained Earnings
|
Accum Other Comp Loss
|
Unearned ESOP
|
Treasury Stock
|
Non-controlling Interests
|
Total Equity
|
||||||||||||||||||
2015
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Balance at Jan 1, 2015
|
$
|
4,000
|
|
$
|
3,107
|
|
$
|
4,846
|
|
$
|
23,045
|
|
$
|
(8,017
|
)
|
$
|
(325
|
)
|
$
|
(4,233
|
)
|
$
|
931
|
|
$
|
23,354
|
|
Net income available for The Dow Chemical Company common stockholders
|
—
|
|
—
|
|
—
|
|
7,345
|
|
—
|
|
—
|
|
—
|
|
—
|
|
7,345
|
|
|||||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(650
|
)
|
—
|
|
—
|
|
—
|
|
(650
|
)
|
|||||||||
Dividends to stockholders
|
—
|
|
—
|
|
—
|
|
(1,942
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,942
|
)
|
|||||||||
Common stock issued/sold
|
—
|
|
—
|
|
508
|
|
—
|
|
—
|
|
—
|
|
766
|
|
—
|
|
1,274
|
|
|||||||||
Stock-based compensation and allocation of ESOP shares
|
—
|
|
—
|
|
(429
|
)
|
—
|
|
—
|
|
53
|
|
—
|
|
—
|
|
(376
|
)
|
|||||||||
Impact of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(122
|
)
|
(122
|
)
|
|||||||||
Treasury stock purchases
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,688
|
)
|
—
|
|
(2,688
|
)
|
|||||||||
Other
|
—
|
|
—
|
|
11
|
|
(23
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(12
|
)
|
|||||||||
Balance at Dec 31, 2015
|
$
|
4,000
|
|
$
|
3,107
|
|
$
|
4,936
|
|
$
|
28,425
|
|
$
|
(8,667
|
)
|
$
|
(272
|
)
|
$
|
(6,155
|
)
|
$
|
809
|
|
$
|
26,183
|
|
2016
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net income available for The Dow Chemical Company common stockholders
|
—
|
|
—
|
|
—
|
|
3,978
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,978
|
|
|||||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,155
|
)
|
—
|
|
—
|
|
—
|
|
(1,155
|
)
|
|||||||||
Dividends to stockholders
|
—
|
|
—
|
|
—
|
|
(2,037
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(2,037
|
)
|
|||||||||
Common stock issued/sold
|
—
|
|
—
|
|
398
|
|
—
|
|
—
|
|
—
|
|
717
|
|
—
|
|
1,115
|
|
|||||||||
Stock-based compensation and allocation of ESOP shares
|
—
|
|
—
|
|
(376
|
)
|
—
|
|
—
|
|
51
|
|
—
|
|
—
|
|
(325
|
)
|
|||||||||
ESOP shares acquired
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(18
|
)
|
—
|
|
—
|
|
(18
|
)
|
|||||||||
Impact of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
433
|
|
433
|
|
|||||||||
Treasury stock purchases
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(916
|
)
|
—
|
|
(916
|
)
|
|||||||||
Preferred stock converted to common stock
|
(4,000
|
)
|
—
|
|
(695
|
)
|
—
|
|
—
|
|
—
|
|
4,695
|
|
—
|
|
—
|
|
|||||||||
Other
|
—
|
|
—
|
|
(1
|
)
|
(28
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(29
|
)
|
|||||||||
Balance at Dec 31, 2016
|
$
|
—
|
|
$
|
3,107
|
|
$
|
4,262
|
|
$
|
30,338
|
|
$
|
(9,822
|
)
|
$
|
(239
|
)
|
$
|
(1,659
|
)
|
$
|
1,242
|
|
$
|
27,229
|
|
2017
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Net income available for The Dow Chemical Company common stockholder
|
—
|
|
—
|
|
—
|
|
466
|
|
—
|
|
—
|
|
—
|
|
—
|
|
466
|
|
|||||||||
Other comprehensive income
|
—
|
|
—
|
|
—
|
|
—
|
|
1,231
|
|
—
|
|
—
|
|
—
|
|
1,231
|
|
|||||||||
Dividends to stockholders
|
—
|
|
—
|
|
—
|
|
(1,673
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,673
|
)
|
|||||||||
Dividends to parent
|
—
|
|
—
|
|
—
|
|
(1,056
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,056
|
)
|
|||||||||
Common stock issued/sold
|
—
|
|
—
|
|
423
|
|
—
|
|
—
|
|
—
|
|
724
|
|
—
|
|
1,147
|
|
|||||||||
Issuance of parent company stock
|
—
|
|
—
|
|
66
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
66
|
|
|||||||||
Stock-based compensation and allocation of ESOP shares
|
—
|
|
—
|
|
(368
|
)
|
—
|
|
—
|
|
50
|
|
—
|
|
—
|
|
(318
|
)
|
|||||||||
Impact of noncontrolling interests
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(56
|
)
|
(56
|
)
|
|||||||||
Merger impact
|
—
|
|
(3,107
|
)
|
2,172
|
|
—
|
|
—
|
|
—
|
|
935
|
|
—
|
|
—
|
|
|||||||||
Other
|
—
|
|
—
|
|
(2
|
)
|
(25
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(27
|
)
|
|||||||||
Balance at Dec 31, 2017
|
$
|
—
|
|
$
|
—
|
|
$
|
6,553
|
|
$
|
28,050
|
|
$
|
(8,591
|
)
|
$
|
(189
|
)
|
$
|
—
|
|
$
|
1,186
|
|
$
|
27,009
|
|
Note
|
|
Page
|
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
10
|
||
11
|
||
12
|
||
13
|
||
14
|
||
15
|
||
16
|
||
17
|
||
18
|
||
19
|
||
20
|
||
21
|
||
22
|
||
23
|
||
24
|
||
25
|
||
26
|
Summary of Changes to the Consolidated Statements of Cash Flows
|
2016
|
2015
|
||||||||||
In millions
|
As Filed
|
Updated
|
As Filed
|
Updated
|
||||||||
Operating Activities
|
|
|
|
|
||||||||
Excess tax benefits from share-based payment arrangements
|
$
|
(57
|
)
|
$
|
—
|
|
$
|
(41
|
)
|
$
|
—
|
|
Other assets and liabilities, net
|
$
|
(34
|
)
|
$
|
31
|
|
$
|
878
|
|
$
|
928
|
|
Cash provided by operating activities
|
$
|
5,478
|
|
$
|
5,600
|
|
$
|
7,516
|
|
$
|
7,607
|
|
Financing Activities
|
|
|
|
|
||||||||
Excess tax benefits from share-based payment arrangements
|
$
|
57
|
|
$
|
—
|
|
$
|
41
|
|
$
|
—
|
|
Employee taxes paid for share-based payment arrangements
|
$
|
—
|
|
$
|
(65
|
)
|
$
|
—
|
|
$
|
(50
|
)
|
Cash used for financing activities
|
$
|
(3,892
|
)
|
$
|
(4,014
|
)
|
$
|
(3,041
|
)
|
$
|
(3,132
|
)
|
Summary of Changes to the Consolidated Statements of Income
|
2016
|
2015
|
||||||||||
In millions
|
As Filed
|
Updated
|
As Filed
|
Updated
|
||||||||
Cost of sales
|
$
|
37,641
|
|
$
|
37,640
|
|
$
|
37,836
|
|
$
|
37,745
|
|
Selling, general and administrative expenses
|
$
|
3,304
|
|
$
|
2,956
|
|
$
|
2,971
|
|
$
|
2,948
|
|
Restructuring, goodwill impairment and asset related charges - net
|
$
|
452
|
|
$
|
595
|
|
$
|
415
|
|
$
|
559
|
|
Integration and separation costs
|
$
|
—
|
|
$
|
349
|
|
$
|
—
|
|
$
|
23
|
|
Sundry income (expense) - net
|
$
|
1,202
|
|
$
|
1,452
|
|
$
|
4,592
|
|
$
|
4,716
|
|
Interest income
|
$
|
107
|
|
$
|
—
|
|
$
|
71
|
|
$
|
—
|
|
Summary of Changes to the Consolidated Balance Sheets
|
Dec 31, 2016
|
|||||
In millions
|
As Filed
|
Updated
|
||||
Accounts and notes receivable - Other
|
$
|
4,358
|
|
$
|
4,312
|
|
Other current assets
|
$
|
665
|
|
$
|
711
|
|
Accounts payable - Other
|
$
|
2,401
|
|
$
|
2,097
|
|
Dividends payable
|
$
|
508
|
|
$
|
—
|
|
Accrued and other current liabilities
|
$
|
3,669
|
|
$
|
4,481
|
|
Summary of Changes to the Consolidated Statements of Cash Flows
|
2016
|
2015
|
||||||||||
In millions
|
As Filed
|
Updated
|
As Filed
|
Updated
|
||||||||
Operating Activities
|
|
|
|
|
||||||||
Net periodic pension benefit cost
|
$
|
—
|
|
$
|
389
|
|
$
|
—
|
|
$
|
755
|
|
Net gain on sales of assets, businesses and investments
|
$
|
—
|
|
$
|
(214
|
)
|
$
|
—
|
|
$
|
(4,655
|
)
|
Net gain on sales of investments
|
$
|
(116
|
)
|
$
|
—
|
|
$
|
(95
|
)
|
$
|
—
|
|
Net gain on sales of property, businesses and consolidated companies
|
$
|
(88
|
)
|
$
|
—
|
|
$
|
(3,811
|
)
|
$
|
—
|
|
Net gain on sales of ownership interests in nonconsolidated affiliates
|
$
|
(10
|
)
|
$
|
—
|
|
$
|
(749
|
)
|
$
|
—
|
|
Asset impairments and related costs
|
$
|
143
|
|
$
|
—
|
|
$
|
144
|
|
$
|
—
|
|
Restructuring, goodwill impairment and asset related charges - net
|
$
|
452
|
|
$
|
595
|
|
$
|
415
|
|
$
|
559
|
|
Loss on early extinguishment of debt
|
$
|
—
|
|
$
|
—
|
|
$
|
8
|
|
$
|
—
|
|
Other net loss
|
$
|
113
|
|
$
|
361
|
|
$
|
172
|
|
$
|
437
|
|
Accounts payable
|
$
|
458
|
|
$
|
569
|
|
$
|
(681
|
)
|
$
|
(717
|
)
|
Other assets and liabilities, net
1
|
$
|
31
|
|
$
|
(717
|
)
|
$
|
928
|
|
$
|
(48
|
)
|
Financing Activities
|
|
|
|
|
||||||||
Transaction financing, debt issuance and other costs
|
$
|
(2
|
)
|
$
|
—
|
|
$
|
(88
|
)
|
$
|
—
|
|
Other financing activities, net
|
$
|
—
|
|
$
|
(2
|
)
|
$
|
—
|
|
$
|
(88
|
)
|
1.
|
As updated for ASU 2016-09.
|
Summary of Changes to the Consolidated Statements of Equity
|
2016
|
2015
|
||||||||||
In millions
|
As Filed
|
Updated
|
As Filed
|
Updated
|
||||||||
Dividend equivalents on participating securities
|
$
|
(28
|
)
|
$
|
—
|
|
$
|
(23
|
)
|
$
|
—
|
|
Other
|
$
|
—
|
|
$
|
(28
|
)
|
$
|
—
|
|
$
|
(23
|
)
|
•
|
Dow divested its global Ethylene Acrylic Acid copolymers and ionomers business ("EAA Business") to SK Global Chemical Co., Ltd., on September 1, 2017, as part of a divestiture commitment given to the European Commission ("EC") in connection with the EC's conditional approval of the Merger granted on March 27, 2017. See Note
5
for additional information on this transaction.
|
•
|
DuPont divested its Cereal Broadleaf Herbicides and Chewing Insecticides portfolios as well as its Crop Protection research and development ("R&D") pipeline and organization (excluding seed treatment, nematicides, late-stage R&D programs and certain personnel needed to support marketed products and R&D programs that will remain with DuPont) (collectively, the "DuPont Divested Assets") to FMC Corporation ("FMC") on November 1, 2017, as part of the EC's conditional approval granted on March 27, 2017. Also on November 1, 2017, DuPont completed its acquisition of FMC's Health and Nutrition business, excluding its Omega-3 products.
|
•
|
On May 2, 2017, Dow and DuPont announced that China's Ministry of Commerce ("MOFCOM") granted conditional regulatory approval for the companies' proposed merger of equals which included commitments already made to the EC including DuPont's divestiture of the DuPont Divested Assets and Dow's divestiture of the EAA Business. In addition, Dow and DuPont have made commitments related to the supply and distribution in China of certain herbicide and insecticide ingredients and formulations for rice crops for five years after the closing of the Merger.
|
•
|
Dow divested a select portion of Dow AgroSciences' corn seed business in Brazil ("DAS Divested Ag Business") to CITIC Agri Fund on November 30, 2017. The divestiture was part of the commitment given to Brazil's Administrative Council for Economic Defense ("CADE") in connection with the CADE's conditional approval of the Merger granted on May 17, 2017, which was incremental to commitments already made to the EC, China and regulatory agencies in other jurisdictions. See Note
5
for additional information on this transaction.
|
•
|
On June 15, 2017, Dow and DuPont announced that a proposed agreement had been reached with the Antitrust Division of the United States Department of Justice that permitted the companies to proceed with the proposed merger of equals transaction. The proposed agreement was consistent with commitments already made to the EC.
|
Assets Acquired and Liabilities Assumed on Jun 1, 2016
|
|||
In millions
|
|||
Fair Value of Previously Held Equity Investment, excluding the HSC Group
|
$
|
4,818
|
|
Fair Value of Assets Acquired
|
|
||
Cash and cash equivalents
|
$
|
1,050
|
|
Accounts and notes receivable - Trade
|
647
|
|
|
Accounts and notes receivable - Other
|
223
|
|
|
Inventories
|
1,147
|
|
|
Other current assets
|
51
|
|
|
Investment in nonconsolidated affiliates
|
110
|
|
|
Noncurrent receivables
|
112
|
|
|
Net property
|
3,996
|
|
|
Other intangible assets
1
|
2,987
|
|
|
Deferred income tax assets
|
999
|
|
|
Other assets
|
98
|
|
|
Total Assets Acquired
|
$
|
11,420
|
|
Fair Value of Liabilities Assumed
|
|
||
Accounts payable - Trade
|
$
|
374
|
|
Income taxes payable
|
260
|
|
|
Accrued and other current liabilities
|
404
|
|
|
Other current liabilities
|
112
|
|
|
Long-Term Debt
|
4,672
|
|
|
Deferred income tax liabilities
|
1,858
|
|
|
Pension and other postretirement benefits - noncurrent
2
|
1,241
|
|
|
Other noncurrent obligations
|
437
|
|
|
Total Liabilities Assumed
|
$
|
9,358
|
|
Noncontrolling interests
|
$
|
473
|
|
Goodwill
|
$
|
3,229
|
|
1.
|
Includes
$30 million
of trademarks/tradenames,
$1,200 million
of developed technology,
$2 million
of software and
$1,755 million
of customer-related intangibles. See Note
13
for additional information.
|
2.
|
Includes pension and other postretirement benefits as well as long-term disability obligations.
|
DowDuPont Synergy Program
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Costs Associated with Exit and Disposal Activities
|
Total
|
||||||||
In millions
|
||||||||||||
2017 restructuring charges
|
$
|
357
|
|
$
|
287
|
|
$
|
43
|
|
$
|
687
|
|
Charges against the reserve
|
—
|
|
(287
|
)
|
—
|
|
(287
|
)
|
||||
Cash payments
|
(51
|
)
|
—
|
|
—
|
|
(51
|
)
|
||||
Reserve balance at Dec 31, 2017
|
$
|
306
|
|
$
|
—
|
|
$
|
43
|
|
$
|
349
|
|
•
|
The Company will close or consolidate several manufacturing, R&D and administrative facilities around the world aligned with seed and crop protection activities, including the write-down of other non-manufacturing assets. As a result, the Company recorded a charge of
$94 million
. These facilities will be shut down or consolidated by the end of the fourth quarter of 2019.
|
•
|
The Company recorded a charge of
$83 million
for asset write-downs and write-offs aligned with electronics and imaging product lines, including the shutdown of a metalorganic manufacturing facility in Cheonan, South Korea, the write-off of in-process research and development and other intangible assets, and the consolidation of certain R&D facilities. The Korean facility will be shut down by the second quarter of 2018.
|
•
|
The Company recorded a charge of
$22 million
for asset write-downs and write-offs aligned with an energy project, including the write-off of capital projects and other non-manufacturing assets.
|
•
|
The Company wrote-off
$21 million
of assets aligned with safety and construction products, including intangible assets as a result of the Clean Filtration Technologies plant shutdown in the fourth quarter of 2017.
|
•
|
The Company recorded a charge of
$67 million
for other miscellaneous asset write-downs and write-offs, including the shutdown of several small manufacturing facilities and the write-off of non-manufacturing assets, certain corporate facilities and data centers. These manufacturing facilities will be shut down over the next two years.
|
2016 Restructuring Charges
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Costs Associated with Exit and Disposal Activities
|
Total
|
||||||||
In millions
|
||||||||||||
2016 restructuring charges
|
$
|
268
|
|
$
|
153
|
|
$
|
28
|
|
$
|
449
|
|
Charges against the reserve
|
—
|
|
(153
|
)
|
—
|
|
(153
|
)
|
||||
Cash payments
|
(67
|
)
|
—
|
|
(1
|
)
|
(68
|
)
|
||||
Reserve balance at Dec 31, 2016
|
$
|
201
|
|
$
|
—
|
|
$
|
27
|
|
$
|
228
|
|
Adjustments to the reserve
1
|
—
|
|
—
|
|
(7
|
)
|
(7
|
)
|
||||
Cash payments
|
(150
|
)
|
—
|
|
(3
|
)
|
(153
|
)
|
||||
Reserve balance at Dec 31, 2017
|
$
|
51
|
|
$
|
—
|
|
$
|
17
|
|
$
|
68
|
|
1.
|
Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.
|
•
|
The Company recorded a charge of
$70 million
for asset write-downs and write-offs including the shutdown of a solar manufacturing facility in Midland, Michigan; the write-down of a solar facility in Milpitas, California; and, the write-off of capital projects and in-process research and development. The Midland facility was shut down in the third quarter of 2016.
|
•
|
To enhance competitiveness and streamline costs associated with the ownership restructure of Dow Corning, a silicones manufacturing facility in Yamakita, Japan, will be shut down by the end of 2018. In addition, an idled facility was shut down in the second quarter of 2016. As a result, the Company recorded a charge of
$25 million
.
|
•
|
The Company recorded a charge of
$25 million
to close and/or consolidate certain corporate facilities and data centers. These facilities will be shut down no later than the end of the second quarter of 2018.
|
•
|
A decision was made to shut down a small manufacturing facility and to write-down other non-manufacturing assets, including a cost method investment and certain aircraft. As a result, the Company recorded a charge of
$33 million
. The manufacturing facility was shut down in the second quarter of 2016.
|
2015 Restructuring Charges
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Costs Associated with Exit and Disposal Activities
|
Total
|
||||||||
In millions
|
||||||||||||
2015 restructuring charges
|
$
|
196
|
|
$
|
169
|
|
$
|
10
|
|
$
|
375
|
|
Charges against the reserve
|
—
|
|
(169
|
)
|
—
|
|
(169
|
)
|
||||
Adjustments to the reserve
1
|
39
|
|
—
|
|
1
|
|
40
|
|
||||
Impact of currency
|
—
|
|
—
|
|
(1
|
)
|
(1
|
)
|
||||
Cash payments
|
(92
|
)
|
—
|
|
—
|
|
(92
|
)
|
||||
Reserve balance at Dec 31, 2015
|
$
|
143
|
|
$
|
—
|
|
$
|
10
|
|
$
|
153
|
|
Charges against the reserve
|
—
|
|
3
|
|
—
|
|
3
|
|
||||
Adjustments to the reserve
1
|
—
|
|
(3
|
)
|
6
|
|
3
|
|
||||
Cash payments
|
(98
|
)
|
—
|
|
(8
|
)
|
(106
|
)
|
||||
Reserve balance at Dec 31, 2016
|
$
|
45
|
|
$
|
—
|
|
$
|
8
|
|
$
|
53
|
|
Adjustments to the reserve
1
|
(9
|
)
|
—
|
|
(1
|
)
|
(10
|
)
|
||||
Cash payments
|
(33
|
)
|
—
|
|
—
|
|
(33
|
)
|
||||
Reserve balance at Jun 30, 2017
|
$
|
3
|
|
$
|
—
|
|
$
|
7
|
|
$
|
10
|
|
1.
|
Included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.
|
•
|
As a result of changing market dynamics in certain end-use markets, select manufacturing facilities and non-core assets aligned with electronics and imaging products were shut down in 2016. The assets impacted included certain display films and metalorganic precursors, including a metalorganic materials manufacturing site in North Andover, Massachusetts, and related operations in Taoyuan, Taiwan, as well as certain display films’ manufacturing assets aligned with SKC Haas Display Films Co., Ltd., a former majority-owned joint venture located in Cheonan, South Korea. The Company recorded a
$51 million
charge for asset write-downs and write-offs.
|
•
|
The Company shut down and/or consolidated manufacturing capacity aligned with safety and construction products during 2016. As a result, the Company recorded a charge of
$15 million
.
|
•
|
A manufacturing facility that produces water soluble polymers in Institute, West Virginia, was shut down in the fourth quarter of 2015. As a result, an asset write-down of
$14 million
was recorded.
|
•
|
A photovoltaic plant in Schkopau, Germany, was permanently shut down in the second quarter of 2015, resulting in an asset write-off of
$12 million
.
|
•
|
Select operations for seed and crop protection products were shut down, closed or idled in the second half of 2015, resulting in a pretax charge of
$8 million
for the write-down of assets.
|
•
|
A decision was made to shut down two small manufacturing facilities and an administrative facility to optimize the Company's asset footprint, resulting in a charge of
$14 million
. The manufacturing facilities were shut down in 2015 and the administrative facility was shut down in 2017.
|
•
|
Due to a change in the Company's strategy to monetize and exit certain Venture Capital portfolio investments, a write-down of
$55 million
was recorded.
|
Dow Chlorine Value Chain Income Statement Information
|
2015
1
|
||
In millions
|
|||
Income Before Income Taxes
2
|
$
|
139
|
|
Loss before income taxes attributable to noncontrolling interests
|
11
|
|
|
Income Before Income Taxes attributable to The Dow Chemical Company
2
|
$
|
150
|
|
1.
|
Income statement information for 2015 includes results through September 30, 2015.
|
2.
|
Excludes transaction costs associated with the separation of the chlorine value chain, which are reported below.
|
Sundry Income (Expense) – Net
|
|
|
|
||||||
In millions
|
2017
|
2016
|
2015
|
||||||
Gain on sales of other assets and investments
|
$
|
182
|
|
$
|
170
|
|
$
|
237
|
|
Interest income
|
106
|
|
107
|
|
71
|
|
|||
Foreign exchange losses
|
(72
|
)
|
(126
|
)
|
(191
|
)
|
|||
Gain on divestiture of DAS Divested Ag Business
1
|
635
|
|
—
|
|
—
|
|
|||
Gain on divestiture of the EAA Business
1
|
227
|
|
—
|
|
—
|
|
|||
Gain related to Nova patent infringement award
2
|
137
|
|
—
|
|
—
|
|
|||
Impact of split-off of chlorine value chain
3
|
7
|
|
6
|
|
2,233
|
|
|||
Loss related to Bayer CropScience arbitration matter
2
|
(469
|
)
|
—
|
|
—
|
|
|||
Gain on ownership restructure of Dow Corning
4
|
—
|
|
2,445
|
|
—
|
|
|||
Settlement of the urethane matters class action lawsuit and opt-out cases
2
|
—
|
|
(1,235
|
)
|
—
|
|
|||
Costs associated with transactions and productivity actions
5
|
—
|
|
(41
|
)
|
(119
|
)
|
|||
Implant liability adjustment
2
|
—
|
|
27
|
|
—
|
|
|||
Gain (loss) on divestiture of AgroFresh business
1, 6
|
—
|
|
(25
|
)
|
618
|
|
|||
Gain (loss) on sale of MEGlobal
1
|
—
|
|
(1
|
)
|
723
|
|
|||
Gain on sale of a Dow AgroSciences subsidiary
7
|
—
|
|
—
|
|
44
|
|
|||
Gain on divestiture of ANGUS Chemical Company
1
|
—
|
|
—
|
|
682
|
|
|||
Gain on Univation step acquisition
4
|
—
|
|
—
|
|
361
|
|
|||
Gain on divestiture of Sodium Borohydride business
1
|
—
|
|
—
|
|
20
|
|
|||
Loss on early extinguishment of debt
8
|
—
|
|
—
|
|
(8
|
)
|
|||
Reclassification of cumulative translation adjustments
|
8
|
|
—
|
|
(4
|
)
|
|||
Other - net
|
116
|
|
125
|
|
49
|
|
|||
Total sundry income (expense) – net
|
$
|
877
|
|
$
|
1,452
|
|
$
|
4,716
|
|
1.
|
See Note
5
for additional information.
|
2.
|
See Note
16
for additional information.
|
3.
|
See Note
7
for additional information.
|
4.
|
See Note
4
for additional information.
|
5.
|
Transaction costs primarily associated with the separation of the chlorine value chain.
|
6.
|
Includes a
$5 million
loss in 2016 (
$8 million
loss in 2015) on mark-to-market adjustments related to warrants.
|
7.
|
See Note
23
for additional information.
|
8.
|
Excludes
$68 million
related to the split-off of the chlorine value chain. See Notes
7
and
15
for additional information.
|
•
|
As a result of The Act, the Company remeasured its U.S. federal deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21 percent. However, the Company is still analyzing certain aspects of The Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of the Company’s deferred tax balance was
$50 million
, recorded as a charge to “Provision for income taxes.”
|
•
|
The Act requires a mandatory deemed repatriation of post-1986 undistributed foreign earnings and profits (“E&P”), which results in a one-time transition tax. As a result, the Company recorded a provisional amount for the transition tax liability for its foreign subsidiaries of
$865 million
, recorded as a charge to “Provision for income taxes.” The Company has not yet completed its calculation of the total post-1986 foreign E&P for its foreign subsidiaries as E&P will not be finalized until the DowDuPont federal income tax return is filed. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets, which is a defined term under The Act.
|
•
|
For tax years beginning after December 31, 2017, The Act introduces new provisions for U.S. taxation of certain global intangible low-taxed income (“GILTI”). Due to its complexity and a current lack of guidance as to how to calculate the tax, the Company is not yet able to determine a reasonable estimate for the impact of the incremental tax liability. When additional guidance is available, the Company will make a policy election for how the additional liability will be recorded in the period in which it is incurred or recognized for the basis differences that would be expected to reverse in future years.
|
Geographic Allocation of Income and Provision for Income Taxes
|
|
|
|
||||||
In millions
|
2017
|
2016
|
2015
|
||||||
Income (Loss) Before Income Taxes
|
|
|
|
||||||
Domestic
1, 2
|
$
|
(1,973
|
)
|
$
|
485
|
|
$
|
5,313
|
|
Foreign
1
|
4,772
|
|
3,928
|
|
4,617
|
|
|||
Income Before Income Taxes
|
$
|
2,799
|
|
$
|
4,413
|
|
$
|
9,930
|
|
Current tax expense (benefit)
|
|
|
|
||||||
Federal
|
$
|
(308
|
)
|
$
|
91
|
|
$
|
583
|
|
State and local
|
—
|
|
21
|
|
38
|
|
|||
Foreign
|
1,579
|
|
1,156
|
|
1,221
|
|
|||
Total current tax expense
|
$
|
1,271
|
|
$
|
1,268
|
|
$
|
1,842
|
|
Deferred tax expense (benefit)
|
|
|
|
||||||
Federal
3
|
$
|
1,027
|
|
$
|
(1,255
|
)
|
$
|
358
|
|
State and local
|
56
|
|
(10
|
)
|
(8
|
)
|
|||
Foreign
|
(150
|
)
|
6
|
|
(45
|
)
|
|||
Total deferred tax expense (benefit)
|
$
|
933
|
|
$
|
(1,259
|
)
|
$
|
305
|
|
Provision for income taxes
|
$
|
2,204
|
|
$
|
9
|
|
$
|
2,147
|
|
Net Income
|
$
|
595
|
|
$
|
4,404
|
|
$
|
7,783
|
|
1.
|
In 2017, the domestic component of "Income Before Income Taxes" included approximately
$308 million
(
$2.1 billion
and
$3.5 billion
in 2016 and 2015, respectively) and the foreign component contained
$562 million
(
zero
and
$1.1 billion
in 2016 and 2015, respectively) of income from portfolio actions. See Notes
4
,
5
and
7
for additional information.
|
2.
|
In 2017, the domestic component of "Income Before Income Taxes" included approximately
$2.7 billion
of expense related to a goodwill impairment, non-qualified pension plan change in control charges and litigation settlements. In 2016, the domestic component of "Income Before Income Taxes" included approximately
$2.6 billion
of expenses related to the urethane matters class action lawsuit and opt-out cases settlements, asbestos-related charge and charges for environmental matters. See Notes
13
,
16
and
19
for additional information.
|
3.
|
The 2017 amount reflects the tax impact of The Act which accelerated the utilization of tax credits and required remeasurement of all U.S. deferred tax assets and liabilities. The 2016 amount reflects the tax impact of accrued one-time items and reduced domestic income which limited the utilization of tax credits.
|
Reconciliation to U.S. Statutory Rate
|
2017
|
2016
|
2015
|
|||
Statutory U.S. federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
Equity earnings effect
|
(4.2
|
)
|
(1.2
|
)
|
(1.8
|
)
|
Foreign income taxed at rates other than 35%
1
|
(15.9
|
)
|
(7.0
|
)
|
(4.0
|
)
|
U.S. tax effect of foreign earnings and dividends
|
(1.6
|
)
|
(4.6
|
)
|
1.3
|
|
Unrecognized tax benefits
|
1.1
|
|
(0.8
|
)
|
0.8
|
|
Acquisitions, divestitures and ownership restructuring activities
2
|
11.7
|
|
(21.2
|
)
|
(9.5
|
)
|
Impact of U.S. tax reform
|
32.7
|
|
—
|
|
—
|
|
State and local income taxes
3
|
3.2
|
|
0.2
|
|
0.6
|
|
Goodwill impairment
|
19.2
|
|
—
|
|
—
|
|
Excess tax benefits from stock compensation
|
(3.5
|
)
|
—
|
|
—
|
|
Other - net
3
|
1.0
|
|
(0.2
|
)
|
(0.8
|
)
|
Effective Tax Rate
|
78.7
|
%
|
0.2
|
%
|
21.6
|
%
|
1.
|
Includes the impact of valuation allowances in foreign jurisdictions.
|
2.
|
See Notes
4
,
5
and
7
for additional information.
|
3.
|
Prior year was adjusted to conform with the current year presentation.
|
Deferred Tax Balances at Dec 31
|
2017
|
2016
|
||||||||||
In millions
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
||||||||
Property
|
$
|
508
|
|
$
|
2,474
|
|
$
|
307
|
|
$
|
2,860
|
|
Tax loss and credit carryforwards
|
1,734
|
|
—
|
|
2,450
|
|
—
|
|
||||
Postretirement benefit obligations
|
2,442
|
|
136
|
|
3,715
|
|
75
|
|
||||
Other accruals and reserves
|
1,251
|
|
146
|
|
1,964
|
|
883
|
|
||||
Intangibles
|
176
|
|
1,010
|
|
128
|
|
1,536
|
|
||||
Inventory
|
35
|
|
171
|
|
50
|
|
197
|
|
||||
Investments
|
272
|
|
158
|
|
179
|
|
119
|
|
||||
Other – net
|
420
|
|
414
|
|
737
|
|
643
|
|
||||
Subtotal
|
$
|
6,838
|
|
$
|
4,509
|
|
$
|
9,530
|
|
$
|
6,313
|
|
Valuation allowances
|
(1,371
|
)
|
—
|
|
(1,061
|
)
|
—
|
|
||||
Total
|
$
|
5,467
|
|
$
|
4,509
|
|
$
|
8,469
|
|
$
|
6,313
|
|
Operating Loss and Tax Credit Carryforwards
|
2017
|
2016
|
||||
In millions
|
Assets
|
Assets
|
||||
Operating loss carryforwards
|
|
|
||||
Expire within 5 years
|
$
|
246
|
|
$
|
176
|
|
Expire after 5 years or indefinite expiration
|
1,305
|
|
1,346
|
|
||
Total operating loss carryforwards
|
$
|
1,551
|
|
$
|
1,522
|
|
Tax credit carryforwards
|
|
|
||||
Expire within 5 years
|
$
|
39
|
|
$
|
28
|
|
Expire after 5 years or indefinite expiration
|
144
|
|
900
|
|
||
Total Operating Loss and Tax Credit Carryforwards
|
$
|
183
|
|
$
|
928
|
|
Total Gross Unrecognized Tax Benefits
|
|
|
|
||||||
In millions
|
2017
|
2016
|
2015
|
||||||
Total unrecognized tax benefits at Jan 1
|
$
|
231
|
|
$
|
280
|
|
$
|
240
|
|
Decreases related to positions taken on items from prior years
|
(4
|
)
|
(12
|
)
|
(6
|
)
|
|||
Increases related to positions taken on items from prior years
1
|
37
|
|
153
|
|
92
|
|
|||
Increases related to positions taken in the current year
2
|
10
|
|
135
|
|
10
|
|
|||
Settlement of uncertain tax positions with tax authorities
1
|
(12
|
)
|
(325
|
)
|
(56
|
)
|
|||
Decreases due to expiration of statutes of limitations
|
(9
|
)
|
—
|
|
—
|
|
|||
Total unrecognized tax benefits at Dec 31
|
$
|
253
|
|
$
|
231
|
|
$
|
280
|
|
Total unrecognized tax benefits that, if recognized, would impact the effective tax rate
|
$
|
243
|
|
$
|
223
|
|
$
|
206
|
|
Total amount of interest and penalties (benefit) recognized in "Provision for income taxes"
|
$
|
2
|
|
$
|
(55
|
)
|
$
|
80
|
|
Total accrual for interest and penalties recognized in the consolidated balance sheets
|
$
|
110
|
|
$
|
89
|
|
$
|
178
|
|
1.
|
The 2016 balance includes the impact of a settlement agreement related to a historical change in the legal ownership structure of a nonconsolidated affiliate discussed below.
|
2.
|
The 2016 balance includes
$126 million
assumed in the DCC Transaction.
|
Tax Years Subject to Examination by Major Tax Jurisdiction at Dec 31, 2017
|
Earliest Open Year
|
Jurisdiction
|
|
Argentina
|
2010
|
Brazil
|
2007
|
Canada
|
2014
|
China
|
2007
|
Germany
|
2006
|
Italy
|
2013
|
The Netherlands
|
2015
|
Switzerland
|
2014
|
United States:
|
|
Federal income tax
|
2004
|
State and local income tax
|
2004
|
Inventories at Dec 31
|
|
|
||||
In millions
|
2017
|
2016
|
||||
Finished goods
|
$
|
5,213
|
|
$
|
4,230
|
|
Work in process
|
1,747
|
|
1,510
|
|
||
Raw materials
|
898
|
|
853
|
|
||
Supplies
|
848
|
|
823
|
|
||
Total
|
$
|
8,706
|
|
$
|
7,416
|
|
Adjustment of inventories to a LIFO basis
|
(330
|
)
|
(53
|
)
|
||
Total inventories
|
$
|
8,376
|
|
$
|
7,363
|
|
Property at Dec 31
1
|
Estimated Useful
Lives (Years)
|
2017
|
2016
|
|||||
In millions
|
||||||||
Land and land improvements
|
0-25
|
|
$
|
2,535
|
|
$
|
2,524
|
|
Buildings
|
5-50
|
|
5,920
|
|
5,935
|
|
||
Machinery and equipment
|
3-25
|
|
43,208
|
|
38,499
|
|
||
Other property
|
3-50
|
|
5,277
|
|
4,380
|
|
||
Construction in progress
|
—
|
|
3,486
|
|
6,100
|
|
||
Total property
|
|
$
|
60,426
|
|
$
|
57,438
|
|
1.
|
Updated to conform with the presentation adopted for DowDuPont.
|
In millions
|
2017
|
2016
|
2015
|
||||||
Depreciation expense
|
$
|
2,329
|
|
$
|
2,130
|
|
$
|
1,908
|
|
Capitalized interest
|
$
|
240
|
|
$
|
243
|
|
$
|
218
|
|
Investments in Nonconsolidated Affiliates at Dec 31
|
2017
1
|
2016
1
|
||||
In millions
|
||||||
Investment in nonconsolidated affiliates
|
$
|
3,742
|
|
$
|
3,747
|
|
Other noncurrent obligations
|
(752
|
)
|
(1,030
|
)
|
||
Net investment in nonconsolidated affiliates
|
$
|
2,990
|
|
$
|
2,717
|
|
1.
|
The carrying amount of the Company’s investments in nonconsolidated affiliates at December 31, 2017, was
$32 million
less than its share of the investees’ net assets, exclusive of additional differences for EQUATE and AFSI, which are discussed separately in the disclosures that follow. At December 31, 2016, the carrying amount of the Company’s investments in nonconsolidated affiliates was
$62 million
more than its share of the investees’ net assets, exclusive of additional differences relating to EQUATE and AFSI.
|
Dividends Received from Nonconsolidated Affiliates
|
2017
1
|
2016
|
2015
|
||||||
In millions
|
|||||||||
Dividends from nonconsolidated affiliates
|
$
|
865
|
|
$
|
685
|
|
$
|
816
|
|
Principal Nonconsolidated Affiliates at Dec 31
|
Ownership Interest
|
|||||
|
2017
|
2016
|
2015
|
|||
Dow Corning Corporation
1
|
N/A
|
|
N/A
|
|
50
|
%
|
EQUATE Petrochemical Company K.S.C.
|
42.5
|
%
|
42.5
|
%
|
42.5
|
%
|
The HSC Group:
2
|
|
|
|
|||
DC HSC Holdings LLC
|
50
|
%
|
50
|
%
|
N/A
|
|
Hemlock Semiconductor L.L.C.
|
50.1
|
%
|
50.1
|
%
|
N/A
|
|
The Kuwait Olefins Company K.S.C.
|
42.5
|
%
|
42.5
|
%
|
42.5
|
%
|
The Kuwait Styrene Company K.S.C.
|
42.5
|
%
|
42.5
|
%
|
42.5
|
%
|
Map Ta Phut Olefins Company Limited
3
|
32.77
|
%
|
32.77
|
%
|
32.77
|
%
|
Sadara Chemical Company
|
35
|
%
|
35
|
%
|
35
|
%
|
The SCG-Dow Group:
|
|
|
|
|||
Siam Polyethylene Company Limited
|
50
|
%
|
50
|
%
|
50
|
%
|
Siam Polystyrene Company Limited
|
50
|
%
|
50
|
%
|
50
|
%
|
Siam Styrene Monomer Co., Ltd.
|
50
|
%
|
50
|
%
|
50
|
%
|
Siam Synthetic Latex Company Limited
|
50
|
%
|
50
|
%
|
50
|
%
|
1.
|
On June 1, 2016, Dow became the
100 percent
owner of Dow Corning. See Note
4
for additional information.
|
2.
|
The HSC Group was previously part of the Dow Corning equity method investment and was added as principal nonconsolidated affiliates in the fourth quarter of 2016.
|
3.
|
The Company's effective ownership of Map Ta Phut Olefins Company Limited is
32.77 percent
, of which the Company directly owns
20.27 percent
and indirectly owns
12.5 percent
through its equity interest in Siam Polyethylene Company Limited and Siam Synthetic Latex Company Limited.
|
Equity Earnings from Principal Nonconsolidated Affiliates
|
2017
|
2016
1
|
2015
2
|
||||||
In millions
|
|||||||||
Equity in earnings of principal nonconsolidated affiliates
|
$
|
701
|
|
$
|
449
|
|
$
|
704
|
|
1.
|
Equity in earnings of principal nonconsolidated affiliates for 2016 includes the results of Dow Corning through May 31, 2016.
|
2.
|
Equity in earnings of principal nonconsolidated affiliates for 2015 includes the results of Univation through April 30, 2015.
|
1.
|
The summarized balance sheet information for 2016 does not include Dow Corning.
|
1.
|
The results in this table reflect purchase and sale activity between certain principal nonconsolidated affiliates and the Company, as previously discussed in the "Transactions with Nonconsolidated Affiliates" section.
|
2.
|
The summarized income statement information for 2016 includes the results of Dow Corning through May 31, 2016.
|
3.
|
The summarized income statement information for 2015 includes the results of Univation through April 30, 2015 and MEGlobal through November 30, 2015.
|
Goodwill
|
|||
In millions
|
|||
Balance at Jan 1, 2016
|
$
|
12,154
|
|
Acquisition of an aniline plant
|
37
|
|
|
Sale of product lines
|
(15
|
)
|
|
Goodwill related to the DCC Transaction
1
|
3,229
|
|
|
Foreign currency impact
|
(133
|
)
|
|
Balance at Dec 31, 2016
|
$
|
15,272
|
|
Sale of SKC Haas Display Films
2
|
(34
|
)
|
|
Divestiture of the EAA Business
3
|
(23
|
)
|
|
Divestiture of the DAS Divested Ag Business
4
|
(128
|
)
|
|
Dissolution of joint venture
5
|
48
|
|
|
Goodwill impairment
|
(1,491
|
)
|
|
Foreign currency impact
|
299
|
|
|
Other
|
(5
|
)
|
|
Balance at Dec 31, 2017
|
$
|
13,938
|
|
1.
|
See Note
4
for information on the DCC Transaction.
|
2.
|
On June 30, 2017, the Company sold its ownership interest in the SKC Haas Display Films group of companies. See Note
18
for additional information.
|
3.
|
On September 1, 2017, the Company divested its EAA Business to SK Global Chemical Co., Ltd. See Note
5
for additional information.
|
Other Intangible Assets at Dec 31
1
|
2017
|
2016
|
||||||||||||||||
In millions
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
3,263
|
|
$
|
(1,690
|
)
|
$
|
1,573
|
|
$
|
3,254
|
|
$
|
(1,383
|
)
|
$
|
1,871
|
|
Software
|
1,420
|
|
(780
|
)
|
640
|
|
1,336
|
|
(696
|
)
|
640
|
|
||||||
Trademarks/tradenames
|
697
|
|
(570
|
)
|
127
|
|
696
|
|
(503
|
)
|
193
|
|
||||||
Customer-related
|
5,035
|
|
(1,965
|
)
|
3,070
|
|
4,806
|
|
(1,567
|
)
|
3,239
|
|
||||||
Other
|
245
|
|
(156
|
)
|
89
|
|
168
|
|
(146
|
)
|
22
|
|
||||||
Total other intangible assets, finite lives
|
$
|
10,660
|
|
$
|
(5,161
|
)
|
$
|
5,499
|
|
$
|
10,260
|
|
$
|
(4,295
|
)
|
$
|
5,965
|
|
In-process research and development ("IPR&D")
|
50
|
|
—
|
|
50
|
|
61
|
|
—
|
|
61
|
|
||||||
Total other intangible assets
|
$
|
10,710
|
|
$
|
(5,161
|
)
|
$
|
5,549
|
|
$
|
10,321
|
|
$
|
(4,295
|
)
|
$
|
6,026
|
|
1.
|
Prior year amounts have been updated to conform with the current year presentation.
|
Amortization Expense
|
2017
|
2016
|
2015
|
||||||
In millions
|
|||||||||
Other intangible assets, excluding software
|
$
|
624
|
|
$
|
544
|
|
$
|
419
|
|
Software, included in “Cost of sales”
|
$
|
87
|
|
$
|
73
|
|
$
|
72
|
|
Interests Held at Dec 31
|
|
|
||||
In millions
|
2017
|
2016
|
||||
Carrying value of interests held
|
$
|
677
|
|
$
|
1,237
|
|
Percentage of anticipated credit losses
|
2.64
|
%
|
0.36
|
%
|
||
Impact to carrying value - 10% adverse change
|
$
|
—
|
|
$
|
1
|
|
Impact to carrying value - 20% adverse change
|
$
|
1
|
|
$
|
1
|
|
Cash Proceeds
|
|
|
|
||||||
In millions
|
2017
|
2016
|
2015
|
||||||
Sale of receivables
|
$
|
1
|
|
$
|
1
|
|
$
|
18
|
|
Collections reinvested in revolving receivables
|
$
|
21,293
|
|
$
|
21,652
|
|
$
|
22,951
|
|
Interests in conduits
1
|
$
|
2,269
|
|
$
|
1,257
|
|
$
|
1,034
|
|
1.
|
Presented in "Operating Activities" in the consolidated statements of cash flows.
|
Trade Accounts Receivable Sold at Dec 31
|
|
|
||||
In millions
|
2017
|
2016
|
||||
Delinquencies on sold receivables still outstanding
|
$
|
82
|
|
$
|
86
|
|
Trade accounts receivable outstanding and derecognized
|
$
|
612
|
|
$
|
2,257
|
|
Notes Payable at Dec 31
|
|
|
||||
In millions
|
2017
|
2016
|
||||
Commercial paper
|
$
|
231
|
|
$
|
—
|
|
Notes payable to banks and other lenders
|
253
|
|
225
|
|
||
Notes payable to related companies
|
—
|
|
44
|
|
||
Notes payable trade
|
—
|
|
3
|
|
||
Total notes payable
|
$
|
484
|
|
$
|
272
|
|
Year-end average interest rates
|
4.42
|
%
|
4.60
|
%
|
Long-Term Debt at Dec 31
|
2017 Average Rate
|
2017
|
2016
Average
Rate
|
2016
|
||||||
In millions
|
||||||||||
Promissory notes and debentures:
|
|
|
|
|
||||||
Final maturity 2017
|
—
|
%
|
$
|
—
|
|
6.06
|
%
|
$
|
442
|
|
Final maturity 2018
|
5.78
|
%
|
339
|
|
5.78
|
%
|
339
|
|
||
Final maturity 2019
|
8.55
|
%
|
2,122
|
|
8.55
|
%
|
2,122
|
|
||
Final maturity 2020
|
4.46
|
%
|
1,547
|
|
4.46
|
%
|
1,547
|
|
||
Final maturity 2021
|
4.71
|
%
|
1,424
|
|
4.72
|
%
|
1,424
|
|
||
Final maturity 2022
1
|
3.50
|
%
|
1,373
|
|
3.50
|
%
|
1,371
|
|
||
Final maturity 2023 and thereafter
|
6.00
|
%
|
7,182
|
|
5.98
|
%
|
7,199
|
|
||
Other facilities:
|
|
|
|
|
||||||
U.S. dollar loans, various rates and maturities
|
2.44
|
%
|
4,564
|
|
1.60
|
%
|
4,595
|
|
||
Foreign currency loans, various rates and maturities
|
3.00
|
%
|
814
|
|
3.42
|
%
|
882
|
|
||
Medium-term notes, varying maturities through 2025
1
|
3.20
|
%
|
873
|
|
3.18
|
%
|
905
|
|
||
Tax-exempt bonds, varying maturities through 2038
|
5.66
|
%
|
343
|
|
5.66
|
%
|
343
|
|
||
Capital lease obligations
|
|
282
|
|
|
295
|
|
||||
Unamortized debt discount and issuance costs
|
|
(346
|
)
|
|
(373
|
)
|
||||
Long-term debt due within one year
2
|
|
(752
|
)
|
|
(635
|
)
|
||||
Long-term debt
|
|
|
$
|
19,765
|
|
|
|
$
|
20,456
|
|
1.
|
Prior year data has been updated to conform with the current year presentation.
|
2.
|
Presented net of current portion of unamortized debt issuance costs.
|
1.
|
Assumes the option to extend a term loan facility related to the DCC Transaction will be exercised.
|
Committed and Available Credit Facilities at Dec 31, 2017
|
|||||||||
In millions
|
Effective Date
|
Committed Credit
|
Credit Available
|
Maturity Date
|
Interest
|
||||
Five Year Competitive Advance and Revolving Credit Facility
|
March 2015
|
$
|
5,000
|
|
$
|
5,000
|
|
March 2020
|
Floating rate
|
Bilateral Revolving Credit Facility
|
August 2015
|
100
|
|
100
|
|
March 2018
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2015
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2015
|
280
|
|
280
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2015
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2015
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2015
|
200
|
|
200
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
May 2016
|
200
|
|
200
|
|
May 2018
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
July 2016
|
200
|
|
200
|
|
July 2018
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
August 2016
|
100
|
|
100
|
|
August 2018
|
Floating rate
|
||
DCC Term Loan Facility
|
February 2016
|
4,500
|
|
—
|
|
December 2019
|
Floating rate
|
||
Total Committed and Available Credit Facilities
|
|
$
|
10,880
|
|
$
|
6,380
|
|
|
|
(a)
|
the obligation to maintain the ratio of the Company’s consolidated indebtedness to consolidated capitalization at no greater than
0.65
to
1.00
at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement dated March 24, 2015, equals or exceeds
$500 million
,
|
(b)
|
a default if the Company or an applicable subsidiary fails to make any payment, including principal, premium or interest, under the applicable agreement on other indebtedness of, or guaranteed by, the Company or such applicable subsidiary in an aggregate amount of
$100 million
or more when due, or any other default or other event under the applicable agreement with respect to such indebtedness occurs which permits or results in the acceleration of
$400 million
or more in the aggregate of principal, and
|
(c)
|
a default if the Company or any applicable subsidiary fails to discharge or stay within 60 days after the entry of a final judgment against the Company or such applicable subsidiary of more than
$400 million
.
|
Guarantees
|
Dec 31, 2017
|
Dec 31, 2016
|
||||||||||||
In millions
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
||||||||
Guarantees
|
2023
|
$
|
4,774
|
|
$
|
49
|
|
2021
|
$
|
5,096
|
|
$
|
86
|
|
Residual value guarantees
|
2027
|
889
|
|
135
|
|
2027
|
947
|
|
134
|
|
||||
Total guarantees
|
|
$
|
5,663
|
|
$
|
184
|
|
|
$
|
6,043
|
|
$
|
220
|
|
Asset Retirement Obligations
|
2017
|
2016
|
||||
In millions
|
||||||
Balance at Jan 1
|
$
|
110
|
|
$
|
96
|
|
Additional accruals
1
|
3
|
|
17
|
|
||
Liabilities settled
|
(9
|
)
|
(9
|
)
|
||
Accretion expense
|
5
|
|
2
|
|
||
Revisions in estimated cash flows
|
(9
|
)
|
5
|
|
||
Other
|
4
|
|
(1
|
)
|
||
Balance at Dec 31
|
$
|
104
|
|
$
|
110
|
|
1.
|
Includes
$14 million
of asset retirement obligations from the DCC Transaction in 2016.
|
Shares of Dow Common Stock
|
Issued
|
Held in Treasury
|
||
In thousands
|
||||
Balance at Jan 1, 2015
|
1,242,763
|
|
85,169
|
|
Issued
1
|
32
|
|
(16,490
|
)
|
Repurchased
2
|
—
|
|
57,174
|
|
Balance at Dec 31, 2015
|
1,242,795
|
|
125,853
|
|
Issued
1
|
—
|
|
(14,494
|
)
|
Repurchased
|
—
|
|
17,107
|
|
Preferred stock converted to common stock
|
—
|
|
(96,804
|
)
|
Balance at Dec 31, 2016
|
1,242,795
|
|
31,662
|
|
Issued
1
|
—
|
|
(14,195
|
)
|
Converted to DowDuPont shares or canceled on Aug 31, 2017
3
|
(1,242,795
|
)
|
(17,467
|
)
|
Balance at Aug 31, 2017
|
—
|
|
—
|
|
1.
|
Shares issued to employees and non-employee directors under the Company's equity compensation plans.
|
2.
|
Includes
34.1 million
treasury shares as part of the Reverse Morris Trust transaction with Olin, which were tendered as part of a non-cash, public exchange offer. See Note
7
for additional information.
|
3.
|
Each share of Dow Common Stock issued and outstanding immediately prior to the Merger was converted into one share of DowDuPont Common Stock; treasury shares were canceled as a result of the Merger.
|
Accumulated Other Comprehensive Loss
1
|
Unrealized Gains (Losses) on Investments
|
Cumulative Translation Adj
|
Pension and Other Postretire Benefits
|
Derivative Instruments
|
Accum Other Comp Loss
|
||||||||||
In millions
|
|||||||||||||||
2015
|
|
|
|
|
|
||||||||||
Balance at Jan 1, 2015
|
$
|
141
|
|
$
|
(751
|
)
|
$
|
(7,321
|
)
|
$
|
(86
|
)
|
$
|
(8,017
|
)
|
Other comprehensive income (loss) before reclassifications
|
(40
|
)
|
(990
|
)
|
105
|
|
(136
|
)
|
(1,061
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(54
|
)
|
4
|
|
447
|
|
14
|
|
411
|
|
|||||
Net other comprehensive income (loss)
|
$
|
(94
|
)
|
$
|
(986
|
)
|
$
|
552
|
|
$
|
(122
|
)
|
$
|
(650
|
)
|
Balance at Dec 31, 2015
|
$
|
47
|
|
$
|
(1,737
|
)
|
$
|
(6,769
|
)
|
$
|
(208
|
)
|
$
|
(8,667
|
)
|
2016
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss) before reclassifications
|
32
|
|
(644
|
)
|
(1,354
|
)
|
84
|
|
(1,882
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(36
|
)
|
—
|
|
734
|
|
29
|
|
727
|
|
|||||
Net other comprehensive income (loss)
|
$
|
(4
|
)
|
$
|
(644
|
)
|
$
|
(620
|
)
|
$
|
113
|
|
$
|
(1,155
|
)
|
Balance at Dec 31, 2016
|
$
|
43
|
|
$
|
(2,381
|
)
|
$
|
(7,389
|
)
|
$
|
(95
|
)
|
$
|
(9,822
|
)
|
2017
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss) before reclassifications
|
25
|
|
908
|
|
(23
|
)
|
1
|
|
911
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
(71
|
)
|
(8
|
)
|
414
|
|
(15
|
)
|
320
|
|
|||||
Net other comprehensive income (loss)
|
$
|
(46
|
)
|
$
|
900
|
|
$
|
391
|
|
$
|
(14
|
)
|
$
|
1,231
|
|
Balance at Dec 31, 2017
|
$
|
(3
|
)
|
$
|
(1,481
|
)
|
$
|
(6,998
|
)
|
$
|
(109
|
)
|
$
|
(8,591
|
)
|
1.
|
Prior year amounts have been updated to conform with the current year presentation.
|
Tax Benefit (Expense)
|
2017
|
2016
|
2015
|
||||||
In millions
|
|||||||||
Unrealized gains (losses) on investments
|
$
|
(26
|
)
|
$
|
2
|
|
$
|
(52
|
)
|
Cumulative translation adjustments
|
98
|
|
171
|
|
(84
|
)
|
|||
Pension and other postretirement benefit plans
|
213
|
|
(438
|
)
|
252
|
|
|||
Derivative instruments
|
3
|
|
32
|
|
(70
|
)
|
|||
Tax benefit (expense) from income taxes related to other comprehensive income
(loss) items
|
$
|
288
|
|
$
|
(233
|
)
|
$
|
46
|
|
Reclassifications Out of Accumulated Other Comprehensive Loss
In millions
|
2017
|
2016
|
2015
|
Consolidated Statements of Income Classification
|
|||||||
Unrealized gains on investments
|
$
|
(110
|
)
|
$
|
(56
|
)
|
$
|
(84
|
)
|
See (1) below
|
|
Tax expense
|
39
|
|
20
|
|
30
|
|
See (2) below
|
||||
After-tax
|
$
|
(71
|
)
|
$
|
(36
|
)
|
$
|
(54
|
)
|
|
|
Cumulative translation adjustments
|
$
|
(8
|
)
|
$
|
—
|
|
$
|
4
|
|
See (3) below
|
|
Pension and other postretirement benefit plans
|
$
|
607
|
|
$
|
913
|
|
$
|
665
|
|
See (4) below
|
|
Tax benefit
|
(193
|
)
|
(179
|
)
|
(218
|
)
|
See (2) below
|
||||
After-tax
|
$
|
414
|
|
$
|
734
|
|
$
|
447
|
|
|
|
Derivative instruments
|
$
|
(13
|
)
|
$
|
34
|
|
$
|
23
|
|
See (5) below
|
|
Tax benefit
|
(2
|
)
|
(5
|
)
|
(9
|
)
|
See (2) below
|
||||
After-tax
|
$
|
(15
|
)
|
$
|
29
|
|
$
|
14
|
|
|
|
Total reclassifications for the period, after-tax
|
$
|
320
|
|
$
|
727
|
|
$
|
411
|
|
|
1.
|
"Net sales" and "Sundry income (expense) - net."
|
2.
|
"Provision for income taxes."
|
3.
|
"Sundry income (expense) - net."
|
4.
|
These accumulated other comprehensive loss components are included in the computation of net periodic benefit cost of the Company's pension and other postretirement plans. See Note
19
for additional information. In the year ended December 31, 2016,
$360 million
was included in “Sundry income (expense) - net” (
zero
impact to "Provision for income taxes") related to the DCC transaction. See Note
4
for additional information.
|
5.
|
"Cost of sales" and "Sundry income (expense) - net."
|
Noncontrolling Interests
|
|
|
|
||||||
In millions
|
2017
|
2016
|
2015
|
||||||
Balance at Jan 1
|
$
|
1,242
|
|
$
|
809
|
|
$
|
931
|
|
Net income attributable to noncontrolling interests
|
129
|
|
86
|
|
98
|
|
|||
Distributions to noncontrolling interests
1
|
(109
|
)
|
(123
|
)
|
(76
|
)
|
|||
Capital contributions
2
|
—
|
|
—
|
|
38
|
|
|||
Purchases of noncontrolling interests
3
|
—
|
|
—
|
|
(42
|
)
|
|||
Transfers of redeemable noncontrolling interest
4
|
—
|
|
—
|
|
(108
|
)
|
|||
Acquisition of noncontrolling interests
5
|
—
|
|
473
|
|
—
|
|
|||
Deconsolidation of noncontrolling interests
6
|
(119
|
)
|
—
|
|
—
|
|
|||
Cumulative translation adjustments
|
41
|
|
(4
|
)
|
(34
|
)
|
|||
Other
|
2
|
|
1
|
|
2
|
|
|||
Balance at Dec 31
|
$
|
1,186
|
|
$
|
1,242
|
|
$
|
809
|
|
1.
|
Distributions to noncontrolling interests is net of
$20 million
in 2017 (
$53 million
in 2016 and
$36 million
in 2015) in dividends paid to a joint venture, which were reclassified to "Equity in earnings of nonconsolidated affiliates" in the consolidated statements of income.
|
2.
|
Includes non-cash capital contributions of
$21 million
in 2015.
|
3.
|
The 2016 value excludes a
$202 million
cash payment as the noncontrolling interest was classified as "Accrued and other current liabilities" in the consolidated balance sheets. The 2015 value excludes a
$133 million
cash payment for the purchase of a Redeemable Noncontrolling Interest. See Notes
7
and
23
for additional information.
|
4.
|
See Notes
7
and
23
for additional information.
|
5.
|
Assumed in the DCC Transaction. See Note
4
for additional information.
|
6.
|
On June 30, 2017, the Company sold its ownership interest in the SKC Haas Display Films group of companies. See Note
13
for additional information.
|
Weighted-Average Assumptions for All Pension Plans
|
Benefit Obligations
at Dec 31
|
Net Periodic Costs
for the Year Ended
|
||||||||
|
2017
|
2016
|
2017
|
2016
|
2015
|
|||||
Discount rate
|
3.17
|
%
|
3.52
|
%
|
3.52
|
%
|
3.85
|
%
|
3.60
|
%
|
Rate of compensation increase
|
3.88
|
%
|
3.90
|
%
|
3.90
|
%
|
4.04
|
%
|
4.13
|
%
|
Expected return on plan assets
|
—
|
|
—
|
|
7.16
|
%
|
7.22
|
%
|
7.35
|
%
|
Weighted-Average Assumptions for U.S. Pension Plans
|
Benefit Obligations
at Dec 31
|
Net Periodic Costs
for the Year Ended
|
||||||||
|
2017
|
2016
|
2017
|
2016
|
2015
|
|||||
Discount rate
|
3.66
|
%
|
4.11
|
%
|
4.11
|
%
|
4.40
|
%
|
4.04
|
%
|
Rate of compensation increase
|
4.25
|
%
|
4.25
|
%
|
4.25
|
%
|
4.50
|
%
|
4.50
|
%
|
Expected return on plan assets
|
—
|
|
—
|
|
7.91
|
%
|
7.77
|
%
|
7.85
|
%
|
Weighted-Average Assumptions for U.S. Other Postretirement Benefits Plans
|
Benefit Obligations
at Dec 31
|
Net Periodic Costs
for the Year Ended
|
||||||||
|
2017
|
2016
|
2017
|
2016
|
2015
|
|||||
Discount rate
|
3.51
|
%
|
3.83
|
%
|
3.83
|
%
|
3.96
|
%
|
3.68
|
%
|
Health care cost trend rate assumed for next year
|
6.75
|
%
|
7.00
|
%
|
7.00
|
%
|
7.25
|
%
|
7.06
|
%
|
Rate to which the cost trend rate is assumed to decline (the ultimate health care cost trend rate)
|
5.00
|
%
|
5.00
|
%
|
5.00
|
%
|
5.00
|
%
|
5.00
|
%
|
Year that the rate reaches the ultimate health care cost trend rate
|
2025
|
|
2025
|
|
2025
|
|
2025
|
|
2020
|
|
Change in Projected Benefit Obligations, Plan Assets and Funded Status of All Significant Plans
|
Defined Benefit Pension Plans
|
Other Postretirement Benefits
|
||||||||||
In millions
|
2017
|
2016
|
2017
|
2016
|
||||||||
Change in projected benefit obligations:
|
|
|
|
|
||||||||
Benefit obligations at beginning of year
|
$
|
30,280
|
|
$
|
25,652
|
|
$
|
1,835
|
|
$
|
1,597
|
|
Service cost
|
506
|
|
463
|
|
14
|
|
13
|
|
||||
Interest cost
|
883
|
|
846
|
|
54
|
|
52
|
|
||||
Plan participants' contributions
|
14
|
|
19
|
|
—
|
|
—
|
|
||||
Actuarial changes in assumptions and experience
|
1,804
|
|
1,967
|
|
(198
|
)
|
13
|
|
||||
Benefits paid
|
(1,440
|
)
|
(1,324
|
)
|
(151
|
)
|
(154
|
)
|
||||
Plan amendments
|
14
|
|
—
|
|
—
|
|
—
|
|
||||
Acquisitions/divestitures/other
1
|
50
|
|
3,201
|
|
—
|
|
313
|
|
||||
Effect of foreign exchange rates
|
932
|
|
(506
|
)
|
13
|
|
1
|
|
||||
Termination benefits/curtailment cost/settlements
2
|
(1,192
|
)
|
(38
|
)
|
—
|
|
—
|
|
||||
Benefit obligations at end of year
|
$
|
31,851
|
|
$
|
30,280
|
|
$
|
1,567
|
|
$
|
1,835
|
|
|
|
|
|
|
||||||||
Change in plan assets:
|
|
|
|
|
||||||||
Fair value of plan assets at beginning of year
|
$
|
21,208
|
|
$
|
18,774
|
|
$
|
—
|
|
$
|
—
|
|
Actual return on plan assets
|
2,500
|
|
1,437
|
|
—
|
|
—
|
|
||||
Employer contributions
|
1,676
|
|
629
|
|
—
|
|
—
|
|
||||
Plan participants' contributions
|
14
|
|
19
|
|
—
|
|
—
|
|
||||
Benefits paid
|
(1,440
|
)
|
(1,324
|
)
|
—
|
|
—
|
|
||||
Acquisitions/divestitures/other
3
|
(15
|
)
|
2,077
|
|
—
|
|
—
|
|
||||
Effect of foreign exchange rates
|
646
|
|
(404
|
)
|
—
|
|
—
|
|
||||
Settlements
4
|
(1,188
|
)
|
—
|
|
—
|
|
—
|
|
||||
Fair value of plan assets at end of year
|
$
|
23,401
|
|
$
|
21,208
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Funded status:
|
|
|
|
|
||||||||
U.S. plans with plan assets
5
|
$
|
(5,363
|
)
|
$
|
(5,122
|
)
|
$
|
—
|
|
$
|
—
|
|
Non-U.S. plans with plan assets
5
|
(2,333
|
)
|
(2,474
|
)
|
—
|
|
—
|
|
||||
All other plans
5
|
(754
|
)
|
(1,476
|
)
|
(1,567
|
)
|
(1,835
|
)
|
||||
Funded status at end of year
|
$
|
(8,450
|
)
|
$
|
(9,072
|
)
|
$
|
(1,567
|
)
|
$
|
(1,835
|
)
|
|
|
|
|
|
||||||||
Amounts recognized in the consolidated balance sheets at Dec 31:
|
|
|
|
|
||||||||
Deferred charges and other assets
|
$
|
548
|
|
$
|
292
|
|
$
|
—
|
|
$
|
—
|
|
Accrued and other current liabilities
|
(48
|
)
|
(74
|
)
|
(125
|
)
|
(158
|
)
|
||||
Pension and other postretirement benefits - noncurrent
|
(8,950
|
)
|
(9,290
|
)
|
(1,442
|
)
|
(1,677
|
)
|
||||
Net amount recognized
|
$
|
(8,450
|
)
|
$
|
(9,072
|
)
|
$
|
(1,567
|
)
|
$
|
(1,835
|
)
|
|
|
|
|
|
||||||||
Pretax amounts recognized in accumulated other comprehensive (income) loss at Dec 31:
|
|
|
|
|
||||||||
Net loss (gain)
|
$
|
10,899
|
|
$
|
11,379
|
|
$
|
(326
|
)
|
$
|
(133
|
)
|
Prior service credit
|
(265
|
)
|
(304
|
)
|
—
|
|
—
|
|
||||
Pretax balance in accumulated other comprehensive (income) loss at end of year
|
$
|
10,634
|
|
$
|
11,075
|
|
$
|
(326
|
)
|
$
|
(133
|
)
|
1.
|
The 2017 impact includes the reclassification of a China pension liability of
$69 million
from "Other noncurrent obligations" to "Pension and other postretirement benefits - noncurrent" and the divestiture of a Korean company with pension benefit obligations of
$25 million
. The 2016 impact includes pension benefit obligations of
$3,252 million
and other postretirement benefit obligations of
$313 million
assumed with the ownership restructure of Dow Corning. The 2016 impact also includes the transfer of benefit obligations of
$53 million
in the U.S. through the purchase of annuity contracts from an insurance company. See Note
4
for additional information.
|
2.
|
The 2017 impact includes the settlement of certain plan obligations for a U.S. non-qualified pension plan of
$1,170 million
required due to a change in control provision. The 2017 impact also includes the conversion of a Korean pension plan of
$22 million
to a defined contribution plan. The 2016 impact primarily relates to the curtailment of benefits for certain participants of a U.S. Dow Corning plan of
$36 million
.
|
3.
|
The 2017 impact relates to the divestiture of a Korean company. The 2016 impact includes plan assets assumed with the ownership restructure of Dow Corning of
$2,327 million
. The 2016 impact also includes the purchase of annuity contracts of
$55 million
in the U.S. associated with the transfer of benefit obligations to an insurance company and the transfer of plan assets associated with the Reverse Morris Trust transaction with Olin of
$184 million
. See Notes
4
and
7
for additional information.
|
4.
|
The 2017 impact includes payments made of
$1,170 million
to settle certain plan obligations of a U.S. non-qualified pension plan required due to a change in control provision. The 2017 impact also includes payments made of
$18 million
to convert a Korean pension plan to a defined contribution plan.
|
5.
|
Updated to conform with the current year presentation.
|
Net Periodic Benefit Costs for All Significant Plans for the Year Ended Dec 31
|
Defined Benefit Pension Plans
|
Other Postretirement Benefits
|
||||||||||||||||
In millions
|
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
||||||||||||
Net Periodic Benefit Costs:
|
|
|
|
|
|
|
||||||||||||
Service cost
|
$
|
506
|
|
$
|
463
|
|
$
|
484
|
|
$
|
14
|
|
$
|
13
|
|
$
|
14
|
|
Interest cost
|
883
|
|
846
|
|
975
|
|
54
|
|
52
|
|
59
|
|
||||||
Expected return on plan assets
|
(1,548
|
)
|
(1,447
|
)
|
(1,382
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of prior service credit
|
(25
|
)
|
(24
|
)
|
(28
|
)
|
—
|
|
(3
|
)
|
(2
|
)
|
||||||
Amortization of unrecognized (gain) loss
|
638
|
|
587
|
|
706
|
|
(6
|
)
|
(7
|
)
|
(11
|
)
|
||||||
Curtailment/settlement/other
1
|
683
|
|
(36
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Net periodic benefit costs
|
$
|
1,137
|
|
$
|
389
|
|
$
|
755
|
|
$
|
62
|
|
$
|
55
|
|
$
|
60
|
|
Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss:
|
|
|
|
|
|
|
||||||||||||
Net (gain) loss
|
$
|
845
|
|
$
|
1,954
|
|
$
|
(127
|
)
|
$
|
(199
|
)
|
$
|
14
|
|
$
|
11
|
|
Prior service cost
|
14
|
|
—
|
|
63
|
|
—
|
|
—
|
|
—
|
|
||||||
Amortization of prior service credit
|
25
|
|
24
|
|
28
|
|
—
|
|
3
|
|
2
|
|
||||||
Amortization of unrecognized gain (loss)
|
(638
|
)
|
(587
|
)
|
(706
|
)
|
6
|
|
7
|
|
11
|
|
||||||
Settlement loss
2
|
(687
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||
Total recognized in other comprehensive (income) loss
|
$
|
(441
|
)
|
$
|
1,391
|
|
$
|
(742
|
)
|
$
|
(193
|
)
|
$
|
24
|
|
$
|
24
|
|
Total recognized in net periodic benefit cost and other comprehensive (income) loss
|
$
|
696
|
|
$
|
1,780
|
|
$
|
13
|
|
$
|
(131
|
)
|
$
|
79
|
|
$
|
84
|
|
1.
|
The 2017 impact relates to the settlement of a U.S. non-qualified plan triggered by a change in control provision. The 2016 impact relates to the curtailment of benefits for certain participants of a Dow Corning plan in the U.S.
|
2.
|
The 2017 impact relates to the settlement of a U.S. non-qualified plan triggered by a change in control provision.
|
Estimated Future Benefit Payments at Dec 31, 2017
|
Defined Benefit Pension Plans
|
Other Postretirement Benefits
|
||||
In millions
|
||||||
2018
|
$
|
1,471
|
|
$
|
126
|
|
2019
|
1,502
|
|
117
|
|
||
2020
|
1,533
|
|
118
|
|
||
2021
|
1,571
|
|
117
|
|
||
2022
|
1,612
|
|
115
|
|
||
2023-2027
|
8,517
|
|
527
|
|
||
Total
|
$
|
16,206
|
|
$
|
1,120
|
|
Basis of Fair Value Measurements
|
Dec 31, 2017
|
Dec 31, 2016
1
|
||||||||||||||||||||||
In millions
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Cash and cash equivalents
|
$
|
772
|
|
$
|
671
|
|
$
|
101
|
|
$
|
—
|
|
$
|
879
|
|
$
|
867
|
|
$
|
12
|
|
$
|
—
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. equity securities
2
|
$
|
3,755
|
|
$
|
3,416
|
|
$
|
339
|
|
$
|
—
|
|
$
|
3,645
|
|
$
|
3,208
|
|
$
|
436
|
|
$
|
1
|
|
Non - U.S. equity securities
|
5,551
|
|
4,533
|
|
978
|
|
40
|
|
4,288
|
|
3,564
|
|
692
|
|
32
|
|
||||||||
Total equity securities
|
$
|
9,306
|
|
$
|
7,949
|
|
$
|
1,317
|
|
$
|
40
|
|
$
|
7,933
|
|
$
|
6,772
|
|
$
|
1,128
|
|
$
|
33
|
|
Fixed income securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt - government-issued
|
$
|
4,596
|
|
$
|
158
|
|
$
|
4,437
|
|
$
|
1
|
|
$
|
3,970
|
|
$
|
136
|
|
$
|
3,834
|
|
$
|
—
|
|
Debt - corporate-issued
|
3,300
|
|
351
|
|
2,935
|
|
14
|
|
3,187
|
|
306
|
|
2,866
|
|
15
|
|
||||||||
Debt - asset-backed
|
101
|
|
—
|
|
100
|
|
1
|
|
97
|
|
—
|
|
95
|
|
2
|
|
||||||||
Total fixed income securities
|
$
|
7,997
|
|
$
|
509
|
|
$
|
7,472
|
|
$
|
16
|
|
$
|
7,254
|
|
$
|
442
|
|
$
|
6,795
|
|
$
|
17
|
|
Alternative investments:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Hedge funds
|
$
|
1,593
|
|
$
|
—
|
|
$
|
663
|
|
$
|
930
|
|
$
|
1,670
|
|
$
|
92
|
|
$
|
631
|
|
$
|
947
|
|
Private market securities
|
1,390
|
|
—
|
|
—
|
|
1,390
|
|
1,128
|
|
—
|
|
—
|
|
1,128
|
|
||||||||
Real estate
|
2,221
|
|
21
|
|
—
|
|
2,200
|
|
2,087
|
|
21
|
|
24
|
|
2,042
|
|
||||||||
Derivatives - asset position
|
261
|
|
2
|
|
259
|
|
—
|
|
367
|
|
2
|
|
365
|
|
—
|
|
||||||||
Derivatives - liability position
|
(305
|
)
|
(2
|
)
|
(303
|
)
|
—
|
|
(374
|
)
|
(2
|
)
|
(372
|
)
|
—
|
|
||||||||
Total alternative investments
|
$
|
5,160
|
|
$
|
21
|
|
$
|
619
|
|
$
|
4,520
|
|
$
|
4,878
|
|
$
|
113
|
|
$
|
648
|
|
$
|
4,117
|
|
Other investments
|
$
|
275
|
|
$
|
37
|
|
$
|
236
|
|
$
|
2
|
|
$
|
351
|
|
$
|
30
|
|
$
|
226
|
|
$
|
95
|
|
Subtotal
|
$
|
23,510
|
|
$
|
9,187
|
|
$
|
9,745
|
|
$
|
4,578
|
|
$
|
21,295
|
|
$
|
8,224
|
|
$
|
8,809
|
|
$
|
4,262
|
|
Items to reconcile to fair value of plan assets:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Pension trust receivables
3
|
$
|
27
|
|
|
|
|
|
|
|
$
|
38
|
|
|
|
|
|
|
|
||||||
Pension trust payables
4
|
(136
|
)
|
|
|
|
|
|
|
(125
|
)
|
|
|
|
|
|
|
||||||||
Total
|
$
|
23,401
|
|
|
|
|
|
|
|
$
|
21,208
|
|
|
|
|
|
|
|
1.
|
As a result of the Merger, certain asset categories and classifications of prior period amounts were revised to improve comparability with the presentation of DowDuPont, including reclassifying cash and cash equivalents of
$794 million
, equity securities of
$1,646 million
, fixed income securities of
$442 million
, alternative investments of
$92 million
and other investments of
$30 million
from Level 2 to Level 1. Further, pension trust receivables and pension trust payables previously presented as Level 2 investments are now separately presented.
|
2.
|
No DowDuPont common stock was directly held at
December 31, 2017
. No Dow common stock was directly held at
December 31, 2016
.
|
3.
|
Primarily receivables for investment securities sold.
|
4.
|
Primarily payables for investment securities purchased.
|
Fair Value Measurement of Level 3 Pension Plan Assets
1
|
Equity Securities
|
Fixed Income Securities
|
Alternative Investments
|
Other Investments
|
Total
|
||||||||||
In millions
|
|||||||||||||||
Balance at Jan 1, 2016
|
$
|
28
|
|
$
|
17
|
|
$
|
3,797
|
|
$
|
38
|
|
$
|
3,880
|
|
Actual return on assets:
|
|
|
|
|
|
||||||||||
Relating to assets sold during 2016
|
—
|
|
2
|
|
163
|
|
(7
|
)
|
158
|
|
|||||
Relating to assets held at Dec 31, 2016
|
7
|
|
(1
|
)
|
(15
|
)
|
11
|
|
2
|
|
|||||
Purchases, sales and settlements, net
|
—
|
|
(4
|
)
|
172
|
|
53
|
|
221
|
|
|||||
Transfers out of Level 3, net
|
(2
|
)
|
3
|
|
—
|
|
—
|
|
1
|
|
|||||
Balance at Dec 31, 2016
|
$
|
33
|
|
$
|
17
|
|
$
|
4,117
|
|
$
|
95
|
|
$
|
4,262
|
|
Actual return on assets:
|
|
|
|
|
|
||||||||||
Relating to assets sold during 2017
|
(1
|
)
|
—
|
|
163
|
|
6
|
|
168
|
|
|||||
Relating to assets held at Dec 31, 2017
|
5
|
|
1
|
|
77
|
|
(5
|
)
|
78
|
|
|||||
Purchases, sales and settlements, net
|
3
|
|
(2
|
)
|
163
|
|
(94
|
)
|
70
|
|
|||||
Balance at Dec 31, 2017
|
$
|
40
|
|
$
|
16
|
|
$
|
4,520
|
|
$
|
2
|
|
$
|
4,578
|
|
1.
|
As a result of the Merger, certain classifications of prior period amounts have been revised to improve comparability with the presentation of DowDuPont, including the reclassification of
$1 million
at December 31, 2016 of assets from equity securities to alternative investments and
$481 million
at December 31, 2016 (
$276 million
at January 1, 2016) of assets from fixed income securities to alternative investments.
|
Weighted-Average Assumptions
|
2017
|
2016
|
2015
|
|||
Dividend yield
|
3.01
|
%
|
4.13
|
%
|
3.54
|
%
|
Expected volatility
|
23.71
|
%
|
31.60
|
%
|
27.84
|
%
|
Risk-free interest rate
|
1.28
|
%
|
1.12
|
%
|
1.02
|
%
|
Expected life of stock options granted during period (years)
|
7.5
|
|
7.8
|
|
7.7
|
|
Life of Employee Stock Purchase Plan (months)
|
3
|
|
4
|
|
6
|
|
Stock Options
|
2017
|
|||||
Shares in thousands
|
Shares
|
Exercise
Price
1
|
||||
Outstanding at Jan 1, 2017
|
34,770
|
|
$
|
36.20
|
|
|
Granted
|
2,221
|
|
$
|
61.19
|
|
|
Exercised
|
(10,194
|
)
|
$
|
36.02
|
|
|
Forfeited/Expired
|
(169
|
)
|
$
|
43.75
|
|
|
Outstanding at Dec 31, 2017
|
26,628
|
|
$
|
38.30
|
|
|
Remaining contractual life in years
|
|
5.10
|
|
|||
Aggregate intrinsic value in millions
|
$
|
877
|
|
|
|
|
Exercisable at Dec 31, 2017
|
22,019
|
|
$
|
35.16
|
|
|
Remaining contractual life in years
|
|
4.43
|
|
|||
Aggregate intrinsic value in millions
|
$
|
794
|
|
|
|
Additional Information about Stock Options
|
|
|
|
||||||
In millions, except per share amounts
|
2017
|
2016
|
2015
|
||||||
Weighted-average fair value per share of options granted
|
$
|
14.44
|
|
$
|
10.95
|
|
$
|
11.61
|
|
Total compensation expense for stock option plans
|
$
|
37
|
|
$
|
32
|
|
$
|
55
|
|
Related tax benefit
|
$
|
14
|
|
$
|
12
|
|
$
|
20
|
|
Total amount of cash received from the exercise of options
|
$
|
310
|
|
$
|
312
|
|
$
|
377
|
|
Total intrinsic value of options exercised
1
|
$
|
286
|
|
$
|
153
|
|
$
|
175
|
|
Related tax benefit
|
$
|
106
|
|
$
|
57
|
|
$
|
65
|
|
Deferred Stock
|
2017
|
||||
Shares in thousands
|
Shares
|
Grant Date
Fair Value
1
|
|||
Nonvested at Jan 1, 2017
|
6,382
|
|
$
|
47.49
|
|
Granted
|
1,709
|
|
$
|
61.29
|
|
Vested
|
(2,804
|
)
|
$
|
47.60
|
|
Canceled
|
(112
|
)
|
$
|
50.14
|
|
Conversion of performance deferred stock awards at Conversion Date
|
8,171
|
|
$
|
49.94
|
|
Nonvested at Dec 31, 2017
|
13,346
|
|
$
|
50.71
|
|
Additional Information about Deferred Stock
|
|
|
|
||||||
In millions, except per share amounts
|
2017
|
2016
|
2015
|
||||||
Weighted-average fair value per share of deferred stock granted
|
$
|
61.29
|
|
$
|
46.25
|
|
$
|
49.42
|
|
Total fair value of deferred stock vested
|
$
|
179
|
|
$
|
166
|
|
$
|
162
|
|
Related tax benefit
|
$
|
66
|
|
$
|
61
|
|
$
|
60
|
|
Total compensation expense for deferred stock awards
|
$
|
178
|
|
$
|
97
|
|
$
|
110
|
|
Related tax benefit
|
$
|
66
|
|
$
|
36
|
|
$
|
41
|
|
Additional Information about Performance Deferred Stock
|
|
|
|
||||||
In millions, except share amounts
|
2017
|
2016
|
2015
|
||||||
Total fair value of performance deferred stock vested and delivered
1
|
$
|
202
|
|
$
|
103
|
|
$
|
37
|
|
Related tax benefit
|
$
|
75
|
|
$
|
38
|
|
$
|
14
|
|
Total compensation expense for performance deferred stock awards
|
$
|
106
|
|
$
|
125
|
|
$
|
172
|
|
Related tax benefit
|
$
|
39
|
|
$
|
46
|
|
$
|
63
|
|
Shares of performance deferred stock settled in cash (in thousands)
2
|
616
|
|
861
|
|
327
|
|
|||
Total cash paid to settle performance deferred stock awards
3
|
$
|
38
|
|
$
|
40
|
|
$
|
16
|
|
Restricted Stock
|
Shares Issued
(in thousands)
|
Weighted-Average Fair Value
|
|||
Year
|
|||||
2017
|
33
|
|
$
|
62.04
|
|
2016
|
32
|
|
$
|
50.55
|
|
2015
|
32
|
|
$
|
51.51
|
|
Employee Stock Purchase Plan
|
2017
|
||||
Shares in thousands
|
Shares
|
Exercise
Price
1
|
|||
Outstanding and exercisable at Jan 1, 2017
|
—
|
|
$
|
—
|
|
Granted
|
3,578
|
|
$
|
50.22
|
|
Exercised
|
(3,560
|
)
|
$
|
50.22
|
|
Forfeited/Expired
|
(18
|
)
|
$
|
50.22
|
|
Outstanding and exercisable at Dec 31, 2017
|
—
|
|
$
|
—
|
|
Additional Information about Employee Stock Purchase Plan
|
|
|
|
||||||
In millions, except per share amounts
|
2017
|
2016
|
2015
|
||||||
Weighted-average fair value per share of purchase rights granted
|
$
|
10.70
|
|
$
|
3.40
|
|
$
|
4.62
|
|
Total compensation expense for ESPP
|
$
|
38
|
|
$
|
7
|
|
$
|
15
|
|
Related tax benefit
|
$
|
14
|
|
$
|
3
|
|
$
|
5
|
|
Total amount of cash received from the exercise of purchase rights
|
$
|
179
|
|
$
|
86
|
|
$
|
131
|
|
Total intrinsic value of purchase rights exercised
1
|
$
|
48
|
|
$
|
23
|
|
$
|
25
|
|
Related tax benefit
|
$
|
18
|
|
$
|
9
|
|
$
|
9
|
|
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
|
|
|
|
||||||
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
|
)
|
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.
|
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
|
|
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
|
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
|
|
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.
|
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).
|
Basis of Fair Value Measurements on a Recurring Basis
|
Dec 31, 2017
|
Dec 31, 2016
|
||||||||||||||||||||||
In millions
|
Level 1
|
Level 2
|
Level 3
|
Total
|
Level 1
|
Level 2
|
Level 3
|
Total
|
||||||||||||||||
Assets at fair value:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents
1
|
$
|
—
|
|
$
|
2,280
|
|
$
|
—
|
|
$
|
2,280
|
|
$
|
—
|
|
$
|
4,173
|
|
$
|
—
|
|
$
|
4,173
|
|
Marketable securities
|
—
|
|
4
|
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
|
||||||||
Interests in trade accounts receivable conduits
2
|
—
|
|
—
|
|
677
|
|
677
|
|
—
|
|
—
|
|
1,237
|
|
1,237
|
|
||||||||
Equity securities
3
|
88
|
|
52
|
|
—
|
|
140
|
|
619
|
|
87
|
|
—
|
|
706
|
|
||||||||
Debt securities:
3
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government debt
4
|
—
|
|
639
|
|
—
|
|
639
|
|
—
|
|
608
|
|
—
|
|
608
|
|
||||||||
Corporate bonds
|
—
|
|
733
|
|
—
|
|
733
|
|
—
|
|
645
|
|
—
|
|
645
|
|
||||||||
Derivatives relating to:
5
|
|
|
|
|
|
|
|
|
||||||||||||||||
Commodities
|
47
|
|
100
|
|
—
|
|
147
|
|
48
|
|
29
|
|
—
|
|
77
|
|
||||||||
Foreign currency
|
—
|
|
126
|
|
—
|
|
126
|
|
—
|
|
193
|
|
—
|
|
193
|
|
||||||||
Total assets at fair value
|
$
|
135
|
|
$
|
3,934
|
|
$
|
677
|
|
$
|
4,746
|
|
$
|
667
|
|
$
|
5,735
|
|
$
|
1,237
|
|
$
|
7,639
|
|
Liabilities at fair value:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Long-term debt
6
|
$
|
—
|
|
$
|
22,615
|
|
$
|
—
|
|
$
|
22,615
|
|
$
|
—
|
|
$
|
22,807
|
|
$
|
—
|
|
$
|
22,807
|
|
Derivatives relating to:
5
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rates
|
—
|
|
4
|
|
—
|
|
4
|
|
—
|
|
5
|
|
—
|
|
5
|
|
||||||||
Commodities
|
31
|
|
261
|
|
—
|
|
292
|
|
20
|
|
214
|
|
—
|
|
234
|
|
||||||||
Foreign currency
|
—
|
|
216
|
|
—
|
|
216
|
|
—
|
|
139
|
|
—
|
|
139
|
|
||||||||
Total liabilities at fair value
|
$
|
31
|
|
$
|
23,096
|
|
$
|
—
|
|
$
|
23,127
|
|
$
|
20
|
|
$
|
23,165
|
|
$
|
—
|
|
$
|
23,185
|
|
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.
|
1.
|
Included in "Accounts and notes receivable – Other" in the consolidated balance sheets.
|
2.
|
Included in "Selling, general and administrative expenses" in the consolidated statements of income.
|
Basis of Fair Value Measurements on a Nonrecurring Basis at Dec 31
|
Quoted Prices in Active Markets for Identical Items (Level 1)
|
Significant Other Unobservable Inputs
(Level 3)
|
Total Losses
|
||||||
In millions
|
|||||||||
2017
|
|
|
|
||||||
Assets at fair value:
|
|
|
|
||||||
Long-lived assets, intangible assets, other assets and equity method investments
|
$
|
—
|
|
$
|
61
|
|
$
|
(1,226
|
)
|
Goodwill
|
$
|
—
|
|
$
|
—
|
|
$
|
(1,491
|
)
|
2016
|
|
|
|
||||||
Assets at fair value:
|
|
|
|
||||||
Long-lived assets, other assets and equity method investments
|
$
|
46
|
|
$
|
—
|
|
$
|
(296
|
)
|
2015
|
|
|
|
||||||
Assets at fair value:
|
|
|
|
||||||
Long-lived assets, equity method investments, investments and other assets
|
$
|
—
|
|
$
|
24
|
|
$
|
(313
|
)
|
1.
|
All assets were restricted at
December 31, 2017
and
December 31, 2016
.
|
2.
|
All liabilities were nonrecourse at
December 31, 2017
and
December 31, 2016
.
|
1.
|
On October 5, 2015, the Company completed the transfer of its U.S. Gulf Coast Chlor-Alkali and Vinyl, Global Chlorinated Organics and Global Epoxy businesses to Olin. See Note
7
for additional information.
|
Geographic Region Information
|
United
States
|
EMEA
|
Rest of
World
|
Total
|
||||||||
In millions
|
||||||||||||
2017
|
|
|
|
|
||||||||
Sales to external customers
|
$
|
19,166
|
|
$
|
16,393
|
|
$
|
19,949
|
|
$
|
55,508
|
|
Long-lived assets
|
$
|
15,715
|
|
$
|
2,999
|
|
$
|
5,098
|
|
$
|
23,812
|
|
2016
1
|
|
|
|
|
||||||||
Sales to external customers
|
$
|
16,681
|
|
$
|
13,633
|
|
$
|
17,844
|
|
$
|
48,158
|
|
Long-lived assets
|
$
|
14,812
|
|
$
|
2,708
|
|
$
|
5,966
|
|
$
|
23,486
|
|
2015
1
|
|
|
|
|
||||||||
Sales to external customers
|
$
|
16,865
|
|
$
|
14,288
|
|
$
|
17,625
|
|
$
|
48,778
|
|
Long-lived assets
|
$
|
11,062
|
|
$
|
2,137
|
|
$
|
4,655
|
|
$
|
17,854
|
|
1.
|
Updated to conform with the current year presentation.
|
2017
|
|
|
|
|
|
||||||||||
In millions, except per share amounts (Unaudited)
|
1st
|
2nd
|
3rd
|
4th
|
Year
|
||||||||||
Net sales
|
$
|
13,230
|
|
$
|
13,834
|
|
$
|
13,633
|
|
$
|
14,811
|
|
$
|
55,508
|
|
Cost of sales
1
|
$
|
10,197
|
|
$
|
10,763
|
|
$
|
10,666
|
|
$
|
12,682
|
|
$
|
44,308
|
|
Gross margin
|
$
|
3,033
|
|
$
|
3,071
|
|
$
|
2,967
|
|
$
|
2,129
|
|
$
|
11,200
|
|
Restructuring, goodwill impairment and asset related charges - net
2
|
$
|
(1
|
)
|
$
|
(12
|
)
|
$
|
139
|
|
$
|
2,974
|
|
$
|
3,100
|
|
Integration and separation costs
|
$
|
109
|
|
$
|
136
|
|
$
|
283
|
|
$
|
258
|
|
$
|
786
|
|
Net income (loss)
3
|
$
|
915
|
|
$
|
1,359
|
|
$
|
805
|
|
$
|
(2,484
|
)
|
$
|
595
|
|
Net income (loss) available for common stockholders
|
$
|
888
|
|
$
|
1,321
|
|
$
|
783
|
|
$
|
(2,526
|
)
|
$
|
466
|
|
Earnings per common share - basic
4
|
$
|
0.74
|
|
$
|
1.08
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|||
Earnings per common share - diluted
4
|
$
|
0.72
|
|
$
|
1.07
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|||
Dividends declared per share of common stock
4, 5
|
$
|
0.46
|
|
$
|
0.46
|
|
$
|
0.46
|
|
N/A
|
|
$
|
1.38
|
|
|
Market price range of common stock:
6
|
|
|
|
|
|
||||||||||
High
|
$
|
65.00
|
|
$
|
65.26
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|||
Low
|
$
|
57.09
|
|
$
|
60.20
|
|
N/A
|
|
N/A
|
|
N/A
|
|
1.
|
Previously reported amounts have been updated for reclassifications made to the integration and separations costs line.
|
2.
|
See Note
6
for additional information.
|
3.
|
See Notes
5
,
8
,
9
,
13
,
16
and
19
for additional information on items materially impacting "Net income (loss)." The fourth quarter of 2017 included: the effects of the U.S. Tax Cuts and Jobs Act, enacted on December 22, 2017; a gain related to the DAS Divested Ag Business; and, a charge related to payment of plan obligations to certain participants of a U.S. non-qualified pension plan. The third quarter of 2017 included a gain related to the sale of the Company's EAA Business. The second quarter of 2017 included a gain related to the Nova patent infringement award. The first quarter of 2017 included a loss related to the Bayer CropScience arbitration matter.
|
4.
|
Effective with the Merger, all issued and outstanding shares of the Company's common stock are owned solely by its parent, DowDuPont Inc.
|
5.
|
Dow declared its last dividend on common stock in July 2017.
|
6.
|
Composite price as reported by the New York Stock Exchange.
|
2016
|
|
|
|
|
|
||||||||||
In millions, except per share amounts (Unaudited)
|
1st
|
2nd
|
3rd
|
4th
|
Year
|
||||||||||
Net sales
|
$
|
10,703
|
|
$
|
11,952
|
|
$
|
12,483
|
|
$
|
13,020
|
|
$
|
48,158
|
|
Cost of sales
|
$
|
7,951
|
|
$
|
9,275
|
|
$
|
9,840
|
|
$
|
10,574
|
|
$
|
37,640
|
|
Gross margin
|
$
|
2,752
|
|
$
|
2,677
|
|
$
|
2,643
|
|
$
|
2,446
|
|
$
|
10,518
|
|
Restructuring, goodwill impairment and asset related charges - net
1
|
$
|
(2
|
)
|
$
|
454
|
|
$
|
—
|
|
$
|
143
|
|
$
|
595
|
|
Integration and separation costs
|
$
|
34
|
|
$
|
67
|
|
$
|
127
|
|
$
|
121
|
|
$
|
349
|
|
Asbestos-related charge
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,113
|
|
$
|
1,113
|
|
Net income
2
|
$
|
275
|
|
$
|
3,227
|
|
$
|
818
|
|
$
|
84
|
|
$
|
4,404
|
|
Net income (loss) available for common stockholders
|
$
|
169
|
|
$
|
3,123
|
|
$
|
719
|
|
$
|
(33
|
)
|
$
|
3,978
|
|
Earnings (Loss) per common share - basic
3, 4
|
$
|
0.15
|
|
$
|
2.79
|
|
$
|
0.64
|
|
$
|
(0.03
|
)
|
$
|
3.57
|
|
Earnings (Loss) per common share - diluted
3, 5, 6
|
$
|
0.15
|
|
$
|
2.61
|
|
$
|
0.63
|
|
$
|
(0.03
|
)
|
$
|
3.52
|
|
Dividends declared per share of common stock
|
$
|
0.46
|
|
$
|
0.46
|
|
$
|
0.46
|
|
$
|
0.46
|
|
$
|
1.84
|
|
Market price range of common stock:
7
|
|
|
|
|
|
||||||||||
High
|
$
|
52.23
|
|
$
|
53.98
|
|
$
|
54.59
|
|
$
|
59.33
|
|
$
|
59.33
|
|
Low
|
$
|
40.26
|
|
$
|
47.75
|
|
$
|
47.51
|
|
$
|
51.60
|
|
$
|
40.26
|
|
1.
|
See Note
6
for additional information.
|
2.
|
The second quarter of 2016 included the gain related to the Dow Corning ownership restructure. See Note
4
for further information.
|
3.
|
Due to quarterly changes in the share count and the allocation of income to participating securities, the sum of the four quarters does not equal the earnings per share amount calculated for the year.
|
4.
|
On December 30, 2016, the Company converted
4 million
shares of Cumulative Convertible Perpetual Preferred Stock, Series A ("Preferred Stock") into
96.8 million
shares of the Company's common stock. As a result, the basic share count reflects a two-day averaging effect for the three- and twelve-month periods ended December 31, 2016.
|
5.
|
"Earnings (loss) per common share - diluted" for the three-month period ended December 31, 2016, was calculated using "Weighted average common shares outstanding - basic" due to a net loss reported in the period.
|
6.
|
For the quarter ended June 30, 2016, an assumed conversion of Preferred Stock into shares of the Company's common stock was included in the calculation of earnings per common share - diluted. The assumed conversion of the Preferred Stock was considered antidilutive for all other periods.
|
7.
|
Composite price as reported by the New York Stock Exchange.
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.
|
/s/ ANDREW N. LIVERIS
|
|
/s/ HOWARD I. UNGERLEIDER
|
Andrew N. Liveris
|
|
Howard I. Ungerleider
|
Chief Executive Officer and Chairman of the Board
|
|
Vice Chairman and Chief Financial Officer
|
|
|
|
|
|
|
/s/ RONALD C. EDMONDS
|
|
|
Ronald C. Edmonds
|
|
|
Controller and Vice President of Controllers and Tax
|
|
|
/
S
/ DELOITTE & TOUCHE
LLP
|
Deloitte & Touche
LLP
|
Midland, Michigan
|
February 15, 2018
|
Type of Fees
|
|
|
||||
In thousands
|
2017
|
2016
|
||||
Audit Fees
1
|
$
|
25,792
|
|
$
|
24,686
|
|
Audit-Related Fees
2
|
8,062
|
|
12,012
|
|
||
Tax Fees
3
|
1,729
|
|
4,237
|
|
||
Total
|
$
|
35,583
|
|
$
|
40,935
|
|
1.
|
The aggregate fees billed for the integrated audit of the Company's annual financial statements and internal control over financial reporting, the reviews of the financial statements in quarterly reports on Form 10-Q, comfort letters, consents, statutory audits, and other regulatory filings.
|
2.
|
The aggregate fees billed primarily for audits of employee benefit plans' financial statements, assessment of controls relating to outsourced services, audits and reviews supporting divestiture activities, and agreed-upon procedures engagements.
|
3.
|
The aggregate fees billed for preparation of expatriate employees' tax returns and related compliance services.
|
(a)
|
The following documents are filed as part of this report:
|
(1)
|
The Company’s
2017
Consolidated Financial Statements and the Report of Independent Registered Public Accounting Firm are included in Part II, Item 8. Financial Statements and Supplementary Data.
|
(2)
|
Financial Statement Schedules – The following Financial Statement Schedule should be read in conjunction with the Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm included in Part II, Item 8. Financial Statements and Supplementary Data:
|
Schedule II
|
Valuation and Qualifying Accounts
|
(3)
|
The following exhibits are filed with or incorporated by reference into this Annual Report on Form 10-K:
|
Exhibit No.
|
Description of Exhibit
|
2.1
|
2.1.1
|
2.2
|
2.2.1
|
2.3
|
2.3.1
|
2.4
|
2.4.1
|
3.1
|
3.2
|
4.1
|
4.2
|
10.1
|
10.1.1
|
10.1.2
|
10.1.3
|
10.1.4
|
10.1.5
|
10.2
|
10.3
|
10.4
|
10.4.1
|
10.5
|
10.6
|
10.7
|
10.8
|
10.8.1
|
10.9
|
10.10
|
10.11
|
12.1*
|
21*
|
23.1*
|
23.2*
|
31.1*
|
31.2*
|
32.1*
|
32.2*
|
99.1
|
99.2
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
The Dow Chemical Company and Subsidiaries
|
Schedule II
|
|
Valuation and Qualifying Accounts
|
|
(In millions) For the years ended Dec 31,
|
2017
|
2016
|
2015
|
||||||
Accounts Receivable - Allowance for Doubtful Receivables
|
|
|
|
||||||
Balance at beginning of year
|
$
|
110
|
|
$
|
94
|
|
$
|
110
|
|
Additions charged to expenses
|
33
|
|
31
|
|
24
|
|
|||
Additions charged to other accounts
1
|
3
|
|
—
|
|
2
|
|
|||
Deductions from reserves
2
|
(29
|
)
|
(15
|
)
|
(42
|
)
|
|||
Balance at end of year
|
$
|
117
|
|
$
|
110
|
|
$
|
94
|
|
Inventory - Obsolescence Reserve
|
|
|
|
||||||
Balance at beginning of year
|
$
|
123
|
|
$
|
152
|
|
$
|
135
|
|
Additions charged to expenses
|
40
|
|
29
|
|
63
|
|
|||
Deductions from reserves
3
|
(48
|
)
|
(58
|
)
|
(46
|
)
|
|||
Balance at end of year
|
$
|
115
|
|
$
|
123
|
|
$
|
152
|
|
Reserves for Other Investments and Noncurrent Receivables
|
|
|
|
||||||
Balance at beginning of year
|
$
|
358
|
|
$
|
494
|
|
$
|
477
|
|
Additions charged to expenses
4
|
83
|
|
153
|
|
108
|
|
|||
Deductions from reserves
5
|
(4
|
)
|
(289
|
)
|
(91
|
)
|
|||
Balance at end of year
|
$
|
437
|
|
$
|
358
|
|
$
|
494
|
|
Deferred Tax Assets - Valuation Allowance
|
|
|
|
||||||
Balance at beginning of year
|
$
|
1,061
|
|
$
|
1,000
|
|
$
|
1,106
|
|
Additions charged to expenses
|
370
|
|
155
|
|
67
|
|
|||
Deductions from reserves
|
(60
|
)
|
(94
|
)
|
(173
|
)
|
|||
Balance at end of year
|
$
|
1,371
|
|
$
|
1,061
|
|
$
|
1,000
|
|
1.
|
Additions to allowance for doubtful accounts charged to other accounts were classified as "Accounts and notes receivable - Other" in the consolidated balance sheets. These reserves relate to the Company's sale of trade accounts receivable. Anticipated credit losses in the portfolio of receivables sold are used to fair value the Company's interests held in trade accounts receivable conduits. See Notes
14
and
22
to the Consolidated Financial Statements for further information.
|
2.
|
Deductions include write-offs, recoveries, currency translation adjustment and other miscellaneous items.
|
4.
|
In 2016, additions to reserves for "Other investments and noncurrent receivables" charged to costs and expenses include
$143 million
related to the Company's investment in AgroFresh Solutions, Inc. See Note
5
to the Consolidated Financial Statements for further information.
|
5.
|
In 2016, deductions from reserves for "Other investments and noncurrent receivables" include
$237 million
related to the DCC Transaction. See Note
4
to the Consolidated Financial Statements for further information.
|
THE DOW CHEMICAL COMPANY
|
|
|
|
By
|
/s/ R. C. EDMONDS
|
|
R. C. Edmonds, Controller and Vice President of Controllers and Tax
|
Date
|
February 15, 2018
|
|
|
|
|
|
By
|
/s/ R. C. EDMONDS
|
|
By
|
/s/ H. I. UNGERLEIDER
|
|
R. C. Edmonds, Controller and Vice President of Controllers and Tax
|
|
|
H. I. Ungerleider, Director, Vice Chairman and Chief Financial Officer
|
Date
|
February 15, 2018
|
|
Date
|
February 15, 2018
|
|
|
|
|
|
By
|
/s/ A. N. LIVERIS
|
|
|
|
|
A. N. Liveris, Director, Chief Executive Officer and Chairman of the Board
|
|
|
|
Date
|
February 15, 2018
|
|
|
|
The Dow Chemical Company and Subsidiaries
|
Trademark Listing
|
1 Year Dow Chart |
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