Commission
File Number
|
Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number
|
State of Incorporation or
Organization
|
I.R.S. Employer
Identification No.
|
001-38646
|
Dow Inc.
|
Delaware
|
30-1128146
|
|
2211 H.H. Dow Way, Midland, MI 48674
|
|
|
|
(989) 636-1000
|
|
|
001-03433
|
The Dow Chemical Company
|
Delaware
|
38-1285128
|
|
2211 H.H. Dow Way, Midland, MI 48674
|
|
|
|
(989) 636-1000
|
|
|
Dow Inc.
|
Large accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated filer
þ
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
The Dow Chemical Company
|
Large accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated filer
þ
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
Registrant
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Dow Inc.
|
Common Stock, par value $0.01 per share
|
DOW
|
New York Stock Exchange
|
|
|
PAGE
|
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
|
The Dow Chemical Company and Subsidiaries:
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
Dow Inc. and The Dow Chemical Company and Subsidiaries:
|
|
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
Exhibits
.
|
|
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
PART I – FINANCIAL INFORMATION
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Net sales
|
$
|
13,582
|
|
$
|
14,899
|
|
Cost of sales
|
10,707
|
|
11,552
|
|
||
Research and development expenses
|
361
|
|
386
|
|
||
Selling, general and administrative expenses
|
701
|
|
751
|
|
||
Amortization of intangibles
|
154
|
|
159
|
|
||
Restructuring and asset related charges - net
|
232
|
|
165
|
|
||
Integration and separation costs
|
408
|
|
202
|
|
||
Equity in earnings of nonconsolidated affiliates
|
13
|
|
243
|
|
||
Sundry income (expense) - net
|
73
|
|
83
|
|
||
Interest expense and amortization of debt discount
|
247
|
|
270
|
|
||
Income before income taxes
|
858
|
|
1,740
|
|
||
Provision for income taxes
|
272
|
|
363
|
|
||
Net income
|
586
|
|
1,377
|
|
||
Net income attributable to noncontrolling interests
|
45
|
|
35
|
|
||
Net income available for The Dow Chemical Company common stockholder
|
$
|
541
|
|
$
|
1,342
|
|
|
|
|
||||
Depreciation
|
$
|
598
|
|
$
|
621
|
|
Capital expenditures
|
$
|
514
|
|
$
|
423
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Net income
|
$
|
586
|
|
$
|
1,377
|
|
Other comprehensive income (loss), net of tax
|
|
|
||||
Unrealized gains (losses) on investments
|
67
|
|
(25
|
)
|
||
Cumulative translation adjustments
|
(31
|
)
|
376
|
|
||
Pension and other postretirement benefit plans
|
141
|
|
126
|
|
||
Derivative instruments
|
(75
|
)
|
6
|
|
||
Total other comprehensive income
|
102
|
|
483
|
|
||
Comprehensive income
|
688
|
|
1,860
|
|
||
Comprehensive income attributable to noncontrolling interests, net of tax
|
51
|
|
28
|
|
||
Comprehensive income attributable to The Dow Chemical Company
|
$
|
637
|
|
$
|
1,832
|
|
In millions, except share amounts (Unaudited)
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and cash equivalents (variable interest entities restricted - 2019: $109; 2018: $82)
|
$
|
2,969
|
|
$
|
2,669
|
|
Marketable securities
|
101
|
|
100
|
|
||
Accounts and notes receivable:
|
|
|
||||
Trade (net of allowance for doubtful receivables - 2019: $109; 2018: $106)
|
8,428
|
|
8,246
|
|
||
Other
|
3,947
|
|
4,136
|
|
||
Inventories
|
9,508
|
|
9,260
|
|
||
Other current assets
|
708
|
|
852
|
|
||
Total current assets
|
25,661
|
|
25,263
|
|
||
Investments
|
|
|
||||
Investment in nonconsolidated affiliates
|
3,321
|
|
3,823
|
|
||
Other investments (investments carried at fair value - 2019: $1,796; 2018: $1,699)
|
2,737
|
|
2,648
|
|
||
Noncurrent receivables
|
345
|
|
394
|
|
||
Total investments
|
6,403
|
|
6,865
|
|
||
Property
|
|
|
||||
Property
|
61,764
|
|
61,437
|
|
||
Less accumulated depreciation
|
38,272
|
|
37,775
|
|
||
Net property (variable interest entities restricted - 2019: $718; 2018: $734)
|
23,492
|
|
23,662
|
|
||
Other Assets
|
|
|
||||
Goodwill
|
13,812
|
|
13,848
|
|
||
Other intangible assets (net of accumulated amortization - 2019: $5,912; 2018: $5,762)
|
4,743
|
|
4,913
|
|
||
Operating lease right-of-use assets
|
2,584
|
|
—
|
|
||
Deferred income tax assets
|
2,183
|
|
2,031
|
|
||
Deferred charges and other assets
|
859
|
|
796
|
|
||
Total other assets
|
24,181
|
|
21,588
|
|
||
Total Assets
|
$
|
79,737
|
|
$
|
77,378
|
|
Liabilities and Equity
|
|
|
||||
Current Liabilities
|
|
|
||||
Notes payable
|
$
|
317
|
|
$
|
305
|
|
Long-term debt due within one year
|
2,369
|
|
340
|
|
||
Accounts payable:
|
|
|
||||
Trade
|
5,103
|
|
5,378
|
|
||
Other
|
3,176
|
|
3,330
|
|
||
Operating lease liabilities - current
|
477
|
|
—
|
|
||
Income taxes payable
|
699
|
|
791
|
|
||
Accrued and other current liabilities
|
3,232
|
|
3,611
|
|
||
Total current liabilities
|
15,373
|
|
13,755
|
|
||
Long-Term Debt (variable interest entities nonrecourse - 2019: $43; 2018: $75)
|
17,160
|
|
19,254
|
|
||
Other Noncurrent Liabilities
|
|
|
||||
Deferred income tax liabilities
|
721
|
|
664
|
|
||
Pension and other postretirement benefits - noncurrent
|
9,103
|
|
9,226
|
|
||
Asbestos-related liabilities - noncurrent
|
1,133
|
|
1,142
|
|
||
Operating lease liabilities - noncurrent
|
2,126
|
|
—
|
|
||
Other noncurrent obligations
|
5,975
|
|
5,368
|
|
||
Total other noncurrent liabilities
|
19,058
|
|
16,400
|
|
||
Stockholders’ Equity
|
|
|
||||
Common stock (authorized and issued 100 shares of $0.01 par value each)
|
—
|
|
—
|
|
||
Additional paid-in capital
|
7,153
|
|
7,042
|
|
||
Retained earnings
|
29,701
|
|
29,808
|
|
||
Accumulated other comprehensive loss
|
(9,783
|
)
|
(9,885
|
)
|
||
Unearned ESOP shares
|
(105
|
)
|
(134
|
)
|
||
The Dow Chemical Company’s stockholders’ equity
|
26,966
|
|
26,831
|
|
||
Noncontrolling interests
|
1,180
|
|
1,138
|
|
||
Total equity
|
28,146
|
|
27,969
|
|
||
Total Liabilities and Equity
|
$
|
79,737
|
|
$
|
77,378
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Operating Activities
|
|
|
||||
Net income
|
$
|
586
|
|
$
|
1,377
|
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
|
|
|
||||
Depreciation and amortization
|
840
|
|
837
|
|
||
Credit for deferred income tax
|
(89
|
)
|
(67
|
)
|
||
Earnings of nonconsolidated affiliates less than dividends received
|
750
|
|
287
|
|
||
Net periodic pension benefit cost
|
62
|
|
110
|
|
||
Pension contributions
|
(103
|
)
|
(308
|
)
|
||
Net (gain) loss on sales of assets, businesses and investments
|
12
|
|
(33
|
)
|
||
Restructuring and asset related charges - net
|
232
|
|
165
|
|
||
Other net loss
|
39
|
|
98
|
|
||
Changes in assets and liabilities, net of effects of acquired and divested companies:
|
|
|
||||
Accounts and notes receivable
|
(58
|
)
|
(1,524
|
)
|
||
Inventories
|
(266
|
)
|
(1,239
|
)
|
||
Accounts payable
|
(468
|
)
|
823
|
|
||
Other assets and liabilities, net
|
(111
|
)
|
(684
|
)
|
||
Cash provided by (used for) operating activities
|
1,426
|
|
(158
|
)
|
||
Investing Activities
|
|
|
||||
Capital expenditures
|
(514
|
)
|
(423
|
)
|
||
Investment in gas field developments
|
(25
|
)
|
(28
|
)
|
||
Proceeds from sales of property and businesses, net of cash divested
|
25
|
|
17
|
|
||
Proceeds from sale of ownership interests in nonconsolidated affiliates
|
21
|
|
—
|
|
||
Purchases of investments
|
(173
|
)
|
(557
|
)
|
||
Proceeds from sales and maturities of investments
|
180
|
|
454
|
|
||
Proceeds from interests in trade accounts receivable conduits
|
—
|
|
445
|
|
||
Cash used for investing activities
|
(486
|
)
|
(92
|
)
|
||
Financing Activities
|
|
|
||||
Changes in short-term notes payable
|
(17
|
)
|
293
|
|
||
Payments on long-term debt
|
(80
|
)
|
(54
|
)
|
||
Proceeds from issuance of parent company stock
|
28
|
|
63
|
|
||
Employee taxes paid for share-based payment arrangements
|
(54
|
)
|
(77
|
)
|
||
Distributions to noncontrolling interests
|
(9
|
)
|
(24
|
)
|
||
Dividends paid to parent
|
(535
|
)
|
(1,057
|
)
|
||
Other financing activities, net
|
—
|
|
3
|
|
||
Cash used for financing activities
|
(667
|
)
|
(853
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
30
|
|
100
|
|
||
Summary
|
|
|
||||
Increase (Decrease) in cash, cash equivalents and restricted cash
|
303
|
|
(1,003
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
2,709
|
|
6,207
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
3,012
|
|
$
|
5,204
|
|
Less: Restricted cash and cash equivalents, included in "Other current assets"
|
43
|
|
18
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,969
|
|
$
|
5,186
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Common Stock
|
|
|
||||
Balance at beginning and end of period
|
$
|
—
|
|
$
|
—
|
|
Additional Paid-in Capital
|
|
|
||||
Balance at beginning of period
|
7,042
|
|
6,553
|
|
||
Issuance of parent company stock
|
28
|
|
63
|
|
||
Stock-based compensation and allocation of ESOP shares
|
83
|
|
142
|
|
||
Balance at end of period
|
7,153
|
|
6,758
|
|
||
Retained Earnings
|
|
|
||||
Balance at beginning of period
|
29,808
|
|
28,050
|
|
||
Net income available for The Dow Chemical Company common stockholder
|
541
|
|
1,342
|
|
||
Dividends to parent
|
(535
|
)
|
(1,057
|
)
|
||
Adoption of accounting standards (Notes 1, 2 and 6)
|
(111
|
)
|
(68
|
)
|
||
Other
|
(2
|
)
|
(6
|
)
|
||
Balance at end of period
|
29,701
|
|
28,261
|
|
||
Accumulated Other Comprehensive Loss
|
|
|
||||
Balance at beginning of period
|
(9,885
|
)
|
(8,591
|
)
|
||
Other comprehensive income
|
102
|
|
483
|
|
||
Adoption of accounting standards (Note 1)
|
—
|
|
20
|
|
||
Balance at end of period
|
(9,783
|
)
|
(8,088
|
)
|
||
Unearned ESOP Shares
|
|
|
||||
Balance at beginning of period
|
(134
|
)
|
(189
|
)
|
||
Allocation of ESOP shares
|
29
|
|
39
|
|
||
Balance at end of period
|
(105
|
)
|
(150
|
)
|
||
The Dow Chemical Company's stockholders' equity
|
26,966
|
|
26,781
|
|
||
Noncontrolling Interests
|
1,180
|
|
1,190
|
|
||
Total Equity
|
$
|
28,146
|
|
$
|
27,971
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
Note
|
|
Page
|
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
10
|
||
11
|
||
12
|
||
13
|
||
14
|
||
15
|
||
16
|
||
17
|
||
18
|
||
19
|
Net Trade Sales by Principal Product Group
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Coatings & Performance Monomers
|
$
|
904
|
|
$
|
954
|
|
Consumer Solutions
|
1,365
|
|
1,363
|
|
||
Crop Protection
|
1,124
|
|
1,122
|
|
||
Electronics & Imaging
|
625
|
|
627
|
|
||
Hydrocarbons & Energy
|
1,380
|
|
1,779
|
|
||
Industrial Biosciences
|
119
|
|
135
|
|
||
Industrial Solutions
1
|
1,104
|
|
1,156
|
|
||
Nutrition & Health
|
152
|
|
156
|
|
||
Packaging and Specialty Plastics
|
3,410
|
|
3,854
|
|
||
Polyurethanes & CAV
1
|
2,297
|
|
2,557
|
|
||
Safety & Construction
|
424
|
|
444
|
|
||
Seed
|
323
|
|
371
|
|
||
Transportation & Advanced Polymers
|
284
|
|
304
|
|
||
Corporate
|
69
|
|
73
|
|
||
Other
|
2
|
|
4
|
|
||
Total
|
$
|
13,582
|
|
$
|
14,899
|
|
Net Trade Sales by Geographic Region
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
U.S. & Canada
|
$
|
4,884
|
|
$
|
5,468
|
|
EMEA
1
|
4,211
|
|
4,765
|
|
||
Asia Pacific
|
3,202
|
|
3,256
|
|
||
Latin America
|
1,285
|
|
1,410
|
|
||
Total
|
$
|
13,582
|
|
$
|
14,899
|
|
Contract Balances
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Accounts and notes receivable - Trade
|
$
|
8,428
|
|
$
|
8,246
|
|
Contract assets - current
1
|
$
|
26
|
|
$
|
37
|
|
Contract assets - noncurrent
2
|
$
|
47
|
|
$
|
47
|
|
Contract liabilities - current
3
|
$
|
233
|
|
$
|
165
|
|
Contract liabilities - noncurrent
4
|
$
|
1,739
|
|
$
|
1,390
|
|
1.
|
Included in "Other current assets" in the consolidated balance sheets.
|
2.
|
Included in "Deferred charges and other assets" in the consolidated balance sheets.
|
3.
|
Included in "Accrued and other current liabilities" in the consolidated balance sheets.
|
4.
|
Included in "Other noncurrent obligations" in the consolidated balance sheets.
|
DowDuPont Agriculture Division Program
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Total
|
||||||
In millions
|
|||||||||
2018 restructuring charges
|
$
|
24
|
|
$
|
1
|
|
$
|
25
|
|
Charges against the reserve
|
—
|
|
(1
|
)
|
(1
|
)
|
|||
Cash payments
|
(1
|
)
|
—
|
|
(1
|
)
|
|||
Reserve balance at Dec 31, 2018
|
$
|
23
|
|
$
|
—
|
|
$
|
23
|
|
Adjustments to the reserve
|
(4
|
)
|
—
|
|
(4
|
)
|
|||
Cash payments
|
(8
|
)
|
—
|
|
(8
|
)
|
|||
Reserve balance at Mar 31, 2019
|
$
|
11
|
|
$
|
—
|
|
$
|
11
|
|
DowDuPont Synergy Program
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Costs Associated with Exit and Disposal Activities
|
Total
|
||||||||
In millions
|
||||||||||||
Reserve balance at Dec 31, 2018
|
$
|
262
|
|
$
|
—
|
|
$
|
65
|
|
$
|
327
|
|
2019 restructuring charges
|
72
|
|
100
|
|
52
|
|
224
|
|
||||
Charges against the reserve
|
—
|
|
(100
|
)
|
—
|
|
(100
|
)
|
||||
Cash payments
|
(97
|
)
|
—
|
|
(29
|
)
|
(126
|
)
|
||||
Reserve balance at Mar 31, 2019
|
$
|
237
|
|
$
|
—
|
|
$
|
88
|
|
$
|
325
|
|
Inventories
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Finished goods
|
$
|
5,703
|
|
$
|
5,640
|
|
Work in process
|
2,239
|
|
2,214
|
|
||
Raw materials
|
940
|
|
941
|
|
||
Supplies
|
891
|
|
880
|
|
||
Total
|
$
|
9,773
|
|
$
|
9,675
|
|
Adjustment of inventories to a LIFO basis
|
(265
|
)
|
(415
|
)
|
||
Total inventories
|
$
|
9,508
|
|
$
|
9,260
|
|
Investments in Nonconsolidated Affiliates
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Investment in nonconsolidated affiliates
|
$
|
3,321
|
|
$
|
3,823
|
|
Other noncurrent obligations
|
(870
|
)
|
(495
|
)
|
||
Net investment in nonconsolidated affiliates
|
$
|
2,451
|
|
$
|
3,328
|
|
Investment in the HSC Group
|
|
Investment
|
|||||
In millions
|
Balance Sheet Classification
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
Hemlock Semiconductor L.L.C.
|
Other noncurrent obligations
|
$
|
(658
|
)
|
$
|
(495
|
)
|
DC HSC Holdings LLC
|
Investment in nonconsolidated affiliates
|
$
|
485
|
|
$
|
535
|
|
Goodwill
|
|
||
In millions
|
|||
Net goodwill at Dec 31, 2018
|
$
|
13,848
|
|
Foreign currency impact
|
(36
|
)
|
|
Net goodwill at Mar 31, 2019
|
$
|
13,812
|
|
Other Intangible Assets
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
In millions
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
3,253
|
|
$
|
(1,996
|
)
|
$
|
1,257
|
|
$
|
3,255
|
|
$
|
(1,934
|
)
|
$
|
1,321
|
|
Software
|
1,539
|
|
(900
|
)
|
639
|
|
1,529
|
|
(876
|
)
|
653
|
|
||||||
Trademarks/tradenames
|
680
|
|
(638
|
)
|
42
|
|
688
|
|
(631
|
)
|
57
|
|
||||||
Customer-related
|
4,898
|
|
(2,211
|
)
|
2,687
|
|
4,911
|
|
(2,151
|
)
|
2,760
|
|
||||||
Other
|
236
|
|
(167
|
)
|
69
|
|
243
|
|
(170
|
)
|
73
|
|
||||||
Total other intangible assets, finite lives
|
$
|
10,606
|
|
$
|
(5,912
|
)
|
$
|
4,694
|
|
$
|
10,626
|
|
$
|
(5,762
|
)
|
$
|
4,864
|
|
In-process research and development
|
49
|
|
—
|
|
49
|
|
49
|
|
—
|
|
49
|
|
||||||
Total other intangible assets
|
$
|
10,655
|
|
$
|
(5,912
|
)
|
$
|
4,743
|
|
$
|
10,675
|
|
$
|
(5,762
|
)
|
$
|
4,913
|
|
Amortization Expense
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Other intangible assets, excluding software
|
$
|
154
|
|
$
|
159
|
|
Software, included in “Cost of sales”
|
$
|
25
|
|
$
|
23
|
|
Cash Proceeds
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Interests in conduits
1
|
$
|
—
|
|
$
|
445
|
|
1.
|
Presented in "Investing Activities" in the consolidated statements of cash flows.
|
Notes Payable
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
In millions
|
||||||
Commercial paper
|
$
|
—
|
|
$
|
10
|
|
Notes payable to banks and other lenders
|
317
|
|
295
|
|
||
Total notes payable
|
$
|
317
|
|
$
|
305
|
|
Period-end average interest rates
|
12.09
|
%
|
8.61
|
%
|
Long-Term Debt
|
2019 Average Rate
|
Mar 31,
2019 |
2018
Average
Rate
|
Dec 31,
2018 |
||||||
In millions
|
||||||||||
Promissory notes and debentures:
|
|
|
|
|
||||||
Final maturity 2019
|
9.80
|
%
|
$
|
7
|
|
9.80
|
%
|
$
|
7
|
|
Final maturity 2020
|
4.46
|
%
|
1,547
|
|
4.46
|
%
|
1,547
|
|
||
Final maturity 2021
|
4.71
|
%
|
1,424
|
|
4.71
|
%
|
1,424
|
|
||
Final maturity 2022
|
3.50
|
%
|
1,372
|
|
3.50
|
%
|
1,373
|
|
||
Final maturity 2023
|
7.64
|
%
|
325
|
|
7.64
|
%
|
325
|
|
||
Final maturity 2024
|
3.50
|
%
|
896
|
|
3.50
|
%
|
896
|
|
||
Final maturity 2025 and thereafter
|
5.98
|
%
|
7,963
|
|
5.98
|
%
|
7,963
|
|
||
Other facilities:
|
|
|
|
|
||||||
U.S. dollar loans, various rates and maturities
|
3.52
|
%
|
4,533
|
|
3.59
|
%
|
4,533
|
|
||
Foreign currency loans, various rates and maturities
|
3.19
|
%
|
714
|
|
3.21
|
%
|
713
|
|
||
Medium-term notes, varying maturities through 2025
|
3.33
|
%
|
703
|
|
3.26
|
%
|
778
|
|
||
Finance lease obligations
|
|
369
|
|
|
369
|
|
||||
Unamortized debt discount and issuance costs
|
|
(324
|
)
|
|
(334
|
)
|
||||
Long-term debt due within one year
1
|
|
(2,369
|
)
|
|
(340
|
)
|
||||
Long-term debt
|
|
$
|
17,160
|
|
|
$
|
19,254
|
|
1.
|
Presented net of current portion of unamortized debt issuance costs.
|
1.
|
Includes
$2.0 billion
of current maturities related to the Dow Silicones term loan facility, repaid on April 5, 2019.
|
2.
|
Assumes the option to extend will be exercised for
$2.5 billion
of the Dow Silicones term loan facility.
|
Committed and Available Credit Facilities at Mar 31, 2019
|
||||||||
In millions
|
Committed Credit
|
Credit Available
|
Maturity Date
|
Interest
|
||||
Five Year Competitive Advance and Revolving Credit Facility
|
$
|
5,000
|
|
$
|
5,000
|
|
October 2023
|
Floating rate
|
Term Loan Facility
1
|
2,000
|
|
—
|
|
April 2019
|
Floating rate
|
||
Term Loan Facility
2
|
2,500
|
|
—
|
|
December 2021
|
Floating rate
|
||
North American Securitization Facility
|
800
|
|
800
|
|
September 2019
|
Floating rate
|
||
European Securitization Facility
3
|
450
|
|
450
|
|
October 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
October 2019
|
Floating rate
|
||
Bilateral Revolving Credit Facility
4
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
280
|
|
280
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
May 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
July 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
August 2020
|
Floating rate
|
||
Total committed and available credit facilities
|
$
|
12,130
|
|
$
|
7,630
|
|
|
|
1.
|
Dow Silicones voluntarily repaid
$2.0 billion
of principal on April 5, 2019.
|
2.
|
Assumes the option to extend the Dow Silicones term loan facility will be exercised.
|
3.
|
Equivalent to
Euro 400 million
.
|
4.
|
On March 9, 2019, TDCC renewed a
$100 million
Bilateral Revolving Credit Facility agreement, which has a maturity date in March 2020 and provides for interest at floating rates, as defined in the agreement.
|
Guarantees
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||
In millions
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
||||||||
Guarantees
|
2023
|
$
|
4,514
|
|
$
|
15
|
|
2023
|
$
|
4,523
|
|
$
|
25
|
|
Lease Cost
|
Three Months Ended
Mar 31, 2019 |
||
In millions
|
|||
Operating lease cost
|
$
|
147
|
|
Finance lease cost
|
|
||
Amortization of right-of-use assets - finance
|
6
|
|
|
Interest on lease liabilities - finance
|
6
|
|
|
Total finance lease cost
|
$
|
12
|
|
Short-term lease cost
|
55
|
|
|
Variable lease cost
|
85
|
|
|
Sublease income
|
(1
|
)
|
|
Total lease cost
|
$
|
298
|
|
Other Lease Information
|
Three Months Ended
Mar 31, 2019 |
||
In millions
|
|||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
154
|
|
Operating cash flows from finance leases
|
$
|
6
|
|
Financing cash flows from finance leases
|
$
|
3
|
|
Lease Position
|
Balance Sheet Classification
|
Mar 31, 2019
|
||
In millions
|
||||
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
||
Operating leases
1
|
|
$
|
2,714
|
|
Assets
|
|
|
||
Operating lease assets
|
Operating lease right-of-use assets
|
$
|
2,584
|
|
Finance lease assets
|
Property
|
437
|
|
|
Finance lease amortization
|
Accumulated depreciation
|
(143
|
)
|
|
Total lease assets
|
|
$
|
2,878
|
|
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Operating lease liabilities - current
|
$
|
477
|
|
Finance
|
Long-term debt due within one year
|
20
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease liabilities - noncurrent
|
2,126
|
|
|
Finance
|
Long-Term Debt
|
349
|
|
|
Total lease liabilities
|
|
$
|
2,972
|
|
1.
|
Includes
$2.7 billion
related to the adoption of Topic 842. See Note
2
for additional information.
|
Lease Term and Discount Rate
|
Mar 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
Operating leases
|
8.7 years
|
|
Finance leases
|
18.7 years
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
4.12
|
%
|
Finance leases
|
6.98
|
%
|
Lease Guarantees
|
March 31, 2019
|
December 31, 2018
|
||||||||||||
In millions
|
Final Expiration
|
Maximum Future Payments
|
Recorded Liability
|
Final Expiration
|
Maximum Future Payments
|
Recorded Liability
|
||||||||
Residual value guarantees
|
2028
|
$
|
885
|
|
$
|
—
|
|
2028
|
$
|
885
|
|
$
|
130
|
|
Accumulated Other Comprehensive Loss
|
Unrealized Gains (Losses) on Investments
|
Cumulative Translation Adj
|
Pension and Other Postretire Benefits
|
Derivative Instruments
|
Total Accum Other Comp Loss
|
||||||||||
In millions
|
|||||||||||||||
Balance at Jan 1, 2018
|
$
|
17
|
|
$
|
(1,481
|
)
|
$
|
(6,998
|
)
|
$
|
(109
|
)
|
$
|
(8,571
|
)
|
Other comprehensive income (loss) before reclassifications
|
(26
|
)
|
376
|
|
—
|
|
(16
|
)
|
334
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
1
|
|
—
|
|
126
|
|
22
|
|
149
|
|
|||||
Net other comprehensive income (loss)
|
$
|
(25
|
)
|
$
|
376
|
|
$
|
126
|
|
$
|
6
|
|
$
|
483
|
|
Balance at Mar 31, 2018
|
$
|
(8
|
)
|
$
|
(1,105
|
)
|
$
|
(6,872
|
)
|
$
|
(103
|
)
|
$
|
(8,088
|
)
|
|
|
|
|
|
|
||||||||||
Balance at Jan 1, 2019
|
$
|
(51
|
)
|
$
|
(1,813
|
)
|
$
|
(7,965
|
)
|
$
|
(56
|
)
|
$
|
(9,885
|
)
|
Other comprehensive income (loss) before reclassifications
|
68
|
|
(13
|
)
|
—
|
|
(68
|
)
|
(13
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
(1
|
)
|
(18
|
)
|
141
|
|
(7
|
)
|
115
|
|
|||||
Net other comprehensive income (loss)
|
$
|
67
|
|
$
|
(31
|
)
|
$
|
141
|
|
$
|
(75
|
)
|
$
|
102
|
|
Balance at Mar 31, 2019
|
$
|
16
|
|
$
|
(1,844
|
)
|
$
|
(7,824
|
)
|
$
|
(131
|
)
|
$
|
(9,783
|
)
|
Tax Benefit (Expense)
1
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Unrealized gains (losses) on investments
|
$
|
(18
|
)
|
$
|
6
|
|
Cumulative translation adjustments
|
(1
|
)
|
5
|
|
||
Pension and other postretirement benefit plans
|
(25
|
)
|
(28
|
)
|
||
Derivative instruments
|
27
|
|
3
|
|
||
Tax expense from income taxes related to other comprehensive income (loss) items
|
$
|
(17
|
)
|
$
|
(14
|
)
|
1.
|
Prior period amounts were updated to conform with the current year presentation.
|
Reclassifications Out of Accumulated Other Comprehensive Loss
|
Three Months Ended
|
Consolidated Statements of Income Classification
|
|||||
Mar 31, 2019
|
Mar 31, 2018
|
||||||
In millions
|
|||||||
Unrealized (gains) losses on investments
|
$
|
(1
|
)
|
$
|
2
|
|
See (1) below
|
Tax benefit
|
—
|
|
(1
|
)
|
See (2) below
|
||
After tax
|
$
|
(1
|
)
|
$
|
1
|
|
|
Cumulative translation adjustments
|
$
|
(18
|
)
|
$
|
—
|
|
See (3) below
|
Pension and other postretirement benefit plans
|
$
|
166
|
|
$
|
154
|
|
See (4) below
|
Tax benefit
|
(25
|
)
|
(28
|
)
|
See (2) below
|
||
After tax
|
$
|
141
|
|
$
|
126
|
|
|
Derivative instruments
|
$
|
(7
|
)
|
$
|
27
|
|
See (5) below
|
Tax benefit
|
—
|
|
(5
|
)
|
See (2) below
|
||
After tax
|
$
|
(7
|
)
|
$
|
22
|
|
|
Total reclassifications for the period, after tax
|
$
|
115
|
|
$
|
149
|
|
|
1.
|
"Net sales" and "Sundry income (expense) - net."
|
2.
|
"Provision for income taxes."
|
3.
|
"Sundry income (expense) - net."
|
4.
|
These AOCL components are included in the computation of net periodic benefit cost of TDCC's defined benefit pension and other postretirement benefit plans. See Note
14
for additional information.
|
5.
|
"Cost of sales," "Sundry income (expense) - net" and "Interest expense and amortization of debt discount."
|
Noncontrolling Interests
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Balance at beginning of period
|
$
|
1,138
|
|
$
|
1,186
|
|
Net income attributable to noncontrolling interests
|
45
|
|
35
|
|
||
Distributions to noncontrolling interests
|
(9
|
)
|
(24
|
)
|
||
Cumulative translation adjustments
|
7
|
|
(6
|
)
|
||
Other
|
(1
|
)
|
(1
|
)
|
||
Balance at end of period
|
$
|
1,180
|
|
$
|
1,190
|
|
Net Periodic Benefit Cost for All Significant Plans
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Defined Benefit Pension Plans:
|
|
|
||||
Service cost
|
$
|
112
|
|
$
|
133
|
|
Interest cost
|
241
|
|
218
|
|
||
Expected return on plan assets
|
(417
|
)
|
(406
|
)
|
||
Amortization of prior service credit
|
(6
|
)
|
(6
|
)
|
||
Amortization of net loss
|
132
|
|
171
|
|
||
Net periodic benefit cost
|
$
|
62
|
|
$
|
110
|
|
|
|
|
||||
Other Postretirement Benefits:
|
|
|
||||
Service cost
|
$
|
2
|
|
$
|
3
|
|
Interest cost
|
14
|
|
11
|
|
||
Amortization of net gain
|
(6
|
)
|
(6
|
)
|
||
Net periodic benefit cost
|
$
|
10
|
|
$
|
8
|
|
Fair Value of Financial Instruments
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||||||||||||
In millions
|
Cost
|
Gain
|
Loss
|
Fair Value
|
Cost
|
Gain
|
Loss
|
Fair Value
|
||||||||||||||||
Cash equivalents
|
$
|
345
|
|
$
|
—
|
|
$
|
—
|
|
$
|
345
|
|
$
|
566
|
|
$
|
—
|
|
$
|
—
|
|
$
|
566
|
|
Marketable securities
|
$
|
101
|
|
$
|
—
|
|
$
|
—
|
|
$
|
101
|
|
$
|
100
|
|
$
|
—
|
|
$
|
—
|
|
$
|
100
|
|
Other investments:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government debt
1
|
$
|
694
|
|
$
|
17
|
|
$
|
(9
|
)
|
$
|
702
|
|
$
|
714
|
|
$
|
9
|
|
$
|
(23
|
)
|
$
|
700
|
|
Corporate bonds
|
1,051
|
|
43
|
|
(21
|
)
|
1,073
|
|
1,026
|
|
20
|
|
(63
|
)
|
983
|
|
||||||||
Total debt securities
|
$
|
1,745
|
|
$
|
60
|
|
$
|
(30
|
)
|
$
|
1,775
|
|
$
|
1,740
|
|
$
|
29
|
|
$
|
(86
|
)
|
$
|
1,683
|
|
Equity securities
2
|
16
|
|
5
|
|
—
|
|
21
|
|
16
|
|
1
|
|
(1
|
)
|
16
|
|
||||||||
Total other investments
|
$
|
1,761
|
|
$
|
65
|
|
$
|
(30
|
)
|
$
|
1,796
|
|
$
|
1,756
|
|
$
|
30
|
|
$
|
(87
|
)
|
$
|
1,699
|
|
Total cash equivalents, marketable securities and other investments
|
$
|
2,207
|
|
$
|
65
|
|
$
|
(30
|
)
|
$
|
2,242
|
|
$
|
2,422
|
|
$
|
30
|
|
$
|
(87
|
)
|
$
|
2,365
|
|
Long-term debt including debt due within one year
3
|
$
|
(19,529
|
)
|
$
|
84
|
|
$
|
(1,405
|
)
|
$
|
(20,850
|
)
|
$
|
(19,594
|
)
|
$
|
351
|
|
$
|
(971
|
)
|
$
|
(20,214
|
)
|
Derivatives relating to:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rates
|
$
|
—
|
|
$
|
—
|
|
$
|
(181
|
)
|
$
|
(181
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(64
|
)
|
$
|
(64
|
)
|
Foreign currency
|
—
|
|
86
|
|
(14
|
)
|
72
|
|
—
|
|
120
|
|
(43
|
)
|
77
|
|
||||||||
Commodities
4
|
—
|
|
88
|
|
(147
|
)
|
(59
|
)
|
—
|
|
91
|
|
(178
|
)
|
(87
|
)
|
||||||||
Total derivatives
|
$
|
—
|
|
$
|
174
|
|
$
|
(342
|
)
|
$
|
(168
|
)
|
$
|
—
|
|
$
|
211
|
|
$
|
(285
|
)
|
$
|
(74
|
)
|
2.
|
Equity securities with a readily determinable fair value.
|
3.
|
Cost includes fair value hedge adjustments of
$17 million
at
March 31, 2019
and
$18 million
at
December 31, 2018
on
$2,290 million
of debt at
March 31, 2019
and
December 31, 2018
.
|
4.
|
Presented net of cash collateral where master netting arrangements allow.
|
Investing Results
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Proceeds from sales of available-for-sale securities
|
$
|
159
|
|
$
|
348
|
|
Gross realized gains
|
$
|
6
|