DOW INC
For the period ended Mar 31, 2025. Filed Apr 25, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 25, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
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Financial Instruments
NOTE 16 –FINANCIAL INSTRUMENTS
A summary of the Company's financial instruments, risk management policies, derivative instruments and hedging activities can be found in Note 21 to the Consolidated Financial Statements included in the 2024 10-K.
Refer to Note 17 for a summary of the fair value of financial instruments at March 31, 2025 and December 31, 2024.
Debt Securities
The Company's investments in debt securities are primarily classified as available-for-sale. The following table provides investing results from available-for-sale securities for the three months ended March 31, 2025 and 2024:
| Investing Results | Three Months Ended | |
|---|---|---|
| In millions | Mar 31, 2025 | Mar 31, 2024 |
| Proceeds from sales of available-for-sale securities | $154 | $721 |
| Gross realized gains | $2 | $9 |
| Gross realized losses | $(1) | $(5) |
The following table summarizes contractual maturities of the Company's investments in debt securities:
| Contractual Maturities of Debt Securities at Mar 31, 2025 | Cost | Fair Value |
|---|---|---|
| In millions | ||
| Within one year | $110 | $100 |
| One to five years | 1,188 | 1,094 |
| Six to ten years | 426 | 412 |
| After ten years | 524 | 425 |
| Total | $2,248 | $2,031 |
Equity Securities
There were no material adjustments to the carrying value of the not readily determinable investments for impairment or observable price changes for the three months ended March 31, 2025. There was $3 million of net unrealized losses recognized in earnings on equity securities for the three months ended March 31, 2025 (no unrealized gains or losses for the three months ended March 31, 2024).
| Investments in Equity Securities | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|
| In millions | ||
| Readily determinable fair value | $11 | $14 |
| Not readily determinable fair value | $149 | $153 |
Derivative Instruments
The notional amounts of the Company's derivative instruments at March 31, 2025 and December 31, 2024 were as follows:
| Notional Amounts 1 | Mar 31, 2025 | Dec 31, 2024 |
|---|---|---|
| In millions | ||
| Derivatives designated as hedging instruments: | ||
| Interest rate contracts | $757 | $1,870 |
| Foreign currency contracts | $4,080 | $3,144 |
| Derivatives not designated as hedging instruments: | ||
| Interest rate contracts | $44 | $14 |
| Foreign currency contracts | $19,738 | $9,244 |
- Notional amounts represent the absolute value of open derivative positions at the end of the period. Multi-leg option positions are reflected at the maximum notional position at expiration.
The notional amounts of the Company's commodity derivatives at March 31, 2025 and December 31, 2024 were as follows:
| Commodity Notionals 1 | Mar 31, 2025 | Dec 31, 2024 | Notional Volume Unit |
|---|---|---|---|
| Derivatives designated as hedging instruments: | |||
| Hydrocarbon derivatives | 5.0 | 3.2 | million barrels of oil equivalent |
| Derivatives not designated as hedging instruments: | |||
| Hydrocarbon derivatives | 1.0 | 1.1 | million barrels of oil equivalent |
- Notional amounts represent the net volume of open derivative positions outstanding at the end of the period.
| Maturity Dates of Derivatives Designated as Hedging Instruments | Year |
|---|---|
| Interest rate contracts | 2027 |
| Foreign currency contracts | 2026 |
| Commodity contracts | 2028 |
The following table provides the fair value and balance sheet classification of derivative instruments at March 31, 2025 and December 31, 2024:
| Fair Value of Derivative Instruments | Mar 31, 2025 | Dec 31, 2024 | ||||
|---|---|---|---|---|---|---|
| In millions | Gross | Counterparty and Cash Collateral Netting 1 | Net 2 | Gross | Counterparty and Cash Collateral Netting 1 | Net 2 |
| Asset derivatives | ||||||
| Derivatives designated as hedging instruments: | ||||||
| Interest rate contracts 3 | $27 | $(18) | $9 | $20 | $(20) | $— |
| Interest rate contracts 4 | 25 | (19) | 6 | — | — | — |
| Foreign currency contracts 3 | 34 | (33) | 1 | 33 | (15) | 18 |
| Foreign currency contracts 4 | 22 | (21) | 1 | — | — | — |
| Commodity contracts 3 | 55 | (25) | 30 | 25 | (14) | 11 |
| Commodity contracts 4 | 44 | (37) | 7 | 46 | (36) | 10 |
| Total | $207 | $(153) | $54 | $124 | $(85) | $39 |
| Derivatives not designated as hedging instruments: | ||||||
| Interest rate contracts 4 | $1 | $(1) | $— | $— | $— | $— |
| Foreign currency contracts 3 | 25 | (24) | 1 | 74 | (16) | 58 |
| Commodity contracts 3 | 13 | (1) | 12 | 16 | (1) | 15 |
| Commodity contracts 4 | 4 | (3) | 1 | 4 | (3) | 1 |
| Total | $43 | $(29) | $14 | $94 | $(20) | $74 |
| Total asset derivatives | $250 | $(182) | $68 | $218 | $(105) | $113 |
| Liability derivatives | ||||||
| Derivatives designated as hedging instruments: | ||||||
| Interest rate contracts 5 | $18 | $(18) | $— | $46 | $(20) | $26 |
| Interest rate contracts 6 | 19 | (19) | — | — | — | — |
| Foreign currency contracts 5 | 97 | (33) | 64 | 75 | (15) | 60 |
| Foreign currency contracts 6 | 53 | (21) | 32 | 40 | — | 40 |
| Commodity contracts 5 | 36 | (26) | 10 | 16 | (14) | 2 |
| Commodity contracts 6 | 39 | (37) | 2 | 37 | (36) | 1 |
| Total | $262 | $(154) | $108 | $214 | $(85) | $129 |
| Derivatives not designated as hedging instruments: | ||||||
| Interest rate contracts 5 | $— | $— | $— | $1 | $— | $1 |
| Interest rate contracts 6 | 1 | (1) | — | — | — | — |
| Foreign currency contracts 5 | 178 | (24) | 154 | 27 | (16) | 11 |
| Commodity contracts 5 | 4 | (1) | 3 | 8 | (1) | 7 |
| Commodity contracts 6 | 3 | (3) | — | 4 | (3) | 1 |
| Total | $186 | $(29) | $157 | $40 | $(20) | $20 |
| Total liability derivatives | $448 | $(183) | $265 | $254 | $(105) | $149 |
Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
Represents the net amounts included in the consolidated balance sheets.
Included in "Other current assets" in the consolidated balance sheets.
Included in "Deferred charges and other assets" in the consolidated balance sheets.
Included in "Accrued and other current liabilities" in the consolidated balance sheets.
Included in "Other noncurrent obligations" in the consolidated balance sheets.
Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding assets or liabilities, when applicable. The Company posted cash collateral of $12 million at March 31, 2025 ($16 million at December 31, 2024). No cash collateral was posted by counterparties with the Company at March 31, 2025 and December 31, 2024.
The following table summarizes the gain (loss) of derivative instruments in the consolidated statements of income and comprehensive income for the three months ended March 31, 2025 and 2024:
| Effect of Derivative Instruments · Gain (loss) recognized in OCI 1 · Gain (loss) recognized in income 2 | ||||
|---|---|---|---|---|
| Three Months Ended | Three Months Ended | |||
| In millions | Mar 31, 2025 | Mar 31, 2024 | Mar 31, 2025 | Mar 31, 2024 |
| Derivatives designated as hedging instruments: | ||||
| Fair value hedges: | ||||
| Interest rate contracts 3, 4 | $— | $— | $20 | $— |
| Excluded components 3, 5 | (5) | (38) | — | — |
| Cash flow hedges: | ||||
| Interest rate contracts 3 | 1 | 1 | (1) | (2) |
| Foreign currency contracts 6 | (6) | (13) | 2 | 1 |
| Commodity contracts 6 | 6 | 15 | 4 | (8) |
| Excluded components 5, 6 | — | (6) | (1) | (1) |
| Net foreign investment hedges: | ||||
| Foreign currency contracts | (27) | 2 | — | — |
| Excluded components 5, 7 | 27 | 6 | 7 | 3 |
| Total derivatives designated as hedging instruments | $(4) | $(33) | $31 | $(7) |
| Derivatives not designated as hedging instruments: | ||||
| Foreign currency contracts 7 | — | — | (56) | 31 |
| Commodity contracts 6 | — | — | (5) | 8 |
| Total return swap 6 | — | — | (11) | 22 |
| Total derivatives not designated as hedging instruments | $— | $— | $(72) | $61 |
| Total derivatives | $(4) | $(33) | $(41) | $54 |
OCI is defined as other comprehensive income (loss).
Pretax amounts.
Included in "Interest expense and amortization of debt discount" in the consolidated statements of income.
Gain (loss) recognized in income of derivatives is offset by gain (loss) recognized in income of the hedged item.
The excluded components are related to the time value of the derivatives designated as hedges.
Included in "Cost of sales" in the consolidated statements of income.
Included in "Sundry income (expense) - net" in the consolidated statements of income.
The following table provides the net after-tax gain (loss) expected to be reclassified from AOCL to income within the next 12 months:
| Expected Reclassifications from AOCL within the next 12 months | Mar 31, 2025 |
|---|---|
| In millions | |
| Cash flow hedges: | |
| Interest rate contracts | $(3) |
| Commodity contracts | $13 |
| Foreign currency contracts | $(1) |
| Excluded components | $(3) |
| Net foreign investment hedges: | |
| Excluded components | $25 |
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