Dow Chemical 2011 Annual Report Download - page 193

99
The following tables provide the fair value and gross unrealized losses of the Company’s investments that were deemed to
be temporarily impaired at December 31, 2011 and 2010, aggregated by investment category and length of time that individual
securities had been in a continuous unrealized loss position:
Temporarily Impaired Securities at December 31, 2011 (1)
In millions
Debt securities:
Corporate bonds
Equity securities
Total temporarily impaired securities
Less than 12 months
Fair
Value
$ 44
190
$ 234
Unrealized
Losses
$ (2)
(36)
$ (38)
(1) Unrealized losses of 12 months or more were less than $1 million.
Temporarily Impaired Securities at December 31, 2010 (1)
In millions
Debt securities:
Government debt (2)
Corporate bonds
Total debt securities
Equity securities
Total temporarily impaired securities
Less than 12 months
Fair
Value
$ 62
43
$ 105
52
$ 157
Unrealized
Losses
$ (2)
(1)
$ (3)
(3)
$ (6)
(1) Unrealized losses of 12 months or more were less than $1 million.
(2) U.S. Treasury obligations, U.S. agency obligations, agency mortgage-
backed securities and other municipalities’ obligations.
Portfolio managers regularly review the Company’s holdings to determine if any investments are other-than-temporarily
impaired. The analysis includes reviewing the amount of the impairment, as well as the length of time it has been impaired. In
addition, specific guidelines for each instrument type are followed to determine if an other-than-temporary impairment has
occurred.
For debt securities, the credit rating of the issuer, current credit rating trends, the trends of the issuer’s overall sector, the
ability of the issuer to pay expected cash flows and the length of time the security has been in a loss position are considered in
determining whether unrealized losses represent an other-than-temporary impairment. The Company did not have any credit-
related losses during 2011, 2010 or 2009.
For equity securities, the Company’s investments are primarily in Standard & Poor’s (“S&P”) 500 companies; however,
the Company’s policies allow investments in companies outside of the S&P 500. The largest holdings are Exchange Traded
Funds that represent the S&P 500 index or an S&P 500 sector or subset; the Company also has holdings in Exchange Traded
Funds that represent emerging markets. The Company considers the evidence to support the recovery of the cost basis of a
security including volatility of the stock, the length of time the security has been in a loss position, value and growth
expectations, and overall market and sector fundamentals, as well as technical analysis, in determining whether unrealized
losses represent an other-than-temporary impairment. In 2011, other-than-temporary impairment write-downs on investments
still held by the Company were $6 million ($5 million in 2010).
The aggregate cost of the Company's cost method investments totaled $179 million at December 31, 2011 ($171 million at
December 31, 2010). Due to the nature of these investments, the fair market value is not readily determinable. These
investments are reviewed quarterly for impairment indicators. During 2011, the Company's impairment analysis resulted in no
reduction in the cost basis of these investments; the analysis in 2010 resulted in a reduction of $16 million for the year ended
December 31, 2010.