Dow Chemical 2012 Annual Report Download - page 117

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91
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, 2012 and 2011, aggregated by investment category:
Temporarily Impaired Securities at December 31, 2012 (1)
Less than 12 months
In millions
Fair
Value
Unrealized
Losses
Corporate bonds $ 22 $ (1)
Equity securities 30 (2)
Total temporarily impaired securities $ 52 $ (3)
(1) Unrealized losses of 12 months or more were less than $1 million.
Temporarily Impaired Securities at December 31, 2011 (1)
Less than 12 months
In millions
Fair
Value
Unrealized
Losses
Corporate bonds $ 44 $ (2)
Equity securities 190 (36)
Total temporarily impaired securities $ 234 $ (38)
(1) Unrealized losses of 12 months or more were less than $1 million.
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 2012, 2011 or 2010.
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 2012, other-than-temporary impairment write-downs on investments
still held by the Company were $7 million ($6 million in 2011).
The aggregate cost of the Company's cost method investments totaled $176 million at December 31, 2012 ($179 million at
December 31, 2011). Due to the nature of these investments, the fair market value is not readily determinable. These
investments are reviewed quarterly for impairment indicators. The Company's impairment analysis resulted in a $3 million
reduction in the cost basis of these investments for the year ended December 31, 2012; the analysis in 2011 resulted in no
reduction for the year ended December 31, 2011.