Dow Chemical 2014 Annual Report Download - page 113

89
The following table summarizes the contractual maturities of the Company’s investments in debt securities:
Contractual Maturities of Debt Securities
at December 31, 2014
In millions Amortized Cost Fair Value
Within one year $ 8 $ 9
One to five years 496 517
Six to ten years 503 521
After ten years 206 234
Total $ 1,213 $ 1,281
At December 31, 2014, the Company had $1,050 million ($1,581 million at December 31, 2013) of held-to-maturity securities
(primarily Treasury Bills) classified as cash equivalents as these securities had maturities of three months or less at the time of
purchase. The Company’s investments in held-to-maturity securities are held at amortized cost, which approximates fair value.
At December 31, 2014, the Company had investments in money market funds of $1,655 million classified as cash equivalents
($1,331 million at December 31, 2013).
The net unrealized gain/loss from mark-to-market adjustments recognized in earnings on trading securities held at the end of
the year was a $3 million gain in 2014, a $13 million loss in 2013 and a $1 million gain in 2012.
The following table provides the fair value and gross unrealized losses of the Company’s investments that were deemed to be
temporarily impaired at December 31, 2014 and 2013, aggregated by investment category:
Temporarily Impaired Securities at
December 31 (1)
2014 2013
Less than 12 months Less than 12 months
In millions
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Government debt (2) $ 74 $ (1) $ 160 $ (8)
Corporate bonds 102 (1) 213 (7)
Equity securities 175 (15) 144 (4)
Total temporarily impaired securities $ 351 $ (17) $ 517 $ (19)
(1) Unrealized losses of 12 months or more were $1 million at December 31, 2014 and less than
$1 million at December 31, 2013.
(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 2014, 2013 or 2012.
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 2014, other-than-temporary impairment write-downs on investments still held by the
Company were $6 million ($2 million in 2013).
The aggregate cost of the Company's cost method investments totaled $181 million at December 31, 2014 ($185 million at
December 31, 2013). Due to the nature of these investments, either the cost basis approximates fair market value or fair value is