Dow Chemical 2014 Annual Report Download - page 116

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Other Derivative Instruments
The Company utilizes futures, options and swap instruments that are effective as economic hedges of commodity price
exposures, but do not the meet hedge accounting criteria for derivatives and hedging. At December 31, 2014 and 2013, the
Company had the following gross aggregate notionals of outstanding commodity contracts:
Commodity
Dec 31,
2014
Dec 31,
2013 Notional Volume Unit
Ethane 0.2 0.3 million barrels
Gasoline 15.0 — kilotons
Naphtha Price Spread 91.0 — kilotons
Natural Gas 0.5 5.2 million million British thermal units
The Company also uses foreign exchange forward contracts, options and cross-currency swaps that are not designated as
hedging instruments primarily to manage foreign currency exposure. The Company had open foreign exchange contracts and
cross-currency swaps with various expiration dates to buy, sell or exchange foreign currencies with a gross notional U.S. dollar
equivalent of $20,156 million at December 31, 2014 ($17,228 million at December 31, 2013) and had no open interest rate
swaps at December 31, 2014 and December 31, 2013.
The following table provides the fair value and gross balance sheet classification of derivative instruments at December 31,
2014 and 2013:
Fair Value of Derivative Instruments
In millions Balance Sheet Classification 2014 2013
Asset Derivatives
Derivatives designated as hedges:
Commodities Other current assets $ 4 $ 13
Foreign currency Accounts and notes receivable – Other 25 —
Total derivatives designated as hedges $ 29 $ 13
Derivatives not designated as hedges:
Commodities Other current assets $ 2 $ 1
Foreign currency Accounts and notes receivable – Other 91 65
Total derivatives not designated as hedges $ 93 $ 66
Total asset derivatives $ 122 $ 79
Liability Derivatives
Derivatives designated as hedges:
Interest rates Accounts payable – Other $ 12 $ 5
Commodities Accounts payable – Other 106 5
Foreign currency Accounts payable – Other — 9
Total derivatives designated as hedges $ 118 $ 19
Derivatives not designated as hedges:
Commodities Accounts payable – Other $ 2 $ 1
Foreign currency Accounts payable – Other 161 24
Total derivatives not designated as hedges $ 163 $ 25
Total liability derivatives $ 281 $ 44
Foreign currency derivatives not designated as hedges are offset by foreign exchange gains or losses resulting from the
underlying exposures of foreign currency denominated assets and liabilities. The amount charged on a pretax basis related to
foreign currency derivatives not designated as a hedge, which is included in "Sundry income (expense) - net" in the
consolidated statements of income, was a loss of $333 million for 2014, gain of $89 million for 2013 and loss of $9 million for
2012. See Note 12 for the net impact of foreign exchange transactions.