REVENUE (Notes)

9 Months Ended

Sep. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

REVENUE

Revenue Recognition

The majority of Dow's revenue is derived from product sales. In the three and nine months ended September 30, 2019, 98 percent of Dow's revenue related to product sales (99 percent for the three and nine months ended September 30, 2018), with the remaining balance primarily related to the Company's insurance operations and licensing of patents and technologies. Product sales consist of sales of Dow's products to manufacturers and distributors and considers order confirmations or purchase orders, which in some cases are governed by master supply agreements, to be contracts with a customer. Dow enters into licensing arrangements in which it licenses certain rights of its patents and technology to customers. Revenue from Dow’s licenses for patents and technology is derived from sales-based royalties and licensing arrangements based on billing schedules established in each contract.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. At September 30, 2019, Dow had unfulfilled performance obligations of $611 million ($407 million at December 31, 2018) related to the licensing of technology. Dow expects revenue to be recognized for the remaining performance obligations over the next one to six years.

The remaining performance obligations are for product sales that have expected durations of one year or less, product sales of materials delivered through a pipeline for which Dow has elected the right to invoice practical expedient, or variable consideration attributable to royalties for licenses of patents and technology. Dow has received advance payments from customers related to long-term supply agreements that are deferred and recognized over the life of the contract, with remaining contract terms that range up to 22 years. Dow will have rights to future consideration for revenue recognized when product is delivered to the customer. These payments are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets.

Disaggregation of Revenue

Dow disaggregates its revenue from contracts with customers by segment and business, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows.

Net Trade Sales by Segment and Business	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2019		Sep 30, 2018		Sep 30, 2019		Sep 30, 2018
Hydrocarbons & Energy	$	1,325	$	2,008	$	4,078	$	5,715
Packaging and Specialty Plastics	3,737		4,136		11,327		12,591
Packaging & Specialty Plastics	$	5,062	$	6,144	$	15,405	$	18,306
Industrial Solutions	$	1,066	$	1,232	$	3,263	$	3,621
Polyurethanes & Construction Chemicals	2,295		2,674		6,914		8,045
Other	4		4		10		11
Industrial Intermediates & Infrastructure	$	3,365	$	3,910	$	10,187	$	11,677
Coatings & Performance Monomers	$	900	$	1,050	$	2,749	$	3,103
Consumer Solutions	1,350		1,455		4,139		4,353
Performance Materials & Coatings	$	2,250	$	2,505	$	6,888	$	7,456
Corporate	$	87	$	75	$	267	$	221
Total	$	10,764	$	12,634	$	32,747	$	37,660

Net Trade Sales by Geographic Region	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2019		Sep 30, 2018		Sep 30, 2019		Sep 30, 2018
U.S. & Canada	$	3,932	$	4,609	$	11,937	$	13,602
EMEAI 1	3,621		4,386		11,228		13,257
Asia Pacific	2,193		2,362		6,464		7,030
Latin America	1,018		1,277		3,118		3,771
Total	$	10,764	$	12,634	$	32,747	$	37,660

1. Europe, Middle East, Africa and India.

Contract Assets and Liabilities

Dow receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets include amounts related to Dow's contractual right to consideration for completed performance obligations not yet invoiced. Contract liabilities include payments received in advance of performance under the contract and are realized when the associated revenue is recognized under the contract. "Contract liabilities - current" primarily reflects deferred revenue from prepayments from customers for product to be delivered in 12 months or less. "Contract liabilities - noncurrent" includes advance payments that Dow has received from customers related to long-term supply agreements and royalty payments that are deferred and recognized over the life of the contract.

The increase in contract liabilities from December 31, 2018 to September 30, 2019 was due to advanced payments from a customer related to long-term product supply agreements. Revenue recognized in the first nine months of 2019 from amounts included in contract liabilities at the beginning of the period was approximately $100 million (approximately $110 million in the first nine months of 2018). In the first nine months of 2019, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming unconditional was approximately $15 million (insignificant in the first nine months of 2018).

The following table summarizes the contract balances at September 30, 2019 and December 31, 2018:

Contract Assets and Liabilities	Sep 30, 2019		Dec 31, 2018
In millions
Accounts and notes receivable - Trade	$	5,125	$	5,646
Contract assets - current 1	$	78	$	19
Contract assets - noncurrent 2	$	3	$	1
Contract liabilities - current 3	$	201	$	134
Contract liabilities - noncurrent 4	$	1,619	$	1,318

1. Included in "Other current assets" in the consolidated balance sheets.

2. Included in "Deferred charges and other assets" in the consolidated balance sheets.

3. Included in "Accrued and other current liabilities" in the consolidated balance sheets.

4.

Included in "Other noncurrent obligations" in the consolidated balance sheets.