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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20212022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________

dow-20220630_g1.jpg


Commission
File Number
Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number
State of Incorporation or
Organization
I.R.S. Employer
Identification No.
001-38646Dow Inc.Delaware30-1128146
2211 H.H. Dow Way, Midland, MI 48674
(989) 636-1000
001-03433The Dow Chemical CompanyDelaware38-1285128
2211 H.H. Dow Way, Midland, MI 48674
(989) 636-1000
Securities registered pursuant to Section 12(b) of the Act:
RegistrantTitle of each classTrading Symbol(s)Name of each exchange on which registered
Dow Inc.Common Stock, par value $0.01 per shareDOWNew York Stock Exchange
The Dow Chemical Company0.500% Notes due March 15, 2027DOW/27New York Stock Exchange
The Dow Chemical Company1.125% Notes due March 15, 2032DOW/32New York Stock Exchange
The Dow Chemical Company1.875% Notes due March 15, 2040DOW/40New York Stock Exchange
The Dow Chemical Company4.625% Notes due October 1, 2044DOW/44New York Stock Exchange


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Dow Inc.YesNoThe Dow Chemical CompanyYesNo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Dow Inc.YesNoThe Dow Chemical CompanyYesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Dow Inc.Large accelerated filerAccelerated
filer
Non-accelerated filerSmaller reporting companyEmerging growth company
The Dow Chemical CompanyLarge accelerated filerAccelerated
filer
Non-accelerated filerSmaller reporting companyEmerging growth company

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Dow Inc.
The Dow Chemical Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Dow Inc.YesNoThe Dow Chemical CompanyYesNo

Dow Inc. had 739,614,412718,167,477 shares of common stock, $0.01 par value, outstanding at SeptemberJune 30, 2021.2022. The Dow Chemical Company had 100 shares of common stock, $0.01 par value, outstanding at SeptemberJune 30, 2021,2022, all of which were held by the registrant’s parent, Dow Inc.

The Dow Chemical Company meets the conditions set forth in General Instruction H(1)(a) and (b) for Form 10-Q and therefore is filing this form with a reduced disclosure format.
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Dow Inc. and Subsidiaries
The Dow Chemical Company and Subsidiaries
QUARTERLY REPORT ON FORM 10-Q
For the quarterly period ended SeptemberJune 30, 20212022
TABLE OF CONTENTS
  PAGE
Item 1.
Dow Inc. and Subsidiaries:
The Dow Chemical Company and Subsidiaries:
Dow Inc. and Subsidiaries and The Dow Chemical Company and Subsidiaries:
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 4.
Item 5.
Item 6.

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Dow Inc. and Subsidiaries
The Dow Chemical Company and Subsidiaries
This Quarterly Report on Form 10-Q is a combined report being filed by Dow Inc. and The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the "Company") due to the parent/subsidiary relationship between Dow Inc. and TDCC. The information reflected in the report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted. Each of Dow Inc. and TDCC is filing information in this report on its own behalf and neither company makes any representation to the information relating to the other company.

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
Certain statements in this report are “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements often address expected future business and financial performance, financial condition, and other matters, and often contain words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “outlook,” “plan,” “project,” “seek,” “should,” “strategy,” “target,” “will,” “will be,” “will continue,” “will likely result,” “would” and similar expressions, and variations or negatives of these words or phrases.

Forward-looking statements are based on current assumptions and expectations of future events that are subject to risks, uncertainties and other factors that are beyond Dow’s control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements and speak only as of the date the statements were made. These factors include, but are not limited to: sales of Dow’s products; Dow’s expenses, future revenues and profitability; the continuing global and regional economic impacts of the coronavirus disease 2019 (“COVID-19”) pandemic and other public health-related risks and events on Dow’s business; any sanction, export restrictions, supply chain disruptions or increased economic uncertainty related to the ongoing conflict between Russia and Ukraine; capital requirements and need for and availability of financing; unexpected barriers in the development of technology, including with respect to Dow's contemplated capital and operating projects; Dow's ability to realize its commitment to carbon neutrality on the contemplated timeframe; size of the markets for Dow’s products and services and ability to compete in such markets; failure to develop and market new products and optimally manage product life cycles; the rate and degree of market acceptance of Dow’s products; significant litigation and environmental matters and related contingencies and unexpected expenses; the success of competing technologies that are or may become available; the ability to protect Dow’s intellectual property in the United States and abroad; developments related to contemplated restructuring activities and proposed divestitures or acquisitions such as workforce reduction, manufacturing facility and/or asset closure and related exit and disposal activities, and the benefits and costs associated with each of the foregoing; fluctuations in energy and raw material prices; management of process safety and product stewardship; changes in relationships with Dow’s significant customers and suppliers; changes in consumer preferences and demand; changes in laws and regulations, political conditions or industry development; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war;war including the ongoing conflict between Russia and Ukraine; weather events and natural disasters; and disruptions in Dow’s information technology networks and systems.
Riskssystems; and risks related to Dow’s separation from DowDuPont Inc. include, but are not limited to: (i) Dow’s inability to achieve some or all of the benefits that it expects to receive from the separation from DowDuPont Inc.; (ii) certain tax risks associated with the separation; (iii) the failure of Dow’s pro forma financial information to be a reliable indicator of Dow’s future results; (iv) non-compete restrictions under the separation agreement; (v) receipt of less favorable terms in the commercial agreements Dow entered into with DuPont de Nemours, Inc. ("DuPont") and Corteva, Inc. (“Corteva”), including restrictions under intellectual property cross-license agreements, than Dow would have received from an unaffiliated third party; and (vi)such as Dow’s obligation to indemnify DuPont de Nemours, Inc. and/or Corteva, Inc. for certain liabilities.

Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. A detailed discussion of principal risks and uncertainties which may cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” contained in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.2021. These are not the only risks and uncertainties that Dow faces. There may be other risks and uncertainties that Dow is unable to identify at this time or that Dow does not currently expect to have a material impact on its business. If any of those risks or uncertainties develops into an actual event, it could have a material adverse effect on Dow’s business. Dow assumesand TDCC assume no obligation to update or revise publicly any forward-looking statements whether because of new information, future events, or otherwise, except as required by securities and other applicable laws.
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PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

Dow Inc. and Subsidiaries
Consolidated Statements of Income
 
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
In millions, except per share amounts (Unaudited)In millions, except per share amounts (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions, except per share amounts (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Net salesNet sales$14,837 $9,712 $40,604 $27,836 Net sales$15,664 $13,885 $30,928 $25,767 
Cost of salesCost of sales11,611 8,371 32,413 24,211 Cost of sales12,899 10,740 25,301 20,802 
Research and development expensesResearch and development expenses210 193 632 554 Research and development expenses217 228 435 422 
Selling, general and administrative expensesSelling, general and administrative expenses403 372 1,209 1,063 Selling, general and administrative expenses435 440 933 806 
Amortization of intangiblesAmortization of intangibles100 100 301 300 Amortization of intangibles85 100 173 201 
Restructuring and asset related charges - netRestructuring and asset related charges - net— 617 22 719 Restructuring and asset related charges - net— 22 186 22 
Integration and separation costs— 63 — 174 
Equity in earnings (losses) of nonconsolidated affiliates249 60 751 (124)
Equity in earnings of nonconsolidated affiliatesEquity in earnings of nonconsolidated affiliates195 278 369 502 
Sundry income (expense) - netSundry income (expense) - net(350)182 (225)154 Sundry income (expense) - net75 (3)223 125 
Interest incomeInterest income14 35 27 Interest income36 13 64 21 
Interest expense and amortization of debt discountInterest expense and amortization of debt discount178 202 561 617 Interest expense and amortization of debt discount165 187 332 383 
Income before income taxesIncome before income taxes2,248 42 6,027 255 Income before income taxes2,169 2,456 4,224 3,779 
Provision for income taxesProvision for income taxes542 43 1,383 215 Provision for income taxes488 524 991 841 
Net income (loss)1,706 (1)4,644 40 
Net incomeNet income1,681 1,932 3,233 2,938 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests23 24 69 51 Net income attributable to noncontrolling interests20 31 46 
Net income (loss) available for Dow Inc. common stockholders$1,683 $(25)$4,575 $(11)
Net income available for Dow Inc. common stockholdersNet income available for Dow Inc. common stockholders$1,661 $1,901 $3,230 $2,892 
Per common share data:Per common share data:Per common share data:
Earnings (loss) per common share - basic$2.25 $(0.04)$6.11 $(0.02)
Earnings (loss) per common share - diluted$2.23 $(0.04)$6.06 $(0.02)
Earnings per common share - basicEarnings per common share - basic$2.28 $2.53 $4.40 $3.86 
Earnings per common share - dilutedEarnings per common share - diluted$2.26 $2.51 $4.37 $3.83 
Weighted-average common shares outstanding - basicWeighted-average common shares outstanding - basic744.5 740.5 745.4 740.0 Weighted-average common shares outstanding - basic725.7 747.0 730.2 745.9 
Weighted-average common shares outstanding - dilutedWeighted-average common shares outstanding - diluted750.0 740.5 750.9 740.0 Weighted-average common shares outstanding - diluted731.5 752.9 735.6 751.4 
DepreciationDepreciation$517 $526 $1,550 $1,558 Depreciation$486 $518 $977 $1,033 
Capital expendituresCapital expenditures$413 $287 $1,035 $955 Capital expenditures$457 $333 $772 $622 
See Notes to the Consolidated Financial Statements.

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Dow Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
 
Three Months EndedNine Months Ended Three Months EndedSix Months Ended
In millions (Unaudited)In millions (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Net income (loss)$1,706 $(1)$4,644 $40 
Net incomeNet income$1,681 $1,932 $3,233 $2,938 
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax
Unrealized gains (losses) on investmentsUnrealized gains (losses) on investments(13)(45)(16)Unrealized gains (losses) on investments(153)17 (249)(32)
Cumulative translation adjustmentsCumulative translation adjustments(157)91 (345)(9)Cumulative translation adjustments(514)65 (678)(188)
Pension and other postretirement benefit plansPension and other postretirement benefit plans149 147 1,432 430 Pension and other postretirement benefit plans122 149 231 1,283 
Derivative instrumentsDerivative instruments32 38 148 (100)Derivative instruments137 469 116 
Total other comprehensive income11 284 1,190 305 
Total other comprehensive income (loss)Total other comprehensive income (loss)(408)237 (227)1,179 
Comprehensive incomeComprehensive income1,717 283 5,834 345 Comprehensive income1,273 2,169 3,006 4,117 
Comprehensive income attributable to noncontrolling interests, net of taxComprehensive income attributable to noncontrolling interests, net of tax23 24 69 51 Comprehensive income attributable to noncontrolling interests, net of tax20 31 46 
Comprehensive income attributable to Dow Inc.Comprehensive income attributable to Dow Inc.$1,694 $259 $5,765 $294 Comprehensive income attributable to Dow Inc.$1,253 $2,138 $3,003 $4,071 
See Notes to the Consolidated Financial Statements.

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Dow Inc. and Subsidiaries
Consolidated Balance Sheets

In millions, except share amounts (Unaudited)In millions, except share amounts (Unaudited)Sep 30,
2021
Dec 31,
2020
In millions, except share amounts (Unaudited)Jun 30,
2022
Dec 31,
2021
AssetsAssetsAssets
Current AssetsCurrent AssetsCurrent Assets
Cash and cash equivalents (variable interest entities restricted - 2021: $49; 2020: $26)$2,911 $5,104 
Cash and cash equivalentsCash and cash equivalents$2,367 $2,988 
Accounts and notes receivable:Accounts and notes receivable:Accounts and notes receivable:
Trade (net of allowance for doubtful receivables - 2021: $59; 2020: $51)6,844 4,839 
Trade (net of allowance for doubtful receivables - 2022: $212; 2021: $54)Trade (net of allowance for doubtful receivables - 2022: $212; 2021: $54)7,474 6,841 
OtherOther2,565 2,551 Other2,243 2,713 
InventoriesInventories7,111 5,701 Inventories8,225 7,372 
Other current assetsOther current assets962 889 Other current assets1,460 934 
Total current assetsTotal current assets20,393 19,084 Total current assets21,769 20,848 
InvestmentsInvestmentsInvestments
Investment in nonconsolidated affiliatesInvestment in nonconsolidated affiliates1,910 1,327 Investment in nonconsolidated affiliates1,862 2,045 
Other investments (investments carried at fair value - 2021: $1,958; 2020: $1,674)3,053 2,775 
Other investments (investments carried at fair value - 2022: $1,753; 2021: $2,079)Other investments (investments carried at fair value - 2022: $1,753; 2021: $2,079)2,782 3,193 
Noncurrent receivablesNoncurrent receivables472 465 Noncurrent receivables537 478 
Total investmentsTotal investments5,435 4,567 Total investments5,181 5,716 
PropertyPropertyProperty
PropertyProperty56,522 56,325 Property57,180 57,604 
Less: Accumulated depreciationLess: Accumulated depreciation36,874 36,086 Less: Accumulated depreciation37,020 37,049 
Net property (variable interest entities restricted - 2021: $187; 2020: $232)19,648 20,239 
Net propertyNet property20,160 20,555 
Other AssetsOther AssetsOther Assets
GoodwillGoodwill8,801 8,908 Goodwill8,605 8,764 
Other intangible assets (net of accumulated amortization - 2021: $4,747; 2020: $4,428)2,962 3,352 
Other intangible assets (net of accumulated amortization - 2022: $4,833; 2021: $4,725)Other intangible assets (net of accumulated amortization - 2022: $4,833; 2021: $4,725)2,616 2,881 
Operating lease right-of-use assetsOperating lease right-of-use assets1,727 1,856 Operating lease right-of-use assets1,272 1,412 
Deferred income tax assetsDeferred income tax assets1,357 2,215 Deferred income tax assets1,118 1,358 
Deferred charges and other assetsDeferred charges and other assets1,426 1,249 Deferred charges and other assets1,422 1,456 
Total other assetsTotal other assets16,273 17,580 Total other assets15,033 15,871 
Total AssetsTotal Assets$61,749 $61,470 Total Assets$62,143 $62,990 
Liabilities and EquityLiabilities and EquityLiabilities and Equity
Current LiabilitiesCurrent LiabilitiesCurrent Liabilities
Notes payableNotes payable$270 $156 Notes payable$295 $161 
Long-term debt due within one yearLong-term debt due within one year291 460 Long-term debt due within one year361 231 
Accounts payable:Accounts payable:Accounts payable:
TradeTrade4,601 3,763 Trade5,693 5,577 
OtherOther2,896 2,126 Other2,824 2,839 
Operating lease liabilities - currentOperating lease liabilities - current413 416 Operating lease liabilities - current290 314 
Income taxes payableIncome taxes payable621 397 Income taxes payable462 623 
Accrued and other current liabilitiesAccrued and other current liabilities3,701 3,790 Accrued and other current liabilities3,384 3,481 
Total current liabilitiesTotal current liabilities12,793 11,108 Total current liabilities13,309 13,226 
Long-Term Debt (variable interest entities nonrecourse - 2021: $4; 2020: $6)14,027 16,491 
Long-Term DebtLong-Term Debt13,065 14,280 
Other Noncurrent LiabilitiesOther Noncurrent LiabilitiesOther Noncurrent Liabilities
Deferred income tax liabilitiesDeferred income tax liabilities501 405 Deferred income tax liabilities752 506 
Pension and other postretirement benefits - noncurrentPension and other postretirement benefits - noncurrent8,586 11,648 Pension and other postretirement benefits - noncurrent6,934 7,557 
Asbestos-related liabilities - noncurrentAsbestos-related liabilities - noncurrent962 1,013 Asbestos-related liabilities - noncurrent887 931 
Operating lease liabilities - noncurrentOperating lease liabilities - noncurrent1,428 1,521 Operating lease liabilities - noncurrent1,043 1,149 
Other noncurrent obligationsOther noncurrent obligations6,424 6,279 Other noncurrent obligations6,646 6,602 
Total other noncurrent liabilitiesTotal other noncurrent liabilities17,901 20,866 Total other noncurrent liabilities16,262 16,745 
Stockholders’ EquityStockholders’ EquityStockholders’ Equity
Common stock (authorized 5,000,000,000 shares of $0.01 par value each;
issued 2021: 761,777,581 shares; 2020: 755,993,198 shares)
Common stock (authorized 5,000,000,000 shares of $0.01 par value each;
issued 2022: 768,558,885 shares; 2021: 764,226,882 shares)
Common stock (authorized 5,000,000,000 shares of $0.01 par value each;
issued 2022: 768,558,885 shares; 2021: 764,226,882 shares)
Additional paid-in capitalAdditional paid-in capital7,988 7,595 Additional paid-in capital8,343 8,151 
Retained earningsRetained earnings19,357 16,361 Retained earnings22,827 20,623 
Accumulated other comprehensive lossAccumulated other comprehensive loss(9,665)(10,855)Accumulated other comprehensive loss(9,204)(8,977)
Unearned ESOP sharesUnearned ESOP shares(24)(49)Unearned ESOP shares— (15)
Treasury stock at cost (2021: 22,163,169 shares; 2020: 12,803,303 shares)(1,225)(625)
Treasury stock at cost (2022: 50,391,408 shares; 2021: 29,011,573 shares)
Treasury stock at cost (2022: 50,391,408 shares; 2021: 29,011,573 shares)
(3,001)(1,625)
Dow Inc.’s stockholders’ equityDow Inc.’s stockholders’ equity16,439 12,435 Dow Inc.’s stockholders’ equity18,973 18,165 
Noncontrolling interestsNoncontrolling interests589 570 Noncontrolling interests534 574 
Total equityTotal equity17,028 13,005 Total equity19,507 18,739 
Total Liabilities and EquityTotal Liabilities and Equity$61,749 $61,470 Total Liabilities and Equity$62,143 $62,990 
See Notes to the Consolidated Financial Statements.

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Dow Inc. and Subsidiaries
Consolidated Statements of Cash Flows
 
In millions (Unaudited)In millions (Unaudited)Nine Months EndedIn millions (Unaudited)Six Months Ended
Sep 30,
2021
Sep 30,
2020
Jun 30,
2022
Jun 30,
2021
Operating ActivitiesOperating ActivitiesOperating Activities
Net incomeNet income$4,644 $40 Net income$3,233 $2,938 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization2,187 2,148 Depreciation and amortization1,436 1,462 
Provision (credit) for deferred income tax488 (198)
Provision for deferred income taxProvision for deferred income tax348 388 
Earnings of nonconsolidated affiliates less than (in excess of) dividends receivedEarnings of nonconsolidated affiliates less than (in excess of) dividends received(519)515 Earnings of nonconsolidated affiliates less than (in excess of) dividends received289 (283)
Net periodic pension benefit costNet periodic pension benefit cost34 195 Net periodic pension benefit cost14 29 
Pension contributionsPension contributions(1,166)(188)Pension contributions(89)(1,109)
Net gain on sales of assets, businesses and investments(67)(283)
Net (gain) loss on sales of assets, businesses and investmentsNet (gain) loss on sales of assets, businesses and investments(50)
Restructuring and asset related charges - netRestructuring and asset related charges - net22 719 Restructuring and asset related charges - net186 22 
Other net lossOther net loss874 288 Other net loss92 224 
Changes in assets and liabilities, net of effects of acquired and divested companies:Changes in assets and liabilities, net of effects of acquired and divested companies:Changes in assets and liabilities, net of effects of acquired and divested companies:
Accounts and notes receivableAccounts and notes receivable(2,222)339 Accounts and notes receivable(767)(1,903)
InventoriesInventories(1,502)587 Inventories(908)(1,278)
Accounts payableAccounts payable1,487 (560)Accounts payable69 1,357 
Other assets and liabilities, netOther assets and liabilities, net252 994 Other assets and liabilities, net(441)(4)
Cash provided by operating activities - continuing operationsCash provided by operating activities - continuing operations4,512 4,596 Cash provided by operating activities - continuing operations3,468 1,793 
Cash used for operating activities - discontinued operationsCash used for operating activities - discontinued operations(78)— Cash used for operating activities - discontinued operations(11)(80)
Cash provided by operating activitiesCash provided by operating activities4,434 4,596 Cash provided by operating activities3,457 1,713 
Investing ActivitiesInvesting ActivitiesInvesting Activities
Capital expendituresCapital expenditures(1,035)(955)Capital expenditures(772)(622)
Investment in gas field developmentsInvestment in gas field developments(44)(5)Investment in gas field developments(80)(24)
Purchases of previously leased assetsPurchases of previously leased assets(5)(4)Purchases of previously leased assets(3)(3)
Proceeds from sales of property and businesses, net of cash divestedProceeds from sales of property and businesses, net of cash divested15 295 Proceeds from sales of property and businesses, net of cash divested10 
Acquisitions of property and businesses, net of cash acquiredAcquisitions of property and businesses, net of cash acquired(107)(130)Acquisitions of property and businesses, net of cash acquired— (107)
Investments in and loans to nonconsolidated affiliatesInvestments in and loans to nonconsolidated affiliates— (280)Investments in and loans to nonconsolidated affiliates(33)— 
Distributions and loan repayments from nonconsolidated affiliatesDistributions and loan repayments from nonconsolidated affiliates11 Distributions and loan repayments from nonconsolidated affiliates10 11 
Proceeds from sales of ownership interests in nonconsolidated affiliatesProceeds from sales of ownership interests in nonconsolidated affiliates11 — 
Purchases of investmentsPurchases of investments(1,004)(582)Purchases of investments(278)(560)
Proceeds from sales and maturities of investmentsProceeds from sales and maturities of investments644 1,009 Proceeds from sales and maturities of investments418 527 
Other investing activities, netOther investing activities, net(10)29 Other investing activities, net(41)— 
Cash used for investing activitiesCash used for investing activities(1,535)(616)Cash used for investing activities(763)(768)
Financing ActivitiesFinancing ActivitiesFinancing Activities
Changes in short-term notes payableChanges in short-term notes payable(44)(267)Changes in short-term notes payable180 (38)
Proceeds from issuance of short-term debt greater than three monthsProceeds from issuance of short-term debt greater than three months144 163 Proceeds from issuance of short-term debt greater than three months— 72 
Payments on short-term debt greater than three monthsPayments on short-term debt greater than three months— (163)Payments on short-term debt greater than three months(14)— 
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt95 4,649 Proceeds from issuance of long-term debt49 68 
Payments on long-term debtPayments on long-term debt(2,638)(4,347)Payments on long-term debt(927)(1,425)
Purchases of treasury stockPurchases of treasury stock(600)(125)Purchases of treasury stock(1,400)(200)
Proceeds from issuance of stockProceeds from issuance of stock212 53 Proceeds from issuance of stock97 200 
Transaction financing, debt issuance and other costsTransaction financing, debt issuance and other costs(536)(175)Transaction financing, debt issuance and other costs(7)(95)
Employee taxes paid for share-based payment arrangementsEmployee taxes paid for share-based payment arrangements(11)(26)Employee taxes paid for share-based payment arrangements(34)(11)
Distributions to noncontrolling interestsDistributions to noncontrolling interests(35)(19)Distributions to noncontrolling interests(22)(28)
Dividends paid to stockholdersDividends paid to stockholders(1,561)(1,552)Dividends paid to stockholders(1,018)(1,043)
Cash used for financing activitiesCash used for financing activities(4,974)(1,809)Cash used for financing activities(3,096)(2,500)
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash(57)Effect of exchange rate changes on cash, cash equivalents and restricted cash(162)(12)
SummarySummarySummary
Increase (decrease) in cash, cash equivalents and restricted cash(2,132)2,175 
Decrease in cash, cash equivalents and restricted cashDecrease in cash, cash equivalents and restricted cash(564)(1,567)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period5,108 2,380 Cash, cash equivalents and restricted cash at beginning of period3,033 5,108 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$2,976 $4,555 Cash, cash equivalents and restricted cash at end of period$2,469 $3,541 
Less: Restricted cash and cash equivalents, included in "Other current assets"Less: Restricted cash and cash equivalents, included in "Other current assets"65 Less: Restricted cash and cash equivalents, included in "Other current assets"102 50 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$2,911 $4,549 Cash and cash equivalents at end of period$2,367 $3,491 
See Notes to the Consolidated Financial Statements.
8

Table of Contents
Dow Inc. and Subsidiaries
Consolidated Statements of Equity
 
Three Months EndedNine Months Ended Three Months EndedSix Months Ended
In millions, except per share amounts (Unaudited)In millions, except per share amounts (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions, except per share amounts (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Common StockCommon StockCommon Stock
Balance at beginning and end of periodBalance at beginning and end of period$$$$Balance at beginning and end of period$$$$
Additional Paid-in CapitalAdditional Paid-in CapitalAdditional Paid-in Capital
Balance at beginning of periodBalance at beginning of period7,898 7,431 7,595 7,325 Balance at beginning of period8,217 7,743 8,151 7,595 
Common stock issued/soldCommon stock issued/sold11 23 211 53 Common stock issued/sold62 73 97 200 
Stock-based compensation and allocation of ESOP sharesStock-based compensation and allocation of ESOP shares79 43 182 119 Stock-based compensation and allocation of ESOP shares84 82 119 103 
Treasury stock issuances - compensation and benefit plansTreasury stock issuances - compensation and benefit plans(20)— (24)— 
Balance at end of periodBalance at end of period7,988 7,497 7,988 7,497 Balance at end of period8,343 7,898 8,343 7,898 
Retained EarningsRetained EarningsRetained Earnings
Balance at beginning of periodBalance at beginning of period18,200 16,017 16,361 17,045 Balance at beginning of period21,672 16,829 20,623 16,361 
Net income (loss) available for Dow Inc. common stockholders1,683 (25)4,575 (11)
Net income available for Dow Inc. common stockholdersNet income available for Dow Inc. common stockholders1,661 1,901 3,230 2,892 
Dividends to stockholdersDividends to stockholders(518)(518)(1,561)(1,552)Dividends to stockholders(505)(522)(1,018)(1,043)
OtherOther(8)(2)(18)(10)Other(1)(8)(8)(10)
Balance at end of periodBalance at end of period19,357 15,472 19,357 15,472 Balance at end of period22,827 18,200 22,827 18,200 
Accumulated Other Comprehensive LossAccumulated Other Comprehensive LossAccumulated Other Comprehensive Loss
Balance at beginning of periodBalance at beginning of period(9,676)(10,225)(10,855)(10,246)Balance at beginning of period(8,796)(9,913)(8,977)(10,855)
Other comprehensive income11 284 1,190 305 
Other comprehensive income (loss)Other comprehensive income (loss)(408)237 (227)1,179 
Balance at end of periodBalance at end of period(9,665)(9,941)(9,665)(9,941)Balance at end of period(9,204)(9,676)(9,204)(9,676)
Unearned ESOP SharesUnearned ESOP SharesUnearned ESOP Shares
Balance at beginning of periodBalance at beginning of period(32)(69)(49)(91)Balance at beginning of period— (39)(15)(49)
Allocation of ESOP sharesAllocation of ESOP shares12 25 34 Allocation of ESOP shares— 15 17 
Balance at end of periodBalance at end of period(24)(57)(24)(57)Balance at end of period— (32)— (32)
Treasury StockTreasury StockTreasury Stock
Balance at beginning of periodBalance at beginning of period(825)(625)(625)(500)Balance at beginning of period(2,221)(625)(1,625)(625)
Treasury stock purchasesTreasury stock purchases(400)— (600)(125)Treasury stock purchases(800)(200)(1,400)(200)
Treasury stock issuances - compensation and benefit plansTreasury stock issuances - compensation and benefit plans20 — 24 — 
Balance at end of periodBalance at end of period(1,225)(625)(1,225)(625)Balance at end of period(3,001)(825)(3,001)(825)
Dow Inc.'s stockholders' equityDow Inc.'s stockholders' equity16,439 12,354 16,439 12,354 Dow Inc.'s stockholders' equity18,973 15,573 18,973 15,573 
Noncontrolling InterestsNoncontrolling Interests589 578 589 578 Noncontrolling Interests534 580 534 580 
Total EquityTotal Equity$17,028 $12,932 $17,028 $12,932 Total Equity$19,507 $16,153 $19,507 $16,153 
Dividends declared per share of common stockDividends declared per share of common stock$0.70 $0.70 $2.10 $2.10 Dividends declared per share of common stock$0.70 $0.70 $1.40 $1.40 
See Notes to the Consolidated Financial Statements.

9

Table of Contents
The Dow Chemical Company and Subsidiaries
Consolidated Statements of Income
 
Three Months EndedNine Months EndedThree Months EndedSix Months Ended
In millions (Unaudited)In millions (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Net salesNet sales$14,837 $9,712 $40,604 $27,836 Net sales$15,664 $13,885 $30,928 $25,767 
Cost of salesCost of sales11,610 8,371 32,410 24,209 Cost of sales12,899 10,739 25,297 20,800 
Research and development expensesResearch and development expenses210 193 632 554 Research and development expenses217 228 435 422 
Selling, general and administrative expensesSelling, general and administrative expenses403 372 1,209 1,062 Selling, general and administrative expenses434 440 932 806 
Amortization of intangiblesAmortization of intangibles100 100 301 300 Amortization of intangibles85 100 173 201 
Restructuring and asset related charges - netRestructuring and asset related charges - net— 617 22 719 Restructuring and asset related charges - net— 22 186 22 
Integration and separation costs— 63 — 174 
Equity in earnings (losses) of nonconsolidated affiliates249 60 751 (124)
Equity in earnings of nonconsolidated affiliatesEquity in earnings of nonconsolidated affiliates195 278 369 502 
Sundry income (expense) - netSundry income (expense) - net(356)181 (231)150 Sundry income (expense) - net78 214 125 
Interest incomeInterest income15 36 28 Interest income38 13 66 21 
Interest expense and amortization of debt discountInterest expense and amortization of debt discount178 202 561 617 Interest expense and amortization of debt discount165 187 332 383 
Income before income taxesIncome before income taxes2,244 42 6,025 255 Income before income taxes2,175 2,466 4,222 3,781 
Provision for income taxesProvision for income taxes542 43 1,380 215 Provision for income taxes488 521 991 838 
Net income (loss)1,702 (1)4,645 40 
Net incomeNet income1,687 1,945 3,231 2,943 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests23 24 69 51 Net income attributable to noncontrolling interests20 31 46 
Net income (loss) available for The Dow Chemical Company common stockholder$1,679 $(25)$4,576 $(11)
Net income available for The Dow Chemical Company common stockholderNet income available for The Dow Chemical Company common stockholder$1,667 $1,914 $3,228 $2,897 
DepreciationDepreciation$517 $526 $1,550 $1,558 Depreciation$486 $518 $977 $1,033 
Capital expendituresCapital expenditures$413 $287 $1,035 $955 Capital expenditures$457 $333 $772 $622 
See Notes to the Consolidated Financial Statements.

10

Table of Contents
The Dow Chemical Company and Subsidiaries
Consolidated Statements of Comprehensive Income
 
Three Months EndedNine Months Ended Three Months EndedSix Months Ended
In millions (Unaudited)In millions (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Net income (loss)$1,702 $(1)$4,645 $40 
Net incomeNet income$1,687 $1,945 $3,231 $2,943 
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax
Unrealized gains (losses) on investmentsUnrealized gains (losses) on investments(13)(45)(16)Unrealized gains (losses) on investments(153)17 (249)(32)
Cumulative translation adjustmentsCumulative translation adjustments(157)91 (345)(9)Cumulative translation adjustments(514)65 (678)(188)
Pension and other postretirement benefit plansPension and other postretirement benefit plans149 147 1,432 430 Pension and other postretirement benefit plans122 149 231 1,283 
Derivative instrumentsDerivative instruments32 38 148 (100)Derivative instruments137 469 116 
Total other comprehensive income11 284 1,190 305 
Total other comprehensive income (loss)Total other comprehensive income (loss)(408)237 (227)1,179 
Comprehensive incomeComprehensive income1,713 283 5,835 345 Comprehensive income1,279 2,182 3,004 4,122 
Comprehensive income attributable to noncontrolling interests, net of taxComprehensive income attributable to noncontrolling interests, net of tax23 24 69 51 Comprehensive income attributable to noncontrolling interests, net of tax20 31 46 
Comprehensive income attributable to The Dow Chemical CompanyComprehensive income attributable to The Dow Chemical Company$1,690 $259 $5,766 $294 Comprehensive income attributable to The Dow Chemical Company$1,259 $2,151 $3,001 $4,076 
See Notes to the Consolidated Financial Statements.
11

Table of Contents
The Dow Chemical Company and Subsidiaries
Consolidated Balance Sheets

In millions, except share amounts (Unaudited)In millions, except share amounts (Unaudited)Sep 30,
2021
Dec 31,
2020
In millions, except share amounts (Unaudited)Jun 30,
2022
Dec 31,
2021
AssetsAssetsAssets
Current AssetsCurrent AssetsCurrent Assets
Cash and cash equivalents (variable interest entities restricted - 2021: $49; 2020: $26)$2,911 $5,104 
Cash and cash equivalentsCash and cash equivalents$2,367 $2,988 
Accounts and notes receivable:Accounts and notes receivable:Accounts and notes receivable:
Trade (net of allowance for doubtful receivables - 2021: $59; 2020: $51)6,844 4,839 
Trade (net of allowance for doubtful receivables - 2022: $212; 2021: $54)Trade (net of allowance for doubtful receivables - 2022: $212; 2021: $54)7,474 6,841 
OtherOther2,566 2,553 Other2,242 2,712 
InventoriesInventories7,111 5,701 Inventories8,225 7,372 
Other current assetsOther current assets927 801 Other current assets1,425 924 
Total current assetsTotal current assets20,359 18,998 Total current assets21,733 20,837 
InvestmentsInvestmentsInvestments
Investment in nonconsolidated affiliatesInvestment in nonconsolidated affiliates1,910 1,327 Investment in nonconsolidated affiliates1,862 2,045 
Other investments (investments carried at fair value - 2021: $1,958; 2020: $1,674)3,053 2,775 
Other investments (investments carried at fair value - 2022: $1,753; 2021: $2,079)Other investments (investments carried at fair value - 2022: $1,753; 2021: $2,079)2,782 3,193 
Noncurrent receivablesNoncurrent receivables436 426 Noncurrent receivables527 452 
Total investmentsTotal investments5,399 4,528 Total investments5,171 5,690 
PropertyPropertyProperty
PropertyProperty56,522 56,325 Property57,180 57,604 
Less accumulated depreciationLess accumulated depreciation36,874 36,086 Less accumulated depreciation37,020 37,049 
Net property (variable interest entities restricted - 2021: $187; 2020: $232)19,648 20,239 
Net propertyNet property20,160 20,555 
Other AssetsOther AssetsOther Assets
GoodwillGoodwill8,801 8,908 Goodwill8,605 8,764 
Other intangible assets (net of accumulated amortization - 2021: $4,747; 2020: $4,428)2,962 3,352 
Other intangible assets (net of accumulated amortization - 2022: $4,833; 2021: $4,725)Other intangible assets (net of accumulated amortization - 2022: $4,833; 2021: $4,725)2,616 2,881 
Operating lease right-of-use assetsOperating lease right-of-use assets1,727 1,856 Operating lease right-of-use assets1,272 1,412 
Deferred income tax assetsDeferred income tax assets1,357 2,215 Deferred income tax assets1,118 1,358 
Deferred charges and other assetsDeferred charges and other assets1,425 1,249 Deferred charges and other assets1,421 1,455 
Total other assetsTotal other assets16,272 17,580 Total other assets15,032 15,870 
Total AssetsTotal Assets$61,678 $61,345 Total Assets$62,096 $62,952 
Liabilities and EquityLiabilities and EquityLiabilities and Equity
Current LiabilitiesCurrent LiabilitiesCurrent Liabilities
Notes payableNotes payable$270 $156 Notes payable$295 $161 
Long-term debt due within one yearLong-term debt due within one year291 460 Long-term debt due within one year361 231 
Accounts payable:Accounts payable:Accounts payable:
TradeTrade4,601 3,763 Trade5,692 5,577 
OtherOther2,896 2,126 Other2,824 2,841 
Operating lease liabilities - currentOperating lease liabilities - current413 416 Operating lease liabilities - current290 314 
Income taxes payableIncome taxes payable621 397 Income taxes payable462 623 
Accrued and other current liabilitiesAccrued and other current liabilities3,413 3,256 Accrued and other current liabilities3,232 3,299 
Total current liabilitiesTotal current liabilities12,505 10,574 Total current liabilities13,156 13,046 
Long-Term Debt (variable interest entities nonrecourse - 2021: $4; 2020: $6)14,027 16,491 
Long-Term DebtLong-Term Debt13,065 14,280 
Other Noncurrent LiabilitiesOther Noncurrent LiabilitiesOther Noncurrent Liabilities
Deferred income tax liabilitiesDeferred income tax liabilities501 405 Deferred income tax liabilities752 506 
Pension and other postretirement benefits - noncurrentPension and other postretirement benefits - noncurrent8,586 11,648 Pension and other postretirement benefits - noncurrent6,934 7,557 
Asbestos-related liabilities - noncurrentAsbestos-related liabilities - noncurrent962 1,013 Asbestos-related liabilities - noncurrent887 931 
Operating lease liabilities - noncurrentOperating lease liabilities - noncurrent1,428 1,521 Operating lease liabilities - noncurrent1,043 1,149 
Other noncurrent obligationsOther noncurrent obligations6,276 6,124 Other noncurrent obligations6,505 6,454 
Total other noncurrent liabilitiesTotal other noncurrent liabilities17,753 20,711 Total other noncurrent liabilities16,121 16,597 
Stockholder's EquityStockholder's EquityStockholder's Equity
Common stock (authorized and issued 100 shares of $0.01 par value each)Common stock (authorized and issued 100 shares of $0.01 par value each)— — Common stock (authorized and issued 100 shares of $0.01 par value each)— — 
Additional paid-in capitalAdditional paid-in capital7,996 7,603 Additional paid-in capital8,375 8,159 
Retained earningsRetained earnings18,497 16,300 Retained earnings20,049 19,288 
Accumulated other comprehensive lossAccumulated other comprehensive loss(9,665)(10,855)Accumulated other comprehensive loss(9,204)(8,977)
Unearned ESOP sharesUnearned ESOP shares(24)(49)Unearned ESOP shares— (15)
The Dow Chemical Company’s stockholder's equityThe Dow Chemical Company’s stockholder's equity16,804 12,999 The Dow Chemical Company’s stockholder's equity19,220 18,455 
Noncontrolling interestsNoncontrolling interests589 570 Noncontrolling interests534 574 
Total equityTotal equity17,393 13,569 Total equity19,754 19,029 
Total Liabilities and EquityTotal Liabilities and Equity$61,678 $61,345 Total Liabilities and Equity$62,096 $62,952 
See Notes to the Consolidated Financial Statements.
12

Table of Contents
The Dow Chemical Company and Subsidiaries
Consolidated Statements of Cash Flows
 
In millions (Unaudited)In millions (Unaudited)Nine Months EndedIn millions (Unaudited)Six Months Ended
Sep 30,
2021
Sep 30,
2020
Jun 30,
2022
Jun 30,
2021
Operating ActivitiesOperating ActivitiesOperating Activities
Net incomeNet income$4,645 $40 Net income$3,231 $2,943 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortizationDepreciation and amortization2,187 2,148 Depreciation and amortization1,436 1,462 
Provision (credit) for deferred income tax488 (198)
Provision for deferred income taxProvision for deferred income tax348 388 
Earnings of nonconsolidated affiliates less than (in excess of) dividends receivedEarnings of nonconsolidated affiliates less than (in excess of) dividends received(519)515 Earnings of nonconsolidated affiliates less than (in excess of) dividends received289 (283)
Net periodic pension benefit costNet periodic pension benefit cost34 195 Net periodic pension benefit cost14 29 
Pension contributionsPension contributions(1,166)(188)Pension contributions(89)(1,109)
Net gain on sales of assets, businesses and investments(67)(283)
Net (gain) loss on sales of assets, businesses and investmentsNet (gain) loss on sales of assets, businesses and investments(50)
Restructuring and asset related charges - netRestructuring and asset related charges - net22 719 Restructuring and asset related charges - net186 22 
Other net lossOther net loss878 291 Other net loss97 224 
Changes in assets and liabilities, net of effects of acquired and divested companies:Changes in assets and liabilities, net of effects of acquired and divested companies:Changes in assets and liabilities, net of effects of acquired and divested companies:
Accounts and notes receivableAccounts and notes receivable(2,222)339 Accounts and notes receivable(767)(1,903)
InventoriesInventories(1,502)587 Inventories(908)(1,278)
Accounts payableAccounts payable1,487 (560)Accounts payable69 1,357 
Other assets and liabilities, netOther assets and liabilities, net369 999 Other assets and liabilities, net(419)110 
Cash provided by operating activitiesCash provided by operating activities4,634 4,604 Cash provided by operating activities3,493 1,912 
Investing ActivitiesInvesting ActivitiesInvesting Activities
Capital expendituresCapital expenditures(1,035)(955)Capital expenditures(772)(622)
Investment in gas field developmentsInvestment in gas field developments(44)(5)Investment in gas field developments(80)(24)
Purchases of previously leased assetsPurchases of previously leased assets(5)(4)Purchases of previously leased assets(3)(3)
Proceeds from sales of property and businesses, net of cash divestedProceeds from sales of property and businesses, net of cash divested15 295 Proceeds from sales of property and businesses, net of cash divested10 
Acquisitions of property and businesses, net of cash acquiredAcquisitions of property and businesses, net of cash acquired(107)(130)Acquisitions of property and businesses, net of cash acquired— (107)
Investments in and loans to nonconsolidated affiliatesInvestments in and loans to nonconsolidated affiliates— (280)Investments in and loans to nonconsolidated affiliates(33)— 
Distributions and loan repayments from nonconsolidated affiliatesDistributions and loan repayments from nonconsolidated affiliates11 Distributions and loan repayments from nonconsolidated affiliates10 11 
Proceeds from sales of ownership interests in nonconsolidated affiliatesProceeds from sales of ownership interests in nonconsolidated affiliates11 — 
Purchases of investmentsPurchases of investments(1,004)(582)Purchases of investments(278)(560)
Proceeds from sales and maturities of investmentsProceeds from sales and maturities of investments644 1,009 Proceeds from sales and maturities of investments418 527 
Other investing activities, netOther investing activities, net(10)29 Other investing activities, net(41)— 
Cash used for investing activitiesCash used for investing activities(1,535)(616)Cash used for investing activities(763)(768)
Financing ActivitiesFinancing ActivitiesFinancing Activities
Changes in short-term notes payableChanges in short-term notes payable(44)(267)Changes in short-term notes payable180 (38)
Proceeds from issuance of short-term debt greater than three monthsProceeds from issuance of short-term debt greater than three months144 163 Proceeds from issuance of short-term debt greater than three months— 72 
Payments on short-term debt greater than three monthsPayments on short-term debt greater than three months— (163)Payments on short-term debt greater than three months(14)— 
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt95 4,649 Proceeds from issuance of long-term debt49 68 
Payments on long-term debtPayments on long-term debt(2,638)(4,347)Payments on long-term debt(927)(1,425)
Proceeds from issuance of stockProceeds from issuance of stock212 53 Proceeds from issuance of stock97 200 
Transaction financing, debt issuance and other costsTransaction financing, debt issuance and other costs(536)(175)Transaction financing, debt issuance and other costs(7)(95)
Employee taxes paid for share-based payment arrangementsEmployee taxes paid for share-based payment arrangements(11)(26)Employee taxes paid for share-based payment arrangements(34)(11)
Distributions to noncontrolling interestsDistributions to noncontrolling interests(35)(19)Distributions to noncontrolling interests(22)(28)
Dividends paid to Dow Inc.Dividends paid to Dow Inc.(2,361)(1,685)Dividends paid to Dow Inc.(2,454)(1,442)
Cash used for financing activitiesCash used for financing activities(5,174)(1,817)Cash used for financing activities(3,132)(2,699)
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash(57)Effect of exchange rate changes on cash, cash equivalents and restricted cash(162)(12)
SummarySummarySummary
Increase (decrease) in cash, cash equivalents and restricted cash(2,132)2,175 
Decrease in cash, cash equivalents and restricted cashDecrease in cash, cash equivalents and restricted cash(564)(1,567)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period5,108 2,380 Cash, cash equivalents and restricted cash at beginning of period3,033 5,108 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$2,976 $4,555 Cash, cash equivalents and restricted cash at end of period$2,469 $3,541 
Less: Restricted cash and cash equivalents, included in "Other current assets"Less: Restricted cash and cash equivalents, included in "Other current assets"65 Less: Restricted cash and cash equivalents, included in "Other current assets"102 50 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$2,911 $4,549 Cash and cash equivalents at end of period$2,367 $3,491 
See Notes to the Consolidated Financial Statements.
13

Table of Contents
The Dow Chemical Company and Subsidiaries
Consolidated Statements of Equity
 
Three Months EndedNine Months Ended Three Months EndedSix Months Ended
In millions (Unaudited)In millions (Unaudited)Sep 30,
2021
Sep 30,
2020
Sep 30,
2021
Sep 30,
2020
In millions (Unaudited)Jun 30,
2022
Jun 30,
2021
Jun 30,
2022
Jun 30,
2021
Common StockCommon StockCommon Stock
Balance at beginning and end of periodBalance at beginning and end of period$— $— $— $— Balance at beginning and end of period$— $— $— $— 
Additional Paid-in CapitalAdditional Paid-in CapitalAdditional Paid-in Capital
Balance at beginning of periodBalance at beginning of period7,906 7,439 7,603 7,333 Balance at beginning of period8,229 7,751 8,159 7,603 
Issuance of parent company stock - Dow Inc.Issuance of parent company stock - Dow Inc.11 23 211 53 Issuance of parent company stock - Dow Inc.62 73 97 200 
Stock-based compensation and allocation of ESOP sharesStock-based compensation and allocation of ESOP shares79 43 182 119 Stock-based compensation and allocation of ESOP shares84 82 119 103 
Balance at end of periodBalance at end of period7,996 7,505 7,996 7,505 Balance at end of period8,375 7,906 8,375 7,906 
Retained EarningsRetained EarningsRetained Earnings
Balance at beginning of periodBalance at beginning of period17,745 16,147 16,300 17,313 Balance at beginning of period19,721 16,577 19,288 16,300 
Net income (loss) available for The Dow Chemical Company common stockholder1,679 (25)4,576 (11)
Net income available for The Dow Chemical Company common stockholder Net income available for The Dow Chemical Company common stockholder1,667 1,914 3,228 2,897 
Dividends to Dow Inc.Dividends to Dow Inc.(919)(513)(2,361)(1,685)Dividends to Dow Inc.(1,333)(739)(2,454)(1,442)
OtherOther(8)(3)(18)(11)Other(6)(7)(13)(10)
Balance at end of periodBalance at end of period18,497 15,606 18,497 15,606 Balance at end of period20,049 17,745 20,049 17,745 
Accumulated Other Comprehensive LossAccumulated Other Comprehensive LossAccumulated Other Comprehensive Loss
Balance at beginning of periodBalance at beginning of period(9,676)(10,225)(10,855)(10,246)Balance at beginning of period(8,796)(9,913)(8,977)(10,855)
Other comprehensive income11 284 1,190 305 
Other comprehensive income (loss)Other comprehensive income (loss)(408)237 (227)1,179 
Balance at end of periodBalance at end of period(9,665)(9,941)(9,665)(9,941)Balance at end of period(9,204)(9,676)(9,204)(9,676)
Unearned ESOP SharesUnearned ESOP SharesUnearned ESOP Shares
Balance at beginning of periodBalance at beginning of period(32)(69)(49)(91)Balance at beginning of period— (39)(15)(49)
Allocation of ESOP sharesAllocation of ESOP shares12 25 34 Allocation of ESOP shares— 15 17 
Balance at end of periodBalance at end of period(24)(57)(24)(57)Balance at end of period— (32)— (32)
The Dow Chemical Company's stockholder's equityThe Dow Chemical Company's stockholder's equity16,804 13,113 16,804 13,113 The Dow Chemical Company's stockholder's equity19,220 15,943 19,220 15,943 
Noncontrolling InterestsNoncontrolling Interests589 578 589 578 Noncontrolling Interests534 580 534 580 
Total EquityTotal Equity$17,393 $13,691 $17,393 $13,691 Total Equity$19,754 $16,523 $19,754 $16,523 
See Notes to the Consolidated Financial Statements.










14

Table of Contents
Dow Inc. and Subsidiaries
The Dow Chemical Company and Subsidiaries
(Unaudited)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents
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NOTE 1 – CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Dow Inc. is the direct parent company of The Dow Chemical Company and its consolidated subsidiaries ("TDCC" and together with Dow Inc., "Dow" or the "Company"). The unaudited interim consolidated financial statements of Dow Inc. and TDCC were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect all adjustments (including normal recurring accruals) which, in the opinion of management, are considered necessary for the fair presentation of the results for the periods presented. These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the combined Dow Inc. and TDCC Annual Report on Form 10-K for the year ended December 31, 20202021 ("20202021 10-K").

As a result of the parent/subsidiary relationship between Dow Inc. and TDCC, and considering that the financial statements and disclosures of each company are substantially similar, the companies are filing a combined report for this Quarterly Report on Form 10-Q. The information reflected in the report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted. Transactions between TDCC and Dow Inc. are treated as related party transactions for TDCC. See Note 21 for additional information.

Except as otherwise indicated by the context, the term "Union Carbide" means Union Carbide Corporation and the term "Dow Silicones" means Dow Silicones Corporation, both wholly owned subsidiaries of the Company.

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NOTE 2 – RECENT ACCOUNTING GUIDANCE
Recently Adopted Accounting Guidance
In the first quarter of 2021, the Company adopted Accounting Standards Update 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, "Income Taxes" and improve consistent application by clarifying and amending existing guidance. The adoption of this guidance did not have a material impact on the consolidated financial statements.


NOTE 32 – SEPARATION FROM DOWDUPONT
For additional information on the separation from DowDuPont Inc. ("DowDuPont"), see Note 3 to the Consolidated Financial Statements included in the 2020 2021 10-K.

Agreements Related to the Separation and Distribution
Dow Inc. entered into certain agreements with DuPont de Nemours, Inc. ("DuPont") and/or Corteva, Inc. ("Corteva"), including the following: Separation and Distribution Agreement, Tax Matters Agreement and Employee Matters Agreement (collectively, the "Agreements"). In addition to establishing the terms of Dow Inc.'s separation from DowDuPont, the Agreements provide a framework for Dow’s interaction with DuPont and Corteva after the separation and also provide for the allocation among Dow, DuPont and Corteva of assets, liabilities and obligations attributable to periods prior to, at and after the completion of the separation. The Agreements also contain certain indemnity and/or cross-indemnity provisions that are intended to set forth each party’s respective rights, responsibilities and obligations for matters subject to indemnification. Except in certain instances, the parties’ indemnification obligations are uncapped. Certain indemnification obligations will be subject to reduction by insurance proceeds or other third-party proceeds of the indemnified party that reduces the amount of the loss. In addition, indemnifiable losses will be subject to, in certain cases, “de minimis” threshold amounts and, in certain cases, deductible amounts.

The impacts of indemnifications and other post-separation matters relating to the AgreementsDow's separation from DowDuPont were primarily included in the consolidated financial statements of Dow Inc. At SeptemberJune 30, 2021,2022, the Company had assets of $22$19 million ($77 million(zero at December 31, 2020)2021) included in "Other current assets" and $31$2 million ($3320 million at December 31, 2020)2021) included in "Noncurrent receivables," and liabilities of $207$123 million ($412148 million at December 31, 2020)2021) included in "Accrued and other current liabilities" and $40$33 million ($4639 million at December 31, 2020)2021) included in "Other noncurrent obligations" in the consolidated balance sheets of Dow Inc. related to the Agreements.these agreements.

In addition, the Company deferred a portion of the cash distribution received from DowDuPont at separation and recorded an associated liability in "Other noncurrent obligations," with an offset to "Retained earnings" in the consolidated balance sheets of Dow Inc. At SeptemberJune 30, 2021, $612022, $10 million ($10315 million at December 31, 2020)2021) of this liability was recorded in "Accrued and other current liabilities" and $96 million ($96 million at December 31, 2020)2021) was recorded in "Other noncurrent obligations" in the consolidated balance sheets of Dow Inc.


NOTE 43 – REVENUE
Revenue Recognition
The majority of Dow'sthe Company's revenue is derived from product sales. Dow'sThe Company's revenue related to product sales was 99 percent for the three and six months ended SeptemberJune 30, 2021 and 98 percent for the nine months ended September 30, 20212022 (99(98 percent for the three and ninesix months ended SeptemberJune 30, 2020), with the2021). The remaining balancesales were primarily related to the Company's insurance operations and licensing of patents and technologies. Product sales consist of sales of Dow'sthe Company's products to manufacturers and distributors anddistributors. The Company considers order confirmations or purchase orders, which in some cases are governed by master supply agreements, to be contracts with a customer. DowThe Company enters into licensing arrangements in which it licenses certain rights of its patents and technology to customers. Revenue from Dow’sthe Company’s licenses for patents and technology is derived from sales-based royalties and licensing arrangements based on billing schedules established in each contract.

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Remaining Performance Obligations
Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. At SeptemberJune 30, 2021, Dow2022, the Company had unfulfilled performance obligations of $831$911 million ($977829 million at December 31, 2020)2021) related to the licensing of technology. DowThe Company expects revenue to be recognized for the remaining performance obligations over the next sixfive 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 Dowthe Company has elected the right to invoice practical expedient, or variable consideration attributable to royalties for licenses of patents and technology. DowThe Company 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 2018 years. DowThe Company 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.

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Disaggregation of Revenue
DowThe Company disaggregates its revenue from contracts with customers by operating segment and business, as the Company believes it best depicts the nature, amount, timing and uncertainty of its revenue and cash flows. See details in the tables below:

Net Trade Sales by Segment and BusinessNet Trade Sales by Segment and BusinessThree Months EndedNine Months EndedNet Trade Sales by Segment and BusinessThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Hydrocarbons & EnergyHydrocarbons & Energy$2,251 $1,021 $6,010 $3,027 Hydrocarbons & Energy$2,779 $2,008 $5,195 $3,759 
Packaging and Specialty PlasticsPackaging and Specialty Plastics5,485 3,544 14,929 10,148 Packaging and Specialty Plastics5,454 5,113 10,665 9,444 
Packaging & Specialty PlasticsPackaging & Specialty Plastics$7,736 $4,565 $20,939 $13,175 Packaging & Specialty Plastics$8,233 $7,121 $15,860 $13,203 
Industrial SolutionsIndustrial Solutions$1,377 $931 $3,627 $2,879 Industrial Solutions$1,446 $1,201 $2,961 $2,250 
Polyurethanes & Construction ChemicalsPolyurethanes & Construction Chemicals3,102 2,124 8,670 5,632 Polyurethanes & Construction Chemicals2,919 3,012 5,924 5,568 
OtherOtherOther
Industrial Intermediates & InfrastructureIndustrial Intermediates & Infrastructure$4,481 $3,058 $12,303 $8,520 Industrial Intermediates & Infrastructure$4,370 $4,215 $8,894 $7,822 
Coatings & Performance MonomersCoatings & Performance Monomers$1,110 $844 $2,975 $2,438 Coatings & Performance Monomers$1,129 $1,010 $2,204 $1,865 
Consumer SolutionsConsumer Solutions1,416 1,158 4,139 3,484 Consumer Solutions1,874 1,455 3,848 2,723 
Performance Materials & CoatingsPerformance Materials & Coatings$2,526 $2,002 $7,114 $5,922 Performance Materials & Coatings$3,003 $2,465 $6,052 $4,588 
CorporateCorporate$94 $87 $248 $219 Corporate$58 $84 $122 $154 
TotalTotal$14,837 $9,712 $40,604 $27,836 Total$15,664 $13,885 $30,928 $25,767 

Net Trade Sales by Geographic RegionNet Trade Sales by Geographic RegionThree Months EndedNine Months EndedNet Trade Sales by Geographic RegionThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
U.S. & CanadaU.S. & Canada$5,476 $3,391 $14,431 $9,885 U.S. & Canada$5,707 $4,927 $11,244 $8,955 
EMEAI 1
EMEAI 1
5,229 3,272 14,660 9,394 
EMEAI 1
5,677 5,102 11,189 9,431 
Asia PacificAsia Pacific2,579 2,073 7,423 5,850 Asia Pacific2,673 2,479 5,426 4,844 
Latin AmericaLatin America1,553 976 4,090 2,707 Latin America1,607 1,377 3,069 2,537 
TotalTotal$14,837 $9,712 $40,604 $27,836 Total$15,664 $13,885 $30,928 $25,767 
1.Europe, Middle East, Africa and India.

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Contract Assets and Liabilities
DowThe Company 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'sthe Company'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 recognized in revenue when the performance obligations are met. "Contract liabilities - current" primarily reflects deferred revenue from prepayments from customers for product to be delivered in 12 months or less and royalty payments that are deferred and will be recognized in 12 months or less. "Contract liabilities - noncurrent" includes advance payments that Dowthe Company has received from customers related to long-term supply agreements and royalty payments that are deferred and recognized over the life of the contract.

Revenue recognized in the first ninesix months of 20212022 from amounts included in contract liabilities at the beginning of the period was approximately $250$105 million (approximately $110$180 million in the first ninesix months of 2020)2021). In the first ninesix months of 2022 and 2021, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming unconditional was approximately $5 million (approximately $25 million in the first nine months of 2020).insignificant.

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The following table summarizes the contract assets and liabilities at SeptemberJune 30, 20212022 and December 31, 2020:2021:

Contract Assets and LiabilitiesContract Assets and LiabilitiesBalance Sheet ClassificationSep 30, 2021Dec 31, 2020Contract Assets and LiabilitiesBalance Sheet ClassificationJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Accounts and notes receivable - tradeAccounts and notes receivable - trade$6,844 $4,839 Accounts and notes receivable - trade$7,474 $6,841 
Contract assets - currentContract assets - currentOther current assets$52 $58 Contract assets - currentOther current assets$36 $34 
Contract assets - noncurrentContract assets - noncurrentDeferred charges and other assets$39 $11 Contract assets - noncurrentDeferred charges and other assets$25 $26 
Contract liabilities - current 1
Accrued and other current liabilities$207 $349 
Contract liabilities - noncurrentOther noncurrent obligations$1,910 $1,915 
Contract liabilities - currentContract liabilities - currentAccrued and other current liabilities$259 $209 
Contract liabilities - noncurrent 1
Contract liabilities - noncurrent 1
Other noncurrent obligations$1,818 $1,925 
1.The decrease from December 31, 20202021 to SeptemberJune 30, 20212022 was due to the recognition of revenue on long-term product supply agreements and reclassification of deferred royalty payments.payments from noncurrent to current.


NOTE 54 – RESTRUCTURING AND ASSET RELATED CHARGES - NET
Charges for restructuring programs and other asset related charges, which includes asset impairments, are recorded in "Restructuring and asset related charges - net" in the consolidated statements of income and were $22 million for the nine months ended September 30, 2021 ($617 million and $719 million for the three and nine months ended September 30, 2020, respectively).income. For additional information on the Company's restructuring programs, see Note 6 to the Consolidated Financial Statements included in the 20202021 10-K.

Restructuring Plans
2020 Restructuring Program
OnActions related to the restructuring program approved by the Board of Dow Inc. on September 29, 2020 the Board of Directors ("Board") of Dow Inc. approved restructuring actions to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the coronavirus disease 2019 ("COVID-19") pandemic. The restructuring program is designed to reduce structural costs and enable the Company to further enhance competitiveness while the COVID-19 economic recovery continues. This program includes a global workforce cost reduction of approximately 6 percent and actions to rationalize the Company's manufacturing assets, which include asset write-down and write-off charges, related contract termination fees and environmental remediation costs ("2020 Restructuring Program"). These actions are expected to be were substantially complete byat the end of 2021, except forwith the exception of certain cash payments in 2022.that will continue through 2022 and into 2023. The following table summarizes the activities related to the 2020 Restructuring Program since January 1, 2021:










2020 Restructuring ProgramSeverance and Related Benefit CostsAsset Write-downs and Write-offsCosts Associated with Exit and Disposal ActivitiesTotal
In millions
Reserve balance at Jan 1, 2021$289 $— $75 $364 
Cash payments(37)— (12)(49)
Reserve balance at Mar 31, 2021$252 $— $63 $315 
Packaging & Specialty Plastics$— $— $$
Industrial Intermediates & Infrastructure— — 
Performance Materials & Coatings— 10 
Corporate— — 
Total restructuring charges$— $12 $10 $22 
Charges against the reserve— (12)— (12)
Cash payments(53)— (3)(56)
Reserve balance at Jun 30, 2021$199 $— $70 $269 
Cash payments(55)— (2)(57)
Reserve balance at Sep 30, 2021$144 $— $68 $212 
Restructuring charges - Corporate$(10)$— $— $(10)
Cash payments(30)— (4)(34)
Reserve balance at Dec 31, 2021$104 $— $64 $168 
Cash payments(59)— (1)(60)
Reserve balance at Mar 31, 2022$45 $— $63 $108 
Cash payments(8)— (2)(10)
Reserve balance at Jun 30, 2022$37 $— $61 $98 

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The following table summarizes the activities related to the 2020 Restructuring Program:

2020 Restructuring ProgramSeverance and Related Benefit CostsAsset Write-downs and Write-offsCosts Associated with Exit and Disposal ActivitiesTotal
In millions
Packaging & Specialty Plastics$— $11 $— $11 
Industrial Intermediates & Infrastructure— 22 — 22 
Performance Materials & Coatings— 117 57 174 
Corporate297 47 24 368 
Total restructuring charges$297 $197 $81 $575 
Charges against the reserve— (197)— (197)
Cash payments(1)— — (1)
Reserve balance at Sep 30, 2020$296 $— $81 $377 
Performance Materials & Coatings$— $(1)$$
Corporate— — (5)(5)
Total restructuring charges$— $(1)$(1)$(2)
Charges against the reserve— (5)(4)
Cash payments(7)— — (7)
Reserve balance at Dec 31, 2020$289 $— $75 $364 
Cash payments(37)— (12)(49)
Reserve balance at Mar 31, 2021$252 $— $63 $315 
Packaging & Specialty Plastics$— $— $$
Industrial Intermediates & Infrastructure— — 
Performance Materials & Coatings— 10 
Corporate— — 
Total restructuring charges$— $12 $10 $22 
Charges against the reserve— (12)— (12)
Cash payments(53)— (3)(56)
Reserve balance at Jun 30, 2021$199 $— $70 $269 
Cash payments(55)— (2)(57)
Reserve balance at Sep 30, 2021$144 $— $68 $212 

At SeptemberJune 30, 2021, $1472022, $44 million of the reserve balance was included in "Accrued and other current liabilities" ($227112 million at December 31, 2020)2021) and $65$54 million was included in "Other noncurrent obligations" ($13756 million at December 31, 2020)2021) in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $595$585 million inception-to-date under the 2020 Restructuring Program, consisting of severance and related benefit costs of $297$287 million, asset write-downs and write-offs of $208 million and costs associated with exit and disposal activities of $90 million.

The Company expects to incur additional costs in the future related to its restructuring activities. Future costs are expected to include demolition costs related to closed facilities and restructuring implementation costs; these costs will be recognized as incurred. The Company also expects to incur additional employee-related costs, including involuntary termination benefits, related to its other optimization activities. These costs cannot be reasonably estimated at this time.

2022 Asset Related Charges
In the first quarter of 2022, the Company recorded pretax asset related charges of $186 million due to the Russia and Ukraine conflict and the expectation that certain assets will not be recoverable. These charges included the write-down of inventory, the recording of bad debt reserves and the impairment of other assets. Asset related charges by segment were as follows: $31 million in Packaging & Specialty Plastics, $109 million in Industrial Intermediates & Infrastructure, $16 million in Performance Materials & Coatings and $30 million in Corporate.
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NOTE 65 – SUPPLEMENTARY INFORMATION
Dow Inc. Sundry Income (Expense) – NetDow Inc. Sundry Income (Expense) – NetThree Months EndedNine Months EndedDow Inc. Sundry Income (Expense) – NetThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Non-operating pension and other postretirement benefit plan net credits 1
Non-operating pension and other postretirement benefit plan net credits 1
$86 $26 $247 $81 
Non-operating pension and other postretirement benefit plan net credits 1
$89 $86 $178 $161 
Foreign exchange lossesForeign exchange losses(5)(24)(21)(42)Foreign exchange losses(17)(8)(15)(16)
Gain on divestiture of rail infrastructure 2
— 233 — 233 
Loss on early extinguishment of debt 3
(472)(63)(574)(149)
Loss on divestitures 4
— (13)— (13)
Loss on early extinguishment of debt 2
Loss on early extinguishment of debt 2
(8)(102)(8)(102)
Gains on sales of other assets and investmentsGains on sales of other assets and investments12 74 Gains on sales of other assets and investments12 14 43 62 
Indemnification and other transaction related costs 5
— — (5)— 
Gain related to Nova ethylene asset matter 6
— — — 
Dow Silicones breast implant liability adjustment 6
— — — 
Indemnification and other transaction related costs 3
Indemnification and other transaction related costs 3
(8)(5)(5)
Luxi arbitration award 6
54 — 54 — 
Other - netOther - net(25)21 — 26 Other - net12 21 25 
Total sundry income (expense) – netTotal sundry income (expense) – net$(350)$182 $(225)$154 Total sundry income (expense) – net$75 $(3)$223 $125 
1.See Note 16 for additional information.
2.Related to a gain on the sale of rail infrastructure in the U.S. & Canada.
3.See Note 11 for additional information.
4.The three and nine months ended September 30, 2020 includes a loss on the divestiture of a bio-ethanol manufacturing facility in Brazil, related to Packaging & Specialty Plastics.
5.3.See Note 3 for additional information.
6.See Note 122 for additional information.

TDCC Sundry Income (Expense) – NetTDCC Sundry Income (Expense) – NetThree Months EndedNine Months EndedTDCC Sundry Income (Expense) – NetThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Non-operating pension and other postretirement benefit plan net credits 1
Non-operating pension and other postretirement benefit plan net credits 1
$86 $26 $247 $81 
Non-operating pension and other postretirement benefit plan net credits 1
$89 $86 $178 $161 
Foreign exchange lossesForeign exchange losses(8)(22)(24)(45)Foreign exchange losses(22)(4)(20)(16)
Gain on divestiture of rail infrastructure 2
— 233 — 233 
Loss on early extinguishment of debt 3
(472)(63)(574)(149)
Loss on divestitures 4
— (13)— (13)
Loss on early extinguishment of debt 2
Loss on early extinguishment of debt 2
(8)(102)(8)(102)
Gains on sales of other assets and investmentsGains on sales of other assets and investments12 74 Gains on sales of other assets and investments12 14 43 62 
Gain related to Nova ethylene asset matter 5
— — — 
Dow Silicones breast implant liability adjustment 5
— — — 
Luxi arbitration award 5
54 — 54 — 
Other - netOther - net(28)18 (8)25 Other - net12 21 20 
Total sundry income (expense) – netTotal sundry income (expense) – net$(356)$181 $(231)$150 Total sundry income (expense) – net$78 $$214 $125 
1.See Note 16 for additional information.
2.Related to a gain on the sale of rail infrastructure in the U.S. & Canada.
3.See Note 11 for additional information.
4.The three and nine months ended September 30, 2020 includes a loss on the divestiture of a bio-ethanol manufacturing facility in Brazil, related to Packaging & Specialty Plastics.
5.See Note 12 for additional information.

Accrued and Other Current Liabilities
“Accrued and other current liabilities” were $3,701 million and $3,413 million at September 30, 2021 and $3,790 million and $3,256 million at December 31, 2020, for Dow Inc. and TDCC, respectively. Accrued payroll, which is a component of "Accrued and other current liabilities" and includes liabilities related to payroll, performance-based compensation and severance, was $955 million at September 30, 2021 and $866 million at December 31, 2020. No other components of "Accrued and other current liabilities" were more than 5 percent of total current liabilities.


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NOTE 76 - EARNINGS PER SHARE CALCULATIONS
The following tables provide earnings per share calculations for Dow Inc. for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020.2021. Earnings per share of TDCC is not presented as this information is not required in financial statements of wholly owned subsidiaries.

Net Income (Loss) for Earnings Per Share CalculationsThree Months EndedNine Months Ended
Net Income for Earnings Per Share CalculationsNet Income for Earnings Per Share CalculationsThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net income (loss)$1,706 $(1)$4,644 $40 
Net incomeNet income$1,681 $1,932 $3,233 $2,938 
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests23 24 69 51 Net income attributable to noncontrolling interests20 31 46 
Net income attributable to participating securities 1
Net income attributable to participating securities 1
23 
Net income attributable to participating securities 1
10 17 15 
Net income (loss) attributable to common stockholders$1,675 $(28)$4,552 $(18)
Net income attributable to common stockholdersNet income attributable to common stockholders$1,652 $1,891 $3,213 $2,877 

Earnings (Loss) Per Share - Basic and DilutedThree Months EndedNine Months Ended
Dollars per shareSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020
Earnings (loss) per common share - basic$2.25 $(0.04)$6.11 $(0.02)
Earnings (loss) per common share - diluted$2.23 $(0.04)$6.06 $(0.02)
Earnings Per Share - Basic and DilutedThree Months EndedSix Months Ended
Dollars per shareJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Earnings per common share - basic$2.28 $2.53 $4.40 $3.86 
Earnings per common share - diluted$2.26 $2.51 $4.37 $3.83 

Share Count InformationShare Count InformationThree Months EndedNine Months EndedShare Count InformationThree Months EndedSix Months Ended
Shares in millionsShares in millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Shares in millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Shares in millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Weighted-average common shares outstanding - basicWeighted-average common shares outstanding - basic744.5 740.5 745.4 740.0 Weighted-average common shares outstanding - basic725.7 747.0 730.2 745.9 
Plus dilutive effect of equity compensation plans 2
5.5 — 5.5 — 
Weighted-average common shares outstanding - diluted 2
750.0 740.5 750.9 740.0 
Stock options and restricted stock units excluded from EPS calculations 3
7.2 26.9 5.6 27.1 
Plus dilutive effect of equity compensation plansPlus dilutive effect of equity compensation plans5.8 5.9 5.4 5.5 
Weighted-average common shares outstanding - dilutedWeighted-average common shares outstanding - diluted731.5 752.9 735.6 751.4 
Stock options and restricted stock units excluded from EPS calculations 2
Stock options and restricted stock units excluded from EPS calculations 2
4.0 3.8 5.4 4.8 
1.Restricted stock units are considered participating securities due to the Company's practice of paying dividend equivalents on unvested shares.
2.The three and nine months ended September 30, 2020 reflect a loss, and as such, the basic share count was used for purposes of calculating earnings per share on a diluted basis.
3.These outstanding options to purchase shares of common stock and restricted stock units were excluded from the calculation of diluted earnings per share because the effect of including them would have been antidilutive.


NOTE 87 – INVENTORIES
The following table provides a breakdown of inventories:

InventoriesInventoriesSep 30, 2021Dec 31, 2020InventoriesJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Finished goodsFinished goods$4,233 $3,140 Finished goods$5,174 $4,554 
Work in processWork in process1,561 996 Work in process1,994 1,615 
Raw materialsRaw materials867 598 Raw materials1,024 822 
SuppliesSupplies875 933 Supplies871 866 
TotalTotal$7,536 $5,667 Total$9,063 $7,857 
Adjustment of inventories to a LIFO basisAdjustment of inventories to a LIFO basis(425)34 Adjustment of inventories to a LIFO basis(838)(485)
Total inventoriesTotal inventories$7,111 $5,701 Total inventories$8,225 $7,372 


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NOTE 98 – NONCONSOLIDATED AFFILIATES
For additional information on the Company’s nonconsolidated affiliates, see Note 12 to the Consolidated Financial Statements included in the 20202021 10-K.

The Company's investments in companies accounted for using the equity method ("nonconsolidated affiliates"), by classification in the consolidated balance sheets, and dividends received from nonconsolidated affiliates are shown in the following tables:

Investments in Nonconsolidated AffiliatesInvestments in Nonconsolidated AffiliatesSep 30, 2021Dec 31, 2020Investments in Nonconsolidated AffiliatesJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Investment in nonconsolidated affiliatesInvestment in nonconsolidated affiliates$1,910 $1,327 Investment in nonconsolidated affiliates$1,862 $2,045 
Other noncurrent obligationsOther noncurrent obligations— (169)Other noncurrent obligations(103)— 
Net investment in nonconsolidated affiliatesNet investment in nonconsolidated affiliates$1,910 $1,158 Net investment in nonconsolidated affiliates$1,759 $2,045 

Dividends Received from Nonconsolidated AffiliatesNine Months Ended
In millionsSep 30, 2021Sep 30, 2020
Dividends from nonconsolidated affiliates 1
$232 $391 
Dividends from Nonconsolidated AffiliatesSix Months Ended
In millions
Jun 30, 2022 1
Jun 30, 2021 2
Dividends from nonconsolidated affiliates$736 $219 
1.$658 million included in "Earnings of nonconsolidated affiliates less than (in excess of) dividends received" in the consolidated statements of cash flows and $78 million included in "Accounts and notes receivable - Other" in the consolidated balance sheets.
2.Included in "Earnings of nonconsolidated affiliates less than (in excess of) dividends received" in the consolidated statements of cash flows.

At SeptemberIn the first half of 2022, EQUATE Petrochemical Company K.S.C.C. ("EQUATE") paid dividends of $397 million ($79 million in the first half of 2021), reflected in "Earnings of nonconsolidated affiliates less than (in excess of) dividends received" in the consolidated statements of cash flows. As a result, at June 30, 2021,2022, the Company had ana negative investment balance in EQUATE Petrochemical Company K.S.C.C. of $18$103 million included in "Other noncurrent obligations" (positive $115 million at December 31, 2021 included in "Investment in nonconsolidated affiliates" (negative $147 million at December 31, 2020 included in "Other noncurrent obligations") in the consolidated balance sheets.

At September 30, 2021, the Company had an investment balance in Sadara Chemical Company (“Sadara”) of $412 million included in “Investment in nonconsolidated affiliates” (negative $22 million at December 31, 2020 included in “Other noncurrent obligations”) in the consolidated balance sheets. In the first quarter of 2021, the Company entered into a new guarantee in conjunction with Sadara’s debt re-profiling activities. In the second quarter of 2021, as a part of Sadara's debt re-profiling activities, Sadara established a new revolving credit facility guaranteed by Dow, which will be used to fund Dow’s pro-rata share of any potential shortfall during the grace period. The Company does not expect to be required to perform under the guarantee. See Notes 12 and 19 for additional information on the guarantees.

Transactions with Nonconsolidated Affiliates
The Company is currently responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company’s established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. In March 2021, Dow and the Saudi Arabian Oil Company agreed to transition the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 and is being implemented over the next five years.
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NOTE 109 – GOODWILL AND OTHER INTANGIBLE ASSETS
The following table shows changes in the carrying amount of goodwill by reportable segment:

GoodwillGoodwillPackaging & Specialty PlasticsIndustrial Intermediates & InfrastructurePerformance Materials & CoatingsTotalGoodwillPackaging & Specialty PlasticsIndustrial Intermediates & InfrastructurePerformance Materials & CoatingsTotal
In millionsIn millionsIn millions
Net goodwill at Dec 31, 2020$5,115 $1,100 $2,693 $8,908 
Net goodwill at Dec 31, 2021Net goodwill at Dec 31, 2021$5,105 $1,096 $2,563 $8,764 
Foreign currency impactForeign currency impact(7)(3)(97)(107)Foreign currency impact(8)(4)(147)(159)
Net goodwill at Sep 30, 2021$5,108 $1,097 $2,596 $8,801 
Net goodwill at Jun 30, 2022Net goodwill at Jun 30, 2022$5,097 $1,092 $2,416 $8,605 

The following table provides information regarding the Company’s other intangible assets:

Other Intangible AssetsOther Intangible AssetsSep 30, 2021Dec 31, 2020Other Intangible AssetsJun 30, 2022Dec 31, 2021
In millionsIn millionsGross Carrying AmountAccum AmortNetGross Carrying AmountAccum AmortNetIn millionsGross Carrying AmountAccum AmortNetGross Carrying AmountAccum AmortNet
Intangible assets with finite lives:Intangible assets with finite lives:Intangible assets with finite lives:
Developed technologyDeveloped technology$2,637 $(1,833)$804 $2,638 $(1,677)$961 Developed technology$2,633 $(1,947)$686 $2,637 $(1,871)$766 
SoftwareSoftware1,494 (1,042)452 1,489 (989)500 Software1,368 (950)418 1,396 (945)451 
Trademarks/tradenamesTrademarks/tradenames352 (344)352 (343)Trademarks/tradenames352 (345)352 (344)
Customer-relatedCustomer-related3,226 (1,528)1,698 3,301 (1,419)1,882 Customer-related3,079 (1,591)1,488 3,204 (1,565)1,639 
Total other intangible assets, finite livesTotal other intangible assets, finite lives$7,432 $(4,833)$2,599 $7,589 $(4,725)$2,864 
In-process research and developmentIn-process research and development17 — 17 17 — 17 
Total other intangible assetsTotal other intangible assets$7,709 $(4,747)$2,962 $7,780 $(4,428)$3,352 Total other intangible assets$7,449 $(4,833)$2,616 $7,606 $(4,725)$2,881 

The following table provides information regarding amortization expense related to intangible assets:

Amortization ExpenseAmortization ExpenseThree Months EndedNine Months EndedAmortization ExpenseThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Other intangible assets, excluding softwareOther intangible assets, excluding software$100 $100 $301 $300 Other intangible assets, excluding software$85 $100 $173 $201 
Software, included in “Cost of sales”Software, included in “Cost of sales”$22 $24 $67 $72 Software, included in “Cost of sales”$20 $23 $40 $45 

Total estimated amortization expense for 20212022 and the five succeeding fiscal years, including amounts expected to be capitalized, is as follows:

Estimated Amortization Expense
In millions
2021$475 
2022$410 
2023$377 
2024$359 
2025$268 
2026$194 

Estimated Amortization Expense
In millions
2022$415 
2023$381 
2024$362 
2025$271 
2026$196 
2027$164 

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NOTE 10 – TRANSFERS OF FINANCIAL ASSETS
Accounts Receivable Programs
The Company maintains committed accounts receivable facilities with various financial institutions, including in the United States, which expires in November 2022 (“U.S. A/R Program”) and in Europe, which expires in July 2023 (“Europe A/R Program” and together with the U.S. A/R Program, "the Programs"). Under the terms of the Programs, the Company may sell certain eligible trade accounts receivable at any point in time, up to $900 million for the U.S. A/R Program and up to €500 million for the Europe A/R Program. Under the terms of the Programs, the Company continues to service the receivables from the customer, but retains no interest in the receivables, and remits payment to the financial institutions. The Company also provides a guarantee to the financial institutions for the creditworthiness and collection of the receivables in satisfaction of the facility. See Note 12 for additional information related to guarantees. In the second quarter of 2022, the Company sold $141 million of receivables under the Programs ($391 million in the first six months of 2022; zero for the three and six months ended June 30, 2021).


NOTE 11 – NOTES PAYABLE, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES
Notes PayableNotes PayableSep 30, 2021Dec 31, 2020Notes PayableJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Commercial paperCommercial paper$200$
Notes payable to banks and other lendersNotes payable to banks and other lenders$270$156Notes payable to banks and other lenders95161
Total notes payableTotal notes payable$295$161
Period-end average interest ratesPeriod-end average interest rates6.38 %3.89 %Period-end average interest rates4.59 %5.78 %

Long-Term DebtLong-Term Debt2021 Average RateSep 30, 20212020 Average RateDec 31, 2020Long-Term Debt2022 Average RateJun 30, 20222021 Average RateDec 31, 2021
In millions
Promissory notes and debentures:Promissory notes and debentures:Promissory notes and debentures:
Final maturity 2021— %$— 8.95 %$173 
Final maturity 2022Final maturity 20228.64 %121 8.64 %121 Final maturity 2022— %$— 8.64 %$121 
Final maturity 2023Final maturity 20237.63 %250 7.63 %250 Final maturity 20237.63 %250 7.63 %250 
Final maturity 2024— %— 3.43 %1,017 
Final maturity 2025Final maturity 20255.63 %333 5.13 %625 Final maturity 20255.63 %333 5.63 %333 
Final maturity 2026Final maturity 20263.63 %750 3.63 %750 Final maturity 2026— %— 3.63 %750 
Final maturity 2027 and thereafter 1
5.15 %9,364 5.34 %10,138 
Final maturity 2028 and thereafter 1
Final maturity 2028 and thereafter 1
5.15 %9,364 5.15 %9,363 
Other facilities:Other facilities:Other facilities:
Foreign currency notes and loans, various rates and maturitiesForeign currency notes and loans, various rates and maturities1.22 %2,889 1.41 %3,189 Foreign currency notes and loans, various rates and maturities1.16 %2,492 1.17 %2,730 
InterNotes®, varying maturities through 20513.40 %382 3.56 %535 
InterNotes®, varying maturities through 2052InterNotes®, varying maturities through 20523.44 %436 3.37 %392 
Finance lease obligations 2
Finance lease obligations 2
542 518 
Finance lease obligations 2
826 869 
Unamortized debt discount and issuance costsUnamortized debt discount and issuance costs(313)(365)Unamortized debt discount and issuance costs(275)(297)
Long-term debt due within one year 3
Long-term debt due within one year 3
(291)(460)
Long-term debt due within one year 3
(361)(231)
Long-term debtLong-term debt$14,027 $16,491 Long-term debt$13,065 $14,280 
1.Cost includes net fair value hedge adjustment gains of $48$47 million at SeptemberJune 30, 2021 ($69 million at2022 and December 31, 2020).2021. See Note 18 for additional information.
2.See Note 13 for additional information.
3.Presented net of current portion of unamortized debt issuance costs.

Maturities of Long-Term Debt for Next Five Years at Sep 30, 2021
Maturities of Long-Term Debt for Next Five Years at Jun 30, 2022Maturities of Long-Term Debt for Next Five Years at Jun 30, 2022
In millions
2021$122 
20222022$191 2022$58 
20232023$345 2023$388 
20242024$41 2024$81 
20252025$364 2025$386 
20262026$801 2026$78 
20272027$1,113 

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2022 Activity
In the second quarter of 2022, the Company redeemed $750 million aggregate principal amount of 3.625 percent notes due May 2026. As a result of the redemption, the Company recognized a pretax loss on the early extinguishment of debt of $8 million, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.

In the first six months of 2022, the Company issued an aggregate principal amount of $49 million of InterNotes®. The Company also repaid approximately $121 million of long-term debt at maturity.

2021 Activity
In the second quarter of 2021, the Company redeemed $208 million aggregate principal amount of 3.15 percent notes due May 2024 and $811 million aggregate principal amount of 3.50 percent notes due October 2024. As a result of the redemptions, the Company recognized a pretax loss of $101 million on the early extinguishment of debt of $101 million, included in "Sundry income (expense) - net" in the consolidated statements of income (relatedand related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows.Corporate.

In the third quarter of 2021, the Company completed cash tender offers for certain debt securities. In total, $1,042 million aggregate principal amount was tendered and retired. As a result, the Company recognized a pretax loss of $472 million on the early extinguishment of debt, included in "Sundry income (expense) – net" in the consolidated statements of income (related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows. In addition, the Company voluntarily repaid $81 million of long-term debt due within one year.
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In the first ninesix months of 2021, the Company issued an aggregate principal amount of $95$68 million of InterNotes®, and redeemed an aggregate principal amount of $28$18 million at maturity. In addition, the Company voluntarily repaid an aggregate principal amount of $213 million of InterNotes® with various maturities. As a result, the Company recognized a pretax loss on the early extinguishment of debt for the nine months ended September 30, 2021 of $1 million, included in "Sundry income (expense) - net" in the consolidated statements of income (related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows.

Additionally, in the first nine months of 2021, the Company repaid approximately $173 million of long-term debt at maturity and approximately $14 million of long-term debt was repaid by consolidated variable interest entities.

2020 Activity
In February 2020, the Company issued €2.25 billion aggregate principal amount of notes (“Euro Notes”). The Euro Notes included €1.0 billion aggregate principal amount of 0.50 percent notes due 2027, €750 million aggregate principal amount of 1.125 percent notes due 2032 and €500 million aggregate principal amount of 1.875 percent notes due 2040. The Euro Notes have a weighted average coupon rate of approximately 1.0 percent. With the net proceeds from the issuance of the Euro Notes, Dow Silicones voluntarily repaid $750 million of principal under a certain third party credit agreement. In addition, the Company redeemed $1.25 billion of 3.0 percent notes issued by the Company with maturity in 2022. As a result, the Company recognized a pretax loss of $85 million on the early extinguishment of debt, included in “Sundry income (expense) – net” in the consolidated statements of income (related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows.

In July 2020, the Company's accounts receivable securitization facility in Europe was amended and the terms of the agreement changed from a secured borrowing arrangement to an accounts receivable facility. Under the terms of the new agreement, the Company may sell certain eligible trade accounts receivable, up to €400 million, at any point in time. The Company continues to service the receivables from the customer, but retains no interest in the receivables, and remits payment to the financial institutions. The Company also provides a guarantee to the financial institutions for the creditworthiness and collection of the receivables in satisfaction of the facility. There were no receivables sold in the third quarter of 2020. See Note 12 for additional information related to guarantees.

In August 2020, the Company issued $2.0 billion aggregate principal amount of notes. The notes included $850 million aggregate principal amount of 2.1 percent notes due 2030 and $1.15 billion aggregate principal amount of 3.6 percent notes due 2050 (together, the "Notes"). With the net proceeds from the issuance of the Notes, Dow Silicones voluntarily repaid the remaining $1.25 billion outstanding principal balance under the Term Loan Facility. In September 2020, the Company also used $556 million of aggregate proceeds from the Notes to fund cash tender offers for certain of its debt securities and certain debt securities of Union Carbide. In total, $493 million aggregate principal amount was tendered and retired. These actions resulted in a pretax loss of $62 million on the early extinguishment of debt included in "Sundry income (expense) – net" in the consolidated statements of income (related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows.

In the first nine months of 2020, the Company also issued an aggregate principal amount of $167 million of InterNotes®, and redeemed an aggregate principal amount of $166 million at maturity. In addition, the Company voluntarily repaid an aggregate principal amount of $307$204 million of InterNotes® with various maturities. As a result, the Company recognized a pretax loss on the early extinguishment of debt for the three and six months ended SeptemberJune 30, 20202021 of $1 million, ($2 million for the nine months ended September 30, 2020), included in “Sundry"Sundry income (expense) – net”- net" in the consolidated statements of income (relatedand related to Corporate) and included in "Other net loss" in the consolidated statements of cash flows.

Additionally, in the first nine months of 2020, theCorporate. The Company also repaid approximately $76$120 million of long-term debt at maturity and approximately $17$13 million of long-term debt was repaid by consolidated variable interest entities.

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Available Credit Facilities
The following table summarizes the Company's credit facilities:

Committed and Available Credit Facilities at Sep 30, 2021
In millionsCommitted CreditAvailable CreditMaturity DateInterest
Five Year Competitive Advance and Revolving Credit Facility$5,000 $5,000 October 2024Floating rate
Bilateral Revolving Credit Facility300 300 December 2021Floating rate
Bilateral Revolving Credit Facility300 300 December 2021Floating rate
Bilateral Revolving Credit Facility150 150 March 2022Floating rate
Bilateral Revolving Credit Facility100 100 June 2022Floating rate
Bilateral Revolving Credit Facility200 200 September 2022Floating rate
Bilateral Revolving Credit Facility 1
200 200 November 2022Floating rate
Bilateral Revolving Credit Facility200 200 September 2023Floating rate
Bilateral Revolving Credit Facility250 250 September 2023Floating rate
Bilateral Revolving Credit Facility300 300 September 2023Floating rate
Bilateral Revolving Credit Facility100 100 October 2024Floating rate
Bilateral Revolving Credit Facility100 100 October 2024Floating rate
Bilateral Revolving Credit Facility200 200 November 2024Floating rate
Bilateral Revolving Credit Facility100 100 March 2025Floating rate
Bilateral Revolving Credit Facility250 250 March 2025Floating rate
Bilateral Revolving Credit Facility350 350 March 2025Floating rate
Total committed and available credit facilities$8,100 $8,100 
1.Assumes the option to extend the bilateral revolving credit facility will be exercised.
Committed and Available Credit Facilities at Jun 30, 2022
In millionsCommitted CreditAvailable CreditMaturity DateInterest
Five Year Competitive Advance and Revolving Credit Facility$5,000 $5,000 November 2026Floating rate
Bilateral Revolving Credit Facility200 200 September 2022Floating rate
Bilateral Revolving Credit Facility200 200 November 2022Floating rate
Bilateral Revolving Credit Facility200 200 September 2023Floating rate
Bilateral Revolving Credit Facility250 250 September 2023Floating rate
Bilateral Revolving Credit Facility300 300 September 2023Floating rate
Bilateral Revolving Credit Facility300 300 December 2023Floating rate
Bilateral Revolving Credit Facility300 300 December 2023Floating rate
Bilateral Revolving Credit Facility100 100 October 2024Floating rate
Bilateral Revolving Credit Facility200 200 November 2024Floating rate
Bilateral Revolving Credit Facility100 100 March 2025Floating rate
Bilateral Revolving Credit Facility250 250 March 2025Floating rate
Bilateral Revolving Credit Facility100 100 March 2025Floating rate
Bilateral Revolving Credit Facility100 100 March 2025Floating rate
Bilateral Revolving Credit Facility100 100 March 2026Floating rate
Bilateral Revolving Credit Facility100 100 October 2026Floating rate
Bilateral Revolving Credit Facility150 150 November 2026Floating rate
Bilateral Revolving Credit Facility100 100 May 2027Floating rate
Bilateral Revolving Credit Facility350 350 June 2027Floating rate
Total committed and available credit facilities$8,400 $8,400 

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Debt Covenants and Default Provisions
There were no material changes to the debt covenants and default provisions related to the Company's outstanding long-term debt and primary, private credit agreements in the first ninesix months of 2021.2022. For additional information on the Company's debt covenants and default provisions, see Note 15 to the Consolidated Financial Statements included in the 20202021 10-K.


NOTE 12 – COMMITMENTS AND CONTINGENT LIABILITIESCONTINGENCIES
A summary of the Company's commitments and contingent liabilitiescontingencies can be found in Note 16 to the Consolidated Financial Statements included in the 20202021 10-K, which is incorporated by reference herein.

Environmental Matters
Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. At SeptemberJune 30, 2021,2022, the Company had accrued obligations of $1,231$1,238 million for probable environmental remediation and restoration costs ($1,220 million at December 31, 2021), including $235$241 million for the remediation of Superfund sites. These obligations are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets.sites ($237 million at December 31, 2021). This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately one and a halftwo times that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the Company's results of operations, financial condition and cash flows. It is the opinion of the Company’s management, however, that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Company’s results of operations, financial condition and cash flows. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration. As new or additional information becomes available and/or certain spending trends become known, management will evaluate such information in determination of the current estimate of environmental liability. At December 31, 2020, the Company had accrued obligations of $1,244 million for probable environmental remediation and restoration costs, including $248 million for the remediation of Superfund sites.
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Litigation
Asbestos-Related Matters of Union Carbide Corporation
Each quarter, Union Carbide reviews claims filed, settled and dismissed, as well as average settlement and resolution costs by disease category. Union Carbide also considers additional quantitative and qualitative factors such as the nature of pending claims, trial experience of Union Carbide and other asbestos defendants, current spending for defense and processing costs, significant appellate rulings and legislative developments, trends in the tort system, and their respective effects on expected future resolution costs. Union Carbide's management considers these factors in conjunction with the most recent actuarial study and determines whether a change in the estimate is warranted. Based on Union Carbide's review of 20212022 activity, it was determined that no adjustment to the accrual was required at SeptemberJune 30, 2021.2022.

Union Carbide’s total asbestos-related liability for pending and future claims and defense and processing costs was $1,047$977 million at SeptemberJune 30, 20212022 ($1,0981,016 million at December 31, 2020), and was included in “Accrued and other current liabilities” and “Asbestos-related liabilities - noncurrent” in the consolidated balance sheets.2021). At SeptemberJune 30, 2021,2022, approximately 2427 percent of the recorded claim liability related to pending claims and approximately 7673 percent related to future claims.

Dow Silicones Chapter 11 Related Matters
At SeptemberJune 30, 2021,2022, Dow Silicones and its insurers hadhave made life-to-date payments of $1,762$1,817 million to the settlement program administered by an independent claims office (the “Settlement Facility”), created to resolve breast implant and other product liability claims. At SeptemberJune 30, 2021,2022, Dow Silicones estimates that it will be obligated to contribute an additional $160$106 million to the Settlement Facility which was included in “Accrued and other current liabilities” in the consolidated balance sheets ($160130 million at December 31, 2020), of2021, which $80 million ($46 million at December 31, 2020) was included in “Accrued and other current liabilities” and $80 million ($114 million at December 31, 2020) was included in "Other noncurrent obligations" in the consolidated balance sheets.sheets).

Indemnifications with Corning Incorporated
The Company had indemnification assets with Corning Incorporated of $119$96 million at SeptemberJune 30, 20212022 ($11595 million at December 31, 2020)2021), which were included primarily in "Noncurrent receivables" in the consolidated balance sheets.

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Gain Contingency - Dow v. Nova Chemicals Corporation Patent Infringement Matter
As a result of a 2017 damages judgment related to the patent infringement matter, Nova Chemicals Corporation ("Nova") was ordered to pay the Company $645 million Canadian dollars, plus pre- and post-judgment interest, for which the Company received payment of $501 million U.S. dollars in July 2017. In May 2021, the Supreme Court of Canada granted Nova's application for leave and agreed to review the damages judgment. The Company expects a hearing on the appeal in earlyAt June 30, 2022, with a decision by July 2022. The Company is confident of its chances to continue to defend the entire judgment, particularly the trial and appellate courts' determinations on important factual issues, which will be accorded deferential review on appeal. At September 30, 2021, the Company had $341 million ($341 million at December 31, 2020)2021) included in "Accrued and other current liabilities" in the consolidated balance sheets related to the disputed portion of the damages judgment.

Gain Contingency - Dow v. Nova Chemicals Corporation Ethylene Asset Matter
As a result of a 2019 damages judgment related to the ethylene asset matter, Nova was ordered to pay the Company $1.43 billion Canadian dollars (equivalent to approximately $1.08 billion U.S. dollars). In October 2019, Nova paid $1.08 billion Canadian dollars (equivalent to approximately $0.8 billion U.S. dollars) directly to the Company, and remitted $347 million Canadian dollars to the Canada Revenue Agency ("CRA") for the tax account of one of the Company's subsidiaries. In March 2020, the Company received the full refund from the CRA, equivalent to $259 million U.S. dollars. At SeptemberJune 30, 2021,2022, $323 million ($323 million at December 31, 2020)2021) was included in "Other noncurrent obligations" in the Company's consolidated balance sheets related to the disputed portion of the damages judgment. Dow continues to seek an award of additional damages for the period from 2013 through 2018. The trial court ordered a damages hearing for November 2021 that would resolve the impact of the appellate ruling and quantify Dow's damages for the 2013-2018 period, although Nova may seek to further delay this hearing.


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Luxi Chemical Group Breach of Contract Matter
In November 2017, an arbitration panel of the Stockholm Chamber of Commerce held that Luxi Chemical Group Co., Ltd. (“Luxi”) based in Shandong Province, China violated a secrecy and non-use agreement related to the Dow and Johnson Matthey Davy Technologies Limited (“JM”) LP OxoSM Process by using Dow and JM protected information in the design, construction, and operation of its butanol and 2-ethylhexanol plants, awarding damages, fees and costs, plus interest, to both Dow and JM. In September 2021, Luxi paid the arbitration award and interest assessment and, as a result, Dow recorded a pretax gain of $54 million, included in “Sundry income (expense) – net” in the consolidated statements of income and related to Industrial Intermediates & Infrastructure.

Brazilian Tax Credits
In March 2017, the Federal Supreme Court of Brazil (“Brazil Supreme Court”) ruled in a leading case that a Brazilian value-added tax ("ICMS") should not be included in the base used to calculate a taxpayer's federal contribution on total revenue known as PIS/COFINS (the “2017 Decision”). Previously, three of the Company’s Brazilian subsidiaries filed lawsuits challenging the inclusion of ICMS in their calculation of PIS/COFINS, seeking recovery of excess taxes paid. In response to the 2017 Decision, the Brazilian tax authority filed an appeal seeking clarification of the amount of ICMS tax to exclude from the calculation of PIS/COFINS. In May 2021, the Brazil Supreme Court ruled in a leading case related to the amount of ICMS tax to exclude from the calculation of PIS/COFINS, which resolved two of the lawsuits filed by the Company.Company and, in May 2022, a court decision related to the remaining lawsuit, ruling in favor of the Company's Brazilian subsidiary, became final and unappealable. As a result, the Company recorded pretax gains of $112 million in the second quarter of 2021,2022 and $61 million in the Company recorded a pretax gainsecond quarter of $61 million2021 for certain excess PIS/COFINS paid from 2009 to 2019, plus applicable interest, which the Company expects to apply to future required federal tax payments, and the reversal of related liabilities. The pretax gain wasgains were recorded in “Cost of sales” in the consolidated statements of income. At SeptemberJune 30, 2021,2022, related tax credits available and expected to be applied to future required federal tax payments totaled $50 million. The Company has not received a final ruling related to its remaining lawsuit.$139 million ($52 million at December 31, 2021).

Guarantees
The following table provides a summary of the final expiration, maximum future payments and recorded liability included in the consolidated balance sheets for guarantees:

GuaranteesGuaranteesSep 30, 2021Dec 31, 2020GuaranteesJun 30, 2022Dec 31, 2021
In millionsIn millionsFinal
Expiration
Maximum
Future Payments 1
Recorded Liability Final
Expiration
Maximum
Future Payments
Recorded LiabilityIn millionsFinal
Expiration
Maximum
Future Payments 1
Recorded Liability Final
Expiration
Maximum
Future Payments 1
Recorded Liability
GuaranteesGuarantees2038$1,312 $225 2023$251 $Guarantees2038$1,248 $210 2038$1,273 $220 
1.In addition, TDCC has provided guarantees, in proportion to the Company's 35 percent ownership interest, of all future interest payments that will become due on Sadara’s project financing debt during the grace period, which Dow's share is estimated to be $501$443 million at SeptemberJune 30, 2021.2022 ($446 million at December 31, 2021). Based on Sadara's current forecasted cash flows, the Company does not expect to be required to perform under the guarantees.

Guarantees arise during the ordinary course of business from relationships with customers, committed accounts receivable facilities and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others (via delivery of cash or other assets) if specified triggering events occur. With guarantees, such as commercial or financial contracts, non-performance by the guaranteed party triggers the obligation of the Company to make payments to the beneficiary of the guarantee. The majority of the Company’s guarantees relate to debt of nonconsolidated affiliates, which have expiration dates ranging from less than 1 year to less than 1716 years. The Company’s current expectation is that future payment or performance related to the non-performance of others is considered remote.

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TDCC has entered into guarantee agreements related to Sadara, a nonconsolidated affiliate. In the first quarter of 2021, Sadara reached an agreement with its lenders to re-profile Sadara'sits outstanding project financing debt.debt in the first quarter of 2021. In conjunction with the completion of Sadara’s debt re-profiling, TDCC entered into a new guarantee of up to approximately $1.3 billion of Sadara’s debt.debt, proportionate to the Company's 35 percent ownership interest. The debt re-profiling also includes a grace period until June 2026, during which Sadara is obligated to make interest-only payments which are guaranteed by TDCC in proportion to the Company’s 35 percent ownership interest. The total of an Islamic bond and additional project financing outstanding at Sadara was $9.9 billion at September 30, 2021 and December 31, 2020. As part of the successful re-profiling, TDCC’s prior $220 million letter of credit related to the guarantee of one future Sadara debt service schedule payment was cancelled. As a result of these actions, the Company does not expect to provide any shareholder loans or equity contributions to Sadara in 2021.

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In the second quarter of 2021, as a part of Sadara's debt re-profiling, activities, Sadara established a new $500 million revolving credit facility guaranteed by Dow, which willwould be used to fund Dow’s pro-rata share of any potential shortfall during the grace period. Based on Sadara's current forecasted cash flows, recent ability to satisfy all current and near term debt maturities and no significant scheduled debt repayments over the next five years, the Company does not expect Sadara to draw on the facility.


NOTE 13 - LEASES
For additional information on the Company's leases, see Note 17 to the Consolidated Financial Statements included in the 20202021 10-K.

The components of lease cost for operating and finance leases for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 were as follows:

Lease CostLease CostThree Months EndedNine Months EndedLease CostThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Operating lease costOperating lease cost$123 $122 $362 $362 Operating lease cost$99 $118 $196 $239 
Finance lease costFinance lease costFinance lease cost
Amortization of right-of-use assets - financeAmortization of right-of-use assets - finance$19 $16 $53 $42 Amortization of right-of-use assets - finance$26 $19 $52 $34 
Interest on lease liabilities - financeInterest on lease liabilities - finance19 19 Interest on lease liabilities - finance17 13 
Total finance lease costTotal finance lease cost$25 $23 $72 $61 Total finance lease cost$35 $25 $69 $47 
Short-term lease costShort-term lease cost57 54 177 161 Short-term lease cost66 71 125 120 
Variable lease costVariable lease cost78 45 228 157 Variable lease cost133 79 248 150 
Sublease incomeSublease income(2)(2)(5)(4)Sublease income(3)(1)(6)(3)
Total lease costTotal lease cost$281 $242 $834 $737 Total lease cost$330 $292 $632 $553 

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The following table provides supplemental cash flow and other information related to leases:

Other Lease InformationOther Lease InformationNine Months EndedOther Lease InformationSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leasesOperating cash flows for operating leases$364 $357 Operating cash flows for operating leases$196 $245 
Operating cash flows for finance leasesOperating cash flows for finance leases$19 $19 Operating cash flows for finance leases$17 $13 
Financing cash flows for finance leasesFinancing cash flows for finance leases$48 $34 Financing cash flows for finance leases$53 $29 
Right-of-use assets obtained in exchange for lease obligations:Right-of-use assets obtained in exchange for lease obligations:Right-of-use assets obtained in exchange for lease obligations:
Operating leasesOperating leases$133 $68 Operating leases$37 $57 
Finance leasesFinance leases$73 $142 Finance leases$27 $72 

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The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at SeptemberJune 30, 20212022 and December 31, 2020:2021:

Lease PositionLease PositionBalance Sheet ClassificationSep 30, 2021Dec 31, 2020Lease PositionBalance Sheet ClassificationJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
AssetsAssetsAssets
Operating lease assetsOperating lease assetsOperating lease right-of-use assets$1,727 $1,856 Operating lease assetsOperating lease right-of-use assets$1,272 $1,412 
Finance lease assetsFinance lease assetsProperty726 665 Finance lease assetsProperty1,145 1,158 
Finance lease amortizationFinance lease amortizationAccumulated depreciation(263)(216)Finance lease amortizationAccumulated depreciation(395)(368)
Total lease assetsTotal lease assets$2,190 $2,305 Total lease assets$2,022 $2,202 
LiabilitiesLiabilitiesLiabilities
CurrentCurrentCurrent
OperatingOperatingOperating lease liabilities - current$413 $416 OperatingOperating lease liabilities - current$290 $314 
FinanceFinanceLong-term debt due within one year68 54 FinanceLong-term debt due within one year107 106 
NoncurrentNoncurrentNoncurrent
OperatingOperatingOperating lease liabilities - noncurrent1,428 1,521 OperatingOperating lease liabilities - noncurrent1,043 1,149 
FinanceFinanceLong-Term Debt474 464 FinanceLong-Term Debt719 763 
Total lease liabilitiesTotal lease liabilities$2,383 $2,455 Total lease liabilities$2,159 $2,332 

The weighted-average remaining lease term and discount rate for leases recorded in the consolidated balance sheets at SeptemberJune 30, 20212022 and December 31, 20202021 are provided below:

Lease Term and Discount RateSep 30, 2021Dec 31, 2020
Weighted-average remaining lease term
Operating leases7.2 years7.6 years
Finance leases10.3 years11.6 years
Weighted-average discount rate
Operating leases3.63 %3.84 %
Finance leases5.04 %5.41 %

Lease Term and Discount RateJun 30, 2022Dec 31, 2021
Weighted-average remaining lease term
Operating leases7.8 years7.9 years
Finance leases11.4 years11.8 years
Weighted-average discount rate
Operating leases4.04 %3.72 %
Finance leases4.19 %4.17 %


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The following table provides the maturities of lease liabilities at SeptemberJune 30, 2021:2022:

Maturities of Lease LiabilitiesMaturities of Lease LiabilitiesSep 30, 2021Maturities of Lease LiabilitiesJun 30, 2022
In millionsIn millionsOperating LeasesFinance LeasesIn millionsOperating LeasesFinance Leases
2021$140 $29 
20222022434 89 2022$179 $71 
20232023351 113 2023289 164 
20242024273 58 2024225 106 
20252025201 47 2025183 76 
2026 and thereafter744 375 
20262026148 69 
2027 and thereafter2027 and thereafter567 551 
Total future undiscounted lease paymentsTotal future undiscounted lease payments$2,143 $711 Total future undiscounted lease payments$1,591 $1,037 
Less: Imputed interestLess: Imputed interest302 169 Less: Imputed interest258 211 
Total present value of lease liabilitiesTotal present value of lease liabilities$1,841 $542 Total present value of lease liabilities$1,333 $826 

At SeptemberJune 30, 2021,2022, Dow had additional leases of approximately $152$91 million, primarily for equipment, which had not yet commenced. These leases are expected to commence in 20212022 and 2022,2025, with lease terms of up to 2016 years.

Dow provides guarantees related to certain leased assets, specifying the residual value that will be available to the lessor at lease termination through the sale of the assets to the lessee or third parties. The following table provides a summary of the final expiration, maximum future payments and recorded liability included in the consolidated balance sheets for residual value guarantees at SeptemberJune 30, 20212022 and December 31, 2020. The Company had a recorded liability of $56 million related to these residual value guarantees at September 30, 2021 ($22 million at December 31, 2020), as payment of such residual value guarantees was determined to be probable.2021. The lease agreements do not contain any material restrictive covenants.

Lease GuaranteesLease GuaranteesSep 30, 2021Dec 31, 2020Lease GuaranteesJun 30, 2022Dec 31, 2021
In millionsIn millionsFinal ExpirationMaximum Future PaymentsRecorded LiabilityFinal ExpirationMaximum Future PaymentsRecorded LiabilityIn millionsFinal ExpirationMaximum Future PaymentsRecorded LiabilityFinal ExpirationMaximum Future PaymentsRecorded Liability
Residual value guaranteesResidual value guarantees2031$805 $56 2030$818 $22 Residual value guarantees2031$259 $— 2031$280 $— 


NOTE 14 – STOCKHOLDERS' EQUITY
Treasury Stock
Dow Inc.
On April 1, 2019, Dow Inc.'s Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3 billion to be spent on the repurchase of the Company's common stock, with no expiration date. The Company completed the April 1, 2019 share repurchase program in the second quarter of 2022. On April 13, 2022, Dow Inc.'s Board approved a new share repurchase program authorizing up to $3 billion to be spent on the repurchase of the Company's common stock, with no expiration date. The Company repurchased $800 million of its common stock in the second quarter of 2022 ($1,400 million in the first six months of 2022). At June 30, 2022, approximately $2,975 million of the new share repurchase program authorization remained available for repurchases.

The Company began issuing treasury shares to satisfy its obligation to make matching contributions to plan participants under The Dow Employees’ Savings Plan in the first quarter of 2022. The Company may satisfy these obligations using shares of Dow Inc. treasury stock or by issuing new shares of common stock.
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NOTE 14 – ACCUMULATED OTHER COMPREHENSIVE LOSSAccumulated Other Comprehensive Loss
The changes in each component of accumulated other comprehensive loss ("AOCL") for the three and nine sixmonths ended SeptemberJune 30, 2021 2022and 20202021 were as follows:

Accumulated Other Comprehensive LossAccumulated Other Comprehensive LossThree Months EndedNine Months EndedAccumulated Other Comprehensive LossThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Unrealized Gains (Losses) on InvestmentsUnrealized Gains (Losses) on InvestmentsUnrealized Gains (Losses) on Investments
Beginning balanceBeginning balance$72 $40 $104 $64 Beginning balance$(37)$55 $59 $104 
Unrealized gains (losses) on investmentsUnrealized gains (losses) on investments(10)35 (25)39 Unrealized gains (losses) on investments(203)39 (324)(15)
Tax (expense) benefitTax (expense) benefit(8)(10)Tax (expense) benefit43 (9)67 
Net unrealized gains (losses) on investmentsNet unrealized gains (losses) on investments(7)27 (20)29 Net unrealized gains (losses) on investments(160)30 (257)(13)
(Gains) losses reclassified from AOCL to net income 1
(Gains) losses reclassified from AOCL to net income 1
(8)(25)(33)(59)
(Gains) losses reclassified from AOCL to net income 1
(17)10 (25)
Tax expense (benefit) 2
Tax expense (benefit) 2
14 
Tax expense (benefit) 2
(2)(2)
Net (gains) losses reclassified from AOCL to net incomeNet (gains) losses reclassified from AOCL to net income(6)(19)(25)(45)Net (gains) losses reclassified from AOCL to net income(13)(19)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(13)(45)(16)Other comprehensive income (loss), net of tax(153)17 (249)(32)
Ending balanceEnding balance$59 $48 $59 $48 Ending balance$(190)$72 $(190)$72 
Cumulative Translation AdjustmentCumulative Translation AdjustmentCumulative Translation Adjustment
Beginning balanceBeginning balance$(1,118)$(1,235)$(930)$(1,135)Beginning balance$(1,519)$(1,183)$(1,355)$(930)
Gains (losses) on foreign currency translationGains (losses) on foreign currency translation(148)116 (298)18 Gains (losses) on foreign currency translation(500)67 (665)(150)
Tax (expense) benefitTax (expense) benefit(8)(43)18 Tax (expense) benefit(3)10 (35)
Net gains (losses) on foreign currency translationNet gains (losses) on foreign currency translation(156)120 (341)36 Net gains (losses) on foreign currency translation(503)68 (655)(185)
(Gains) losses reclassified from AOCL to net income 3
(Gains) losses reclassified from AOCL to net income 3
(1)(29)(4)(45)
(Gains) losses reclassified from AOCL to net income 3
(11)(3)(23)(3)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax(157)91 (345)(9)Other comprehensive income (loss), net of tax(514)65 (678)(188)
Ending balanceEnding balance$(1,275)$(1,144)$(1,275)$(1,144)Ending balance$(2,033)$(1,118)$(2,033)$(1,118)
Pension and Other Postretirement BenefitsPension and Other Postretirement BenefitsPension and Other Postretirement Benefits
Beginning balanceBeginning balance$(8,276)$(8,498)$(9,559)$(8,781)Beginning balance$(7,225)$(8,425)$(7,334)$(9,559)
Gains (losses) arising during the period 4
Gains (losses) arising during the period 4
1,270 
Gains (losses) arising during the period 4
— 1,268 
Tax (expense) benefitTax (expense) benefit— — (298)— Tax (expense) benefit— — — (298)
Net gains (losses) arising during the periodNet gains (losses) arising during the period972 Net gains (losses) arising during the period— 970 
Amortization and recognition of net loss and prior service credits 5
191 188 583 557 
Amortization of net loss and prior service credits reclassified from AOCL to net income 5
Amortization of net loss and prior service credits reclassified from AOCL to net income 5
156 194 313 392 
Tax expense (benefit) 2
Tax expense (benefit) 2
(44)(43)(123)(129)
Tax expense (benefit) 2
(37)(45)(87)(79)
Net loss and prior service credits reclassified from AOCL to net incomeNet loss and prior service credits reclassified from AOCL to net income147 145 460 428 Net loss and prior service credits reclassified from AOCL to net income119 149 226 313 
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax149 147 1,432 430 Other comprehensive income (loss), net of tax122 149 231 1,283 
Ending balanceEnding balance$(8,127)$(8,351)$(8,127)$(8,351)Ending balance$(7,103)$(8,276)$(7,103)$(8,276)
Derivative InstrumentsDerivative InstrumentsDerivative Instruments
Beginning balanceBeginning balance$(354)$(532)$(470)$(394)Beginning balance$(15)$(360)$(347)$(470)
Gains (losses) on derivative instrumentsGains (losses) on derivative instruments55 45 167 (114)Gains (losses) on derivative instruments260 (10)680 112 
Tax (expense) benefitTax (expense) benefit(9)(10)(10)(2)Tax (expense) benefit(27)(83)(1)
Net gains (losses) on derivative instrumentsNet gains (losses) on derivative instruments46 35 157 (116)Net gains (losses) on derivative instruments233 (2)597 111 
(Gains) losses reclassified from AOCL to net income 6
(Gains) losses reclassified from AOCL to net income 6
(16)(10)24 
(Gains) losses reclassified from AOCL to net income 6
(108)(142)
Tax expense (benefit) 2
Tax expense (benefit) 2
(2)(8)
Tax expense (benefit) 2
12 (1)14 (1)
Net (gains) losses reclassified from AOCL to net incomeNet (gains) losses reclassified from AOCL to net income(14)(9)16 Net (gains) losses reclassified from AOCL to net income(96)(128)
Other comprehensive income (loss), net of taxOther comprehensive income (loss), net of tax32 38 148 (100)Other comprehensive income (loss), net of tax137 469 116 
Ending balanceEnding balance$(322)$(494)$(322)$(494)Ending balance$122 $(354)$122 $(354)
Total AOCL ending balanceTotal AOCL ending balance$(9,665)$(9,941)$(9,665)$(9,941)Total AOCL ending balance$(9,204)$(9,676)$(9,204)$(9,676)
1.Reclassified to "Net sales" and "Sundry income (expense) - net."
2.Reclassified to "Provision for income taxes."
3.Reclassified to "Sundry income (expense) - net."
4.See Note 16 for additional information.The 2021 impact relates to an interim remeasurement of U.S. pension plans due to the announced freeze of plan benefits in the first quarter of 2021.
5.These AOCL components are included in the computation of net periodic benefit cost of the Company's defined benefit pension and other postretirement benefit plans. See Note 16 for additional information.
6.Reclassified to "Cost of sales," "Sundry income (expense) - net" and "Interest expense and amortization of debt discount."
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NOTE 15 – NONCONTROLLING INTERESTS
Ownership interests in the Company's subsidiaries held by parties other than the Company are presented separately from the Company's equity in the consolidated balance sheets as "Noncontrolling interests." The amount of consolidated net income attributable to the Company and the noncontrolling interests are both presented on the face of the consolidated statements of income.

The following table summarizes the activity for equity attributable to noncontrolling interests for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:

Noncontrolling InterestsNoncontrolling InterestsThree Months EndedNine Months EndedNoncontrolling InterestsThree Months EndedSix Months Ended

In millions

In millions
Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020

In millions
Jun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Balance at beginning of periodBalance at beginning of period$580 $560 $570 $553 Balance at beginning of period$545 $560 $574 $570 
Net income attributable to noncontrolling interests23 24 69 51 
Net income attributable to noncontrolling interests 1
Net income attributable to noncontrolling interests 1
20 31 46 
Distributions to noncontrolling interests 1
(7)— (27)(12)
Distributions to noncontrolling interests 2
Distributions to noncontrolling interests 2
(14)(12)(15)(20)
Deconsolidation of noncontrolling interests 2
— (7)— (7)
Cumulative translation adjustmentsCumulative translation adjustments(8)(23)(6)Cumulative translation adjustments(16)(27)(15)
OtherOther(1)— (1)Other(1)— (1)(1)
Balance at end of periodBalance at end of period$589 $578 $589 $578 Balance at end of period$534 $580 $534 $580 
1.The six months ended June 30, 2022 includes the portion of asset related charges attributable to noncontrolling interests related to a joint venture in Russia. See Note 4 for additional information.
2.Distributions to noncontrolling interests are net of $8$7 million for the three and ninesix months ended SeptemberJune 30, 20212022 ($78 million for the three and ninesix months ended SeptemberJune 30, 2020)2021) in dividends paid to a joint venture, which were reclassified to "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated statements of income.
2.Related to the divestiture of the Company's interest in a cogeneration facility in Brazil in the third quarter of 2020.


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NOTE 16 – PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
A summary of the Company's pension and other postretirement benefit plans can be found in Note 20 to the Consolidated Financial Statements included in the 20202021 10-K.

On March 4, 2021, the Company announced changes to its U.S. tax-qualified and non-qualified pension plans. Effective December 31, 2023 ("Effective Date"), the Company will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in its U.S. tax-qualified and non-qualified retirement programs (collectively, the "U.S. Plans"). As a result, at the Effective Date and subject to any bargaining obligations required by law, active participants of the U.S. Plans will not accrue additional benefits for future service and compensation. Additionally, contributions to U.S. tax-qualified and non-qualified defined contribution plans will be harmonized across the Company's U.S. eligible employee population. The new matching contribution, beginning January 1, 2022, will allow all eligible U.S. employees to receive matching contributions of up to 5 percent of their eligible compensation. In addition, beginning on January 1, 2024, all eligible U.S. employees will receive an automatic non-elective contribution of 4 percent of eligible compensation to their respective defined contribution plans.

The Company's funding policy is to contribute to defined benefit pension plans in the United States and a number of other countries when pension laws and/or economics either require or encourage funding. On March 4, 2021, theThe Company electedexpects to contribute $1 billionapproximately $250 million to its U.S. tax-qualified pension plans and, as a result, increased its estimated global 2021 pension contributions to approximately $1,230 million,in 2022, of which $1,165$89 million has been contributed through SeptemberJune 30, 2021.2022.

In connection with the foregoing plan amendments, the Company remeasured its U.S. Plans effective February 28, 2021, which resulted in a pretax actuarial gain of $1,268 million, included in other comprehensive income and inclusive of a $345 million reduction in the projected benefit obligation resulting from the plan amendments, and a pretax curtailment gain of $19 million, recognized in the first quarter of 2021.

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The following table provides the components of the Company's net periodic benefit cost for all significant plans:

Net Periodic Benefit Cost for All Significant PlansNet Periodic Benefit Cost for All Significant PlansThree Months EndedNine Months EndedNet Periodic Benefit Cost for All Significant PlansThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Defined Benefit Pension PlansDefined Benefit Pension PlansDefined Benefit Pension Plans
Service costService cost$95 $100 $293 $298 Service cost$99 $96 $198 $198 
Interest costInterest cost151 191 444 574 Interest cost171 150 342 293 
Expected return on plan assetsExpected return on plan assets(434)(415)(1,291)(1,241)Expected return on plan assets(423)(435)(847)(857)
Amortization of prior service creditAmortization of prior service credit(5)(4)(15)(14)Amortization of prior service credit(5)(5)(11)(10)
Amortization of net lossAmortization of net loss198 194 622 578 Amortization of net loss165 200 332 424 
Curtailment gainCurtailment gain— — (19)— Curtailment gain— — — (19)
Net periodic benefit costNet periodic benefit cost$$66 $34 $195 Net periodic benefit cost$$$14 $29 
Other Postretirement Benefit PlansOther Postretirement Benefit PlansOther Postretirement Benefit Plans
Service costService cost$$$$Service cost$$$$
Interest costInterest cost10 17 29 Interest cost14 11 
Amortization of net gainAmortization of net gain(2)(2)(5)(7)Amortization of net gain(4)(1)(8)(3)
Net periodic benefit costNet periodic benefit cost$$10 $18 $28 Net periodic benefit cost$$$$12 

Net periodic benefit cost, other than the service cost component, is included in "Sundry income (expense) - net" in the consolidated statements of income.


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NOTE 17 – STOCK-BASED COMPENSATION
A summary of the Company's stock-based compensation plans can be found in Note 21 to the Consolidated Financial Statements included in the 20202021 10-K.

Stock Incentive Plan
The Company grants stock-based compensation to employees and non-employee directors under the 2019 Stock Incentive Plan, as amended. Most of the Company's stock-based compensation awards are granted in the first quarter of each year.

In the first quarter of 2021,2022, Dow Inc. granted the following stock-based compensation awards to employees:
1.31.2 million stock options with a weighted-average exercise price of $57.67$60.95 per share and a weighted-average fair value of $10.37$11.08 per share;
1.61.7 million restricted stock units with a weighted-average fair value of $57.70$60.96 per share; and
1.2 million performance stock units with a weighted-average fair value of $61.48$65.83 per share.

There was minimal grant activity in the second and third quartersquarter of 2021.2022.

Employee Stock Purchase Plan
The Board unanimously approved the Dow Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP"), which was approvedadopted by the Company'sBoard on February 11, 2021, and approved by stockholders at the 2021 Annual Meeting of Stockholders heldCompany's annual meeting on April 15, 2021. Under the 2022 annual offering of the 2021 ESPP, offering, most employees were eligible to purchase shares of common stock of Dow Inc. valued at up to 10 percent of their annual total base salary or wages. The number of shares purchased is determined using the amount contributed by the employee divided by the plan price. The plan price of the stock is equal to 85 percent of the fair market value (closing price) of the common stock at JuneApril 1, 20212022 (beginning) or December 3, 2021October 7, 2022 (ending) of the offering period, whichever is lower.

In the secondfirst quarter of 2021,2022, employees subscribed to the right to purchase approximately 2.02 million shares under the 2021 ESPP. The plan price is fixed upon the close of the offering period and will be determined in the fourth quarter of 2021.2022. The shares will be delivered to employees in the fourth quarter of 2021.2022.


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NOTE 18 – FINANCIAL INSTRUMENTS
A summary of the Company's financial instruments, risk management policies, derivative instruments and hedging activities can be found in Note 22 to the Consolidated Financial Statements included in the 20202021 10-K.

The following table summarizes the fair value of financial instruments at SeptemberJune 30, 20212022 and December 31, 2020:2021:

Fair Value of Financial InstrumentsFair Value of Financial InstrumentsSep 30, 2021Dec 31, 2020Fair Value of Financial InstrumentsJun 30, 2022Dec 31, 2021
In millionsIn millionsCostGainLossFair ValueCostGainLossFair ValueIn millionsCostGainLossFair ValueCostGainLossFair Value
Cash equivalents:Cash equivalents:Cash equivalents:
Held-to-maturity securities 1
Held-to-maturity securities 1
$921 $— $— $921 $980 $— $— $980 
Held-to-maturity securities 1
$277 $— $— $277 $317 $— $— $317 
Money market fundsMoney market funds498 — — 498 484 — — 484 Money market funds702 — — 702 489 — — 489 
Total cash equivalentsTotal cash equivalents$1,419 $— $— $1,419 $1,464 $— $— $1,464 Total cash equivalents$979 $— $— $979 $806 $— $— $806 
Marketable securities 2
Marketable securities 2
$138 $$— $141 $45 $— $— $45 
Marketable securities 2
$164 $$— $169 $237 $$— $245 
Other investments:Other investments:Other investments:
Debt securities:Debt securities:Debt securities:
Government debt 3
Government debt 3
$687 $18 $(24)$681 $673 $35 $(10)$698 
Government debt 3
$735 $$(121)$615 $746 $17 $(28)$735 
Corporate bondsCorporate bonds1,172 89 (9)1,252 822 119 (5)936 Corporate bonds1,267 18 (159)1,126 1,251 93 (20)1,324 
Total debt securitiesTotal debt securities$1,859 $107 $(33)$1,933 $1,495 $154 $(15)$1,634 Total debt securities$2,002 $19 $(280)$1,741 $1,997 $110 $(48)$2,059 
Equity securities 4
Equity securities 4
19 — 25 34 — 40 
Equity securities 4
— 12 13 — 20 
Total other investmentsTotal other investments$1,865 $126 $(33)$1,958 $1,501 $188 $(15)$1,674 Total other investments$2,006 $27 $(280)$1,753 $2,004 $123 $(48)$2,079 
Total cash equivalents, marketable securities and other investmentsTotal cash equivalents, marketable securities and other investments$3,422 $129 $(33)$3,518 $3,010 $188 $(15)$3,183 Total cash equivalents, marketable securities and other investments$3,149 $32 $(280)$2,901 $3,047 $131 $(48)$3,130 
Long-term debt including debt due within one year 5
Long-term debt including debt due within one year 5
$(14,318)$21 $(2,673)$(16,970)$(16,951)$$(3,659)$(20,604)
Long-term debt including debt due within one year 5
$(13,426)$1,267 $(567)$(12,726)$(14,511)$27 $(2,641)$(17,125)
Derivatives relating to:Derivatives relating to:Derivatives relating to:
Interest rates 6
Interest rates 6
$— $— $(166)$(166)$— $41 $(182)$(141)
Interest rates 6
$— $167 $— $167 $— $$(140)$(139)
Foreign currencyForeign currency— 53 (82)(29)— 69 (84)(15)Foreign currency— 88 (113)(25)— 46 (18)28 
Commodities 6
Commodities 6
— 240 (132)108 — 63 (84)(21)
Commodities 6
— 366 (234)132 — 142 (92)50 
Total derivativesTotal derivatives$— $293 $(380)$(87)$— $173 $(350)$(177)Total derivatives$— $621 $(347)$274 $— $189 $(250)$(61)
1.The Company's held-to-maturity securities primarily included treasury bills and time deposits.
2.The Company’s investments in marketable securities are included in “Other current assets” in the consolidated balance sheets.
3.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities’ obligations.
4.Equity securities with a readily determinable fair value.
5.Cost includes fair value hedge adjustment gains of $48$47 million at SeptemberJune 30, 20212022 and $69 million at December 31, 20202021 on $2,279 million of debt at SeptemberJune 30, 20212022 and $3,314 million at December 31, 2020.2021.
6.Presented net of cash collateral where master netting arrangements allow.

Cost approximates fair value for all other financial instruments.

Debt Securities
The Company's investments in debt securities are primarily classified as available-for-sale. The following table provides the investing results from available-for-sale securities for the ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:

Investing ResultsInvesting ResultsNine Months EndedInvesting ResultsSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021
Proceeds from sales of available-for-sale securitiesProceeds from sales of available-for-sale securities$339 $742 Proceeds from sales of available-for-sale securities$295 $260 
Gross realized gainsGross realized gains$41 $84 Gross realized gains$20 $31 
Gross realized lossesGross realized losses$(8)$(25)Gross realized losses$(30)$(6)

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The following table summarizes the contractual maturities of the Company's investments in debt securities:

Contractual Maturities of Debt Securities at Sep 30, 2021 1
 CostFair Value
Contractual Maturities of Debt Securities at Jun 30, 2022 1
Contractual Maturities of Debt Securities at Jun 30, 2022 1
 CostFair Value
In millionsIn millions CostFair ValueIn millions
Within one yearWithin one yearWithin one year$31 $28 
One to five yearsOne to five years618 650 One to five years449 419 
Six to ten yearsSix to ten years709 720 Six to ten years1,014 870 
After ten yearsAfter ten years510 540 After ten years508 424 
TotalTotal$1,859 $1,933 Total$2,002 $1,741 
1.Includes marketable securities with maturities of less than one year.

Equity Securities
There were no material adjustments to the carrying value of the not readily determinable investments for impairment or observable price changes for the three months ended SeptemberJune 30, 2021.2022. There was $3 million of net unrealized losses recognized in earnings on equity securities for the three months ended June 30, 2022 ($1 million net unrealized loss for the three months ended June 30, 2021). There was $6 million of net unrealized losses recognized in earnings on equity securities for the threesix months ended SeptemberJune 30, 20212022 ($1 million net unrealized loss for the threesix months ended SeptemberJune 30, 2020). There was $7 million of net unrealized losses recognized in earnings on equity securities for the nine months ended September 30, 2021 ($1 million unrealized loss for the nine months ended September 30, 2020)2021).

Investments in Equity SecuritiesInvestments in Equity SecuritiesSep 30, 2021Dec 31, 2020Investments in Equity SecuritiesJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Readily determinable fair valueReadily determinable fair value$25 $40 Readily determinable fair value$12 $20 
Not readily determinable fair valueNot readily determinable fair value$226 $215 Not readily determinable fair value$204 $209 

Derivative Instruments
The notional amounts of the Company's derivative instruments presented on a net basis at SeptemberJune 30, 20212022 and December 31, 20202021 were as follows:

Notional Amounts - NetNotional Amounts - NetSep 30, 2021Dec 31, 2020Notional Amounts - NetJun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest rate contractsInterest rate contracts$3,005 $612 Interest rate contracts$3,000 $3,000 
Foreign currency contractsForeign currency contracts$3,725 $3,784 Foreign currency contracts$5,173 $5,300 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsInterest rate contracts$58 $94 Interest rate contracts$$36 
Foreign currency contractsForeign currency contracts$13,663 $9,187 Foreign currency contracts$14,393 $8,234 

The notional amounts of the Company's commodity derivatives presented on a net basis at SeptemberJune 30, 20212022 and December 31, 20202021 were as follows:

Commodity Notionals - NetCommodity Notionals - NetSep 30, 2021Dec 31, 2020Notional Volume UnitCommodity Notionals - NetJun 30, 2022Dec 31, 2021Notional Volume Unit
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Hydrocarbon derivativesHydrocarbon derivatives6.9 10.9 million barrels of oil equivalentHydrocarbon derivatives17.3 9.7 million barrels of oil equivalent
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Hydrocarbon derivativesHydrocarbon derivatives0.1 — million barrels of oil equivalentHydrocarbon derivatives— 0.1 million barrels of oil equivalent
Power derivativesPower derivatives10.3 3.3 thousands of megawatt hours

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Maturity Dates of Derivatives Designated as Hedging InstrumentsYear
Interest rate contracts2023
Foreign currency contracts2023
Commodity contracts20232026

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The following tables provide the fair value and balance sheet classification of derivative instruments at SeptemberJune 30, 20212022 and December 31, 2020:2021:

Fair Value of Derivative InstrumentsFair Value of Derivative InstrumentsSep 30, 2021Fair Value of Derivative InstrumentsJun 30, 2022
In millionsIn millionsBalance Sheet ClassificationGross
Counterparty and Cash Collateral Netting 1
Net Amounts Included in the Consolidated Balance SheetsIn millionsBalance Sheet ClassificationGross
Counterparty and Cash Collateral Netting 1
Net Amounts Included in the Consolidated Balance Sheets
Asset derivativesAsset derivativesAsset derivatives
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest rate contractsInterest rate contractsDeferred charges and other assets$182 $(182)$— Interest rate contractsOther current assets$501 $(334)$167 
Foreign currency contractsForeign currency contractsOther current assets32 (18)14 Foreign currency contractsOther current assets309 (228)81 
Foreign currency contractsDeferred charges and other assets86 (51)35 
Commodity contractsCommodity contractsOther current assets448 (253)195 Commodity contractsOther current assets670 (348)322 
Commodity contractsCommodity contractsDeferred charges and other assets68 (32)36 Commodity contractsDeferred charges and other assets14 — 14 
TotalTotal $816 $(536)$280 Total $1,494 $(910)$584 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Foreign currency contractsForeign currency contractsOther current assets$20 $(16)$Foreign currency contractsOther current assets$66 $(59)$
Commodity contractsCommodity contractsOther current assets29 (20)Commodity contractsOther current assets34 (4)30 
Commodity contractsDeferred charges and other assets(2)— 
TotalTotal $51 $(38)$13 Total $100 $(63)$37 
Total asset derivativesTotal asset derivatives $867 $(574)$293 Total asset derivatives $1,594 $(973)$621 
Liability derivativesLiability derivativesLiability derivatives
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest rate contractsInterest rate contractsAccrued and other current liabilities$334 $(334)$— 
Interest rate contractsOther noncurrent obligations$233 $(182)$51 
Foreign currency contractsForeign currency contractsAccrued and other current liabilities21 (18)Foreign currency contractsAccrued and other current liabilities247 (228)19 
Foreign currency contractsOther noncurrent obligations51 (51)— 
Commodity contractsCommodity contractsAccrued and other current liabilities391 (287)104 Commodity contractsAccrued and other current liabilities564 (366)198 
Commodity contractsCommodity contractsOther noncurrent obligations48 (34)14 Commodity contractsOther noncurrent obligations(1)— 
TotalTotal $744 $(572)$172 Total $1,146 $(929)$217 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsOther noncurrent obligations$115 $— $115 
Foreign currency contractsForeign currency contractsAccrued and other current liabilities95 (16)79 Foreign currency contractsAccrued and other current liabilities$153 $(59)$94 
Commodity contractsCommodity contractsAccrued and other current liabilities34 (21)13 Commodity contractsAccrued and other current liabilities52 (16)36 
Commodity contractsOther noncurrent obligations(2)
TotalTotal $247 $(39)$208 Total $205 $(75)$130 
Total liability derivativesTotal liability derivatives $991 $(611)$380 Total liability derivatives $1,351 $(1,004)$347 
1.Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

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Fair Value of Derivative InstrumentsFair Value of Derivative InstrumentsDec 31, 2020Fair Value of Derivative InstrumentsDec 31, 2021
In millionsIn millionsBalance Sheet ClassificationGross
Counterparty and Cash Collateral Netting 1
Net Amounts Included in the Consolidated Balance SheetsIn millionsBalance Sheet ClassificationGross
Counterparty and Cash Collateral Netting 1
Net Amounts Included in the Consolidated Balance Sheets
Asset derivativesAsset derivativesAsset derivatives
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest rate contractsInterest rate contractsOther current assets$$(3)$— Interest rate contractsOther current assets$14 $(14)$— 
Interest rate contractsInterest rate contractsDeferred charges and other assets130 (130)— 
Foreign currency contractsForeign currency contractsOther current assets24 (13)11 
Foreign currency contractsForeign currency contractsOther current assets39 (19)20 Foreign currency contractsDeferred charges and other assets117 (89)28 
Commodity contractsCommodity contractsOther current assets146 (109)37 Commodity contractsOther current assets305 (173)132 
Commodity contractsCommodity contractsDeferred charges and other assets31 (8)23 Commodity contractsDeferred charges and other assets(2)
TotalTotal $219 $(139)$80 Total $599 $(421)$178 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsInterest rate contractsDeferred charges and other assets$41 $— $41 Interest rate contractsOther current assets$$— $
Foreign currency contractsForeign currency contractsOther current assets23 (16)
Foreign currency contractsForeign currency contractsOther current assets74 (25)49 Foreign currency contractsDeferred charges and other assets(1)— 
Commodity contractsCommodity contractsOther current assets(1)Commodity contractsOther current assets(5)
TotalTotal $119 $(26)$93 Total $33 $(22)$11 
Total asset derivativesTotal asset derivatives $338 $(165)$173 Total asset derivatives $632 $(443)$189 
Liability derivativesLiability derivativesLiability derivatives
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Interest rate contractsInterest rate contractsAccrued and other current liabilities$$(3)$Interest rate contractsAccrued and other current liabilities$33 $(14)$19 
Interest rate contractsInterest rate contractsOther noncurrent obligations192 (130)62 
Foreign currency contractsForeign currency contractsAccrued and other current liabilities15 (13)
Foreign currency contractsForeign currency contractsAccrued and other current liabilities93 (19)74 Foreign currency contractsOther noncurrent obligations90 (89)
Commodity contractsCommodity contractsAccrued and other current liabilities151 (112)39 Commodity contractsAccrued and other current liabilities267 (192)75 
Commodity contractsCommodity contractsOther noncurrent obligations48 (9)39 Commodity contractsOther noncurrent obligations(2)— 
TotalTotal $299 $(143)$156 Total $599 $(440)$159 
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsInterest rate contractsAccrued and other current liabilities$59 $— $59 
Interest rate contractsOther noncurrent obligations$178 $— $178 
Foreign currency contractsForeign currency contractsAccrued and other current liabilities31 (16)15 
Foreign currency contractsForeign currency contractsAccrued and other current liabilities35 (25)10 Foreign currency contractsOther noncurrent obligations(1)— 
Commodity contractsCommodity contractsAccrued and other current liabilities(3)Commodity contractsAccrued and other current liabilities25 (8)17 
TotalTotal $222 $(28)$194 Total $116 $(25)$91 
Total liability derivativesTotal liability derivatives $521 $(171)$350 Total liability derivatives $715 $(465)$250 
1.Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding assets or liabilities, when applicable. The Company posted cash collateral of $45$53 million at SeptemberJune 30, 20212022 ($771 million at December 31, 2020)2021). No cash collateral was posted by counterparties with the Company at SeptemberJune 30, 20212022 and December 31, 2020.

2021.

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The following tables summarize the gain (loss) of derivative instruments in the consolidated statements of income and comprehensive income for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:

Effect of Derivative InstrumentsEffect of Derivative Instruments
Amount of gain (loss) recognized in OCI 1
Amount of gain (loss) recognized in income 2
Income Statement ClassificationEffect of Derivative Instruments
Amount of gain (loss) recognized in OCI 1
Amount of gain (loss) recognized in income 2
Income Statement Classification
Three Months EndedThree Months EndedThree Months EndedThree Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Derivatives designated as hedging
instruments:
Derivatives designated as hedging
instruments:
Derivatives designated as hedging instruments:
Fair value hedges:
Excluded components 3
$— $$— $— Interest expense and amortization of debt discount
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Interest rate contractsInterest rate contracts— (2)(1)Interest expense and amortization of debt discountInterest rate contracts$108 $(44)$(2)$(2)Interest expense and amortization of debt discount
Foreign currency contractsForeign currency contracts(12)(3)(1)Cost of salesForeign currency contracts(4)Cost of sales
Commodity contractsCommodity contracts37 42 21 (4)Cost of salesCommodity contracts80 41 107 (2)Cost of sales
Net foreign investment hedges:Net foreign investment hedges:Net foreign investment hedges:
Foreign currency contractsForeign currency contracts20 (19)— — Foreign currency contracts49 — — 
Excluded components 3
Excluded components 3
12 — Sundry income (expense) - net
Excluded components 3
11 Sundry income (expense) - net
Total derivatives designated as hedging instrumentsTotal derivatives designated as hedging instruments$78 $14 $17 $(4)Total derivatives designated as hedging instruments$246 $$119 $(5)
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsInterest rate contracts$— $— $(2)$(3)Interest expense and amortization of debt discountInterest rate contracts$— $— $— $(1)Interest expense and amortization of debt discount
Foreign currency contractsForeign currency contracts— — (84)(5)Sundry income (expense) - netForeign currency contracts— — (191)(5)Sundry income (expense) - net
Commodity contractsCommodity contracts— — (12)(7)Cost of salesCommodity contracts— — (5)Cost of sales
Total derivatives not designated as
hedging instruments
Total derivatives not designated as
hedging instruments
$— $— $(98)$(15)Total derivatives not designated as hedging instruments$— $— $(184)$(11)
Total derivativesTotal derivatives$78 $14 $(81)$(19)Total derivatives$246 $$(65)$(16)
1.OCI is defined as other comprehensive income (loss).
2.Pretax amounts.
3.The excluded components are related to the time value of the derivatives designated as hedges.

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Effect of Derivative InstrumentsEffect of Derivative Instruments
Amount of gain (loss) recognized in OCI 1
Amount of gain (loss) recognized in income 2
Income Statement ClassificationEffect of Derivative Instruments
Amount of gain (loss) recognized in OCI 1
Amount of gain (loss) recognized in income 2
Income Statement Classification
Nine Months EndedNine Months EndedSix Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:Derivatives designated as hedging instruments:
Fair value hedges:Fair value hedges:Fair value hedges:
Interest rate contractsInterest rate contracts$— $— $(25)$24 
Interest expense and amortization of debt discount 3
Interest rate contracts$— $— $— $(25)
Interest expense and amortization of debt discount 3
Excluded components 4
Excluded components 4
10 — — Interest expense and amortization of debt discount
Excluded components 4
— — — Interest expense and amortization of debt discount
Cash flow hedges:Cash flow hedges:Cash flow hedges:
Interest rate contractsInterest rate contracts(39)— (7)(1)Interest expense and amortization of debt discountInterest rate contracts207 (44)(5)(5)Interest expense and amortization of debt discount
Foreign currency contractsForeign currency contracts10 (9)(15)Cost of salesForeign currency contracts(12)Cost of sales
Commodity contractsCommodity contracts143 (23)32 (32)Cost of salesCommodity contracts287 106 141 11 Cost of sales
Net foreign investment hedges:Net foreign investment hedges:Net foreign investment hedges:
Foreign currency contractsForeign currency contracts33 (3)— — Foreign currency contracts47 13 — — 
Excluded components 4
Excluded components 4
20 27 18 Sundry income (expense) - net
Excluded components 4
34 23 Sundry income (expense) - net
Total derivatives designated as hedging instrumentsTotal derivatives designated as hedging instruments$169 $$(10)$17 Total derivatives designated as hedging instruments$581 $91 $165 $(27)
Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:Derivatives not designated as hedging instruments:
Interest rate contractsInterest rate contracts$— $— $(5)$(10)Interest expense and amortization of debt discountInterest rate contracts$— $— $(1)$(3)Interest expense and amortization of debt discount
Foreign currency contractsForeign currency contracts— — (202)(15)Sundry income (expense) - netForeign currency contracts— — (276)(118)Sundry income (expense) - net
Commodity contractsCommodity contracts— — (47)10 Cost of salesCommodity contracts— — 29 (35)Cost of sales
Total derivatives not designated as
hedging instruments
Total derivatives not designated as
hedging instruments
$— $— $(254)$(15)Total derivatives not designated as hedging instruments$— $— $(248)$(156)
Total derivativesTotal derivatives$169 $$(264)$Total derivatives$581 $91 $(83)$(183)
1.OCI is defined as other comprehensive income (loss).
2.Pretax amounts.
3.Gain (loss) recognized in income of derivatives is offset by gain (loss) recognized in income of the hedged item.
4.The excluded components are related to the time value of the derivatives designated as hedges.

The following table provides the net after-tax amountsgain (loss) expected to be reclassified from AOCL to income within the next 12 months:

Expected Reclassifications from AOCL within the next 12 monthsSepJun 30, 20212022
In millions
Cash flow hedges:
Interest rate contracts$(8)
Commodity contracts$74208 
Foreign currency contracts$510 
Net foreign investment hedges:
Excluded components$918 

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NOTE 19 – FAIR VALUE MEASUREMENTS
A summary of the Company's recurring and nonrecurring fair value measurements can be found in Note 23 to the Consolidated Financial Statements included in the 20202021 10-K.

Fair Value Measurements on a Recurring Basis
The following table summarizes the bases used to measure certain assets and liabilities at fair value on a recurring basis:

Basis of Fair Value Measurements on a Recurring BasisBasis of Fair Value Measurements on a Recurring BasisSep 30, 2021Dec 31, 2020Basis of Fair Value Measurements on a Recurring BasisJun 30, 2022Dec 31, 2021
Quoted Prices in Active Markets for Identical Items
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
TotalQuoted Prices in Active Markets for Identical Items
(Level 1)
Significant Other Observable Inputs
(Level 2)
TotalBasis of Fair Value Measurements on a Recurring Basis
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
In millionsIn millionsTotal
Assets at fair value:Assets at fair value:Assets at fair value:
Cash equivalents:Cash equivalents:Cash equivalents:
Held-to-maturity securities 1
Held-to-maturity securities 1
$— $921 $— $921 $— $980 $980 
Held-to-maturity securities 1
$— $277 $— $277 $— $317 $— $317 
Money market fundsMoney market funds— 498 — 498 — 484 484 Money market funds— 702 — 702 — 489 — 489 
Marketable securities 2
Marketable securities 2
— 141 — 141 — 45 45 
Marketable securities 2
— 169 — 169 — 245 — 245 
Equity securities 3
Equity securities 3
25 — — 25 40 — 40 
Equity securities 3
12 — — 12 20 — — 20 
Nonconsolidated affiliates 4
Nonconsolidated affiliates 4
— — 18 18 — — — — 
Debt securities: 3
Debt securities: 3
Debt securities: 3
Government debt 4
— 681 — 681 — 698 698 
Government debt 5
Government debt 5
— 615 — 615 — 735 — 735 
Corporate bondsCorporate bonds39 1,213 — 1,252 28 908 936 Corporate bonds32 1,094 — 1,126 44 1,280 — 1,324 
Derivatives relating to: 5
Derivatives relating to: 6
Derivatives relating to: 6
Interest ratesInterest rates— 182 — 182 — 44 44 Interest rates— 501 — 501 — 145 — 145 
Foreign currencyForeign currency— 138 — 138 — 113 113 Foreign currency— 375 — 375 — 165 — 165 
CommoditiesCommodities20 527 — 547 173 181 Commodities19 699 — 718 15 307 — 322 
Total assets at fair valueTotal assets at fair value$84 $4,301 $— $4,385 $76 $3,445 $3,521 Total assets at fair value$63 $4,432 $18 $4,513 $79 $3,683 $— $3,762 
Liabilities at fair value:Liabilities at fair value:  Liabilities at fair value:  
Long-term debt including debt due within one year 6
$— $16,970 $— $16,970 $— $20,604 $20,604 
Guarantee liability 7
— — 225 225 — — — 
Derivatives relating to: 5
Long-term debt including debt due within one year 7
Long-term debt including debt due within one year 7
$— $12,726 $— $12,726 $— $17,125 $— $17,125 
Guarantee liability 8
Guarantee liability 8
— — 210 210 — — 220 220 
Derivatives relating to: 6
Derivatives relating to: 6
Interest ratesInterest rates— 348 — 348 — 185 185 Interest rates— 334 — 334 — 284 — 284 
Foreign currencyForeign currency— 167 — 167 — 128 128 Foreign currency— 400 — 400 — 137 — 137 
CommoditiesCommodities47 429 — 476 201 208 Commodities46 571 — 617 37 257 — 294 
Total liabilities at fair valueTotal liabilities at fair value$47 $17,914 $225 $18,186 $$21,118 $21,125 Total liabilities at fair value$46 $14,031 $210 $14,287 $37 $17,803 $220 $18,060 
1.The Company's held-to-maturity securities primarily included treasury bills and time deposits.
2.The Company’s investments in marketable securities are included in “Other current assets” in the consolidated balance sheets.
3.The Company’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.
4.Estimated asset for the Company's investment in a limited liability company included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.
5.U.S. Treasury obligations, U.S. agency obligations, U.S. agency mortgage-backed securities and other municipalities’ obligations.
5.6.See Note 18 for the classification of derivatives in the consolidated balance sheets.
6.7.See Note 18 for information on fair value measurements of long-term debt.
7.8.Estimated liability for TDCC's guarantee of Sadara's debt which is included in "Other noncurrent obligations" in the consolidated balance sheets. See Note 12 for additional information.

For equity securities calculated at net asset value per share (or its equivalent), the Company had $125$98 million in private market securities and $22 million in real estate at SeptemberJune 30, 2021 ($1112022 ($106 million in private market securities and $19$22 million in real estate at December 31, 2020)2021). There are no redemption restrictions and the unfunded commitments on these investments were $89$77 million at SeptemberJune 30, 20212022 ($6359 million at December 31, 2020)2021).

For assets classified as Level 3 measurements, fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The level 3 asset value represents the fair value of the Company's investment in a nonconsolidated affiliate. The unfunded commitment on the investment was $72 million at June 30, 2022.

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For liabilities classified as Level 3 measurements, the fair value is based on significant unobservable inputs including assumptions where there is little, if any, market activity. The fair value of the Company’s accrued liability related to the guarantee of Sadara’s debt is in proportion to the Company’s 35 percent ownership interest in Sadara. The estimated fair value of the guarantee was calculated using a "with" and "without" method. The fair value of the debt was calculated "with" the guarantee less the fair value of the debt "without" the guarantee. The "with" and "without" values were calculated using a discounted cash flow method based on contractual cash flows as well as projected prepayments made on the debt by Sadara. See Note 12 for further information on guarantees classified as Level 3 measurements.


NOTE 20 – VARIABLE INTEREST ENTITIES
A summary of the Company's variable interest entities ("VIEs") can be found in Note 24 to the Consolidated Financial Statements included in the 20202021 10-K.

Assets and Liabilities of Consolidated VIEs
The Company's consolidated financial statements include the assets, liabilities and results of operations of VIEs for which the Company is the primary beneficiary. The other equity holders’ interests are included in “Net income attributable to noncontrolling interests” in the consolidated statements of income and "Noncontrolling interests" in the consolidated balance sheets.

The following table summarizes the carrying amounts of these entities' assets and liabilities included in the Company’s consolidated balance sheets at SeptemberJune 30, 20212022 and December 31, 2020:2021:

Assets and Liabilities of Consolidated VIEsAssets and Liabilities of Consolidated VIEsSep 30, 2021Dec 31, 2020Assets and Liabilities of Consolidated VIEsJun 30, 2022Dec 31, 2021
In millions
Cash and cash equivalentsCash and cash equivalents$49 $26 Cash and cash equivalents$44 $40 
Other current assetsOther current assets38 44 Other current assets35 40 
Net propertyNet property187 232 Net property167 184 
Other noncurrent assetsOther noncurrent assets15 17 Other noncurrent assets14 15 
Total assets 1
Total assets 1
$289 $319 
Total assets 1
$260 $279 
Current liabilitiesCurrent liabilities$51 $73 Current liabilities$40 $37 
Long-term debtLong-term debtLong-term debt
Other noncurrent obligationsOther noncurrent obligations14 18 Other noncurrent obligations11 13 
Total liabilities 2
Total liabilities 2
$69 $97 
Total liabilities 2
$52 $53 
1.All assets were restricted at SeptemberJune 30, 20212022 and December 31, 2020.2021.
2.All liabilities were nonrecourse at SeptemberJune 30, 20212022 and December 31, 2020.2021.

Amounts presented in the consolidated balance sheets and the table above as restricted assets or nonrecourse obligations relating to consolidated VIEs at SeptemberJune 30, 20212022 and December 31, 20202021 are adjusted for intercompany eliminations.

Nonconsolidated VIEs
The following table summarizes the carrying amounts of assets included in the consolidated balance sheets at SeptemberJune 30, 20212022 and December 31, 2020,2021, related to variable interests in joint ventures or entities for which the Company is not the primary beneficiary. The Company's maximum exposure to loss is the same as the carrying amounts.

Carrying Amounts of Assets Related to Nonconsolidated VIEsCarrying Amounts of Assets Related to Nonconsolidated VIEsSep 30, 2021Dec 31, 2020Carrying Amounts of Assets Related to Nonconsolidated VIEsJun 30, 2022Dec 31, 2021
In millionsIn millionsDescription of assetIn millionsDescription of asset
Silicon joint venturesSilicon joint ventures
Equity method investments 1
$113 $107 Silicon joint ventures
Equity method investments 1
$116 $110 
1.Included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.




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NOTE 21 – RELATED PARTY TRANSACTIONS
TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by Dow Inc.'s Board from time to time, as well as certain governance expenses. Funding is accomplished through intercompany loans. TDCC's Board reviews and determines a dividend distribution to Dow Inc. to settle the intercompany loans. The following table summarizes cash dividends TDCC declared and paid to Dow Inc. for the three and ninesix months ended SeptemberJune 30, 20212022 and 2020:2021:

TDCC Cash Dividends Declared and PaidTDCC Cash Dividends Declared and PaidThree Months EndedNine Months EndedTDCC Cash Dividends Declared and PaidThree Months EndedSix Months Ended
Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Jun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
In millionsIn millionsIn millions
Cash dividends declared and paidCash dividends declared and paid$919 $513 $2,361 $1,685 Cash dividends declared and paid$1,333 $739 $2,454 $1,442 

At SeptemberJune 30, 20212022 and December 31, 2020,2021, TDCC's outstanding intercompany loan balance with Dow Inc. was insignificant.


NOTE 22 – SEGMENTS AND GEOGRAPHIC REGIONS
Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the Company's chief operating decision maker assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate.

Segment InformationSegment InformationPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Materials & CoatingsCorp.TotalSegment InformationPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Materials & CoatingsCorp.Total
In millionsIn millionsIn millions
Three months ended Sep 30, 2021
Three months ended Jun 30, 2022Three months ended Jun 30, 2022
Net salesNet sales$8,233 $4,370 $3,003 $58 $15,664 
Equity in earnings (losses) of nonconsolidated affiliatesEquity in earnings (losses) of nonconsolidated affiliates$138 $57 $$(2)$195 
Dow Inc. Operating EBIT 1
Dow Inc. Operating EBIT 1
$1,436 $426 $561 $(48)$2,375 
Three months ended Jun 30, 2021Three months ended Jun 30, 2021
Net salesNet sales$7,736 $4,481 $2,526 $94 $14,837 Net sales$7,121 $4,215 $2,465 $84 $13,885 
Equity in earnings of nonconsolidated affiliatesEquity in earnings of nonconsolidated affiliates$124 $122 $$— $249 Equity in earnings of nonconsolidated affiliates$130 $144 $— $$278 
Dow Inc. Operating EBIT 1
Dow Inc. Operating EBIT 1
$1,954 $713 $284 $(65)$2,886 
Dow Inc. Operating EBIT 1
$2,014 $648 $225 $(59)$2,828 
Three months ended Sep 30, 2020
Six months ended Jun 30, 2022Six months ended Jun 30, 2022
Net salesNet sales$4,565 $3,058 $2,002 $87 $9,712 Net sales$15,860 $8,894 $6,052 $122 $30,928 
Equity in earnings (losses) of nonconsolidated affiliatesEquity in earnings (losses) of nonconsolidated affiliates$71 $(13)$$$60 Equity in earnings (losses) of nonconsolidated affiliates$248 $119 $$(3)$369 
Dow Inc. Operating EBIT 1
Dow Inc. Operating EBIT 1
$647 $104 $75 $(65)$761 
Dow Inc. Operating EBIT 1
$2,670 $1,087 $1,156 $(119)$4,794 
Nine months ended Sep 30, 2021
Six months ended Jun 30, 2021Six months ended Jun 30, 2021
Net salesNet sales$20,939 $12,303 $7,114 $248 $40,604 Net sales$13,203 $7,822 $4,588 $154 $25,767 
Equity in earnings of nonconsolidated affiliatesEquity in earnings of nonconsolidated affiliates$360 $381 $$$751 Equity in earnings of nonconsolidated affiliates$236 $259 $$$502 
Dow Inc. Operating EBIT 1
Dow Inc. Operating EBIT 1
$5,196 $1,687 $571 $(186)$7,268 
Dow Inc. Operating EBIT 1
$3,242 $974 $287 $(121)$4,382 
Nine months ended Sep 30, 2020
Net sales$13,175 $8,520 $5,922 $219 $27,836 
Equity in earnings (losses) of nonconsolidated affiliates$96 $(202)$$(22)$(124)
Dow Inc. Operating EBIT 1
$1,545 $59 $264 $(207)$1,661 
1.Operating EBIT for TDCC for the three and ninesix months ended SeptemberJune 30, 20212022 and 20202021 is substantially the same as that of Dow Inc. and therefore has not been disclosed separately in the table above. A reconciliation of "Net income" to Operating EBIT is provided in the following table.

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Reconciliation of "Net income (loss)" to Operating EBITThree Months EndedNine Months Ended
Reconciliation of "Net income" to Operating EBITReconciliation of "Net income" to Operating EBITThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net income (loss)$1,706 $(1)$4,644 $40 
Net incomeNet income$1,681 $1,932 $3,233 $2,938 
+ Provision for income taxes+ Provision for income taxes542 43 1,383 215 + Provision for income taxes488 524 991 841 
Income before income taxesIncome before income taxes$2,248 $42 $6,027 $255 Income before income taxes$2,169 $2,456 $4,224 $3,779 
- Interest income- Interest income14 35 27 - Interest income36 13 64 21 
+ Interest expense and amortization of debt discount+ Interest expense and amortization of debt discount178 202 561 617 + Interest expense and amortization of debt discount165 187 332 383 
- Significant items- Significant items(474)(523)(715)(816)- Significant items(77)(198)(302)(241)
Operating EBITOperating EBIT$2,886 $761 $7,268 $1,661 Operating EBIT$2,375 $2,828 $4,794 $4,382 

The following tables summarize the pretax impact of significant items by segment excluded from Operating EBIT:

Significant Items by SegmentSignificant Items by SegmentThree Months Ended Sep 30, 2021Nine Months Ended Sep 30, 2021Significant Items by SegmentThree Months Ended Jun 30, 2022Six Months Ended Jun 30, 2022
Pack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.TotalPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.TotalPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.TotalPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.Total
In millionsIn millionsIn millions
Digitalization program costs 1
Digitalization program costs 1
$— $— $— $(40)$(40)$— $— $— $(121)$(121)
Digitalization program costs 1
$— $— $— $(51)$(51)$— $— $— $(92)$(92)
Restructuring, implementation costs and asset related charges - net 2
Restructuring, implementation costs and asset related charges - net 2
— — — (16)(16)(8)(1)(10)(50)(69)
Restructuring, implementation costs and asset related charges - net 2
— — — (10)(10)— — — (20)(20)
Loss on early extinguishment of debt 3
— — — (472)(472)— — — (574)(574)
Litigation related charges, awards and adjustments 4
— 54 — — 54 — 54 — — 54 
Russia / Ukraine conflict charges 3
Russia / Ukraine conflict charges 3
— — — — — (31)(109)(16)(30)(186)
Loss on early extinguishment of debt 4
Loss on early extinguishment of debt 4
— — — (8)(8)— — — (8)(8)
Indemnification and other transaction related costs 5
Indemnification and other transaction related costs 5
— — — — — — — — (5)(5)
Indemnification and other transaction related costs 5
— — — (8)(8)— — — 
TotalTotal$— $54 $— $(528)$(474)$(8)$53 $(10)$(750)$(715)Total$— $— $— $(77)$(77)$(31)$(109)$(16)$(146)$(302)
1.Includes costs associated with implementing the Company's digital accelerationDigital Acceleration program.
2.Includes Board approved restructuring plans, including costs associated with implementing the Company's 2020 Restructuring Program, and assetProgram.
3.Asset related charges which include other asset impairments.due to the Russia and Ukraine conflict. See Note 54 for additional information.
3.4.The Company redeemed outstanding long-term debt resulting in a loss on early extinguishment. See Note 11 for additional information.
4.Related to an arbitration award received from Luxi Chemical Group Co., Ltd. See Note 12 for additional information.
5.Primarily related to charges associated with agreements entered into with DuPont de Nemours, Inc. and Corteva, Inc. as part of the separation and distribution which, among other matters, provides for cross-indemnities and allocations of obligations and liabilities for periods prior to, at and after the completion of the separation. See Note 32 for additional information.

Significant Items by SegmentThree Months Ended Sep 30, 2020Nine Months Ended Sep 30, 2020
Pack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.TotalPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.Total
In millions
Integration and separation costs 1
$— $— $— $(63)$(63)$— $— $— $(174)$(174)
Restructuring, implementation costs and asset-related charges, net 2
(18)(22)(189)(388)(617)(30)(22)(189)(478)(719)
Litigation related charges, awards and adjustments 3
— — — — — — — — 
Net gain on divestitures 4
35 — — 185 220 35 — — 185 220 
Loss on early extinguishment of debt 5
— — — (63)(63)— — — (149)(149)
Total$17 $(22)$(189)$(329)$(523)$11 $(22)$(189)$(616)$(816)
Significant Items by SegmentThree Months Ended Jun 30, 2021Six Months Ended Jun 30, 2021
Pack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.TotalPack. & Spec. PlasticsInd. Interm. & Infrast.Perf. Mat. & CoatingsCorp.Total
In millions
Digitalization program costs 1
$— $— $— $(48)$(48)$— $— $— $(81)$(81)
Restructuring, implementation costs and asset related charges - net 2
(8)(1)(10)(24)(43)(8)(1)(10)(34)(53)
Loss on early extinguishment of debt 3
— — — (102)(102)— — — (102)(102)
Indemnification and other transactions related costs 4
— — — (5)(5)— — — (5)(5)
Total$(8)$(1)$(10)$(179)$(198)$(8)$(1)$(10)$(222)$(241)
1.Costs related to business separation activities.Includes costs associated with implementing the Company's Digital Acceleration program.
2.Includes Board approved restructuring plans and asset related charges, which include other asset impairments. See Note 5 for additional information.costs associated with implementing the Company's 2020 Restructuring Program.
3.Includes a gain associated with a legal matter with Nova. See Note 12 for additional information.
4.Primarily related to a gain on the sale of rail infrastructure in the U.S. & Canada. See Note 6 for additional information.
5.The Company redeemed outstanding long-term debt resulting in a loss on early extinguishment. See Note 11 for additional information.

4.
Primarily related to charges associated with agreements entered into with DuPont de Nemours, Inc. and Corteva, Inc. as part of the separation and distribution which, among other matters, provides for cross-indemnities and allocations of obligations and liabilities for periods prior to, at and after the completion of the separation. See Note 2 for additional information.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Quarterly Report on Form 10-Q is a combined report being filed by Dow Inc. and The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the "Company") due to the parent/subsidiary relationship between Dow Inc. and TDCC. The information reflected in the report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted. Each of Dow Inc. and TDCC is filing information in this report on its own behalf and neither company makes any representation to the information relating to the other company.

Pursuant to General Instruction H(1)(a) and (b) for Form 10-Q "Omission of Information by Certain Wholly-Owned Subsidiaries," TDCC is filing this Form 10-Q with a reduced disclosure format.

Except as otherwise indicated by the context, the term "Union Carbide" means Union Carbide Corporation and the term "Dow Silicones" means Dow Silicones Corporation, both wholly owned subsidiaries of the Company.

STATEMENTS ON COVID-19Russia and U.S. GULF COAST FREEZEUkraine Conflict
COVID-19
Additional information regarding actions taken by Dow since the onset of the pandemic can be foundIn February 2022, Russia invaded Ukraine resulting in the combinedUnited States, Canada, the European Union and other countries imposing economic sanctions on Russia. Dow Inc.is monitoring and TDCC Annual Report on Form 10-Kevaluating the broader economic impact, including sanctions imposed, the potential for the year ended December 31, 2020 ("2020 10-K").

The pandemic caused by coronavirus disease 2019 ("COVID-19") has impacted all geographic regions where Dow products are producedadditional sanctions and sold. During this public health crisis, the Company is focused on the health and safety of its employees, contractors, customers and suppliers around the world as well as maintaining safe and reliable operations of its manufacturing sites. Although supply disruptions and related logistical issues challenge all modes of transportation,any responses from Russia that could directly affect the Company’s manufacturing sites have continued to operate during the COVID-19 pandemic, with no significant impact to manufacturing, whether through shutdownssupply chain, business partners or shortages in labor, raw materials or personal protective equipment. Supply chain and logistical challenges are expected to stabilize in 2022. Contingency plans remain in place in the event of significant impacts from COVID-19 infection resurgences.

customers. At the time of this filing, approximately halfthe conflict between Russia and Ukraine has not had and is not expected to have a material impact on the Company's financial condition or results of Dow’s global workforceoperations.

Dow stands in solidarity with the people of Ukraine and denounces Russia’s invasion of Ukraine. Dow fully supports and is working remotely. The Company continuesfully complying with the sanctions implemented against Russia and the efforts of the international community to encouragereestablish peace and safeguard democracy. Dow is prioritizing the safety and security of its workforce to practice safe behaviors bothcolleagues in Ukraine and Russia. Dow had previously suspended all purchases of feedstocks and energy from Russia and has significantly reduced its operations and product offerings in the workplacecountry. Dow has also stopped all investments in Russia and while awayis only supplying limited essential goods to Russia, including food packaging, hygiene, cleaning and sanitation products and household goods.

In Russia, Dow operates a coatings facility, which is currently idled, as well as a consolidated joint venture which operates a polyurethanes systems facility. Dow’s sales from workmaterials produced in Russia represents less than 1 percent of total net sales and net income.

Prior to help prevent community spread of COVID-19. The Company continuesthe invasion, Dow’s business activities in Ukraine were limited to monitor the ongoing mitigation efforts of each region to appropriately implement its comprehensive Return to Workplace plan. All regions continue to follow on-site workforce restrictions in accordance with government regulations. Certain locations have implemented advanced phases of the Company's Return to Workplace plannon-manufacturing facilities, including sales and it is expected that more locations will progress to their next phase as infection rates subside.marketing offices.

The Company entered 2021is also providing assistance with sequential momentumevacuation, financial assistance, housing and other support to help employees and their families in Ukraine and is well-positionedactivating similar processes for continued profitable growththe Company's Russian employees. Additionally, Dow announced humanitarian support, including a cash match for donations by Dow employees, to meet immediate needs in the ongoing economic recoveryUkraine and improving industry cycle. The Company will maintain its disciplined focus on capital allocation priorities as it benefits from an improving cost structure, financial flexibility and a low-cost operating model. Through the ongoing market recovery, Dow has experienced increasing margins as differentiated parts of the portfolio see improved demand and underlying market dynamics, which has enabled a return to pre‑COVID‑19 sales levels and end-market growth across most businesses.nearby countries aiding refugees.

The Company has continued to maintain a strong financial position and liquidity throughout the economic recession triggered by the COVID-19 pandemic and its ongoing recovery. At September 30, 2021, the Company had cash and committed and available forms of liquidity of $12.4 billion. The Company also has no substantive long-term debt maturities due until 2026.

U.S. Gulf Coast Freeze
In the first quarter of 2021, Winter Storm Uri had a broad impact on2022, the U.S. Gulf CoastCompany recorded pretax asset related charges of $186 million due to the Russia and in particular acrossUkraine conflict and the entire state of Texas, which resulted in widespread utility and raw material supply disruptions and industry-wide production outages. All Dow ethylene production facilities located on the U.S. Gulf Coast were operational by March 31, 2021, along with all sites. As a result of the winter storm, the product and supply chain impacts across the industry created very tight supply dynamics and generated pricing momentum for both raw materials and finished goods.expectation that certain assets will not be recoverable. The Company remains close to its customers andCompany's remaining net asset exposure is not significant.

OUTLOOK
Dow continues to work diligentlysee long-term fundamentals driving growth across its end-markets. While the near-term market conditions are dynamic, Dow will continue to meet demand needs.leverage its diverse, global portfolio and flexible operating model to capitalize on attractive growth opportunities. Dow's actions to enhance the resiliency of its business position it well to deliver across a variety of economic environments. Dow's disciplined and balanced approach to capital allocation has delivered higher mid-cycle earnings, an improved credit profile, and cash generation above pre-pandemic levels. Dow remains well-positioned to continue advancing its decarbonize and grow strategy while delivering attractive shareholder remuneration.

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OUTLOOK
Dow continues to see robust end-market demand that is expected to extend into 2022, coupled with near-term logistics constraints and low inventory levels across its value chains. Longer term, Dow is well-positioned to increase earnings, cash flow and returns as it decarbonizes its footprint and achieves its 2030 and 2050 carbon emissions reduction targets. Dow will continue to build on its competitive advantage with growth from higher-margin, sustainability-driven, downstream solutions, and value-accretive investments to replace end-of-life assets with carbon-efficient and higher return production. Dow expects to deliver significant long-term value for shareholders as it continues to apply its balanced capital allocation approach to grow earnings while maintaining its strong operational and financial discipline.

OVERVIEW
The following is a summary of the results for the three months ended SeptemberJune 30, 2021:2022:
The Company reported net sales in the thirdsecond quarter of 20212022 of $14.8$15.7 billion, up 53 percent from $9.7 billion in the third quarter of 2020, and up 713 percent from $13.9 billion in the second quarter of 2021, with increases across all operating segments and geographic regions. Net sales were up 3 percent from $15.3 billion in the first quarter of 2022, with increases in Packaging & Specialty Plastics, partially offset by decreases in Industrial Intermediates & Infrastructure and Performance Materials & Coatings. Net sales increased in all geographic regions, except Asia Pacific, compared with the first quarter of 2022.
Local price increased 5016 percent compared with the thirdsecond quarter of 20202021 with increases in all operating segments and geographic regions, driven by tight supply and demand dynamics across key value chains.regions. Local price increased in Packaging & Specialty Plastics (up 6314 percent), Industrial Intermediates & Infrastructure (up 4914 percent) and Performance Materials & Coatings (up 2328 percent). Local price increased 56 percent compared with the first quarter of 2022.
Volume was flat compared with the second quarter of 2021.
Volume increased 2 percent compared2021 with the third quarter of 2020 with increasesan increase in Packaging & Specialty Plastics (up 5 percent) and Performance Materials & Coatings (up 2 percent), partiallywhich was offset by a decreasedecreases in Industrial Intermediates & Infrastructure (down 46 percent) and Performance Materials & Coatings (down 3 percent). Volume increaseddecreased 2 percent compared with the secondfirst quarter of 2021.2022.
Currency had a favorablean unfavorable impact of 13 percent on net sales compared with the thirdsecond quarter of 2020,2021, driven by Europe, Middle East, Africa and India ("EMEAI") (up 2(down 9 percent) and Asia Pacific (up 2(down 3 percent).
Equity in earnings of nonconsolidated affiliates was $249$195 million in the thirdsecond quarter of 2022, compared with $278 million in the second quarter of 2021, compared with $60 millionprimarily due to the impact of pandemic-related lockdowns in the third quarter of 2020, primarily driven by margin expansion at Sadara Chemical Company ("Sadara") and the Kuwait joint ventures.China.
Net income available for Dow Inc. and TDCC common stockholder(s) was $1,683$1,661 million and $1,679$1,667 million, respectively, in the thirdsecond quarter of 2021,2022, compared with a net loss of $25$1,901 million and $1,914 million in the thirdsecond quarter of 2020.2021. Earnings per share for Dow Inc. was $2.23$2.26 per share in the thirdsecond quarter of 2021,2022, compared with a loss of $0.04$2.51 per share in the thirdsecond quarter of 2020.2021.
Cash provided by operating activities - continuing operations was $2.7$1.9 billion in the thirdsecond quarter of 2021, up $9582022, down $165 million compared with the same period last year and an increase of $698 million compared withyear. Sequentially, cash provided by operating activities - continuing operations increased $244 million.
In the second quarter of 2021.2022, the Company redeemed $750 million aggregate principal amount of 3.625 percent notes due May 2026.
Dow reduced gross debt by $1.1 billionInc. repurchased $800 million of the Company's common stock in the quarter. The Company's proactive liability management actions to tender existing notes have resulted in no substantive long-term debt maturities due until 2026 and reduced annual interest expense by more than $60 million.second quarter of 2022.
On August 12, 2021,April 13, 2022, Dow Inc. announced that its Board of Directors ("Board") declared a dividend of $0.70 per share, which was paid on SeptemberJune 10, 2021,2022, to shareholders of record as of AugustMay 31, 2021.2022.
On April 13, 2022, Dow Inc. repurchased $400 million's Board approved a new share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, in the third quarter of 2021.with no expiration date.

In addition to the highlights above, the following events occurred subsequent to the third quarter of 2021:
On October 6, 2021, DowEffective April 14, 2022, following the Company's Annual Meeting of Stockholders, Jerri DeVard, former Executive Vice President and Chief Customer Officer of Office Depot, Inc. held an Investor Day event where it announced, was elected to the following: investment plans to deliver more than $3 billion of additional underlying EBITDA growth with a clear path to zero-carbon emissions; the addition of eight new renewable power agreements, reducing emissions by more than 600,000 metric tons of carbon dioxide equivalent per year; a plan to build the world's first net-zero carbon emissions ethylene and derivatives complex; and expansion of global capabilities for circular plastics, with initial products available for customers in 2022.Company's Board.
On October 14, 2021, Dow Inc.May 31, 2022, Moody's Investors Service announced thata credit rating upgrade for TDCC from Baa2 to Baa1, affirmed its Board declaredP-2 rating and maintained a dividendstable outlook. On June 6, 2022, Fitch Ratings affirmed TDCC’s BBB+ and F2 rating, and revised its outlook to positive from stable. On June 8, 2022, Standard & Poor’s affirmed TDCC’s BBB and A-2 rating, and revised its outlook to positive from stable. These credit agencies' decisions were made as part of $0.70 per share, payable on December 10, 2021, to shareholders of record as of November 30, 2021.their annual review process and reflect the Company's supportive financial policies and strong operating performance.

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Selected Financial Data - Dow Inc.Three Months EndedNine Months Ended
In millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020
Net sales$14,837$9,712$40,604$27,836
Cost of sales ("COS")$11,611$8,371$32,413$24,211
Percent of net sales78.3 %86.2 %79.8 %87.0 %
Research and development ("R&D") expenses$210$193$632$554
Percent of net sales1.4 %2.0 %1.6 %2.0 %
Selling, general and administrative ("SG&A") expenses$403$372$1,209$1,063
Percent of net sales2.7 %3.8 %3.0 %3.8 %
Effective tax rate24.1 %102.4 %22.9 %84.3 %
Net income (loss) available for Dow Inc. common stockholders$1,683$(25)$4,575$(11)

Selected Financial Data - TDCCThree Months EndedNine Months Ended
In millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020
Net sales$14,837$9,712$40,604$27,836
COS$11,610$8,371$32,410$24,209
Percent of net sales78.3 %86.2 %79.8 %87.0 %
R&D expenses$210$193$632$554
Percent of net sales1.4 %2.0 %1.6 %2.0 %
SG&A expenses$403$372$1,209$1,062
Percent of net sales2.7 %3.8 %3.0 %3.8 %
Effective tax rate24.2 %102.4 %22.9 %84.3 %
Net income (loss) available for The Dow Chemical Company common stockholder$1,679$(25)$4,576$(11)


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RESULTS OF OPERATIONS
Net Sales
The following tables summarize net sales and sales variances by operating segment and geographic region from the prior year:

Summary of Sales ResultsSummary of Sales ResultsThree Months EndedNine Months EndedSummary of Sales ResultsThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net salesNet sales$14,837 $9,712 $40,604 $27,836 Net sales$15,664 $13,885 $30,928 $25,767 

Sales Variances by Operating Segment and Geographic RegionSales Variances by Operating Segment and Geographic RegionSales Variances by Operating Segment and Geographic Region
Three Months Ended Sep 30, 2021Nine Months Ended Sep 30, 2021Three Months Ended Jun 30, 2022Six Months Ended Jun 30, 2022
Local Price & Product MixCurrencyVolumeTotalLocal Price & Product MixCurrencyVolumeTotalLocal Price & Product MixCurrencyVolumeTotalLocal Price & Product MixCurrencyVolumeTotal
Percentage change from prior yearPercentage change from prior yearTotalPercentage change from prior yearLocal Price & Product MixCurrency
Packaging & Specialty PlasticsPackaging & Specialty Plastics63 %%%69 %52 %%%59 %Packaging & Specialty Plastics14 %(3)%%16 %20 %(3)%%20 %
Industrial Intermediates & InfrastructureIndustrial Intermediates & Infrastructure49 (4)47 41 — 44 Industrial Intermediates & Infrastructure14 (4)(6)21 (4)(3)14 
Performance Materials & CoatingsPerformance Materials & Coatings23 26 14 20 Performance Materials & Coatings28 (3)(3)22 34 (3)32 
TotalTotal50 %%%53 %40 %%%46 %Total16 %(3)%— %13 %22 %(3)%%20 %
Total, excluding the Hydrocarbons & Energy businessTotal, excluding the Hydrocarbons & Energy business45 %%(1)%45 %36 %%— %39 %Total, excluding the Hydrocarbons & Energy business14 %(4)%(2)%%21 %(3)%(1)%17 %
U.S. & CanadaU.S. & Canada56 %— %%61 %44 %— %%46 %U.S. & Canada13 %— %%16 %19 %— %%26 %
EMEAIEMEAI55 60 45 56 EMEAI24 (9)(4)11 31 (8)(4)19 
Asia PacificAsia Pacific28 (6)24 24 — 27 Asia Pacific11 (3)— 16 (2)(2)12 
Latin AmericaLatin America60 — (1)59 51 — — 51 Latin America17 16 — 21 
TotalTotal50 %%%53 %40 %%%46 %Total16 %(3)%— %13 %22 %(3)%%20 %

Net sales in the thirdsecond quarter of 20212022 were $14.8$15.7 billion, up 5313 percent from $9.7$13.9 billion in the thirdsecond quarter of 2020,2021, with local price up 5016 percent, volume up 2 percentflat and a favorablean unfavorable currency impact of 13 percent. Net sales increased in all operating segments and geographic regions. Local price increased in all operating segments and geographic regions, primarily driven by tight supply and demand dynamics across key value chains.and increasing raw material prices. Local price increased in Packaging & Specialty Plastics (up 6314 percent), Industrial Intermediates & Infrastructure (up 4914 percent) and Performance Materials & Coatings (up 2328 percent). Volume increases in the U.S. & Canada and EMEAI were partially offset by volume decreases in Latin America and Asia Pacific. Volume increased in Packaging & Specialty Plastics (up 5 percent) and Performance Materials & Coatings (up 2 percent) and decreased in Industrial Intermediates & Infrastructure (down 46 percent) and Performance Materials & Coatings (down 3 percent). Volume increases in the U.S. & Canada and Latin America were offset by a volume decrease in EMEAI. Currency favorablyunfavorably impacted net sales 1by 3 percent, driven by EMEAI (up 2(down 9 percent) and Asia Pacific (up 2(down 3 percent). Excluding the Hydrocarbons & Energy business, net sales increased 458 percent.

Net sales for the first ninesix months of 20212022 were $40.6$30.9 billion, up 4620 percent from $27.8$25.8 billion in the same period last year, with local price up 4022 percent, volume up 31 percent and a favorablean unfavorable currency impact of 3 percent. Net sales increased in all operating segments and geographic regions. Local price increased in all operating segments and geographic regions, primarily reflecting price gains due todriven by tight supply and demand dynamics.dynamics and increasing raw material prices. Local price increased in Packaging & Specialty Plastics (up 5220 percent), Industrial Intermediates & Infrastructure (up 4121 percent) and Performance Materials & Coatings (up 1434 percent). Volume increased in Packaging & Specialty Plastics (up 43 percent) and Performance Materials & Coatings (up 31 percent) and was flatdecreased in Industrial Intermediates & Infrastructure.Infrastructure (down 3 percent). Volume increases in the U.S. & Canada and Latin America were partially offset by volume decreases in EMEAI and Asia Pacific. Currency favorablyunfavorably impacted net sales by 3 percent compared with the same period last year, driven by EMEAI (up 6(down 8 percent) and Asia Pacific (up 3(down 2 percent). Excluding the Hydrocarbons & Energy business, net sales increased 3917 percent.



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Cost of Sales
COSCost of sales ("COS") was $11.6$12.9 billion in the thirdsecond quarter of 2022, up from $10.7 billion in the second quarter of 2021, primarily due to higher feedstocks, energy and other raw material costs, and logistics costs. For the first six months of 2022, COS was $25.3 billion, up from $8.4$20.8 billion in the third quarterfirst six months of 2020,2021, primarily due to increased sales volume and higher feedstock,feedstocks, energy and other raw material costs, and logistics costs. ForThe second quarter of 2022 included $44 million ($41 million in the first nine monthssecond quarter of 2021, COS was $32.4 billion, up from $24.2 billion2021) and $82 million in the first ninesix months of 2020, primarily due to increased sales volume, higher feedstock and energy costs and impacts from Winter Storm Uri, which included higher raw material costs and repair costs. The third quarter of 2021 included $362022 ($70 million ($106 million forin the first ninesix months of 2021) of costs associated with implementing the Company's digital acceleration program (related to Corporate). COSCost of sales as a percentage of net sales in the thirdsecond quarter of 20212022 was 78.382.3 percent (86.2(77.3 percent in the thirdsecond quarter of 2020)2021) and 79.881.8 percent for the first ninesix months of 2021 (87.02022 (80.7 percent for the first ninesix months of 2020)2021).

Research and Development Expenses
Research and development ("R&D&D") expenses totaled $210$217 million in the thirdsecond quarter of 2021,2022, compared with $193$228 million in the thirdsecond quarter of 2020.2021. R&D expenses decreased in the second quarter of 2022 primarily due to lower fringe benefit expenses driven by stock market declines. R&D expenses for the first ninesix months of 20212022 were $632$435 million, compared with $554$422 million in the first ninesix months of 2020.2021. R&D expenses for the first six months of 2022 increased primarily due to higher performance-based compensation costs, which more than offset a decrease in fringe benefit expenses driven bydue to stock market increases compared with the same period last year and increased spending due to the economic recovery from the COVID-19 pandemic.declines.

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A&A") expenses totaled $403$435 million in the thirdsecond quarter of 2021,2022, compared with $372$440 million in the thirdsecond quarter of 2020.2021. SG&A expenses decreased in the second quarter of 2022 due to lower fringe benefit expenses driven by stock market declines. For the first ninesix months of 2021,2022, SG&A expenses were $1,209$933 million, compared with $1,063$806 million in the first ninesix months of 2020.2021. SG&A expenses for the first six months of 2022 increased primarily due to higher performance-based compensation costs and an increase in bad debt reserves, which more than offset a decrease in fringe benefit expenses driven bydue to stock market increases compared with the same period last year and increased spending due to the economic recovery from the COVID-19 pandemic. The first nine months of 2020 were favorably impacted by the recovery of legal costs related to the Nova Chemicals Corporation ("Nova") ethylene asset matter and the reversal of a bad debt reserve related to an arbitration judgment.declines.

Amortization of Intangibles
Amortization of intangibles was $85 million in the second quarter of 2022, compared with $100 million in the thirdfirst quarter of 2021 and 2020.2021. In the first ninesix months of 2021,2022, amortization of intangibles was $301$173 million, compared with $300$201 million in the first ninesix months of 2020.2021. See Note 109 to the Consolidated Financial Statements for additional information on intangible assets.

Restructuring and Asset Related Charges - Net
Asset Related Charges
In the first quarter of 2022, the Company recorded pretax asset related charges of $186 million due to the Russia and Ukraine conflict and the expectation that certain assets will not be recoverable. These charges included the write-down of inventory, the recording of bad debt reserves and the impairment of other assets. Asset related charges by segment were as follows: $31 million in Packaging & Specialty Plastics, $109 million in Industrial Intermediates & Infrastructure, $16 million in Performance Materials & Coatings and $30 million in Corporate.

2020 Restructuring Program
OnActions related to the restructuring program approved by the Board of Dow. Inc. on September 29, 2020 Dow Inc.'s Board approved restructuring actions to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the COVID-19 pandemic. The restructuring program is designed to reduce structural costs and enable the Company to further enhance competitiveness while the COVID-19 economic recovery continues. These actions are expected to bewere substantially complete byat the end of 2021, except forwith the exception of certain cash payments inthat will continue through 2022.

For In the nine months ended September 30,second quarter of 2021, the Company recorded pretax restructuring charges of $22 million, consisting of $12 million for asset write-downs and write-offs and $10 million for costs associated with exit and disposal activities, impactingactivities. Restructuring charges by segment were as follows: $8 million in Packaging & Specialty Plastics, ($8 million),$1 million in Industrial Intermediates & Infrastructure, ($1 million),$10 million in Performance Materials & Coatings ($10 million) and Corporate ($3 million). For the three months ended September 30, 2020, the Company recorded pretax restructuring charges of $575 million, consisting of severance and related benefit costs of $297 million, asset write-downs and write-offs of $197 million and costs associated with exit and disposal activities of $81 million, impacting Packaging & Specialty Plastics ($11 million), Industrial Intermediates & Infrastructure ($22 million), Performance Materials & Coatings ($174 million) and Corporate ($368 million).

DowDuPont Cost Synergy Program
In September and November 2017, DowDuPont Inc. ("DowDuPont") approved post-merger restructuring actions under the DowDuPont Cost Synergy Program (the "Synergy Program") which was designed to integrate and optimize the organization following the merger and in preparation for the business separations. For the three months ended September 30, 2020, the Company recorded a favorable adjustment to the Synergy Program related to severance and related benefit costs of $4 million.For the nine months ended September 30, 2020, the Company recorded pretax restructuring charges of $90 million for severance and related benefit costs, related to Corporate. These were the final charges related to the Synergy Program.


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Asset Related Charges
The Company recognized pretax impairment charges of $46 million and $58 million for the three and nine months ended September 30, 2020, respectively. Pretax impairment charges for the three months ended September 30, 2020, included a $15 million charge for the write-down of a non-manufacturing asset and the write-off of a capital project (related to Performance Materials & Coatings) and a $24 million charge associated with the write-down of certain corporate leased equipment (related to Corporate). Pretax impairment charges also included $7 million and $19 million for the three and nine months ended September 30, 2020, respectively, related to capital additions made to a bio-ethanol manufacturing facility in Santa Vitoria, Minas Gerais, Brazil, which was impaired in 2017 and divested in 2020 (related to Packaging & Specialty Plastics).

Integration and Separation Costs
Integration and separation costs, which reflect costs related to business separation activities, were $63$3 million in the third quarter of 2020 and $174 million for the first nine months of 2020. Integration and business separation activities were completed as of December 31, 2020. Integration and separation costs are related to Corporate.

Equity in Earnings (Losses) of Nonconsolidated Affiliates
The Company's share of equity in earnings of nonconsolidated affiliates was $249$195 million in the thirdsecond quarter of 2022, compared with $278 million in the second quarter of 2021, compared with equity earnings of $60 millionprimarily due to impacts from pandemic-related lockdowns in the third quarter of 2020.China. Equity in earnings of nonconsolidated affiliates was $751$369 million in the first ninesix months of 2021,2022, compared with equity losses of $124$502 million in the first ninesix months of 2020. The improvement from the prior year was2021, primarily due to lower equity earnings at Sadara compared with equity lossesChemical Company ("Sadara") due to planned maintenance turnaround activity and pandemic-related lockdowns in the same period last year, and higher equity earnings at the Kuwait and Thai joint ventures.China. See Note 98 to the Consolidated Financial Statements for additional information.

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Sundry Income (Expense) – Net
Sundry income (expense) – net includes a variety of income and expense items such as foreign currency exchange gains and losses, dividends from investments, gains and losses on sales of investments and assets, non-operating pension and other postretirement benefit plan credits or costs, losses on early extinguishment of debt and certain litigation matters.

For the three months ended SeptemberJune 30, 2021,2022, Sundry income (expense) - net was expenseincome of $350$75 million and $356$78 million for Dow Inc. and TDCC, respectively, compared with expense of $3 million and income of $182 million and $181$6 million, respectively, for the three months ended SeptemberJune 30, 2020.2021. The thirdsecond quarter of 20212022 included a $472non-operating pension and postretirement benefit plan credits and gains on the sales of assets and investments. These were partially offset by foreign currency exchange losses and an $8 million loss on the early extinguishment of debt (related to CorporateCorporate). In addition, Dow Inc. included an $8 million charge associated with agreements entered into with DuPont de Nemours, Inc. ("DuPont") and included in "Other net loss" inCorteva, Inc. ("Corteva") as part of the consolidated statements of cash flows). This was partially offset by non-operating pensionseparation and postretirement benefit plan credits and a $54 million gain related to an arbitration awarddistribution (related to Industrial Intermediates & Infrastructure)Corporate). The thirdsecond quarter of 20202021 included a $233 million gain related to the sale of rail infrastructure in the U.S. & Canada (related to Packaging & Specialty Plastics and Corporate) and non-operating pension and postretirement benefit plan credits. These were partially offset by a $63$102 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows); a $13 million loss related to the divestiture of a bio-ethanol manufacturing facility in Brazil (related to Packaging & Specialty Plastics); and foreign currency exchange losses.

For the nine months ended September 30, 2021, Sundry income (expense) - net was expense of $225 million and $231 million for Dow Inc. and TDCC, respectively, compared with income of $154 million and $150 million, respectively, for the nine months ended September 30, 2020. The first nine months of 2021 included a $574 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows),Corporate) and foreign currency exchange losses. These were partially offset by non-operating pension and postretirement benefit plan credits and gains on the salesales of assets and investments and a $54 million gain related to an arbitration award (related to Industrial Intermediates & Infrastructure).investments. In addition, Dow Inc. included a $5 million charge associated with agreements entered into with DuPont de Nemours, Inc. ("DuPont") and Corteva as part of the separation and distribution (related to Corporate).

For the six months ended June 30, 2022, Sundry income (expense) - net was income of $223 million and $214 million for Dow Inc. ("Corteva")and TDCC, respectively, compared with income of $125 million for Dow Inc. and TDCC for the six months ended June 30, 2021. The first six months of 2022 included non-operating pension and postretirement benefit plan credits and gains on the sales of assets and investments. These were partially offset by foreign currency exchange losses and an $8 million loss on the early extinguishment of debt (related to Corporate). In addition, Dow Inc. included a $4 million gain associated with agreements entered into with DuPont and Corteva as part of the separation and distribution (related to Corporate). The first ninesix months of 20202021 included a $233 million gain related to the sale of rail infrastructure in the U.S. & Canada (related to Packaging & Specialty Plastics and Corporate), a $6 million gain related to the Nova ethylene asset matter (related to Packaging & Specialty Plastics) and non‑operatingnon-operating pension and postretirement benefit plan credits. Thesecredits and gains on the sales of assets and investments, which were partially offset by a $149$102 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows); a $13 million loss related to the divestiture of a bio‑ethanol manufacturing facility in Brazil (related to Packaging & Specialty Plastics);Corporate) and foreign currency exchange losses. See Notes 6, 11, 16In addition, Dow Inc. included a $5 million charge associated with agreements entered into with DuPont and 22Corteva as part of the separation and distribution (related to the Consolidated Financial Statements for additional information.Corporate).
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Interest Expense and Amortization of Debt Discount
Interest expense and amortization of debt discount was $178$165 million in the thirdsecond quarter of 2021,2022, compared with $202$187 million in the thirdsecond quarter of 2020.2021. Interest expense and amortization of debt discount was $561$332 million in the first ninesix months of 2021,2022, compared with $617$383 million in the first ninesix months of 2020.2021. The decrease in interest expense is primarily due to lower coupon rates and the redemption of debt.liability management actions taken in 2021.

Provision for Income Taxes
The Company's effective tax rate fluctuates based on, among other factors, where income is earned, the level of income relative to tax attributes and the level of equity earnings, since most earnings from the Company's equity method investments are taxed at the joint venture level. The effective tax rate for the thirdsecond quarter of 20212022 was 24.122.5 percent and 24.222.4 percent for Dow Inc. and TDCC, respectively, compared with 102.421.3 percent and 21.1 percent for the thirdsecond quarter of 2020.2021. For the first ninesix months of 2021,2022, the effective tax rate was 22.923.5 percent for Dow Inc. and TDCC, compared with 84.322.3 percent and 22.2 percent for Dow Inc. and TDCC, respectively, for the first ninesix months of 2020.2021. The effective tax rate increased in 2022 primarily due to return to provision adjustments and the third quarter and for the first nine monthsrecognition of 2021 was favorably impacted by geographic mix of earnings and higher equity earnings. Theuncertain tax ratepositions in the third quarter and for the first nine months of 2020 was unfavorably impacted primarily by equity losses and geographic mix of earnings, non-deductible restructuring costs and an increase in tax reserves and was favorably impacted by a capital loss resulting from the divestiture of a bio-ethanol manufacturing facility in Brazil.multiple jurisdictions.

Net Income (Loss) Available for Common Stockholder(s)
Dow Inc.
Net income available for Dow Inc. common stockholders was $1,683$1,661 million, or $2.23$2.26 per share, in the thirdsecond quarter of 2021,2022, compared with a net loss of $25$1,901 million, or $0.04$2.51 per share, in the thirdsecond quarter of 2020.2021. Net income available for Dow Inc. common stockholders was $4,575$3,230 million, or $6.06$4.37 per share, in the first ninesix months of 2021,2022, compared with a net loss of $11$2,892 million, or $0.02$3.83 per share, in the first ninesix months of 2020.2021. See Note 76 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

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TDCC
Net income available for the TDCC common stockholder was $1,679$1,667 million in the thirdsecond quarter of 2021,2022, compared with a net loss of $25$1,914 million in the thirdsecond quarter of 2020.2021. Net income available for the TDCC common stockholder was $4,576$3,228 million in the first ninesix months of 2021,2022, compared with a loss of $11$2,897 million in the first ninesix months of 2020.2021. TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS
Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the Company's chief operating decision maker assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income before income taxes") before interest, excluding the impact of significant items. Operating EBIT by segment includes all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate.

PACKAGING & SPECIALTY PLASTICS
The Packaging & Specialty Plastics operating segment consists of two highly integrated global businesses: Hydrocarbons & Energy and Packaging and Specialty Plastics. The segment employs the industry’s broadest polyolefin product portfolio, supported by the Company’s proprietary catalyst and manufacturing process technologies, to worktechnologies. These differentiators, plus collaboration at the customer’s design table, throughoutenable the value chainsegment to deliver more reliable, durable, higher-performing solutions designed for recyclability and durable, higher performing,enhanced plastics circularity and more sustainable plastics tosustainability. The segment serves customers, brand owners and ultimately consumers in key markets including food and specialty packaging; industrial and consumer packaging; health and hygiene; caps, closures and pipe applications; consumer durables; mobility and transportation; and infrastructure. Ethylene is transferred to downstream derivative businesses at market-based prices, which are generally equivalent to prevailing market prices for large volume purchases. This segment also includes the results of The Kuwait Styrene Company K.S.C.C. and The SCG-Dow Group, as well as a portion of the results of EQUATE Petrochemical Company K.S.C.C. ("EQUATE"), The Kuwait Olefins Company K.S.C.C. ("TKOC"), Map Ta Phut Olefins Company Limited ("Map Ta Phut") and Sadara, all joint ventures of the Company.

The Company is currently responsible for marketing a majority of Sadara products outside of the Middle East zone through the Company's established sales channels. As part of this arrangement, the Company purchases and sells Sadara products for a marketing fee. In March 2021, Dow and the Saudi Arabian Oil Company agreed to transitionand began transitioning the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 andownership, which is being implemented through 2026. This transition will not impact equity earnings but is expected to reduce the Company's sales of Sadara products over the next five years.year period.

Packaging & Specialty PlasticsThree Months EndedSix Months Ended
In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net sales$8,233 $7,121 $15,860 $13,203 
Operating EBIT$1,436 $2,014 $2,670 $3,242 
Equity earnings$138 $130 $248 $236 

Packaging & Specialty PlasticsThree Months EndedSix Months Ended
Percentage change from prior yearJun 30, 2022Jun 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix14 %20 %
Currency(3)(3)
Volume
Total16 %20 %


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Packaging & Specialty PlasticsThree Months EndedNine Months Ended
In millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020
Net sales$7,736 $4,565 $20,939 $13,175 
Operating EBIT$1,954 $647 $5,196 $1,545 
Equity earnings$124 $71 $360 $96 

Packaging & Specialty PlasticsThree Months EndedNine Months Ended
Percentage change from prior yearSep 30, 2021Sep 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix63 %52 %
Currency
Volume
Total69 %59 %

Packaging & Specialty Plastics net sales were $7,736$8,233 million in the thirdsecond quarter of 2021,2022, up 6916 percent from net sales of $4,565$7,121 million in the thirdsecond quarter of 2020,2021, with local price up 6314 percent, volume up 5 percent and a favorable currency impact of 1 percent, primarily in EMEAI. Local price increased in both businesses and across all geographic regions, driven by tight supply and demand dynamics. Local price increased in Hydrocarbons & Energy as prices for co-products are generally correlated to Brent crude oil prices, which increased 69 percent compared with the third quarter of 2020. Local price increased in Packaging and Specialty Plastics driven by tight supply and demand dynamics in polyethylene, notably in industrial and consumer packaging and flexible food and beverage packaging applications. Volume increased in Hydrocarbons & Energy, primarily in the U.S. & Canada, more than offsetting decreased volume in Packaging and Specialty Plastics driven by weather-related supply constraints.

Operating EBIT was $1,954 million in the third quarter of 2021, up $1,307 million from Operating EBIT of $647 million in the third quarter of 2020. Operating EBIT increased primarily due to integrated margin expansion and increased equity earnings at Sadara and the Thai and Kuwait joint ventures.

Packaging & Specialty Plastics net sales were $20,939 million in the first nine months of 2021, up 59 percent from net sales of $13,175 million in the first nine months of 2020, with local price up 52 percent, volume up 4 percent and a favorablean unfavorable currency impact of 3 percent, primarily in EMEAI. Local price increased in both businesses and across all geographic regions, driven by tight supply and demand dynamics. Local price increased in Hydrocarbons & Energy, primarily in EMEAI, as prices for co-products are generally correlated to Brent crude oil prices, which, on average, increased 6062 percent compared with the second quarter of 2021. Local price increased in Packaging and Specialty Plastics driven by favorable supply and demand dynamics in elastomers and specialty resins. Volume increased in Hydrocarbons & Energy, primarily in EMEAI and the U.S. & Canada. Volume increased in Packaging and Specialty Plastics in Asia Pacific, Latin America and the U.S. & Canada, which more than offset a decrease in EMEAI.

Operating EBIT was $1,436 million in the second quarter of 2022, down $578 million from Operating EBIT of $2,014 million in the second quarter of 2021. Operating EBIT decreased due to higher feedstock and raw material costs, which more than offset higher selling prices and increased equity earnings.

Packaging & Specialty Plastics net sales were $15,860 million in the first six months of 2022, up 20 percent from net sales of $13,203 million in the first six months of 2021, with local price up 20 percent, volume up 3 percent and an unfavorable currency impact of 3 percent, primarily in EMEAI. Local price increased in both businesses and across all geographic regions, driven by tight supply and demand dynamics. Local price increased in Hydrocarbons & Energy, primarily in EMEAI and the U.S. & Canada, as prices for co-products are generally correlated to Brent crude oil prices, which, on average, increased 61 percent compared with the first ninesix months of 2020.2021. Local price increased in Packaging and Specialty Plastics driven by favorable supply and demand dynamics in polyethylene and elastomers, notably in industrial and consumer packaging and flexible food and beverage packaging and infrastructure material applications. Volume increased in Hydrocarbons & Energy, primarily in the U.S. & Canada and EMEAI, more than offsetting decreased volume in Asia Pacific.EMEAI. Volume decreased in Packaging and Specialty Plastics, primarily in Latin America and Asia Pacific,EMEAI, which more than offsettingoffset increases in the U.S. & Canada and EMEAI as supply constraints continue to lower exports.all other geographic regions.

Operating EBIT was $5,196$2,670 million in the first ninesix months of 2021, up $3,6512022, down $572 million from Operating EBIT of $1,545$3,242 million in the first ninesix months of 2020.2021. Operating EBIT increased primarilydecreased due to integrated margin expansionhigher feedstock and raw material costs, which more than offset higher selling prices and increased equity earnings at Sadara and the Thai and Kuwait joint ventures.earnings.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE
The Industrial Intermediates & Infrastructure operating segment consists of two customer-centric global businesses - Industrial Solutions and Polyurethanes & Construction Chemicals - that develop important intermediate chemicals that are essential to manufacturing processes, as well as downstream, customized materials and formulations that use advanced development technologies. These businesses primarily produce and market ethylene oxide and propylene oxide derivatives that are aligned to market segments as diverse as appliances, coatings, electronics, surfactants for cleaning and sanitization, infrastructure and oil and gas. The businesses' global scale and reach, of these businesses, world‑classworld-class technology, and R&D capabilities and materials science expertise enable the Company to be a premier solutions provider offering customers value-add sustainable solutions to enhance comfort, energy efficiency, product effectiveness and durability across a wide range of home comfort and appliances,appliance, building and construction, adhesivesmobility and transportation, and adhesive and lubricant applications, among others. This segment also includes a portion of the results of EQUATE, TKOC, Map Ta Phut and Sadara, all joint ventures of the Company.
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The Company is currently responsible for marketing a majority of Sadara products outside of the Middle East zone through the Company's established sales channels. As part of this arrangement, the Company purchases and sells Sadara products for a marketing fee. In March 2021, Dow and the Saudi Arabian Oil Company agreed to transitionand began transitioning the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 andownership, which is being implemented through 2026. This transition will not impact equity earnings but is expected to reduce the Company's sales of Sadara products over the next five years.year period.

Industrial Intermediates & InfrastructureIndustrial Intermediates & InfrastructureThree Months EndedNine Months EndedIndustrial Intermediates & InfrastructureThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net salesNet sales$4,481 $3,058 $12,303 $8,520 Net sales$4,370 $4,215 $8,894 $7,822 
Operating EBITOperating EBIT$713 $104 $1,687 $59 Operating EBIT$426 $648 $1,087 $974 
Equity earnings (losses)$122 $(13)$381 $(202)
Equity earningsEquity earnings$57 $144 $119 $259 

Industrial Intermediates & InfrastructureThree Months EndedNine Months Ended
Percentage change from prior yearSep 30, 2021Sep 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix49 %41 %
Currency
Volume(4)— 
Total47 %44 %
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Industrial Intermediates & Infrastructure net sales were $4,481 million in the third quarter of 2021, up 47 percent from $3,058 million in the third quarter of 2020, with local price up 49 percent, a favorable currency impact of 2 percent and volume down 4 percent. Local price increased in both businesses and in all geographic regions, driven by strong supply and demand dynamics. Volume decreased in Polyurethanes & Construction Chemicals, with decreases in the U.S. & Canada and Asia Pacific, partially offset by an increase in Latin America, primarily driven by a planned transition of a low-margin co-producer contract. Industrial Solutions volume increased in all geographic regions, except EMEAI, due to strong consumer demand in industrial specialties which more than offset decreased volume in performance intermediates. Currency favorably impacted sales in both businesses driven by Asia Pacific and EMEAI.

Operating EBIT was $713 million in the third quarter of 2021, up $609 million from Operating EBIT of $104 million in the third quarter of 2020. Operating EBIT increased primarily due to margin expansion from strong supply and demand dynamics in both businesses and higher equity earnings at Sadara and the Kuwait joint ventures.
Industrial Intermediates & InfrastructureThree Months EndedSix Months Ended
Percentage change from prior yearJun 30, 2022Jun 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix14 %21 %
Currency(4)(4)
Volume(6)(3)
Total%14 %

Industrial Intermediates & Infrastructure net sales were $12,303$4,370 million in the first nine monthssecond quarter of 2021,2022, up 444 percent from net sales of $8,520$4,215 million in the first nine monthssecond quarter of 2020, driven by an increase in2021, with local price of 41up 14 percent, volume down 6 percent, and a favorablean unfavorable currency impact of 34 percent. Volume was flat. Local price increased in both businesses and across all geographic regions, except Asia Pacific. Currency had an unfavorable impact on sales in both businesses and was driven by EMEAI and Asia Pacific. Volume declines in Polyurethanes & Construction Chemicals were partially offset by gains in Industrial Solutions. Volume increased in Industrial Solutions in all geographic regions, driven by higher supply availability and strong demand for pharmaceutical, agricultural and oil and gas-related applications. Volume in Polyurethanes & Construction Chemicals decreased in all geographic regions, excluding Latin America, driven by lower demand, particularly for consumer durables, combined with reduced supply from planned maintenance turnaround activity and third-party outages.

Operating EBIT was $426 million in the second quarter of 2022, down $222 million from Operating EBIT of $648 million in the second quarter of 2021. Operating EBIT decreased primarily due to rising raw material and energy costs; lower equity earnings at Sadara and the Map Ta Phut joint ventures; and increased planned maintenance turnaround activity, which were partially offset by higher selling prices.

Industrial Intermediates & Infrastructure net sales were $8,894 million in the first six months of 2022, up 14 percent from net sales of $7,822 million in the first six months of 2021, with local price up 21 percent, volume down 3 percent, and an unfavorable currency impact of 4 percent. Local price increased in both businesses and across all geographic regions, primarily driven by strong supply and demand dynamics and rising energy prices. Currency favorably impactedhad an unfavorable impact on sales in both businesses, driven by EMEAI. Volume in Industrial Solutions increased in all geographic regions driven by improved supply availability as the year-ago period was impacted by Winter Storm Uri, and by strong demand in EMEAIagricultural, pharmaceutical and Asia Pacific.oil and gas-related applications. Volume in Polyurethanes & Construction Chemicals increased due to gains in Latin America and EMEAI, partially offset by decreased volume in the U.S. & Canada and Asia Pacific, and was primarily due to robust consumer demand in polyurethane systems which more than offset a decrease in vinyl chloride monomers mainly due to a planned transition of a low-margin co-producer contract. Volume in Industrial Solutions decreased in all geographic regions, except Latin America, largely driven byprimarily due to lower supply constraints which more than offset strengtheningavailability from Sadara, slowing demand, particularly for consumer demand.durables, combined with reduced supply from planned maintenance turnaround activity and third-party outages.

Operating EBIT was $1,687$1,087 million in the first ninesix months of 2021,2022, up $1,628$113 million from Operating EBIT of $59$974 million in the first ninesix months of 2020.2021. Operating EBIT increased primarily due to margin expansion from strong supplylocal price increases in both businesses and demand dynamicswas partially offset by increases in Polyurethanes & Construction Chemicalsraw material and higherenergy costs and lower equity earnings at Sadara and the KuwaitMap Ta Phut joint ventures.

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PERFORMANCE MATERIALS & COATINGS
The Performance Materials & Coatings operating segment includes industry-leading franchises that deliver a wide array of solutions into consumer, infrastructure and infrastructuremobility end-markets. The segment consists of two global businesses: Coatings & Performance Monomers and Consumer Solutions. These businesses primarily utilize the Company's acrylics-, cellulosics- and silicone-based technology platforms to serve the needs of the architectural and industrial coatings; home care and personal care; consumer and electronics; mobility and transportation; industrial and chemical processing; and building and infrastructure end-markets. Both businesses employ materials science capabilities, global reach and unique products and technology to combine chemistry platforms to deliver differentiated, offeringsmarket-driven and sustainable innovations to customers.

Performance Materials & CoatingsPerformance Materials & CoatingsThree Months EndedNine Months EndedPerformance Materials & CoatingsThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net salesNet sales$2,526 $2,002 $7,114 $5,922 Net sales$3,003 $2,465 $6,052 $4,588 
Operating EBITOperating EBIT$284 $75 $571 $264 Operating EBIT$561 $225 $1,156 $287 
Equity earningsEquity earnings$$$$Equity earnings$$— $$

Performance Materials & CoatingsPerformance Materials & CoatingsThree Months EndedNine Months EndedPerformance Materials & CoatingsThree Months EndedSix Months Ended
Percentage change from prior yearPercentage change from prior yearSep 30, 2021Sep 30, 2021Percentage change from prior yearJun 30, 2022Jun 30, 2022
Change in Net Sales from Prior Period due to:Change in Net Sales from Prior Period due to:Change in Net Sales from Prior Period due to:
Local price & product mixLocal price & product mix23 %14 %Local price & product mix28 %34 %
CurrencyCurrencyCurrency(3)(3)
VolumeVolumeVolume(3)
TotalTotal26 %20 %Total22 %32 %

Performance Materials & Coatings net sales were $2,526$3,003 million in the thirdsecond quarter of 2021,2022, up 2622 percent from net sales of $2,002$2,465 million in the thirdsecond quarter of 2020,2021, with local price up 2328 percent, volume up 2down 3 percent and a favorablean unfavorable currency impact of 13 percent. Local price increased in both businesses and across all geographic regions. Local price increased in Consumer Solutions primarilyregions due to favorable supply and demand dynamics in siloxanes. Local price increased in Coatings & Performance Monomers primarily in response toand higher raw material costs and favorable supply and demand dynamics.prices. Volume increaseddecreased in Consumer Solutions in Asia Pacific, EMEAI and Latin America, which waswere partially offset by a decreasestrong consumer demand in Coatingsthe U.S. & Performance Monomers. The increase in Consumer Solutions volume was driven by strong demand for downstream silicones.Canada. Volume decreased in Coatings & Performance Monomers as an increase in Asia Pacific, EMEAI and Latin America, which were partially offset by the U.S. & Canada primarily due to improved supply availability as the year-ago period was more thanimpacted by Winter Storm Uri. Volume decreased in both businesses as a result of pandemic-related lockdowns in China. The unfavorable currency impact was driven by EMEAI and Asia Pacific.

Operating EBIT was $561 million in the second quarter of 2022, up $336 million from Operating EBIT of $225 million in the second quarter of 2021. Operating EBIT increased primarily due to margin expansion in Consumer Solutions.

Performance Materials & Coatings net sales were $6,052 million in the first six months of 2022, up 32 percent from net sales of $4,588 million in the first six months of 2021, with local price up 34 percent, volume up 1 percent and an unfavorable currency impact of 3 percent. Local price increased in both businesses and across all geographic regions due to favorable supply and demand dynamics and higher raw material prices. Volume increased in the U.S. & Canada, which was partially offset by decreases in EMEAI, Asia Pacific and Latin America. Volume increased in Consumer Solutions in the U.S. & Canada due to strong consumer demand, which was partially offset by decreases in Asia Pacific, EMEAI and Latin America. Volume increased in Coatings & Performance Monomers in the U.S. & Canada primarily due to improved supply availability as the year-ago period was impacted by Winter Storm Uri, which was partially offset by decreases in Asia Pacific and EMEAI. The unfavorable currency impact was driven by EMEAI as a result of supply constraints.and Asia Pacific.

Operating EBIT was $284$1,156 million in the third quarterfirst six months of 2021,2022, up $209$869 million from Operating EBIT of $75$287 million in the third quarterfirst six months of 2020.2021. Operating EBIT increased primarily due to margin expansion and higher volume in Consumer Solutions.

Performance Materials & Coatings net sales were $7,114 million in the first nine months of 2021, up 20 percent from net sales of $5,922 million in the first nine months of 2020, with local price up 14 percent, volume up 3 percent, and a favorable currency impact of 3 percent. Local price increased in both businesses and all geographic regions. Consumer Solutions local price increased primarily in upstream siloxanes due to favorable supply and demand dynamics. Local price increased in Coatings & Performance Monomers primarily due to improved supply and demand dynamics in acrylic monomers and architectural coatings. Volume increases in Asia Pacific, Latin America and EMEAI were partially offset by a decrease in volume in the U.S & Canada. Consumer Solutions volume increased due to higher demand in all regions. Volume decreased in Coatings & Performance Monomers as decreases in the U.S. & Canada and EMEAI were partially offset by increases in Asia Pacific and Latin America, primarily due to supply availability challenges due to weather-related outages and third-party supply and logistics constraints. The favorable currency impact was driven by Asia Pacific and EMEAI.
52

Operating EBIT was $571 million in the first nine months of 2021, up $307 million from Operating EBIT of $264 million in the first nine months of 2020. Operating EBIT increased due to margin expansion and higher volume in Consumer Solutions.


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CORPORATE
Corporate includes certain enterprise and governance activities (including insurance operations, environmental operations, etc.); non-business aligned joint ventures; non-business aligned litigation expenses; and discontinued or non-aligned businesses.

CorporateCorporateThree Months EndedNine Months EndedCorporateThree Months EndedSix Months Ended
In millionsIn millionsSep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020In millionsJun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
Net salesNet sales$94 $87 $248 $219 Net sales$58 $84 $122 $154 
Operating EBITOperating EBIT$(65)$(65)$(186)$(207)Operating EBIT$(48)$(59)$(119)$(121)
Equity earnings (losses)Equity earnings (losses)$— $$$(22)Equity earnings (losses)$(2)$$(3)$

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $94$58 million in the thirdsecond quarter of 2021, an increase2022, a decrease from net sales of $87$84 million in the thirdsecond quarter of 2020.2021. Net sales were $248$122 million in the first ninesix months of 2021, up2022, a decrease from net sales of $219$154 million in the first ninesix months of 2020.2021.

Operating EBIT was a loss of $65$48 million in the thirdsecond quarter of 2021 and 2020.2022, compared with a loss of $59 million in the second quarter of 2021. Operating EBIT improved primarily due to decreased environmental costs. Operating EBIT was a loss of $186$119 million in the first ninesix months of 2021,2022, compared with a loss of $207$121 million in the first ninesix months of 2020. Operating EBIT improved primarily due to reduced equity losses.2021.

CHANGES IN FINANCIAL CONDITION
The Company had cash and cash equivalents of $2,911$2,367 million at SeptemberJune 30, 20212022 and $5,104$2,988 million at December 31, 2020,2021, of which $1,699$1,397 million at SeptemberJune 30, 20212022 and $862$1,745 million at December 31, 20202021 was held by subsidiaries in foreign countries, including U.S. territories. For each of its foreign subsidiaries, Dow makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

The cashCash held by foreign subsidiaries for permanent reinvestment is generally used to finance the subsidiaries' operational activities and future foreign investments. Dow has the ability to repatriate additional funds to the U.S., which could result in an adjustment to the tax liability for foreign withholding taxes, foreign and/or U.S. state income taxes and the impact of foreign currency movements. At SeptemberJune 30, 2021,2022, management believed that sufficient liquidity was available in the U.S.United States. The Company has and expects to continue repatriating certain funds from its non‑U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company.

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The Company's cash flows from operating, investing and financing activities, as reflected in the consolidated statements of cash flows, are summarized in the following table:

Cash Flow SummaryCash Flow SummaryDow Inc.TDCCCash Flow SummaryDow Inc.TDCC
Nine Months EndedNine Months EndedSix Months EndedSix Months Ended
Sep 30, 2021Sep 30, 2020Sep 30, 2021Sep 30, 2020Jun 30, 2022Jun 30, 2021Jun 30, 2022Jun 30, 2021
In millions
Cash provided by (used for):Cash provided by (used for):Cash provided by (used for):
Operating activities - continuing operationsOperating activities - continuing operations$4,512 $4,596 $4,634 $4,604 Operating activities - continuing operations$3,468 $1,793 $3,493 $1,912 
Operating activities - discontinued operationsOperating activities - discontinued operations(78)— — — Operating activities - discontinued operations(11)(80)— — 
Operating activitiesOperating activities4,434 4,596 4,634 4,604 Operating activities3,457 1,713 3,493 1,912 
Investing activitiesInvesting activities(1,535)(616)(1,535)(616)Investing activities(763)(768)(763)(768)
Financing activitiesFinancing activities(4,974)(1,809)(5,174)(1,817)Financing activities(3,096)(2,500)(3,132)(2,699)
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash(57)(57)Effect of exchange rate changes on cash, cash equivalents and restricted cash(162)(12)(162)(12)
SummarySummarySummary
Increase (decrease) in cash, cash equivalents and restricted cash(2,132)2,175 (2,132)2,175 
Decrease in cash, cash equivalents and restricted cashDecrease in cash, cash equivalents and restricted cash(564)(1,567)(564)(1,567)
Cash, cash equivalents and restricted cash at beginning of periodCash, cash equivalents and restricted cash at beginning of period5,108 2,380 5,108 2,380 Cash, cash equivalents and restricted cash at beginning of period3,033 5,108 3,033 5,108 
Cash, cash equivalents and restricted cash at end of periodCash, cash equivalents and restricted cash at end of period$2,976 $4,555 $2,976 $4,555 Cash, cash equivalents and restricted cash at end of period$2,469 $3,541 $2,469 $3,541 
Less: Restricted cash and cash equivalents, included in "Other current assets"Less: Restricted cash and cash equivalents, included in "Other current assets"65 65 Less: Restricted cash and cash equivalents, included in "Other current assets"102 50 102 50 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$2,911 $4,549 $2,911 $4,549 Cash and cash equivalents at end of period$2,367 $3,491 $2,367 $3,491 

Cash Flows from Operating Activities
Cash provided by operating activities from continuing operations in the first ninesix months of 20212022 was primarily driven by the Company's cash earnings and dividends from equity method investments, which were partially offset by elective pension contributions, cash used for working capital requirements and performance-based compensation payments. Cash provided by operating activities from continuing operations in the first ninesix months of 20202021 was primarily driven by the Company's cash earnings, cash receipts related to an advance payment from a customer and the Nova ethylene asset matter, dividends from equity method investments and working capital improvements. These itemswhich were partially offset by elective pension contributions.contributions, cash used for working capital requirements and performance-based compensation payments.

Net Working CapitalNet Working CapitalDow Inc.TDCCNet Working CapitalDow Inc.TDCC
Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Jun 30, 2022Dec 31, 2021Jun 30, 2022Dec 31, 2021
In millionsIn millionsIn millions
Current assetsCurrent assets$20,393 $19,084 $20,359 $18,998 Current assets$21,769 $20,848 $21,733 $20,837 
Current liabilitiesCurrent liabilities12,793 11,108 12,505 10,574 Current liabilities13,309 13,226 13,156 13,046 
Net working capitalNet working capital$7,600 $7,976 $7,854 $8,424 Net working capital$8,460 $7,622 $8,577 $7,791 
Current ratioCurrent ratio1.59:11.72:11.63:11.80:1Current ratio1.64:11.58:11.65:11.60:1

Working Capital MetricsWorking Capital MetricsThree Months EndedWorking Capital MetricsThree Months Ended
Sep 30, 2021Jun 30, 2021Sep 30, 2020Jun 30, 2022Mar 31, 2022Jun 30, 2021
Days sales outstanding in trade receivablesDays sales outstanding in trade receivables41 39 43 Days sales outstanding in trade receivables43 42 41 
Days sales in inventoryDays sales in inventory56 56 63 Days sales in inventory56 55 56 
Days payables outstandingDays payables outstanding58 55 58 Days payables outstanding58 60 55 

Cash used for operating activities from discontinued operations in the first ninesix months of 2022 and 2021 primarily related to cash payments and receipts Dow Inc. had with DuPont and Corteva that related to certain agreements and matters related to the separation from DowDuPont.DowDuPont Inc. ("DowDuPont"). See Note 32 to the Consolidated Financial Statements for additional information.


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Cash Flows from Investing Activities
Cash used for investing activities in the first ninesix months of 2022 was primarily for capital expenditures and purchases of investments, which were partially offset by proceeds from sales and maturities of investments. Cash used for investing activities in the first six months of 2021 was primarily for capital expenditures, purchases of investments and acquisitions of property and businesses, which were partially offset by proceeds from sales and maturities of investments. Cash used for investing activities in the first nine months of 2020 was primarily for capital expenditures, purchases of investments, investments in and loans to nonconsolidated affiliates (related to Sadara) and acquisitions of property and businesses, which were partially offset by proceeds from sales and maturities of investments, which included partial monetization of the Company's investment in company-owned life insurance policies, and proceeds from sales of property and businesses.

The Company's capital expenditures were $1,035$772 million in the first ninesix months of 2021,2022, compared with $955$622 million in the first ninesix months of 2020.2021. The Company expects full year capital spending in 20212022 to be approximately $1.6$2.1 billion.

As a result of Sadara's debt re-profiling completed in The Company will adjust its spending through the first quarter of 2021, the Company does not expect to provide any shareholder loans or equity contributions to Sadara in 2021. In the first nine months of 2020, the Company loaned $280 million to Sadara.year as economic conditions evolve.

Cash Flows from Financing Activities
Cash used for financing activities in the first ninesix months of 2021 included2022 was primarily for payments on long-term debt, and transaction financing, debt issuance and other costs, which werewas partially offset by proceeds from the issuance of stock and proceeds from issuance of short-term debt greater than three months.common stock. In addition, Dow Inc. included a cash outflowsoutflow for dividends paid to stockholders and purchases of treasury stock andstock. TDCC included a cash outflow for dividends paid to Dow Inc. Cash used for financing activities in the first ninesix months of 20202021 included payments on long-term debt, changes in short-term notes payable and transaction financing, debt issuance and other costs, which werewas partially offset by proceeds from issuance of long-term debt.common stock. In addition, Dow Inc. included a cash outflowsoutflow for dividends paid to common stockholders and purchases of treasury stock andstock. TDCC included a cash outflowsoutflow for dividends paid to Dow Inc. See Note 11 to the Consolidated Financial Statements for additional information related to the issuance and retirement of debt.

Dow Inc. Non-GAAP Cash Flow Measures
Free Cash Flow
Dow defines free cash flow as "Cash provided by operating activities - continuing operations," less capital expenditures. Under this definition, free cash flowFree Cash Flow represents the cash generated by Dow from operations after investing in its asset base. Free cash flow,Cash Flow, combined with cash balances and other sources of liquidity, represents the cash available to fund obligations and provide returns to shareholders. Free cash flowCash Flow is an integral financial measure used in the Company's financial planning process.

Operating EBITDA
Dow defines Operating EBITDA as earnings (i.e., "Income before income taxes") before interest, depreciation and amortization, excluding the impact of significant items.

Cash Flow Conversion (Operating EBITDA to Cash Flow Fromfrom Operations)
Dow defines cash flow conversionCash Flow Conversion (Operating EBITDA to cash flowCash Flow from operations)Operations) as "Cash provided by operating activities - continuing operations," divided by Operating EBITDA. Management believes cash flow conversionCash Flow Conversion is an important financial metric as it helps the Company determine how efficiently it is converting its earnings into cash flow.
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These financial measures are not recognized in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and should not be viewed as alternatives to U.S. GAAP financial measures of performance. All companies do not calculate non-GAAP financial measures in the same manner and, accordingly, Dow's definitions may not be consistent with the methodologies used by other companies.

Reconciliation of Free Cash FlowReconciliation of Free Cash FlowNine Months EndedReconciliation of Free Cash FlowSix Months Ended
Sep 30, 2021Sep 30, 2020Jun 30, 2022Jun 30, 2021
In millions
Cash provided by operating activities - continuing operations (GAAP)Cash provided by operating activities - continuing operations (GAAP)$4,512 $4,596 Cash provided by operating activities - continuing operations (GAAP)$3,468 $1,793 
Capital expendituresCapital expenditures(1,035)(955)Capital expenditures(772)(622)
Free cash flow (non-GAAP) 1
$3,477 $3,641 
Free Cash Flow (non-GAAP) 1
Free Cash Flow (non-GAAP) 1
$2,696 $1,171 
1.Free cash flow in the first ninesix months of 2021 reflects a $1 billion elective pension contribution.

Reconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow from Operations)Reconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow from Operations)Nine Months EndedReconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow from Operations)Six Months Ended
Sep 30, 2021Sep 30, 2020Jun 30, 2022Jun 30, 2021
In millions
Net income (GAAP)Net income (GAAP)$4,644$40Net income (GAAP)$3,233$2,938
+ Provision for income taxes+ Provision for income taxes1,383215+ Provision for income taxes991841
Income before income taxesIncome before income taxes$6,027$255Income before income taxes$4,224$3,779
- Interest income- Interest income3527- Interest income6421
+ Interest expense and amortization of debt discount+ Interest expense and amortization of debt discount561617+ Interest expense and amortization of debt discount332383
- Significant items ¹- Significant items ¹(715)(816)- Significant items ¹(302)(241)
Operating EBIT (non-GAAP)Operating EBIT (non-GAAP)$7,268$1,661Operating EBIT (non-GAAP)$4,794$4,382
+ Depreciation and amortization+ Depreciation and amortization2,1872,148+ Depreciation and amortization1,4361,462
Operating EBITDA (non-GAAP)Operating EBITDA (non-GAAP)$9,455$3,809Operating EBITDA (non-GAAP)$6,230$5,844
Cash provided by operating activities - continuing operations (GAAP)Cash provided by operating activities - continuing operations (GAAP)$4,512$4,596Cash provided by operating activities - continuing operations (GAAP)$3,468$1,793
Cash flow conversion (Operating EBITDA to cash flow from operations) (non-GAAP) 2
47.7 %120.7 %
Cash Flow Conversion (Operating EBITDA to cash flow from operations) (non-GAAP) 2
Cash Flow Conversion (Operating EBITDA to cash flow from operations) (non-GAAP) 2
55.7 %30.7 %
1.The ninesix months ended SeptemberJune 30, 2022 includes costs associated with implementing the Company's Digital Acceleration program and 2020 Restructuring Program, asset related charges due to the Russia and Ukraine conflict, a loss on the early extinguishment of debt and activity related to the separation from DowDuPont. The six months ended June 30, 2021 includes costs associated with implementing the Company's digital acceleration program; restructuring, implementation costsDigital Acceleration program and asset related charges - net;2020 Restructuring Program, a loss on early extinguishment of debt; litigation related charges, awardsdebt and adjustments; and indemnification and other transaction related costs. The nine months ended September 30, 2020 includes integration and separation costs; restructuring, implementation costs and asset related charges - net; a net gain on divestitures; a loss on early extinguishment of debt; and a gainactivity related to a legal matter with Nova.the separation from DowDuPont. See Note 22 to the Consolidated Financial Statements for additional information.
2.Cash flow conversion in the first ninesix months of 2021 reflects a $1 billion elective pension contribution.

Liquidity & Financial Flexibility
The Company’s primary source of incremental liquidity is cash flows from operating activities. The generation of cash from operations and the Company's ability to access capital markets is expected to meet the Company’s cash requirements for working capital, capital expenditures, debt maturities, contributions to pension plans, dividend distributions to stockholders, share repurchases and other needs. In addition to cash from operating activities, the Company’s current liquidity sources also include TDCC's U.S. and Euromarket commercial paper programs, committed and uncommitted credit facilities, committed accounts receivable facilities, a U.S. retail note program (“InterNotes®”) and other debt markets.

The Company continues to maintain a strong financial position with all of its committed credit facilities undrawn and fully available at SeptemberJune 30, 2021.2022. Cash and committed and available forms of liquidity were $12.4$12.2 billion at SeptemberJune 30, 2021.2022. The Company also has no substantive long-term debt maturities due until 2026.2027. Additional details on sources of liquidity are as follows:

Commercial Paper
TDCC issues promissory notes under its U.S. and Euromarket commercial paper programs. TDCC had no$200 million of commercial paper outstanding at SeptemberJune 30, 2021 and December 31, 2020.2022. TDCC maintains access to the commercial paper market at competitive rates. Amounts outstanding under TDCC's commercial paper programs during the period may be greater, or less than, the amount reported at the end of the period. Subsequent to SeptemberJune 30, 2021,2022, TDCC issued approximately $2.4 billion$600 million of commercial paper.


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Committed Credit Facilities
The Company also has the ability to access liquidity through TDCC's committed and available credit facilities. At SeptemberJune 30, 2021,2022, TDCC had total committed and available credit facilities of $8.1$8.4 billion. See Note 11 to the Consolidated Financial Statements for additional information on committed and available credit facilities.

Committed Accounts Receivable Facilities
In addition to the above committed credit facilities, the Company maintains a committed accounts receivable facility in the U.S. where eligible trade accounts receivable, up to $900 million, may be sold at any point in time. The Company also maintains a committed accounts receivable facility in Europe where eligible trade accounts receivable, up to €400€500 million, may be sold at any point in time. At September 30, 2021, there were noIn the second quarter of 2022, the Company sold $141 million ($391 million in the first six months of 2022) of receivables sold under the U.S. and Europe committed accounts receivable facilities. For additional information, seeSee Note 1410 to the Consolidated Financial Statements included in the 2020 10-K.for additional information.

Company-Owned Life Insurance
The Company has investments in company-owned life insurance ("COLI") policies, which are recorded at their cash surrender value as of each balance sheet date. The Company has the ability to monetize its investment in its COLI policies as an additional source of liquidity. In the first quarter of 2021, the Company monetized $200 million of its existing COLI policies' surrender value. In the second quarter of 2021, the Company repaid the drawdown against the cash surrender value. The Company had no outstanding monetization of its existing COLI policies' surrender value at SeptemberJune 30, 2021.2022. For additional information, see Note 7 to the Consolidated Financial Statements included in the 2021 10-K.

Uncommitted Credit Facilities
The Company has entered into various uncommitted bilateral credit arrangements as a potential source of excess liquidity. These lines can be used to support short-term liquidity needs and for general purposes, including letters of credit. The Company had no drawdowns outstanding at SeptemberJune 30, 2021.2022.

Shelf Registration - U.S.
On June 13, 2022, Dow Inc. and TDCC filed a shelf registration statement with the U.S. Securities and Exchange Commission. The shelf indicates that Dow Inc. may offer common stock; preferred stock; depositary shares; debt securities; guarantees; warrants to purchase common stock, preferred stock and debt securities; and stock purchase contracts and stock purchase units, with pricing and availability of any such offerings depending on market conditions. The shelf also indicates that TDCC may offer debt securities, guarantees and warrants to purchase debt securities, with pricing and availability of any such offerings depending on market conditions. In the third quarter of 2022, TDCC intends to file a prospectus supplement under this shelf registration to register an undetermined amount of securities for issuance under InterNotes®. Also, in the third quarter of 2022, TDCC intends to file a prospectus supplement under this shelf registration to register an undetermined amount of securities for issuance under a medium-term notes program.

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Debt
As the Company continues to maintain its strong balance sheet and financial flexibility, management is focused on net debt (a non-GAAP financial measure), as the Company believes this is the best representation of its financial leverage at this point in time. As shown in the following table, net debt is equal to total gross debt minus "Cash and cash equivalents" and "Marketable securities." At September 30, 2021, net debt as a percent of total capitalization decreased to 40.4 percent and 39.9 percent for Dow Inc. and TDCC, respectively, compared with 47.9 percent and 46.8 percent at December 31, 2020.

Total DebtTotal DebtDow Inc.TDCCTotal DebtDow Inc.TDCC
Sep 30, 2021Dec 31, 2020Sep 30, 2021Dec 31, 2020Jun 30, 2022Dec 31, 2021Jun 30, 2022Dec 31, 2021
In millions
Notes payableNotes payable$270$156$270$156Notes payable$295$161$295$161
Long-term debt due within one yearLong-term debt due within one year291460291460Long-term debt due within one year361231361231
Long-term debtLong-term debt14,02716,49114,02716,491Long-term debt13,06514,28013,06514,280
Gross debtGross debt$14,588$17,107$14,588$17,107Gross debt$13,721$14,672$13,721$14,672
- Cash and cash equivalents - Cash and cash equivalents2,9115,1042,9115,104 - Cash and cash equivalents2,3672,9882,3672,988
- Marketable securities 1
- Marketable securities 1
1414514145
- Marketable securities 1
169245169245
Net debtNet debt$11,536$11,958$11,536$11,958Net debt$11,185$11,439$11,185$11,439
Total equityTotal equity$17,028$13,005$17,393$13,569Total equity$19,507$18,739$19,754$19,029
Gross debt as a percent of total capitalizationGross debt as a percent of total capitalization46.1 %56.8 %45.6 %55.8 %Gross debt as a percent of total capitalization41.3 %43.9 %41.0 %43.5 %
Net debt as a percent of total capitalizationNet debt as a percent of total capitalization40.4 %47.9 %39.9 %46.8 %Net debt as a percent of total capitalization36.4 %37.9 %36.2 %37.5 %
1.Included in "Other current assets" in the consolidated balance sheets.

In the second quarter of 2021,2022, the Company redeemed $208$750 million aggregate principal amount of 3.153.625 percent notes due May 2024 and $811 million aggregate principal amount of 3.50 percent notes due October 2024.2026.

In the third quarter of 2021, the Company completed cash tender offers for certain debt securities. In total, $1,042 million aggregate principal amount was tendered and retired. In addition, the Company voluntarily repaid $81 million of long-term debt due within one year.
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The Company may at any time repurchase certain debt securities in the open market or in privately negotiated transactions subject to: the applicable terms under which any such debt securities were issued, certain internal approvals of the Company, and applicable laws and regulations of the relevant jurisdiction in which any such potential transactions might take place. This in no way obligates the Company to make any such repurchases nor should it be considered an offer to do so.

TDCC's public debt instruments and primary, private credit agreements contain, among other provisions, certain customary restrictive covenant and default provisions. TDCC's most significant debt covenant with regard to its financial position is the obligation to maintain the ratio of its consolidated indebtedness to consolidated capitalization at no greater than 0.650.70 to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive Advance and Revolving Credit Facility Agreement ("Revolving Credit Agreement") equals or exceeds $500 million. The ratio of TDCC's consolidated indebtedness to consolidated capitalization as defined in the Revolving Credit Agreement was 0.440.38 to 1.00 at SeptemberJune 30, 2021.2022. Management believes TDCC was in compliance with all of its covenants and default provisions at SeptemberJune 30, 2021.2022. For information on TDCC's debt covenants and default provisions, see Note 15 to the Consolidated Financial Statements included in the 20202021 10-K. There were no material changes to the debt covenants and default provisions related to TDCC’s outstanding long-term debt and primary, private credit agreements in the first ninesix months of 2021.2022.

While taking into consideration the current economic environment, management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its business obligations.
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Credit Ratings
At SeptemberJune 30, 2021,2022, TDCC's credit ratings were as follows:

Credit RatingsLong-Term RatingShort-Term RatingOutlook
Fitch RatingsBBB+F2Positive
Moody’s Investors ServiceBaa1P-2Stable
Standard & Poor’sBBBA-2Stable
Moody’s Investors ServiceBaa2P-2Stable
Fitch RatingsBBB+F2StablePositive

On April 13, 2021,May 31, 2022, Moody's Investors Service announced a credit rating upgrade for TDCC from Baa2 to Baa1, affirmed its P-2 rating and maintained a stable outlook. On June 6, 2022, Fitch Ratings reaffirmedaffirmed TDCC’s BBB+ and F2 rating, and revised its outlook to positive from negativestable. On June 8, 2022, Standard & Poor’s affirmed TDCC’s BBB and A-2 rating, and revised its outlook to positive from stable. The decision wasThese credit agencies' decisions were made as part of Fitch’stheir annual review process.

On June 10, 2021, Standard & Poor's ("S&P") announced a credit rating upgrade for TDCC from BBB-process and A-3 to BBB and A-2, maintaining stable outlook. The decision from S&P reflectsreflect the expectation for an ongoing macroeconomic recovery, the Company’sCompany's supportive financial policies and the strengthening of itsstrong operating performance in 2021 relative to 2020.performance.

Dividends
Dow Inc.
Dow Inc. has paid dividends on a quarterly basis since the separation from DowDuPont and expects to continue to do so, subject to approval by the Board. The dividends declared by the Board align to the Company's strategy announced in 2018 of returning approximately 45 percent of operating net income1 to the shareholders through the dividend and total shareholder remuneration of approximately 65 percent, when including share repurchases, over the economic cycle. The following table summarizes cash dividends declared by the Board and paid to common stockholders of record by Dow Inc. in 2021.2022:

Dow Inc. Cash Dividends Declared and Paid
Declaration DateRecord DatePayment DateAmount (per share)
February 11, 202110, 2022February 26, 202128, 2022March 12, 202111, 2022$0.70 
April 15, 202113, 2022May 28, 202131, 2022June 11, 202110, 2022$0.70 
August 12, 2021August 31, 2021September 10, 2021$0.70 
October 14, 2021November 30, 2021December 10, 2021$0.70 


1.Operating net income is a non-GAAP measure that Dow defines as "Net income (loss) available for Dow Inc. common stockholders," excluding the impact of significant items.
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TDCC
TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by Dow Inc.'s Board from time to time, as well as certain governance expenses. Funding is accomplished through intercompany loans. TDCC's Board reviews and determines a dividend distribution to Dow Inc. to settle the intercompany loans. For the three months ended SeptemberJune 30, 2021,2022, TDCC declared and paid a dividend to Dow Inc. of $919$1,333 million ($2,3612,454 million for the ninesix months ended SeptemberJune 30, 2021)2022). At SeptemberJune 30, 2021,2022, TDCC's intercompany loan balance with Dow Inc. was insignificant. See Note 21 to the Consolidated Financial Statements for additional information.

Share Repurchase Program
On April 1, 2019, Dow Inc.'s Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3.0$3 billion to be spent on the repurchase of the Company's common stock, with no expiration date. The Company completed the April 1, 2019 share repurchase program in the second quarter of 2022. On April 13, 2022, Dow Inc.'s Board approved a new share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date. The Company repurchased $400$800 million of its common stock in the thirdsecond quarter of 20212022 ($6001,400 million in the first ninesix months of 2021)2022). At SeptemberJune 30, 2021,2022, approximately $1,775$2,975 million of the new share repurchase program authorization remained available for repurchases. TheAs previously announced, the Company intends to, at a minimum, repurchase shares to cover dilution and will continuedilution. With the announcement of the new share repurchase program, the Company may from time to evaluate value creatingtime expand its share repurchases as economicbeyond dilution, based on a number of factors including macroeconomic conditions, develop. Thefree cash flow generation, and the Dow share price. Any share repurchases, when coupled with the Company's dividends, intendis intended to ensure that totalimplement the long-term strategy of ensuring shareholder remuneration is approximately 65 percent over the economic cycle.



1.Operating net income is a non-GAAP measure that Dow defines as "Net income available for Dow Inc. common stockholders," excluding the impact of significant items.
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Pension Plans
The Company has both funded and unfunded defined benefit pension plans that cover employees in the United States and a number of other countries. The Company's funding policy is to contribute to funded plans when pension laws and/or economics either require or encourage funding.

On March 4, 2021, the The Company announced changesexpects to the design ofcontribute approximately $250 million to its U.S. tax-qualified and non-qualified pension plans (collectively, the "U.S. Plans") and, effective December 31, 2023, the Company will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in the U.S. Plans. Additionally, the Company elected to contribute $1 billion to its U.S. tax-qualified pension plans. As a result, the Company increased its estimated global 2021 pension contributions to approximately $1,230 million,2022, of which $1,165$89 million has been contributed through SeptemberJune 30, 2021.

In connection with the foregoing plan amendments and inclusive of the additional discretionary contributions to the U.S. tax-qualified pension plans, the Company remeasured the U.S. Plans effective February 28, 2021, which resulted in a decrease of approximately $200 million in the expected net periodic pension benefit cost for 2021, inclusive of curtailment gains of $19 million, recognized in the first quarter of 2021. The Company's total net periodic pension benefit cost is expected to be approximately $40 million in 2021, inclusive of curtailment gains and subject to foreign currency fluctuations and events or actions that may require additional plan remeasurements.

2022. See Note 16 to the Consolidated Financial Statements and Note 20 to the Consolidated Financial Statements included in the 20202021 10-K for additional information related to the Company's pension plans.

Restructuring
The actions related to the 2020 Restructuring Program are expected to result in additional cash expenditures of $212$98 million, primarily through the first quarterend of 2022 and into 2023, consisting of severance and related benefit costs and costs associated with exit and disposal activities, including contract cancellation penalties and environmental remediation. Restructuring implementation costs, primarily decommissioning and demolition activities related to asset actions, are expected to result in additional cash expenditures of approximately $80$20 million, primarily through the third quarterend of 2022. Restructuring implementation costs totaled $16$10 million in the thirdsecond quarter of 20212022 ($4720 million in the first ninesix months of 2021)2022).

The Company expects to incur additional costs in the future related to its restructuring activities, which will be recognized as incurred. The Company also expects to incur additional employee-related costs, including involuntary termination benefits related to its other optimization activities. These costs cannot be reasonably estimated at this time. See Note 54 to the Consolidated Financial Statements for additional information on the Company's restructuring activities.


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Digital Acceleration
In the first quarter of 2021, Dow announced plans to further advance and expand its digitalization efforts to deliver long-term value creation by accelerating investment in three key areas: expanding digital tools to accelerate materials science innovation; further enhancing the e-commerce buying and fulfillment experience for Dow's customers; and adopting real-time digital manufacturing insights, operational data intelligence and demand sensing to enhance the productivity and reliability of Dow’s operations. The Company expects more than $300 million in incremental annual run rate Operating EBITDA generation by the end of 2025 related to digital acceleration, with an additional one-time $100 million in structural working capital efficiency gains, driven in part by enhanced planning from digital tools. The activities related to digital acceleration are expected to result in additional cash expenditures of approximately $280$140 million, primarily through the end of 2022. Digital acceleration expenses totaled $40$51 million in the thirdsecond quarter of 20212022 ($12192 million in the first ninesix months of 2021)2022).

Contractual Obligations
Information related to the Company’s contractual obligations, commercial commitments and expected cash requirements for interest can be found in Notes 15, 16, 17 and 20 to the Consolidated Financial Statements included in the 20202021 10-K. With the exception of the items noted below, there have been no material changes in the Company’s contractual obligations since December 31, 2020.2021.

Contractual Obligations at Sep 30, 2021Payments Due In
Contractual Obligations at Jun 30, 2022Contractual Obligations at Jun 30, 2022Payments Due In
In millionsIn millions20212022-20232024-20252026 and beyondTotalIn millions20222023-20242025-20262027 and beyondTotal
Long-term debt obligations 1
Long-term debt obligations 1
$58 $469 $464 $12,710 $13,701 
Expected cash requirements for interest 2
Expected cash requirements for interest 2
$302 $1,151 $1,106 $7,387 $9,946 
Long-term debt obligations 1
$122 $536 $405 $13,568 $14,631 
Expected cash requirements for interest 2
$157 $1,226 $1,173 $7,907 $10,463 
Pension and other postretirement benefits$71 $655 $649 $7,367 $8,742 
Operating leases 3
$140 $785 $474 $744 $2,143 
1.Excludes unamortized debt discount and issuance costs of $313$275 million. Includes finance lease obligations of $542$826 million.
2.Cash requirements for interest on long-term debt was calculated using current interest rates at SeptemberJune 30, 2021,2022, and includes $110$56 million of various floating rate notes.
3.
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Includes imputed interestTable of $302 million.Contents

Off-Balance Sheet Arrangements
Off-balance sheet arrangements are obligations the Company has with nonconsolidated entities related to transactions, agreements or other contractual arrangements. The Company holds variable interests in joint ventures accounted for under the equity method of accounting. The Company is not the primary beneficiary of these joint ventures and therefore is not required to consolidate these entities (see Note 20 to the Consolidated Financial Statements).

Guarantees arise during the ordinary course of business from relationships with customers, committed accounts receivable facilities and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specific triggering events occur. Additional information related to guarantees can be found in the "Guarantees" section of Note 12 to the Consolidated Financial Statements.

Fair Value Measurements
See Note 19 to the Consolidated Financial Statements for information concerning fair value measurements.

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OTHER MATTERS
Recent Accounting Guidance
See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.

Critical Accounting Estimates
The preparation of financial statements and related disclosures in accordance with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the consolidated financial statements and accompanying notes. Note 1 to the Consolidated Financial Statements included in the 20202021 10-K describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. The Company’s critical accounting policies that are impacted by judgments, assumptions and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 20202021 10-K. Since December 31, 2020,2021, there have been no material changes in the Company’s accounting policies that are impacted by judgments, assumptions and estimates.

Asbestos-Related Matters of Union Carbide Corporation
Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos‑containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc. (“Amchem”). In many cases, plaintiffs are unable to demonstrate that they have suffered any compensable loss as a result of such exposure, or that injuries incurred in fact resulted from exposure to Union Carbide’s products.

The table below provides information regarding asbestos-related claims pending against Union Carbide and Amchem based on criteria developed by Union Carbide and its external consultants:

Asbestos-Related Claim ActivityAsbestos-Related Claim Activity20212020Asbestos-Related Claim Activity20222021
Claims unresolved at Jan 1Claims unresolved at Jan 19,126 11,117 Claims unresolved at Jan 18,747 9,126 
Claims filedClaims filed3,177 3,623 Claims filed2,388 2,081 
Claims settled, dismissed or otherwise resolvedClaims settled, dismissed or otherwise resolved(3,340)(5,099)Claims settled, dismissed or otherwise resolved(2,275)(2,184)
Claims unresolved at Sep 308,963 9,641 
Claims unresolved at Jun 30Claims unresolved at Jun 308,860 9,023 
Claimants with claims against both Union Carbide and AmchemClaimants with claims against both Union Carbide and Amchem(2,312)(3,168)Claimants with claims against both Union Carbide and Amchem(2,106)(2,498)
Individual claimants at Sep 306,651 6,473 
Individual claimants at Jun 30Individual claimants at Jun 306,754 6,525 

Plaintiffs’ lawyers often sue numerous defendants in individual lawsuits or on behalf of numerous claimants. As a result, the damages alleged are not expressly identified as to Union Carbide, Amchem or any other particular defendant, even when specific damages are alleged with respect to a specific disease or injury. In fact, there are no personal injury cases in which only Union Carbide and/or Amchem are the sole named defendants. For these reasons and based upon Union Carbide’s litigation and settlement experience, Union Carbide does not consider the damages alleged against Union Carbide and Amchem to be a meaningful factor in its determination of any potential asbestos-related liability.

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For additional information, see Asbestos-Related Matters of Union Carbide Corporation in Note 12 to the Consolidated Financial StatementsStatements; Part II, Item 1. Legal Proceedings; and Note 16 to the Consolidated Financial Statements included in the 2020 10-K, and Part II, Item 1. Legal Proceedings.2021 10-K.


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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See Note 18 to the Consolidated Financial Statements and Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the combined Dow Inc. and TDCC Annual Report on Form 10-K for the year ended December 31, 2020,2021, for information on the Company's utilization of financial instruments and an analysis of the sensitivity of these instruments.


ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report on Form 10-Q, Dow Inc. and The Dow Chemical Company (the "Companies") carried out an evaluation, under the supervision and with the participation of the Companies' Disclosure Committee and the Companies' management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Companies' disclosure controls and procedures pursuant to paragraph (b) of Exchange Act Rules 13a-15 and 15d-15. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Companies' disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting
There were no changes in the Companies' internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 and 15d-15 that was conducted during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companies' internal control over financial reporting.
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Dow Inc. and Subsidiaries
The Dow Chemical Company and Subsidiaries
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Asbestos-Related Matters of Union Carbide Corporation
No material developments regarding this matter occurred in the first ninesix months of 2021.2022. For a current status of this matter, see Note 12 to the Consolidated Financial Statements.

Environmental Proceedings
On August 27, 2019, the U.S. Environmental Protection Agency ("EPA"), U.S. Department of Justice, Texas Environmental Quality Board, and Texas Office of the Attorney General (collectively, the “Government Agencies”) added Performance Materials NA, Inc., a wholly owned subsidiary of the Company, as an additional signatory to an existing draft consent decree relating to alleged environmental violations at the Sabine olefins manufacturing facility in Orange, Texas (the "Orange, TX Facility"). Performance Materials NA, Inc. acquired the Orange, TX Facility in February 2019 and became a subsidiary of the Company in April 2019. The alleged violations were first identified during multimedia environmental inspections that the EPA conducted at the Orange, TX Facility while under prior ownership in March 2009 and December 2015, and involve the management of materials in the Orange, TX Facility’s wastewater treatment system, hazardous waste management, and air emissions, including leak detection and repair. The Government Agencies filed a proposed final consent decree in the U.S. District Court for the Eastern District of Texas on October 13, 2021.

On May 17, 2021, the Company received a civil complaint from the State of Texas ("State") on behalf of the Texas Commission on Environmental Quality. The complaint, filed in the 250th District Court of Travis County, Texas, alleges environmental violations at the Company's Freeport, Texas, site involving 12 discrete air emissions events. The State is seeking monetary relief of no more than $1 million and injunctive relief to prevent recurrence. On August 31, 2021, the State informed the Company that it would be including additional air emissions events in the complaint, which may impact the monetary relief sought by the State. Discussions between the Company and the Texas Office of the Attorney General are ongoing.

On February 3, 2022, the U.S. Environmental Protection Agency (“EPA”) proposed a draft administrative order to resolve alleged violations at the Rohm and Haas Chemicals facility in Kankakee, Illinois, relating to a storage tank at the site that does not have certain control equipment specified by EPA Clean Air Act regulations. This issue was self-disclosed by the facility to the Illinois Environmental Protection Agency in 2015. Negotiations with the agencies are ongoing.


ITEM 1A. RISK FACTORS
Since December 31, 2020,2021, there have been no material changes to the Company's Risk Factors.Factors, except as noted below:

Global Economic Considerations: The Company operates in a global, competitive environment which gives rise to operating and market risk exposure.
The Company sells its broad range of products and services in a competitive, global environment, and competes worldwide for sales on the basis of product quality, price, technology and customer service. Increased levels of competition could result in lower prices or lower sales volume, which could have a negative impact on the Company’s results of operations. Sales of the Company's products are also subject to extensive federal, state, local and foreign laws and regulations; trade agreements; import and export controls; taxes; and duties and tariffs. The imposition of additional regulations, controls, taxes and duties and tariffs or changes to bilateral and regional trade agreements could result in lower sales volume, which could negatively impact the Company’s results of operations.

Economic conditions around the world, and in certain industries in which the Company does business, also impact sales price and volume. As a result, market uncertainty or an economic downturn driven by inflationary pressures; political tensions; war, including the ongoing conflict between Russia and Ukraine and the related sanctions and export restrictions;terrorism; epidemics; pandemics; or political instability in the geographic regions or industries in which the Company sells its products could reduce demand for these products and result in decreased sales volume, which could have a negative impact on the Company’s results of operations.

In February 2022, Russia invaded Ukraine resulting in the United States, Canada, the European Union and other countries imposing economic sanctions on Russia. Dow suspended all purchases of feedstocks and energy from Russia and has significantly reduced its operations and product offerings in the country. Dow has also stopped all investments in Russia and is only supplying limited essential goods to Russia. These actions have not had and are not expected to have a material impact on the Company's financial condition or results of operations. However, the fluidity and continuation of the conflict may result in additional economic sanctions and other impacts which could have a negative impact on the Company’s financial condition, results of operations and cash flows. These include decreased sales; supply chain and logistics disruptions; volatility in foreign exchange rates and interest rates; inflationary pressures on raw materials and energy; and heightened cybersecurity threats.

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In addition, volatility and disruption of financial markets could limit customers’ ability to obtain adequate financing to maintain operations, which could result in a decrease in sales volume and have a negative impact on the Company’s results of operations. The Company’s global business operations also give rise to market risk exposure related to changes in inflation, foreign currency exchange rates, interest rates, commodity prices and other market factors such as equity prices. To manage such risks, the Company enters into hedging transactions, where deemed appropriate, pursuant to established guidelines and policies. If the Company fails to effectively manage such risks, it could have a negative impact on its results of operations.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information regarding purchases of Dow Inc. common stock by the Company during the three months ended SeptemberJune 30, 2021:2022:

Issuer Purchases of Equity SecuritiesTotal number of shares purchased as part of the Company's publicly announced share repurchase program
Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program 1
(In millions)
PeriodTotal number of shares purchasedAverage price paid per share
July 2021590,309 $61.57 590,309 $2,139 
August 20214,145,582 $62.42 4,145,582 $1,880 
September 20211,674,600 $62.64 1,674,600 $1,775 
Third quarter 20216,410,491 $62.40 6,410,491 $1,775 
Issuer Purchases of Equity SecuritiesTotal number of shares purchased as part of the Company's publicly announced share repurchase program
Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program 1
(In millions)
PeriodTotal number of shares purchasedAverage price paid per share
April 20221,153,050 $67.64 1,153,050 $3,697 
May 20228,057,999 $67.74 8,057,999 $3,151 
June 20222,598,049 $67.81 2,598,049 $2,975 
Second quarter 202211,809,098 $67.74 11,809,098 $2,975 
1.On April 1, 2019, Dow Inc.'s Board of Directors ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3.0 billion to be spent on the repurchase of the Company's common stock, with no expiration date. The Company completed the April 1, 2019 share repurchase program in the second quarter of 2022. On April 13, 2022, Dow Inc.'s Board approved a new share repurchase program authorizing up to $3.0 billion for the repurchase of the Company's common stock, with no expiration date.


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ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.


ITEM 5. OTHER INFORMATION
Not applicable.


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ITEM 6. EXHIBITS
EXHIBIT NO.DESCRIPTION
4.3Dow Inc. agrees to provide the SEC, on request, copies of all other such indentures and instruments that define the rights of holders of long-term debt of Dow Inc. and its consolidated subsidiaries, including The Dow Chemical Company, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K.
23 *
Ankura Consulting Group, LLC's Consent.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSThe instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File. The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

* Filed herewith
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Dow Inc.
The Dow Chemical Company and Subsidiaries
Trademark Listing

The following registered trademark of InspereX Holdings LLC appears in this report: InterNotes®

The following service mark of The Dow Chemical Company or an affiliate of Dow appears in this report: LP Oxo
SM Process

















































® SM Trademark of The Dow Chemical Company ("Dow") or an affiliated company of Dow, except as otherwise specified.
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Dow Inc. and Subsidiaries
The Dow Chemical Company and Subsidiaries
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DOW INC.
THE DOW CHEMICAL COMPANY

Date: OctoberJuly 22, 20212022


/s/ RONALD C. EDMONDS
Ronald C. Edmonds
Controller and Vice President
of Controllers and Tax
(Authorized Signatory and
Principal Accounting Officer)
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