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 ~~September~~June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________


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.
001-38646	Dow Inc.	Delaware	30-1128146
	2211 H.H. Dow Way, Midland, MI 48674
	(989) 636-1000
001-03433	The Dow Chemical Company	Delaware	38-1285128
	2211 H.H. Dow Way, Midland, MI 48674
	(989) 636-1000

Securities registered pursuant to Section 12(b) of the Act:


Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Dow Inc.	Common Stock, par value $0.01 per share	DOW	New York Stock Exchange
The Dow Chemical Company	0.500% Notes due March 15, 2027	DOW/27	New York Stock Exchange
The Dow Chemical Company	1.125% Notes due March 15, 2032	DOW/32	New York Stock Exchange
The Dow Chemical Company	1.875% Notes due March 15, 2040	DOW/40	New York Stock Exchange
The Dow Chemical Company	4.625% Notes due October 1, 2044	DOW/44	New 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.

☑

Yes

☐

The Dow Chemical Company

☑

Yes

☐

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.

☑

Yes

☐

The Dow Chemical Company

☑

Yes

☐

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 filer

☑

Accelerated
filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

The Dow Chemical Company

Large accelerated filer

☐

Accelerated
filer

☐

Non-accelerated filer

☑

Smaller reporting company

☐

Emerging growth company

☐

Table of Contents

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.

☐

Yes

☑

The Dow Chemical Company

☐

Yes

☑

Dow Inc. had ~~739,614,412~~718,167,477 shares of common stock, $0.01 par value, outstanding at ~~September~~June 30, ~~2021.~~2022. The Dow Chemical Company had 100 shares of common stock, $0.01 par value, outstanding at ~~September~~June 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.

Table of Contents

Dow Inc. and Subsidiaries

The Dow Chemical Company and Subsidiaries

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended ~~September~~June 30, ~~2021~~2022

TABLE OF CONTENTS


		PAGE

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	5
	Dow Inc. and Subsidiaries:
	Consolidated Statements of Income.	5
	Consolidated Statements of Comprehensive Income.	6
	Consolidated Balance Sheets.	7
	Consolidated Statements of Cash Flows.	8
	Consolidated Statements of Equity.	9

	The Dow Chemical Company and Subsidiaries:
	Consolidated Statements of Income.	10
	Consolidated Statements of Comprehensive Income.	11
	Consolidated Balance Sheets.	12
	Consolidated Statements of Cash Flows.	13
	Consolidated Statements of Equity.	14

	Dow Inc. and Subsidiaries and The Dow Chemical Company and Subsidiaries:
	Notes to the Consolidated Financial Statements.	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	4544

	Results of Operations.	4846

	Changes in Financial Condition.	5553

	Other Matters.	6361

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	6462

Item 4.	Controls and Procedures.	6462

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	6563

Item 1A.	Risk Factors.	6563

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	6564

Item 4.	Mine Safety Disclosures.	6664

Item 5.	Other Information.	6664

Item 6.	Exhibits.	6665

SIGNATURE		6867

Table of Contents


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.~~

~~Risks~~systems; 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 ~~assumes~~and 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.

Table of Contents


PART I – FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

Dow Inc. and Subsidiaries

Consolidated Statements of Income


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 sales	Net sales	$	14,837	$	9,712	$	40,604	$	27,836	Net sales	$	15,664	$	13,885	$	30,928	$	25,767
Cost of sales	Cost of sales	11,611		8,371		32,413		24,211		Cost of sales	12,899		10,740		25,301		20,802
Research and development expenses	Research and development expenses	210		193		632		554		Research and development expenses	217		228		435		422
Selling, general and administrative expenses	Selling, general and administrative expenses	403		372		1,209		1,063		Selling, general and administrative expenses	435		440		933		806
Amortization of intangibles	Amortization of intangibles	100		100		301		300		Amortization of intangibles	85		100		173		201
Restructuring and asset related charges - net	Restructuring 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 affiliates		249		60		751		(124)
Equity in earnings of nonconsolidated affiliates										Equity in earnings of nonconsolidated affiliates	195		278		369		502
Sundry income (expense) - net	Sundry income (expense) - net	(350)		182		(225)		154		Sundry income (expense) - net	75		(3)		223		125
Interest income	Interest income	14		6		35		27		Interest income	36		13		64		21
Interest expense and amortization of debt discount	Interest expense and amortization of debt discount	178		202		561		617		Interest expense and amortization of debt discount	165		187		332		383
Income before income taxes	Income before income taxes	2,248		42		6,027		255		Income before income taxes	2,169		2,456		4,224		3,779
Provision for income taxes	Provision for income taxes	542		43		1,383		215		Provision for income taxes	488		524		991		841
Net income (loss)		1,706		(1)		4,644		40
Net income										Net income	1,681		1,932		3,233		2,938
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	23		24		69		51		Net income attributable to noncontrolling interests	20		31		3		46
Net income (loss) available for Dow Inc. common stockholders		$	1,683	$	(25)	$	4,575	$	(11)
Net income available for Dow Inc. common stockholders										Net 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 - basic										Earnings per common share - basic	$	2.28	$	2.53	$	4.40	$	3.86
Earnings per common share - diluted										Earnings per common share - diluted	$	2.26	$	2.51	$	4.37	$	3.83

Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic	744.5		740.5		745.4		740.0		Weighted-average common shares outstanding - basic	725.7		747.0		730.2		745.9
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted	750.0		740.5		750.9		740.0		Weighted-average common shares outstanding - diluted	731.5		752.9		735.6		751.4

Depreciation	Depreciation	$	517	$	526	$	1,550	$	1,558	Depreciation	$	486	$	518	$	977	$	1,033
Capital expenditures	Capital expenditures	$	413	$	287	$	1,035	$	955	Capital expenditures	$	457	$	333	$	772	$	622

See Notes to the Consolidated Financial Statements.

Table of Contents

Dow Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 income										Net income	$	1,681	$	1,932	$	3,233	$	2,938
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Unrealized gains (losses) on investments	Unrealized gains (losses) on investments	(13)		8		(45)		(16)		Unrealized gains (losses) on investments	(153)		17		(249)		(32)
Cumulative translation adjustments	Cumulative translation adjustments	(157)		91		(345)		(9)		Cumulative translation adjustments	(514)		65		(678)		(188)
Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	149		147		1,432		430		Pension and other postretirement benefit plans	122		149		231		1,283
Derivative instruments	Derivative instruments	32		38		148		(100)		Derivative instruments	137		6		469		116
Total other comprehensive income		11		284		1,190		305
Total other comprehensive income (loss)										Total other comprehensive income (loss)	(408)		237		(227)		1,179
Comprehensive income	Comprehensive income	1,717		283		5,834		345		Comprehensive income	1,273		2,169		3,006		4,117
Comprehensive income attributable to noncontrolling interests, net of tax	Comprehensive income attributable to noncontrolling interests, net of tax	23		24		69		51		Comprehensive income attributable to noncontrolling interests, net of tax	20		31		3		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.

Table of Contents

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
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents (variable interest entities restricted - 2021: $49; 2020: $26)		$	2,911	$	5,104

Cash and cash equivalents						Cash 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
Other	Other	2,565		2,551		Other	2,243		2,713
Inventories	Inventories	7,111		5,701		Inventories	8,225		7,372
Other current assets	Other current assets	962		889		Other current assets	1,460		934
Total current assets	Total current assets	20,393		19,084		Total current assets	21,769		20,848
Investments	Investments					Investments
Investment in nonconsolidated affiliates	Investment in nonconsolidated affiliates	1,910		1,327		Investment in nonconsolidated affiliates	1,862		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 receivables	Noncurrent receivables	472		465		Noncurrent receivables	537		478
Total investments	Total investments	5,435		4,567		Total investments	5,181		5,716
Property	Property					Property
Property	Property	56,522		56,325		Property	57,180		57,604
Less: Accumulated depreciation	Less: Accumulated depreciation	36,874		36,086		Less: Accumulated depreciation	37,020		37,049
Net property (variable interest entities restricted - 2021: $187; 2020: $232)		19,648		20,239
Net property						Net property	20,160		20,555
Other Assets	Other Assets					Other Assets
Goodwill	Goodwill	8,801		8,908		Goodwill	8,605		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 assets	Operating lease right-of-use assets	1,727		1,856		Operating lease right-of-use assets	1,272		1,412
Deferred income tax assets	Deferred income tax assets	1,357		2,215		Deferred income tax assets	1,118		1,358
Deferred charges and other assets	Deferred charges and other assets	1,426		1,249		Deferred charges and other assets	1,422		1,456
Total other assets	Total other assets	16,273		17,580		Total other assets	15,033		15,871
Total Assets	Total Assets	$	61,749	$	61,470	Total Assets	$	62,143	$	62,990
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities	Current Liabilities					Current Liabilities
Notes payable	Notes payable	$	270	$	156	Notes payable	$	295	$	161
Long-term debt due within one year	Long-term debt due within one year	291		460		Long-term debt due within one year	361		231
Accounts payable:	Accounts payable:					Accounts payable:
Trade	Trade	4,601		3,763		Trade	5,693		5,577
Other	Other	2,896		2,126		Other	2,824		2,839
Operating lease liabilities - current	Operating lease liabilities - current	413		416		Operating lease liabilities - current	290		314
Income taxes payable	Income taxes payable	621		397		Income taxes payable	462		623

Accrued and other current liabilities	Accrued and other current liabilities	3,701		3,790		Accrued and other current liabilities	3,384		3,481
Total current liabilities	Total current liabilities	12,793		11,108		Total current liabilities	13,309		13,226
Long-Term Debt (variable interest entities nonrecourse - 2021: $4; 2020: $6)		14,027		16,491
Long-Term Debt						Long-Term Debt	13,065		14,280
Other Noncurrent Liabilities	Other Noncurrent Liabilities					Other Noncurrent Liabilities
Deferred income tax liabilities	Deferred income tax liabilities	501		405		Deferred income tax liabilities	752		506
Pension and other postretirement benefits - noncurrent	Pension and other postretirement benefits - noncurrent	8,586		11,648		Pension and other postretirement benefits - noncurrent	6,934		7,557
Asbestos-related liabilities - noncurrent	Asbestos-related liabilities - noncurrent	962		1,013		Asbestos-related liabilities - noncurrent	887		931
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	1,428		1,521		Operating lease liabilities - noncurrent	1,043		1,149
Other noncurrent obligations	Other noncurrent obligations	6,424		6,279		Other noncurrent obligations	6,646		6,602
Total other noncurrent liabilities	Total other noncurrent liabilities	17,901		20,866		Total other noncurrent liabilities	16,262		16,745
Stockholders’ Equity	Stockholders’ Equity					Stockholders’ 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)		8		8
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)	8		8
Additional paid-in capital	Additional paid-in capital	7,988		7,595		Additional paid-in capital	8,343		8,151
Retained earnings	Retained earnings	19,357		16,361		Retained earnings	22,827		20,623
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(9,665)		(10,855)		Accumulated other comprehensive loss	(9,204)		(8,977)
Unearned ESOP shares	Unearned 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’ equity	Dow Inc.’s stockholders’ equity	16,439		12,435		Dow Inc.’s stockholders’ equity	18,973		18,165
Noncontrolling interests	Noncontrolling interests	589		570		Noncontrolling interests	534		574
Total equity	Total equity	17,028		13,005		Total equity	19,507		18,739
Total Liabilities and Equity	Total Liabilities and Equity	$	61,749	$	61,470	Total Liabilities and Equity	$	62,143	$	62,990

See Notes to the Consolidated Financial Statements.

Table of Contents

Dow Inc. and Subsidiaries

Consolidated Statements of Cash Flows


In millions (Unaudited)	In millions (Unaudited)	Nine Months Ended				In millions (Unaudited)	Six Months Ended
		Sep 30, 2021		Sep 30, 2020			Jun 30, 2022		Jun 30, 2021
Operating Activities	Operating Activities					Operating Activities
Net income	Net 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 amortization	Depreciation and amortization	2,187		2,148		Depreciation and amortization	1,436		1,462
Provision (credit) for deferred income tax		488		(198)
Provision for deferred income tax						Provision for deferred income tax	348		388
Earnings of nonconsolidated affiliates less than (in excess of) dividends received	Earnings of nonconsolidated affiliates less than (in excess of) dividends received	(519)		515		Earnings of nonconsolidated affiliates less than (in excess of) dividends received	289		(283)
Net periodic pension benefit cost	Net periodic pension benefit cost	34		195		Net periodic pension benefit cost	14		29
Pension contributions	Pension 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 investments						Net (gain) loss on sales of assets, businesses and investments	6		(50)

Restructuring and asset related charges - net	Restructuring and asset related charges - net	22		719		Restructuring and asset related charges - net	186		22
Other net loss	Other net loss	874		288		Other net loss	92		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 receivable	Accounts and notes receivable	(2,222)		339		Accounts and notes receivable	(767)		(1,903)
Inventories	Inventories	(1,502)		587		Inventories	(908)		(1,278)
Accounts payable	Accounts payable	1,487		(560)		Accounts payable	69		1,357
Other assets and liabilities, net	Other assets and liabilities, net	252		994		Other assets and liabilities, net	(441)		(4)
Cash provided by operating activities - continuing operations	Cash provided by operating activities - continuing operations	4,512		4,596		Cash provided by operating activities - continuing operations	3,468		1,793
Cash used for operating activities - discontinued operations	Cash used for operating activities - discontinued operations	(78)		—		Cash used for operating activities - discontinued operations	(11)		(80)
Cash provided by operating activities	Cash provided by operating activities	4,434		4,596		Cash provided by operating activities	3,457		1,713
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(1,035)		(955)		Capital expenditures	(772)		(622)
Investment in gas field developments	Investment in gas field developments	(44)		(5)		Investment in gas field developments	(80)		(24)
Purchases of previously leased assets	Purchases of previously leased assets	(5)		(4)		Purchases of previously leased assets	(3)		(3)
Proceeds from sales of property and businesses, net of cash divested	Proceeds from sales of property and businesses, net of cash divested	15		295		Proceeds from sales of property and businesses, net of cash divested	5		10
Acquisitions of property and businesses, net of cash acquired	Acquisitions 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 affiliates	Investments in and loans to nonconsolidated affiliates	—		(280)		Investments in and loans to nonconsolidated affiliates	(33)		—
Distributions and loan repayments from nonconsolidated affiliates	Distributions and loan repayments from nonconsolidated affiliates	11		7		Distributions and loan repayments from nonconsolidated affiliates	10		11
Proceeds from sales of ownership interests in nonconsolidated affiliates						Proceeds from sales of ownership interests in nonconsolidated affiliates	11		—
Purchases of investments	Purchases of investments	(1,004)		(582)		Purchases of investments	(278)		(560)
Proceeds from sales and maturities of investments	Proceeds from sales and maturities of investments	644		1,009		Proceeds from sales and maturities of investments	418		527

Other investing activities, net	Other investing activities, net	(10)		29		Other investing activities, net	(41)		—
Cash used for investing activities	Cash used for investing activities	(1,535)		(616)		Cash used for investing activities	(763)		(768)
Financing Activities	Financing Activities					Financing Activities
Changes in short-term notes payable	Changes in short-term notes payable	(44)		(267)		Changes in short-term notes payable	180		(38)
Proceeds from issuance of short-term debt greater than three months	Proceeds from issuance of short-term debt greater than three months	144		163		Proceeds from issuance of short-term debt greater than three months	—		72
Payments on short-term debt greater than three months	Payments 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 debt	Proceeds from issuance of long-term debt	95		4,649		Proceeds from issuance of long-term debt	49		68
Payments on long-term debt	Payments on long-term debt	(2,638)		(4,347)		Payments on long-term debt	(927)		(1,425)

Purchases of treasury stock	Purchases of treasury stock	(600)		(125)		Purchases of treasury stock	(1,400)		(200)
Proceeds from issuance of stock	Proceeds from issuance of stock	212		53		Proceeds from issuance of stock	97		200
Transaction financing, debt issuance and other costs	Transaction financing, debt issuance and other costs	(536)		(175)		Transaction financing, debt issuance and other costs	(7)		(95)
Employee taxes paid for share-based payment arrangements	Employee taxes paid for share-based payment arrangements	(11)		(26)		Employee taxes paid for share-based payment arrangements	(34)		(11)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(35)		(19)		Distributions to noncontrolling interests	(22)		(28)

Dividends paid to stockholders	Dividends paid to stockholders	(1,561)		(1,552)		Dividends paid to stockholders	(1,018)		(1,043)

Cash used for financing activities	Cash 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 cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(57)		4		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(162)		(12)

Summary	Summary					Summary
Increase (decrease) in cash, cash equivalents and restricted cash		(2,132)		2,175
Decrease in cash, cash equivalents and restricted cash						Decrease in cash, cash equivalents and restricted cash	(564)		(1,567)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	5,108		2,380		Cash, cash equivalents and restricted cash at beginning of period	3,033		5,108
Cash, cash equivalents and restricted cash at end of period	Cash, 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		6		Less: Restricted cash and cash equivalents, included in "Other current assets"	102		50
Cash and cash equivalents at end of period	Cash 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.

Table of Contents

Dow Inc. and Subsidiaries

Consolidated Statements of Equity


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 Stock	Common Stock									Common Stock
Balance at beginning and end of period	Balance at beginning and end of period	$	8	$	8	$	8	$	8	Balance at beginning and end of period	$	8	$	8	$	8	$	8

Additional Paid-in Capital	Additional Paid-in Capital									Additional Paid-in Capital
Balance at beginning of period	Balance at beginning of period	7,898		7,431		7,595		7,325		Balance at beginning of period	8,217		7,743		8,151		7,595
Common stock issued/sold	Common stock issued/sold	11		23		211		53		Common stock issued/sold	62		73		97		200

Stock-based compensation and allocation of ESOP shares	Stock-based compensation and allocation of ESOP shares	79		43		182		119		Stock-based compensation and allocation of ESOP shares	84		82		119		103
Treasury stock issuances - compensation and benefit plans										Treasury stock issuances - compensation and benefit plans	(20)		—		(24)		—

Balance at end of period	Balance at end of period	7,988		7,497		7,988		7,497		Balance at end of period	8,343		7,898		8,343		7,898
Retained Earnings	Retained Earnings									Retained Earnings
Balance at beginning of period	Balance at beginning of period	18,200		16,017		16,361		17,045		Balance at beginning of period	21,672		16,829		20,623		16,361
Net income (loss) available for Dow Inc. common stockholders		1,683		(25)		4,575		(11)
Net income available for Dow Inc. common stockholders										Net income available for Dow Inc. common stockholders	1,661		1,901		3,230		2,892
Dividends to stockholders	Dividends to stockholders	(518)		(518)		(1,561)		(1,552)		Dividends to stockholders	(505)		(522)		(1,018)		(1,043)

Other	Other	(8)		(2)		(18)		(10)		Other	(1)		(8)		(8)		(10)
Balance at end of period	Balance at end of period	19,357		15,472		19,357		15,472		Balance at end of period	22,827		18,200		22,827		18,200
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss									Accumulated Other Comprehensive Loss
Balance at beginning of period	Balance 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 income		11		284		1,190		305
Other comprehensive income (loss)										Other comprehensive income (loss)	(408)		237		(227)		1,179

Balance at end of period	Balance 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 Shares	Unearned ESOP Shares									Unearned ESOP Shares
Balance at beginning of period	Balance at beginning of period	(32)		(69)		(49)		(91)		Balance at beginning of period	—		(39)		(15)		(49)

Allocation of ESOP shares	Allocation of ESOP shares	8		12		25		34		Allocation of ESOP shares	—		7		15		17
Balance at end of period	Balance at end of period	(24)		(57)		(24)		(57)		Balance at end of period	—		(32)		—		(32)
Treasury Stock	Treasury Stock									Treasury Stock
Balance at beginning of period	Balance at beginning of period	(825)		(625)		(625)		(500)		Balance at beginning of period	(2,221)		(625)		(1,625)		(625)
Treasury stock purchases	Treasury stock purchases	(400)		—		(600)		(125)		Treasury stock purchases	(800)		(200)		(1,400)		(200)
Treasury stock issuances - compensation and benefit plans										Treasury stock issuances - compensation and benefit plans	20		—		24		—
Balance at end of period	Balance 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' equity	Dow Inc.'s stockholders' equity	16,439		12,354		16,439		12,354		Dow Inc.'s stockholders' equity	18,973		15,573		18,973		15,573
Noncontrolling Interests	Noncontrolling Interests	589		578		589		578		Noncontrolling Interests	534		580		534		580
Total Equity	Total 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 stock	Dividends 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.

Table of Contents

The Dow Chemical Company and Subsidiaries

Consolidated Statements of Income


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 sales	Net sales	$	14,837	$	9,712	$	40,604	$	27,836	Net sales	$	15,664	$	13,885	$	30,928	$	25,767
Cost of sales	Cost of sales	11,610		8,371		32,410		24,209		Cost of sales	12,899		10,739		25,297		20,800
Research and development expenses	Research and development expenses	210		193		632		554		Research and development expenses	217		228		435		422
Selling, general and administrative expenses	Selling, general and administrative expenses	403		372		1,209		1,062		Selling, general and administrative expenses	434		440		932		806
Amortization of intangibles	Amortization of intangibles	100		100		301		300		Amortization of intangibles	85		100		173		201
Restructuring and asset related charges - net	Restructuring 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 affiliates		249		60		751		(124)
Equity in earnings of nonconsolidated affiliates										Equity in earnings of nonconsolidated affiliates	195		278		369		502
Sundry income (expense) - net	Sundry income (expense) - net	(356)		181		(231)		150		Sundry income (expense) - net	78		6		214		125
Interest income	Interest income	15		7		36		28		Interest income	38		13		66		21
Interest expense and amortization of debt discount	Interest expense and amortization of debt discount	178		202		561		617		Interest expense and amortization of debt discount	165		187		332		383
Income before income taxes	Income before income taxes	2,244		42		6,025		255		Income before income taxes	2,175		2,466		4,222		3,781
Provision for income taxes	Provision for income taxes	542		43		1,380		215		Provision for income taxes	488		521		991		838
Net income (loss)		1,702		(1)		4,645		40
Net income										Net income	1,687		1,945		3,231		2,943
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	23		24		69		51		Net income attributable to noncontrolling interests	20		31		3		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 stockholder										Net income available for The Dow Chemical Company common stockholder	$	1,667	$	1,914	$	3,228	$	2,897

Depreciation	Depreciation	$	517	$	526	$	1,550	$	1,558	Depreciation	$	486	$	518	$	977	$	1,033
Capital expenditures	Capital expenditures	$	413	$	287	$	1,035	$	955	Capital expenditures	$	457	$	333	$	772	$	622

See Notes to the Consolidated Financial Statements.

Table of Contents

The Dow Chemical Company and Subsidiaries

Consolidated Statements of Comprehensive Income


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 income										Net income	$	1,687	$	1,945	$	3,231	$	2,943
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Unrealized gains (losses) on investments	Unrealized gains (losses) on investments	(13)		8		(45)		(16)		Unrealized gains (losses) on investments	(153)		17		(249)		(32)
Cumulative translation adjustments	Cumulative translation adjustments	(157)		91		(345)		(9)		Cumulative translation adjustments	(514)		65		(678)		(188)
Pension and other postretirement benefit plans	Pension and other postretirement benefit plans	149		147		1,432		430		Pension and other postretirement benefit plans	122		149		231		1,283
Derivative instruments	Derivative instruments	32		38		148		(100)		Derivative instruments	137		6		469		116
Total other comprehensive income		11		284		1,190		305
Total other comprehensive income (loss)										Total other comprehensive income (loss)	(408)		237		(227)		1,179
Comprehensive income	Comprehensive income	1,713		283		5,835		345		Comprehensive income	1,279		2,182		3,004		4,122
Comprehensive income attributable to noncontrolling interests, net of tax	Comprehensive income attributable to noncontrolling interests, net of tax	23		24		69		51		Comprehensive income attributable to noncontrolling interests, net of tax	20		31		3		46
Comprehensive income attributable to The Dow Chemical Company	Comprehensive 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.

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
Assets	Assets					Assets
Current Assets	Current Assets					Current Assets
Cash and cash equivalents (variable interest entities restricted - 2021: $49; 2020: $26)		$	2,911	$	5,104
Cash and cash equivalents						Cash 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
Other	Other	2,566		2,553		Other	2,242		2,712
Inventories	Inventories	7,111		5,701		Inventories	8,225		7,372
Other current assets	Other current assets	927		801		Other current assets	1,425		924
Total current assets	Total current assets	20,359		18,998		Total current assets	21,733		20,837
Investments	Investments					Investments
Investment in nonconsolidated affiliates	Investment in nonconsolidated affiliates	1,910		1,327		Investment in nonconsolidated affiliates	1,862		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 receivables	Noncurrent receivables	436		426		Noncurrent receivables	527		452
Total investments	Total investments	5,399		4,528		Total investments	5,171		5,690
Property	Property					Property
Property	Property	56,522		56,325		Property	57,180		57,604
Less accumulated depreciation	Less accumulated depreciation	36,874		36,086		Less accumulated depreciation	37,020		37,049
Net property (variable interest entities restricted - 2021: $187; 2020: $232)		19,648		20,239
Net property						Net property	20,160		20,555
Other Assets	Other Assets					Other Assets
Goodwill	Goodwill	8,801		8,908		Goodwill	8,605		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 assets	Operating lease right-of-use assets	1,727		1,856		Operating lease right-of-use assets	1,272		1,412
Deferred income tax assets	Deferred income tax assets	1,357		2,215		Deferred income tax assets	1,118		1,358
Deferred charges and other assets	Deferred charges and other assets	1,425		1,249		Deferred charges and other assets	1,421		1,455
Total other assets	Total other assets	16,272		17,580		Total other assets	15,032		15,870
Total Assets	Total Assets	$	61,678	$	61,345	Total Assets	$	62,096	$	62,952
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current Liabilities	Current Liabilities					Current Liabilities
Notes payable	Notes payable	$	270	$	156	Notes payable	$	295	$	161
Long-term debt due within one year	Long-term debt due within one year	291		460		Long-term debt due within one year	361		231
Accounts payable:	Accounts payable:					Accounts payable:
Trade	Trade	4,601		3,763		Trade	5,692		5,577
Other	Other	2,896		2,126		Other	2,824		2,841
Operating lease liabilities - current	Operating lease liabilities - current	413		416		Operating lease liabilities - current	290		314
Income taxes payable	Income taxes payable	621		397		Income taxes payable	462		623

Accrued and other current liabilities	Accrued and other current liabilities	3,413		3,256		Accrued and other current liabilities	3,232		3,299
Total current liabilities	Total current liabilities	12,505		10,574		Total current liabilities	13,156		13,046
Long-Term Debt (variable interest entities nonrecourse - 2021: $4; 2020: $6)		14,027		16,491
Long-Term Debt						Long-Term Debt	13,065		14,280
Other Noncurrent Liabilities	Other Noncurrent Liabilities					Other Noncurrent Liabilities
Deferred income tax liabilities	Deferred income tax liabilities	501		405		Deferred income tax liabilities	752		506
Pension and other postretirement benefits - noncurrent	Pension and other postretirement benefits - noncurrent	8,586		11,648		Pension and other postretirement benefits - noncurrent	6,934		7,557
Asbestos-related liabilities - noncurrent	Asbestos-related liabilities - noncurrent	962		1,013		Asbestos-related liabilities - noncurrent	887		931
Operating lease liabilities - noncurrent	Operating lease liabilities - noncurrent	1,428		1,521		Operating lease liabilities - noncurrent	1,043		1,149
Other noncurrent obligations	Other noncurrent obligations	6,276		6,124		Other noncurrent obligations	6,505		6,454
Total other noncurrent liabilities	Total other noncurrent liabilities	17,753		20,711		Total other noncurrent liabilities	16,121		16,597
Stockholder's Equity	Stockholder's Equity					Stockholder'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 capital	Additional paid-in capital	7,996		7,603		Additional paid-in capital	8,375		8,159
Retained earnings	Retained earnings	18,497		16,300		Retained earnings	20,049		19,288
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(9,665)		(10,855)		Accumulated other comprehensive loss	(9,204)		(8,977)
Unearned ESOP shares	Unearned ESOP shares	(24)		(49)		Unearned ESOP shares	—		(15)

The Dow Chemical Company’s stockholder's equity	The Dow Chemical Company’s stockholder's equity	16,804		12,999		The Dow Chemical Company’s stockholder's equity	19,220		18,455
Noncontrolling interests	Noncontrolling interests	589		570		Noncontrolling interests	534		574
Total equity	Total equity	17,393		13,569		Total equity	19,754		19,029
Total Liabilities and Equity	Total Liabilities and Equity	$	61,678	$	61,345	Total Liabilities and Equity	$	62,096	$	62,952

See Notes to the Consolidated Financial Statements.

Table of Contents

The Dow Chemical Company and Subsidiaries

Consolidated Statements of Cash Flows


In millions (Unaudited)	In millions (Unaudited)	Nine Months Ended				In millions (Unaudited)	Six Months Ended
		Sep 30, 2021		Sep 30, 2020			Jun 30, 2022		Jun 30, 2021
Operating Activities	Operating Activities					Operating Activities
Net income	Net 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 amortization	Depreciation and amortization	2,187		2,148		Depreciation and amortization	1,436		1,462
Provision (credit) for deferred income tax		488		(198)
Provision for deferred income tax						Provision for deferred income tax	348		388
Earnings of nonconsolidated affiliates less than (in excess of) dividends received	Earnings of nonconsolidated affiliates less than (in excess of) dividends received	(519)		515		Earnings of nonconsolidated affiliates less than (in excess of) dividends received	289		(283)
Net periodic pension benefit cost	Net periodic pension benefit cost	34		195		Net periodic pension benefit cost	14		29
Pension contributions	Pension 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 investments						Net (gain) loss on sales of assets, businesses and investments	6		(50)
Restructuring and asset related charges - net	Restructuring and asset related charges - net	22		719		Restructuring and asset related charges - net	186		22
Other net loss	Other net loss	878		291		Other net loss	97		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 receivable	Accounts and notes receivable	(2,222)		339		Accounts and notes receivable	(767)		(1,903)
Inventories	Inventories	(1,502)		587		Inventories	(908)		(1,278)
Accounts payable	Accounts payable	1,487		(560)		Accounts payable	69		1,357
Other assets and liabilities, net	Other assets and liabilities, net	369		999		Other assets and liabilities, net	(419)		110
Cash provided by operating activities	Cash provided by operating activities	4,634		4,604		Cash provided by operating activities	3,493		1,912
Investing Activities	Investing Activities					Investing Activities
Capital expenditures	Capital expenditures	(1,035)		(955)		Capital expenditures	(772)		(622)
Investment in gas field developments	Investment in gas field developments	(44)		(5)		Investment in gas field developments	(80)		(24)
Purchases of previously leased assets	Purchases of previously leased assets	(5)		(4)		Purchases of previously leased assets	(3)		(3)
Proceeds from sales of property and businesses, net of cash divested	Proceeds from sales of property and businesses, net of cash divested	15		295		Proceeds from sales of property and businesses, net of cash divested	5		10
Acquisitions of property and businesses, net of cash acquired	Acquisitions 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 affiliates	Investments in and loans to nonconsolidated affiliates	—		(280)		Investments in and loans to nonconsolidated affiliates	(33)		—
Distributions and loan repayments from nonconsolidated affiliates	Distributions and loan repayments from nonconsolidated affiliates	11		7		Distributions and loan repayments from nonconsolidated affiliates	10		11
Proceeds from sales of ownership interests in nonconsolidated affiliates						Proceeds from sales of ownership interests in nonconsolidated affiliates	11		—
Purchases of investments	Purchases of investments	(1,004)		(582)		Purchases of investments	(278)		(560)
Proceeds from sales and maturities of investments	Proceeds from sales and maturities of investments	644		1,009		Proceeds from sales and maturities of investments	418		527
Other investing activities, net	Other investing activities, net	(10)		29		Other investing activities, net	(41)		—
Cash used for investing activities	Cash used for investing activities	(1,535)		(616)		Cash used for investing activities	(763)		(768)
Financing Activities	Financing Activities					Financing Activities
Changes in short-term notes payable	Changes in short-term notes payable	(44)		(267)		Changes in short-term notes payable	180		(38)
Proceeds from issuance of short-term debt greater than three months	Proceeds from issuance of short-term debt greater than three months	144		163		Proceeds from issuance of short-term debt greater than three months	—		72
Payments on short-term debt greater than three months	Payments 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 debt	Proceeds from issuance of long-term debt	95		4,649		Proceeds from issuance of long-term debt	49		68
Payments on long-term debt	Payments on long-term debt	(2,638)		(4,347)		Payments on long-term debt	(927)		(1,425)

Proceeds from issuance of stock	Proceeds from issuance of stock	212		53		Proceeds from issuance of stock	97		200
Transaction financing, debt issuance and other costs	Transaction financing, debt issuance and other costs	(536)		(175)		Transaction financing, debt issuance and other costs	(7)		(95)
Employee taxes paid for share-based payment arrangements	Employee taxes paid for share-based payment arrangements	(11)		(26)		Employee taxes paid for share-based payment arrangements	(34)		(11)
Distributions to noncontrolling interests	Distributions 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 activities	Cash 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 cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(57)		4		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(162)		(12)

Summary	Summary					Summary
Increase (decrease) in cash, cash equivalents and restricted cash		(2,132)		2,175
Decrease in cash, cash equivalents and restricted cash						Decrease in cash, cash equivalents and restricted cash	(564)		(1,567)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	5,108		2,380		Cash, cash equivalents and restricted cash at beginning of period	3,033		5,108
Cash, cash equivalents and restricted cash at end of period	Cash, 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		6		Less: Restricted cash and cash equivalents, included in "Other current assets"	102		50
Cash and cash equivalents at end of period	Cash 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.

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The Dow Chemical Company and Subsidiaries

Consolidated Statements of Equity


		Three Months Ended				Nine Months Ended					Three Months Ended				Six 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 Stock	Common Stock									Common Stock
Balance at beginning and end of period	Balance at beginning and end of period	$	—	$	—	$	—	$	—	Balance at beginning and end of period	$	—	$	—	$	—	$	—
Additional Paid-in Capital	Additional Paid-in Capital									Additional Paid-in Capital
Balance at beginning of period	Balance at beginning of period	7,906		7,439		7,603		7,333		Balance at beginning of period	8,229		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 shares	Stock-based compensation and allocation of ESOP shares	79		43		182		119		Stock-based compensation and allocation of ESOP shares	84		82		119		103

Balance at end of period	Balance at end of period	7,996		7,505		7,996		7,505		Balance at end of period	8,375		7,906		8,375		7,906
Retained Earnings	Retained Earnings									Retained Earnings
Balance at beginning of period	Balance at beginning of period	17,745		16,147		16,300		17,313		Balance at beginning of period	19,721		16,577		19,288		16,300
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 stockholder										Net income available for The Dow Chemical Company common stockholder	1,667		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)

Other	Other	(8)		(3)		(18)		(11)		Other	(6)		(7)		(13)		(10)
Balance at end of period	Balance at end of period	18,497		15,606		18,497		15,606		Balance at end of period	20,049		17,745		20,049		17,745
Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss									Accumulated Other Comprehensive Loss
Balance at beginning of period	Balance 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 income		11		284		1,190		305

Other comprehensive income (loss)										Other comprehensive income (loss)	(408)		237		(227)		1,179
Balance at end of period	Balance 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 Shares	Unearned ESOP Shares									Unearned ESOP Shares
Balance at beginning of period	Balance at beginning of period	(32)		(69)		(49)		(91)		Balance at beginning of period	—		(39)		(15)		(49)

Allocation of ESOP shares	Allocation of ESOP shares	8		12		25		34		Allocation of ESOP shares	—		7		15		17
Balance at end of period	Balance at end of period	(24)		(57)		(24)		(57)		Balance at end of period	—		(32)		—		(32)

The Dow Chemical Company's stockholder's equity	The Dow Chemical Company's stockholder's equity	16,804		13,113		16,804		13,113		The Dow Chemical Company's stockholder's equity	19,220		15,943		19,220		15,943
Noncontrolling Interests	Noncontrolling Interests	589		578		589		578		Noncontrolling Interests	534		580		534		580
Total Equity	Total 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.

Table of Contents


Dow Inc. and Subsidiaries The Dow Chemical Company and Subsidiaries (Unaudited)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents


Note	Note		Page	Note		Page
1	1	Consolidated Financial Statements	15	1	Consolidated Financial Statements	15
2	2	Recent Accounting Guidance	16	2	Separation from DowDuPont	16
3	3	Separation from DowDuPont	16	3	Revenue	16
4	4	Revenue	16	4	Restructuring and Asset Related Charges - Net	18
5	5	Restructuring and Asset Related Charges - Net	18	5	Supplementary Information	19
6	6	Supplementary Information	20	6	Earnings Per Share Calculations	20
7	7	Earnings Per Share Calculations	21	7	Inventories	20
8	8	Inventories	21	8	Nonconsolidated Affiliates	21
9	9	Nonconsolidated Affiliates	22	9	Goodwill and Other Intangible Assets	22
10	10	Goodwill and Other Intangible Assets	23	10	Transfers of Financial Assets	23
11	11	Notes Payable, Long-Term Debt and Available Credit Facilities	24	11	Notes Payable, Long-Term Debt and Available Credit Facilities	23
12	12	Commitments and Contingent Liabilities	26	12	Commitments and Contingencies	25
13	13	Leases	29	13	Leases	27
14	14	Accumulated Other Comprehensive Loss	32	14	Stockholders' Equity	29
15	15	Noncontrolling Interests	33	15	Noncontrolling Interests	31
16	16	Pension and Other Postretirement Benefit Plans	33	16	Pension and Other Postretirement Benefit Plans	32
17	17	Stock-Based Compensation	34	17	Stock-Based Compensation	33
18	18	Financial Instruments	35	18	Financial Instruments	34
19	19	Fair Value Measurements	41	19	Fair Value Measurements	40
20	20	Variable Interest Entities	42	20	Variable Interest Entities	41
21	21	Related Party Transactions	43	21	Related Party Transactions	42
22	22	Segments and Geographic Regions	43	22	Segments and Geographic Regions	42

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, ~~2020~~2021 ("~~2020~~2021 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 Agreements~~Dow's separation from DowDuPont were primarily included in the consolidated financial statements of Dow Inc. At ~~September~~June 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~~$123 million ($~~412~~148 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 ~~September~~June 30, ~~2021, $61~~2022, $10 million ($~~103~~15 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's~~the Company's revenue is derived from product sales. ~~Dow's~~The Company's revenue related to product sales was 99 percent for the three and six months ended ~~September~~June 30, ~~2021 and 98 percent for the nine months ended September 30, 2021~~2022 ~~(99~~(98 percent for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020), with the~~2021). The remaining ~~balance~~sales were primarily related to the Company's insurance operations and licensing of patents and technologies. Product sales consist of sales of ~~Dow's~~the Company's products to manufacturers and ~~distributors and~~distributors. The Company considers order confirmations or purchase orders, which in some cases are governed by master supply agreements, to be contracts with a customer. ~~Dow~~The Company enters into licensing arrangements in which it licenses certain rights of its patents and technology to customers. Revenue from ~~Dow’s~~the Company’s licenses for patents and technology is derived from sales-based royalties and licensing arrangements based on billing schedules established in each contract.

~~Table of Contents~~

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations. At ~~September~~June 30, ~~2021, Dow~~2022, the Company had unfulfilled performance obligations of ~~$831~~$911 million ($~~977~~829 million at December 31, ~~2020)~~2021) related to the licensing of technology. ~~Dow~~The Company expects revenue to be recognized for the remaining performance obligations over the next ~~six~~five years.

The remaining performance obligations are for product sales that have expected durations of one year or less, product sales of materials delivered through a pipeline for which ~~Dow~~the Company has elected the right to invoice practical expedient, or variable consideration attributable to royalties for licenses of patents and technology. ~~Dow~~The 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. ~~Dow~~The 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.

Table of Contents

Disaggregation of Revenue

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


Net Trade Sales by Geographic Region	Net Trade Sales by Geographic Region	Three Months Ended				Nine Months Ended				Net Trade Sales by Geographic Region	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
U.S. & Canada	U.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 Pacific	Asia Pacific	2,579		2,073		7,423		5,850		Asia Pacific	2,673		2,479		5,426		4,844
Latin America	Latin America	1,553		976		4,090		2,707		Latin America	1,607		1,377		3,069		2,537
Total	Total	$	14,837	$	9,712	$	40,604	$	27,836	Total	$	15,664	$	13,885	$	30,928	$	25,767

1.Europe, Middle East, Africa and India.

~~Table of Contents~~

Contract Assets and Liabilities

~~Dow~~The 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's~~the 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 ~~Dow~~the 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 ~~nine~~six months of ~~2021~~2022 from amounts included in contract liabilities at the beginning of the period was approximately ~~$250~~$105 million (approximately ~~$110~~$180 million in the first ~~nine~~six months of ~~2020)~~2021). In the first ~~nine~~six 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.

Table of Contents

The following table summarizes ~~the~~ contract assets and liabilities at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


Contract Assets and Liabilities	Contract Assets and Liabilities	Balance Sheet Classification	Sep 30, 2021		Dec 31, 2020		Contract Assets and Liabilities	Balance Sheet Classification	Jun 30, 2022		Dec 31, 2021
In millions	In millions						In millions
Accounts and notes receivable - trade	Accounts and notes receivable - trade		$	6,844	$	4,839	Accounts and notes receivable - trade		$	7,474	$	6,841
Contract assets - current	Contract assets - current	Other current assets	$	52	$	58	Contract assets - current	Other current assets	$	36	$	34
Contract assets - noncurrent	Contract assets - noncurrent	Deferred charges and other assets	$	39	$	11	Contract assets - noncurrent	Deferred charges and other assets	$	25	$	26
Contract liabilities - current 1		Accrued and other current liabilities	$	207	$	349
Contract liabilities - noncurrent		Other noncurrent obligations	$	1,910	$	1,915
Contract liabilities - current							Contract liabilities - current	Accrued 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, ~~2020~~2021 to ~~September~~June 30, ~~2021~~2022 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 ~~2020~~2021 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 for~~with 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 Program	Severance and Related Benefit Costs		Asset Write-downs and Write-offs		Costs Associated with Exit and Disposal Activities		Total
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	$	—	$	—	$	8	$	8
Industrial Intermediates & Infrastructure	—		1		—		1
Performance Materials & Coatings	—		8		2		10
Corporate	—		3		—		3
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

Table of Contents

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

2020 Restructuring Program Severance and Related Benefit Costs Asset Write-downs and Write-offs Costs Associated with Exit and Disposal Activities Total
In millions
Packaging & Specialty Plastics $ — $ 11 $ — $ 11
Industrial Intermediates & Infrastructure — 22 — 22
Performance Materials & Coatings — 117 57 174
Corporate 297 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) $ 4 $ 3
Corporate — — (5) (5)
Total restructuring charges $ — $ (1) $ (1) $ (2)
Charges against the reserve — 1 (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 $ — $ — $ 8 $ 8
Industrial Intermediates & Infrastructure — 1 — 1
Performance Materials & Coatings — 8 2 10
Corporate — 3 — 3
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 ~~September~~June 30, ~~2021, $147~~2022, $44 million of the reserve balance was included in "Accrued and other current liabilities" ($~~227~~112 million at December 31, ~~2020)~~2021) and ~~$65~~$54 million was included in "Other noncurrent obligations" ($~~137~~56 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.

~~Table of Contents~~

NOTE 65 – SUPPLEMENTARY INFORMATION


Dow Inc. Sundry Income (Expense) – Net	Dow Inc. Sundry Income (Expense) – Net	Three Months Ended				Nine Months Ended				Dow Inc. Sundry Income (Expense) – Net	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 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 losses	Foreign 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 investments	Gains on sales of other assets and investments	12		2		74		7		Gains on sales of other assets and investments	12		14		43		62
Indemnification and other transaction related costs 5		—		—		(5)		—
Gain related to Nova ethylene asset matter 6		—		—		—		6
Dow Silicones breast implant liability adjustment 6		—		—		—		5
Indemnification and other transaction related costs 3										Indemnification and other transaction related costs 3	(8)		(5)		4		(5)

Luxi arbitration award 6		54		—		54		—
Other - net	Other - net	(25)		21		—		26		Other - net	7		12		21		25
Total sundry income (expense) – net	Total 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 12~~2 for additional information.


TDCC Sundry Income (Expense) – Net	TDCC Sundry Income (Expense) – Net	Three Months Ended				Nine Months Ended				TDCC Sundry Income (Expense) – Net	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 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 losses	Foreign 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 investments	Gains on sales of other assets and investments	12		2		74		7		Gains on sales of other assets and investments	12		14		43		62
Gain related to Nova ethylene asset matter 5		—		—		—		6
Dow Silicones breast implant liability adjustment 5		—		—		—		5

Luxi arbitration award 5		54		—		54		—
Other - net	Other - net	(28)		18		(8)		25		Other - net	7		12		21		20
Total sundry income (expense) – net	Total sundry income (expense) – net	$	(356)	$	181	$	(231)	$	150	Total sundry income (expense) – net	$	78	$	6	$	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.

2019

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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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 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 Calculations		Three Months Ended				Nine Months Ended
Net Income for Earnings Per Share Calculations										Net Income for Earnings Per Share Calculations	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
																			In millions	Jun 30, 2022	Jun 30, 2021	Jun 30, 2022	Jun 30, 2021
Net income (loss)		$	1,706	$	(1)	$	4,644	$	40
Net income										Net income	$	1,681	$	1,932	$	3,233	$	2,938
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	23		24		69		51		Net income attributable to noncontrolling interests	20		31		3		46
Net income attributable to participating securities 1	Net income attributable to participating securities 1	8		3		23		7		Net income attributable to participating securities 1	9		10		17		15
Net income (loss) attributable to common stockholders		$	1,675	$	(28)	$	4,552	$	(18)
Net income attributable to common stockholders										Net income attributable to common stockholders	$	1,652	$	1,891	$	3,213	$	2,877

Earnings (Loss) Per Share - Basic and Diluted Three Months Ended Nine Months Ended
Dollars per share Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 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 Diluted	Three Months Ended				Six Months Ended
Dollars per share	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Dollars per share	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 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 Information	Share Count Information	Three Months Ended		Nine Months Ended		Share Count Information	Three Months Ended		Six Months Ended
Shares in millions	Shares in millions	Sep 30, 2021	Sep 30, 2020	Sep 30, 2021	Sep 30, 2020	Shares in millions	Jun 30, 2022	Jun 30, 2021	Jun 30, 2022	Jun 30, 2021
											Shares in millions	Jun 30, 2022	Jun 30, 2021	Jun 30, 2022	Jun 30, 2021
Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic	744.5	740.5	745.4	740.0	Weighted-average common shares outstanding - basic	725.7	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 plans						Plus dilutive effect of equity compensation plans	5.8	5.9	5.4	5.5
Weighted-average common shares outstanding - diluted						Weighted-average common shares outstanding - diluted	731.5	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:


Inventories	Inventories	Sep 30, 2021		Dec 31, 2020		Inventories	Jun 30, 2022		Dec 31, 2021
In millions	In millions					In millions
Finished goods	Finished goods	$	4,233	$	3,140	Finished goods	$	5,174	$	4,554
Work in process	Work in process	1,561		996		Work in process	1,994		1,615
Raw materials	Raw materials	867		598		Raw materials	1,024		822
Supplies	Supplies	875		933		Supplies	871		866
Total	Total	$	7,536	$	5,667	Total	$	9,063	$	7,857
Adjustment of inventories to a LIFO basis	Adjustment of inventories to a LIFO basis	(425)		34		Adjustment of inventories to a LIFO basis	(838)		(485)
Total inventories	Total inventories	$	7,111	$	5,701	Total inventories	$	8,225	$	7,372

2120

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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 ~~2020~~2021 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 Affiliates	Investments in Nonconsolidated Affiliates	Sep 30, 2021		Dec 31, 2020		Investments in Nonconsolidated Affiliates	Jun 30, 2022		Dec 31, 2021
In millions	In millions					In millions
Investment in nonconsolidated affiliates	Investment in nonconsolidated affiliates	$	1,910	$	1,327	Investment in nonconsolidated affiliates	$	1,862	$	2,045
Other noncurrent obligations	Other noncurrent obligations	—		(169)		Other noncurrent obligations	(103)		—
Net investment in nonconsolidated affiliates	Net investment in nonconsolidated affiliates	$	1,910	$	1,158	Net investment in nonconsolidated affiliates	$	1,759	$	2,045

Dividends Received from Nonconsolidated Affiliates Nine Months Ended
In millions Sep 30, 2021 Sep 30, 2020
Dividends from nonconsolidated affiliates 1
$ 232 $ 391


Dividends from Nonconsolidated Affiliates	Six 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 September~~In 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.

2221

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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:


Goodwill	Goodwill	Packaging & Specialty Plastics		Industrial Intermediates & Infrastructure		Performance Materials & Coatings		Total		Goodwill	Packaging & Specialty Plastics		Industrial Intermediates & Infrastructure		Performance Materials & Coatings		Total
In millions	In millions									In millions
Net goodwill at Dec 31, 2020		$	5,115	$	1,100	$	2,693	$	8,908
Net goodwill at Dec 31, 2021										Net goodwill at Dec 31, 2021	$	5,105	$	1,096	$	2,563	$	8,764

Foreign currency impact	Foreign 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, 2022										Net 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 Assets	Other Intangible Assets	Sep 30, 2021						Dec 31, 2020						Other Intangible Assets	Jun 30, 2022						Dec 31, 2021
In millions	In millions	Gross Carrying Amount		Accum Amort		Net		Gross Carrying Amount		Accum Amort		Net		In millions	Gross Carrying Amount		Accum Amort		Net		Gross Carrying Amount		Accum Amort		Net
Intangible assets with finite lives:	Intangible assets with finite lives:													Intangible assets with finite lives:
Developed technology	Developed technology	$	2,637	$	(1,833)	$	804	$	2,638	$	(1,677)	$	961	Developed technology	$	2,633	$	(1,947)	$	686	$	2,637	$	(1,871)	$	766
Software	Software	1,494		(1,042)		452		1,489		(989)		500		Software	1,368		(950)		418		1,396		(945)		451
Trademarks/tradenames	Trademarks/tradenames	352		(344)		8		352		(343)		9		Trademarks/tradenames	352		(345)		7		352		(344)		8
Customer-related	Customer-related	3,226		(1,528)		1,698		3,301		(1,419)		1,882		Customer-related	3,079		(1,591)		1,488		3,204		(1,565)		1,639

Total other intangible assets, finite lives														Total other intangible assets, finite lives	$	7,432	$	(4,833)	$	2,599	$	7,589	$	(4,725)	$	2,864
In-process research and development														In-process research and development	17		—		17		17		—		17
Total other intangible assets	Total 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 Expense	Amortization Expense	Three Months Ended				Nine Months Ended				Amortization Expense	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Other intangible assets, excluding software	Other 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 ~~2021~~2022 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

2322

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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 Payable	Notes Payable	Sep 30, 2021			Dec 31, 2020			Notes Payable	Jun 30, 2022			Dec 31, 2021
In millions	In millions							In millions

Commercial paper								Commercial paper	$	200		$	—
Notes payable to banks and other lenders	Notes payable to banks and other lenders	$	270		$	156		Notes payable to banks and other lenders	95			161

Total notes payable								Total notes payable	$	295		$	161
Period-end average interest rates	Period-end average interest rates	6.38		%	3.89		%	Period-end average interest rates	4.59		%	5.78		%


Long-Term Debt	Long-Term Debt	2021 Average Rate		Sep 30, 2021		2020 Average Rate		Dec 31, 2020		Long-Term Debt	2022 Average Rate		Jun 30, 2022		2021 Average Rate		Dec 31, 2021
In millions
Promissory notes and debentures:	Promissory notes and debentures:										Promissory notes and debentures:
Final maturity 2021		—	%	$	—	8.95	%	$	173
Final maturity 2022	Final maturity 2022	8.64	%	121		8.64	%	121		Final maturity 2022	—	%	$	—	8.64	%	$	121
Final maturity 2023	Final maturity 2023	7.63	%	250		7.63	%	250		Final maturity 2023	7.63	%	250		7.63	%	250
Final maturity 2024		—	%	—		3.43	%	1,017

Final maturity 2025	Final maturity 2025	5.63	%	333		5.13	%	625		Final maturity 2025	5.63	%	333		5.63	%	333
Final maturity 2026	Final maturity 2026	3.63	%	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 maturities	Foreign currency notes and loans, various rates and maturities	1.22	%	2,889		1.41	%	3,189		Foreign currency notes and loans, various rates and maturities	1.16	%	2,492		1.17	%	2,730
InterNotes®, varying maturities through 2051		3.40	%	382		3.56	%	535
InterNotes®, varying maturities through 2052										InterNotes®, varying maturities through 2052	3.44	%	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 costs	Unamortized 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 debt	Long-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 ~~September~~June 30, ~~2021 ($69 million at~~2022 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, 2022				Maturities of Long-Term Debt for Next Five Years at Jun 30, 2022
In millions
2021		$	122
2022	2022	$	191	2022	$	58
2023	2023	$	345	2023	$	388
2024	2024	$	41	2024	$	81
2025	2025	$	364	2025	$	386
2026	2026	$	801	2026	$	78
2027				2027	$	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 ~~(related~~and 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 ~~nine~~six 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 ~~September~~June 30, ~~2020~~2021 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 ~~(related~~and related to ~~Corporate) and included in "Other net loss" in the consolidated statements of cash flows.~~

~~Additionally, in the first nine months of 2020, the~~Corporate. 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 millions Committed Credit Available Credit Maturity Date Interest
Five Year Competitive Advance and Revolving Credit Facility $ 5,000 $ 5,000 October 2024 Floating rate
Bilateral Revolving Credit Facility 300 300 December 2021 Floating rate
Bilateral Revolving Credit Facility 300 300 December 2021 Floating rate
Bilateral Revolving Credit Facility 150 150 March 2022 Floating rate
Bilateral Revolving Credit Facility 100 100 June 2022 Floating rate
Bilateral Revolving Credit Facility 200 200 September 2022 Floating rate
Bilateral Revolving Credit Facility 1
200 200 November 2022 Floating rate
Bilateral Revolving Credit Facility 200 200 September 2023 Floating rate
Bilateral Revolving Credit Facility 250 250 September 2023 Floating rate
Bilateral Revolving Credit Facility 300 300 September 2023 Floating rate
Bilateral Revolving Credit Facility 100 100 October 2024 Floating rate
Bilateral Revolving Credit Facility 100 100 October 2024 Floating rate
Bilateral Revolving Credit Facility 200 200 November 2024 Floating rate
Bilateral Revolving Credit Facility 100 100 March 2025 Floating rate
Bilateral Revolving Credit Facility 250 250 March 2025 Floating rate
Bilateral Revolving Credit Facility 350 350 March 2025 Floating 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 millions	Committed Credit		Available Credit		Maturity Date	Interest
Five Year Competitive Advance and Revolving Credit Facility	$	5,000	$	5,000	November 2026	Floating rate
Bilateral Revolving Credit Facility	200		200		September 2022	Floating rate
Bilateral Revolving Credit Facility	200		200		November 2022	Floating rate
Bilateral Revolving Credit Facility	200		200		September 2023	Floating rate
Bilateral Revolving Credit Facility	250		250		September 2023	Floating rate
Bilateral Revolving Credit Facility	300		300		September 2023	Floating rate
Bilateral Revolving Credit Facility	300		300		December 2023	Floating rate
Bilateral Revolving Credit Facility	300		300		December 2023	Floating rate
Bilateral Revolving Credit Facility	100		100		October 2024	Floating rate
Bilateral Revolving Credit Facility	200		200		November 2024	Floating rate
Bilateral Revolving Credit Facility	100		100		March 2025	Floating rate
Bilateral Revolving Credit Facility	250		250		March 2025	Floating rate
Bilateral Revolving Credit Facility	100		100		March 2025	Floating rate
Bilateral Revolving Credit Facility	100		100		March 2025	Floating rate
Bilateral Revolving Credit Facility	100		100		March 2026	Floating rate
Bilateral Revolving Credit Facility	100		100		October 2026	Floating rate
Bilateral Revolving Credit Facility	150		150		November 2026	Floating rate
Bilateral Revolving Credit Facility	100		100		May 2027	Floating rate
Bilateral Revolving Credit Facility	350		350		June 2027	Floating 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 ~~nine~~six 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 ~~2020~~2021 10-K.

NOTE 12 – COMMITMENTS AND ~~CONTINGENT LIABILITIES~~CONTINGENCIES

A summary of the Company's commitments and ~~contingent liabilities~~contingencies can be found in Note 16 to the Consolidated Financial Statements included in the ~~2020~~2021 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 ~~September~~June 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 half~~two 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 ~~2021~~2022 activity, it was determined that no adjustment to the accrual was required at ~~September~~June 30, ~~2021.~~2022.

Union Carbide’s total asbestos-related liability for pending and future claims and defense and processing costs was ~~$1,047~~$977 million at ~~September~~June 30, ~~2021~~2022 ($~~1,098~~1,016 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 ~~September~~June 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 ~~September~~June 30, ~~2021,~~2022, Dow Silicones and its insurers ~~had~~have 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 ~~September~~June 30, ~~2021,~~2022, Dow Silicones estimates that it will be obligated to contribute an additional ~~$160~~$106 million to the Settlement Facility which was included in “Accrued and other current liabilities” in the consolidated balance sheets ($~~160~~130 million at December 31, ~~2020), of~~2021, 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~~$96 million at ~~September~~June 30, ~~2021~~2022 ($~~115~~95 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 early~~At 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 ~~September~~June 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 gain~~second quarter of ~~$61 million~~2021 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 was~~gains were recorded in “Cost of sales” in the consolidated statements of income. At ~~September~~June 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:


Guarantees	Guarantees	Sep 30, 2021					Dec 31, 2020					Guarantees	Jun 30, 2022					Dec 31, 2021
In millions	In millions	Final Expiration	Maximum Future Payments 1		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability		In millions	Final Expiration	Maximum Future Payments 1		Recorded Liability		Final Expiration	Maximum Future Payments 1		Recorded Liability
Guarantees	Guarantees	2038	$	1,312	$	225	2023	$	251	$	2	Guarantees	2038	$	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 ~~September~~June 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 17~~16 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's~~its 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 ~~will~~would 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 ~~2020~~2021 10-K.

The components of lease cost for operating and finance leases for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


Lease Cost	Lease Cost	Three Months Ended				Nine Months Ended				Lease Cost	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Operating lease cost	Operating lease cost	$	123	$	122	$	362	$	362	Operating lease cost	$	99	$	118	$	196	$	239
Finance lease cost	Finance lease cost									Finance lease cost
Amortization of right-of-use assets - finance	Amortization 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 - finance	Interest on lease liabilities - finance	6		7		19		19		Interest on lease liabilities - finance	9		6		17		13
Total finance lease cost	Total finance lease cost	$	25	$	23	$	72	$	61	Total finance lease cost	$	35	$	25	$	69	$	47
Short-term lease cost	Short-term lease cost	57		54		177		161		Short-term lease cost	66		71		125		120
Variable lease cost	Variable lease cost	78		45		228		157		Variable lease cost	133		79		248		150
Sublease income	Sublease income	(2)		(2)		(5)		(4)		Sublease income	(3)		(1)		(6)		(3)
Total lease cost	Total 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 Information	Other Lease Information	Nine Months Ended				Other Lease Information	Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 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 leases	Operating cash flows for operating leases	$	364	$	357	Operating cash flows for operating leases	$	196	$	245
Operating cash flows for finance leases	Operating cash flows for finance leases	$	19	$	19	Operating cash flows for finance leases	$	17	$	13
Financing cash flows for finance leases	Financing 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 leases	Operating leases	$	133	$	68	Operating leases	$	37	$	57
Finance leases	Finance leases	$	73	$	142	Finance leases	$	27	$	72

~~Table of Contents~~

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


Lease Position	Lease Position	Balance Sheet Classification	Sep 30, 2021		Dec 31, 2020		Lease Position	Balance Sheet Classification	Jun 30, 2022		Dec 31, 2021
In millions	In millions						In millions
Assets	Assets						Assets
Operating lease assets	Operating lease assets	Operating lease right-of-use assets	$	1,727	$	1,856	Operating lease assets	Operating lease right-of-use assets	$	1,272	$	1,412
Finance lease assets	Finance lease assets	Property	726		665		Finance lease assets	Property	1,145		1,158
Finance lease amortization	Finance lease amortization	Accumulated depreciation	(263)		(216)		Finance lease amortization	Accumulated depreciation	(395)		(368)
Total lease assets	Total lease assets		$	2,190	$	2,305	Total lease assets		$	2,022	$	2,202
Liabilities	Liabilities						Liabilities
Current	Current						Current
Operating	Operating	Operating lease liabilities - current	$	413	$	416	Operating	Operating lease liabilities - current	$	290	$	314
Finance	Finance	Long-term debt due within one year	68		54		Finance	Long-term debt due within one year	107		106
Noncurrent	Noncurrent						Noncurrent
Operating	Operating	Operating lease liabilities - noncurrent	1,428		1,521		Operating	Operating lease liabilities - noncurrent	1,043		1,149
Finance	Finance	Long-Term Debt	474		464		Finance	Long-Term Debt	719		763
Total lease liabilities	Total 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are provided below:

Lease Term and Discount Rate Sep 30, 2021 Dec 31, 2020
Weighted-average remaining lease term
Operating leases 7.2 years 7.6 years
Finance leases 10.3 years 11.6 years
Weighted-average discount rate
Operating leases 3.63 % 3.84 %
Finance leases 5.04 % 5.41 %


Lease Term and Discount Rate	Jun 30, 2022		Dec 31, 2021
Weighted-average remaining lease term
Operating leases	7.8 years		7.9 years
Finance leases	11.4 years		11.8 years
Weighted-average discount rate
Operating leases	4.04	%	3.72	%
Finance leases	4.19	%	4.17	%

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The following table provides the maturities of lease liabilities at ~~September~~June 30, ~~2021:~~2022:


Maturities of Lease Liabilities	Maturities of Lease Liabilities	Sep 30, 2021				Maturities of Lease Liabilities	Jun 30, 2022
In millions	In millions	Operating Leases		Finance Leases		In millions	Operating Leases		Finance Leases
2021		$	140	$	29
2022	2022	434		89		2022	$	179	$	71
2023	2023	351		113		2023	289		164
2024	2024	273		58		2024	225		106
2025	2025	201		47		2025	183		76
2026 and thereafter		744		375
2026						2026	148		69
2027 and thereafter						2027 and thereafter	567		551
Total future undiscounted lease payments	Total future undiscounted lease payments	$	2,143	$	711	Total future undiscounted lease payments	$	1,591	$	1,037
Less: Imputed interest	Less: Imputed interest	302		169		Less: Imputed interest	258		211
Total present value of lease liabilities	Total present value of lease liabilities	$	1,841	$	542	Total present value of lease liabilities	$	1,333	$	826

At ~~September~~June 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 ~~2021~~2022 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 ~~September~~June 30, ~~2021~~2022 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 Guarantees	Lease Guarantees	Sep 30, 2021					Dec 31, 2020					Lease Guarantees	Jun 30, 2022					Dec 31, 2021
In millions	In millions	Final Expiration	Maximum Future Payments		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability		In millions	Final Expiration	Maximum Future Payments		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability
Residual value guarantees	Residual value guarantees	2031	$	805	$	56	2030	$	818	$	22	Residual value guarantees	2031	$	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 LOSS~~Accumulated Other Comprehensive Loss

The changes in each component of accumulated other comprehensive loss ("AOCL") for the three and ~~nine~~ sixmonths ended ~~September~~June 30, ~~2021~~ 2022and ~~2020~~2021 were as follows:


Accumulated Other Comprehensive Loss	Accumulated Other Comprehensive Loss	Three Months Ended				Nine Months Ended				Accumulated Other Comprehensive Loss	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Unrealized Gains (Losses) on Investments	Unrealized Gains (Losses) on Investments									Unrealized Gains (Losses) on Investments
Beginning balance	Beginning balance	$	72	$	40	$	104	$	64	Beginning balance	$	(37)	$	55	$	59	$	104
Unrealized gains (losses) on investments	Unrealized gains (losses) on investments	(10)		35		(25)		39		Unrealized gains (losses) on investments	(203)		39		(324)		(15)
Tax (expense) benefit	Tax (expense) benefit	3		(8)		5		(10)		Tax (expense) benefit	43		(9)		67		2
Net unrealized gains (losses) on investments	Net 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	9		(17)		10		(25)
Tax expense (benefit) 2	Tax expense (benefit) 2	2		6		8		14		Tax expense (benefit) 2	(2)		4		(2)		6
Net (gains) losses reclassified from AOCL to net income	Net (gains) losses reclassified from AOCL to net income	(6)		(19)		(25)		(45)		Net (gains) losses reclassified from AOCL to net income	7		(13)		8		(19)
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	(13)		8		(45)		(16)		Other comprehensive income (loss), net of tax	(153)		17		(249)		(32)
Ending balance	Ending balance	$	59	$	48	$	59	$	48	Ending balance	$	(190)	$	72	$	(190)	$	72
Cumulative Translation Adjustment	Cumulative Translation Adjustment									Cumulative Translation Adjustment
Beginning balance	Beginning balance	$	(1,118)	$	(1,235)	$	(930)	$	(1,135)	Beginning balance	$	(1,519)	$	(1,183)	$	(1,355)	$	(930)
Gains (losses) on foreign currency translation	Gains (losses) on foreign currency translation	(148)		116		(298)		18		Gains (losses) on foreign currency translation	(500)		67		(665)		(150)
Tax (expense) benefit	Tax (expense) benefit	(8)		4		(43)		18		Tax (expense) benefit	(3)		1		10		(35)
Net gains (losses) on foreign currency translation	Net 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 tax	Other comprehensive income (loss), net of tax	(157)		91		(345)		(9)		Other comprehensive income (loss), net of tax	(514)		65		(678)		(188)
Ending balance	Ending balance	$	(1,275)	$	(1,144)	$	(1,275)	$	(1,144)	Ending balance	$	(2,033)	$	(1,118)	$	(2,033)	$	(1,118)
Pension and Other Postretirement Benefits	Pension and Other Postretirement Benefits									Pension and Other Postretirement Benefits
Beginning balance	Beginning 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	2		2		1,270		2		Gains (losses) arising during the period 4	3		—		5		1,268
Tax (expense) benefit	Tax (expense) benefit	—		—		(298)		—		Tax (expense) benefit	—		—		—		(298)
Net gains (losses) arising during the period	Net gains (losses) arising during the period	2		2		972		2		Net gains (losses) arising during the period	3		—		5		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 income	Net loss and prior service credits reclassified from AOCL to net income	147		145		460		428		Net loss and prior service credits reclassified from AOCL to net income	119		149		226		313
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	149		147		1,432		430		Other comprehensive income (loss), net of tax	122		149		231		1,283
Ending balance	Ending balance	$	(8,127)	$	(8,351)	$	(8,127)	$	(8,351)	Ending balance	$	(7,103)	$	(8,276)	$	(7,103)	$	(8,276)
Derivative Instruments	Derivative Instruments									Derivative Instruments
Beginning balance	Beginning balance	$	(354)	$	(532)	$	(470)	$	(394)	Beginning balance	$	(15)	$	(360)	$	(347)	$	(470)
Gains (losses) on derivative instruments	Gains (losses) on derivative instruments	55		45		167		(114)		Gains (losses) on derivative instruments	260		(10)		680		112
Tax (expense) benefit	Tax (expense) benefit	(9)		(10)		(10)		(2)		Tax (expense) benefit	(27)		8		(83)		(1)
Net gains (losses) on derivative instruments	Net gains (losses) on derivative instruments	46		35		157		(116)		Net gains (losses) on derivative instruments	233		(2)		597		111
(Gains) losses reclassified from AOCL to net income 6	(Gains) losses reclassified from AOCL to net income 6	(16)		5		(10)		24		(Gains) losses reclassified from AOCL to net income 6	(108)		9		(142)		6
Tax expense (benefit) 2	Tax expense (benefit) 2	2		(2)		1		(8)		Tax expense (benefit) 2	12		(1)		14		(1)
Net (gains) losses reclassified from AOCL to net income	Net (gains) losses reclassified from AOCL to net income	(14)		3		(9)		16		Net (gains) losses reclassified from AOCL to net income	(96)		8		(128)		5
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax	32		38		148		(100)		Other comprehensive income (loss), net of tax	137		6		469		116
Ending balance	Ending balance	$	(322)	$	(494)	$	(322)	$	(494)	Ending balance	$	122	$	(354)	$	122	$	(354)
Total AOCL ending balance	Total 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


Noncontrolling Interests	Noncontrolling Interests	Three Months Ended				Nine Months Ended				Noncontrolling Interests	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Balance at beginning of period	Balance at beginning of period	$	580	$	560	$	570	$	553	Balance at beginning of period	$	545	$	560	$	574	$	570
Net income attributable to noncontrolling interests		23		24		69		51
Net income attributable to noncontrolling interests 1										Net income attributable to noncontrolling interests 1	20		31		3		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 adjustments	Cumulative translation adjustments	(8)		2		(23)		(6)		Cumulative translation adjustments	(16)		1		(27)		(15)
Other	Other	1		(1)		—		(1)		Other	(1)		—		(1)		(1)
Balance at end of period	Balance 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 ($78 million for the three and ~~nine~~six months ended ~~September~~June 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 ~~2020~~2021 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, the~~The Company ~~elected~~expects to contribute ~~$1 billion~~approximately $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 ~~September~~June 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 Plans	Net Periodic Benefit Cost for All Significant Plans	Three Months Ended				Nine Months Ended				Net Periodic Benefit Cost for All Significant Plans	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Defined Benefit Pension Plans	Defined Benefit Pension Plans									Defined Benefit Pension Plans
Service cost	Service cost	$	95	$	100	$	293	$	298	Service cost	$	99	$	96	$	198	$	198
Interest cost	Interest cost	151		191		444		574		Interest cost	171		150		342		293
Expected return on plan assets	Expected return on plan assets	(434)		(415)		(1,291)		(1,241)		Expected return on plan assets	(423)		(435)		(847)		(857)
Amortization of prior service credit	Amortization of prior service credit	(5)		(4)		(15)		(14)		Amortization of prior service credit	(5)		(5)		(11)		(10)
Amortization of net loss	Amortization of net loss	198		194		622		578		Amortization of net loss	165		200		332		424
Curtailment gain	Curtailment gain	—		—		(19)		—		Curtailment gain	—		—		—		(19)
Net periodic benefit cost	Net periodic benefit cost	$	5	$	66	$	34	$	195	Net periodic benefit cost	$	7	$	6	$	14	$	29

Other Postretirement Benefit Plans	Other Postretirement Benefit Plans									Other Postretirement Benefit Plans
Service cost	Service cost	$	2	$	2	$	6	$	6	Service cost	$	2	$	2	$	3	$	4
Interest cost	Interest cost	6		10		17		29		Interest cost	7		5		14		11
Amortization of net gain	Amortization of net gain	(2)		(2)		(5)		(7)		Amortization of net gain	(4)		(1)		(8)		(3)

Net periodic benefit cost	Net periodic benefit cost	$	6	$	10	$	18	$	28	Net periodic benefit cost	$	5	$	6	$	9	$	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 ~~2020~~2021 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:

•~~1.3~~1.2 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;

•~~1.6~~1.7 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 quarters~~quarter of ~~2021.~~2022.

Employee Stock Purchase Plan

The ~~Board unanimously approved the~~ Dow Inc. 2021 Employee Stock Purchase Plan (the "2021 ESPP")~~, which~~ was ~~approved~~adopted by the ~~Company's~~Board on February 11, 2021, and approved by stockholders at the ~~2021 Annual Meeting of Stockholders held~~Company'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 ~~June~~April 1, ~~2021~~2022 (beginning) or ~~December 3, 2021~~October 7, 2022 (ending) of the offering period, whichever is lower.

In the ~~second~~first quarter of ~~2021,~~2022, employees subscribed to the right to purchase approximately ~~2.0~~2 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 ~~2020~~2021 10-K.

The following table summarizes the fair value of financial instruments at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


Fair Value of Financial Instruments	Fair Value of Financial Instruments	Sep 30, 2021								Dec 31, 2020								Fair Value of Financial Instruments	Jun 30, 2022								Dec 31, 2021
In millions	In millions	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		Fair Value		In millions	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		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 funds	Money market funds	498		—		—		498		484		—		—		484		Money market funds	702		—		—		702		489		—		—		489
Total cash equivalents	Total cash equivalents	$	1,419	$	—	$	—	$	1,419	$	1,464	$	—	$	—	$	1,464	Total cash equivalents	$	979	$	—	$	—	$	979	$	806	$	—	$	—	$	806
Marketable securities 2	Marketable securities 2	$	138	$	3	$	—	$	141	$	45	$	—	$	—	$	45	Marketable securities 2	$	164	$	5	$	—	$	169	$	237	$	8	$	—	$	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	$	1	$	(121)	$	615	$	746	$	17	$	(28)	$	735
Corporate bonds	Corporate bonds	1,172		89		(9)		1,252		822		119		(5)		936		Corporate bonds	1,267		18		(159)		1,126		1,251		93		(20)		1,324
Total debt securities	Total 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	6		19		—		25		6		34		—		40		Equity securities 4	4		8		—		12		7		13		—		20
Total other investments	Total 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 investments	Total 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)	$	6	$	(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	$	—	$	1	$	(140)	$	(139)
Foreign currency	Foreign 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 derivatives	Total 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 ~~September~~June 30, ~~2021~~2022 and ~~$69 million at~~ December 31, ~~2020~~2021 on $2,279 million of debt at ~~September~~June 30, ~~2021~~2022 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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


Investing Results	Investing Results	Nine Months Ended				Investing Results	Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021
Proceeds from sales of available-for-sale securities	Proceeds from sales of available-for-sale securities	$	339	$	742	Proceeds from sales of available-for-sale securities	$	295	$	260
Gross realized gains	Gross realized gains	$	41	$	84	Gross realized gains	$	20	$	31
Gross realized losses	Gross 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		Cost		Fair Value
Contractual Maturities of Debt Securities at Jun 30, 2022 1						Contractual Maturities of Debt Securities at Jun 30, 2022 1	Cost		Fair Value
In millions	In millions	Cost		Fair Value		In millions
Within one year	Within one year					Within one year	$	31	$	28
One to five years	One to five years	618		650		One to five years	449		419
Six to ten years	Six to ten years	709		720		Six to ten years	1,014		870
After ten years	After ten years	510		540		After ten years	508		424
Total	Total	$	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 ~~September~~June 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 ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 ($1 million net unrealized loss for the ~~three~~six months ended ~~September~~June 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 Securities	Investments in Equity Securities	Sep 30, 2021		Dec 31, 2020		Investments in Equity Securities	Jun 30, 2022		Dec 31, 2021
In millions	In millions					In millions
Readily determinable fair value	Readily determinable fair value	$	25	$	40	Readily determinable fair value	$	12	$	20
Not readily determinable fair value	Not 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:


Notional Amounts - Net	Notional Amounts - Net	Sep 30, 2021		Dec 31, 2020		Notional Amounts - Net	Jun 30, 2022		Dec 31, 2021
In millions	In millions					In millions
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:					Derivatives designated as hedging instruments:
Interest rate contracts	Interest rate contracts	$	3,005	$	612	Interest rate contracts	$	3,000	$	3,000
Foreign currency contracts	Foreign 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 contracts	Interest rate contracts	$	58	$	94	Interest rate contracts	$	3	$	36
Foreign currency contracts	Foreign 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows:

Commodity Notionals - Net

Sep 30, 2021

Dec 31, 2020

Notional Volume Unit

Commodity Notionals - Net

Jun 30, 2022

Dec 31, 2021

Notional Volume Unit

Derivatives designated as hedging instruments:

Hydrocarbon derivatives

6.9

10.9

million barrels of oil equivalent

Hydrocarbon derivatives

17.3

9.7

million barrels of oil equivalent

Derivatives not designated as hedging instruments:

Hydrocarbon derivatives

0.1

—

million barrels of oil equivalent

Hydrocarbon derivatives

—

0.1

million barrels of oil equivalent

Power derivatives

10.3

3.3

thousands of megawatt hours

Table of Contents


Maturity Dates of Derivatives Designated as Hedging Instruments			Year
Interest rate contracts			2023
Foreign currency contracts			2023
Commodity contracts			~~2023~~2026

~~Table of Contents~~

The following tables provide the fair value and balance sheet classification of derivative instruments at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


Fair Value of Derivative Instruments	Fair Value of Derivative Instruments		Sep 30, 2021						Fair Value of Derivative Instruments		Jun 30, 2022
In millions	In millions	Balance Sheet Classification	Gross		Counterparty and Cash Collateral Netting 1		Net Amounts Included in the Consolidated Balance Sheets		In millions	Balance Sheet Classification	Gross		Counterparty and Cash Collateral Netting 1		Net Amounts Included in the Consolidated Balance Sheets
Asset derivatives	Asset derivatives								Asset derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:								Derivatives designated as hedging instruments:
Interest rate contracts	Interest rate contracts	Deferred charges and other assets	$	182	$	(182)	$	—	Interest rate contracts	Other current assets	$	501	$	(334)	$	167

Foreign currency contracts	Foreign currency contracts	Other current assets	32		(18)		14		Foreign currency contracts	Other current assets	309		(228)		81
Foreign currency contracts		Deferred charges and other assets	86		(51)		35

Commodity contracts	Commodity contracts	Other current assets	448		(253)		195		Commodity contracts	Other current assets	670		(348)		322
Commodity contracts	Commodity contracts	Deferred charges and other assets	68		(32)		36		Commodity contracts	Deferred charges and other assets	14		—		14
Total	Total		$	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 contracts	Foreign currency contracts	Other current assets	$	20	$	(16)	$	4	Foreign currency contracts	Other current assets	$	66	$	(59)	$	7

Commodity contracts	Commodity contracts	Other current assets	29		(20)		9		Commodity contracts	Other current assets	34		(4)		30
Commodity contracts		Deferred charges and other assets	2		(2)		—

Total	Total		$	51	$	(38)	$	13	Total		$	100	$	(63)	$	37
Total asset derivatives	Total asset derivatives		$	867	$	(574)	$	293	Total asset derivatives		$	1,594	$	(973)	$	621

Liability derivatives	Liability derivatives								Liability derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:								Derivatives designated as hedging instruments:
Interest rate contracts									Interest rate contracts	Accrued and other current liabilities	$	334	$	(334)	$	—

Interest rate contracts		Other noncurrent obligations	$	233	$	(182)	$	51
Foreign currency contracts	Foreign currency contracts	Accrued and other current liabilities	21		(18)		3		Foreign currency contracts	Accrued and other current liabilities	247		(228)		19
Foreign currency contracts		Other noncurrent obligations	51		(51)		—

Commodity contracts	Commodity contracts	Accrued and other current liabilities	391		(287)		104		Commodity contracts	Accrued and other current liabilities	564		(366)		198
Commodity contracts	Commodity contracts	Other noncurrent obligations	48		(34)		14		Commodity contracts	Other noncurrent obligations	1		(1)		—
Total	Total		$	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 contracts		Other noncurrent obligations	$	115	$	—	$	115

Foreign currency contracts	Foreign currency contracts	Accrued and other current liabilities	95		(16)		79		Foreign currency contracts	Accrued and other current liabilities	$	153	$	(59)	$	94

Commodity contracts	Commodity contracts	Accrued and other current liabilities	34		(21)		13		Commodity contracts	Accrued and other current liabilities	52		(16)		36
Commodity contracts		Other noncurrent obligations	3		(2)		1

Total	Total		$	247	$	(39)	$	208	Total		$	205	$	(75)	$	130
Total liability derivatives	Total 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.

3736

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Fair Value of Derivative Instruments	Fair Value of Derivative Instruments		Dec 31, 2020						Fair Value of Derivative Instruments		Dec 31, 2021
In millions	In millions	Balance Sheet Classification	Gross		Counterparty and Cash Collateral Netting 1		Net Amounts Included in the Consolidated Balance Sheets		In millions	Balance Sheet Classification	Gross		Counterparty and Cash Collateral Netting 1		Net Amounts Included in the Consolidated Balance Sheets
Asset derivatives	Asset derivatives								Asset derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:								Derivatives designated as hedging instruments:
Interest rate contracts	Interest rate contracts	Other current assets	$	3	$	(3)	$	—	Interest rate contracts	Other current assets	$	14	$	(14)	$	—
Interest rate contracts									Interest rate contracts	Deferred charges and other assets	130		(130)		—
Foreign currency contracts									Foreign currency contracts	Other current assets	24		(13)		11
Foreign currency contracts	Foreign currency contracts	Other current assets	39		(19)		20		Foreign currency contracts	Deferred charges and other assets	117		(89)		28
Commodity contracts	Commodity contracts	Other current assets	146		(109)		37		Commodity contracts	Other current assets	305		(173)		132
Commodity contracts	Commodity contracts	Deferred charges and other assets	31		(8)		23		Commodity contracts	Deferred charges and other assets	9		(2)		7
Total	Total		$	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 contracts	Interest rate contracts	Deferred charges and other assets	$	41	$	—	$	41	Interest rate contracts	Other current assets	$	1	$	—	$	1
Foreign currency contracts									Foreign currency contracts	Other current assets	23		(16)		7
Foreign currency contracts	Foreign currency contracts	Other current assets	74		(25)		49		Foreign currency contracts	Deferred charges and other assets	1		(1)		—
Commodity contracts	Commodity contracts	Other current assets	4		(1)		3		Commodity contracts	Other current assets	8		(5)		3

Total	Total		$	119	$	(26)	$	93	Total		$	33	$	(22)	$	11
Total asset derivatives	Total asset derivatives		$	338	$	(165)	$	173	Total asset derivatives		$	632	$	(443)	$	189

Liability derivatives	Liability derivatives								Liability derivatives
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:								Derivatives designated as hedging instruments:
Interest rate contracts	Interest rate contracts	Accrued and other current liabilities	$	7	$	(3)	$	4	Interest rate contracts	Accrued and other current liabilities	$	33	$	(14)	$	19

Interest rate contracts									Interest rate contracts	Other noncurrent obligations	192		(130)		62
Foreign currency contracts									Foreign currency contracts	Accrued and other current liabilities	15		(13)		2
Foreign currency contracts	Foreign currency contracts	Accrued and other current liabilities	93		(19)		74		Foreign currency contracts	Other noncurrent obligations	90		(89)		1
Commodity contracts	Commodity contracts	Accrued and other current liabilities	151		(112)		39		Commodity contracts	Accrued and other current liabilities	267		(192)		75
Commodity contracts	Commodity contracts	Other noncurrent obligations	48		(9)		39		Commodity contracts	Other noncurrent obligations	2		(2)		—
Total	Total		$	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 contracts									Interest rate contracts	Accrued and other current liabilities	$	59	$	—	$	59

Interest rate contracts		Other noncurrent obligations	$	178	$	—	$	178
Foreign currency contracts									Foreign currency contracts	Accrued and other current liabilities	31		(16)		15
Foreign currency contracts	Foreign currency contracts	Accrued and other current liabilities	35		(25)		10		Foreign currency contracts	Other noncurrent obligations	1		(1)		—
Commodity contracts	Commodity contracts	Accrued and other current liabilities	9		(3)		6		Commodity contracts	Accrued and other current liabilities	25		(8)		17

Total	Total		$	222	$	(28)	$	194	Total		$	116	$	(25)	$	91
Total liability derivatives	Total liability derivatives		$	521	$	(171)	$	350	Total liability derivatives		$	715	$	(465)	$	250

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 ~~September~~June 30, ~~2021~~2022 ($771 million at December 31, ~~2020)~~2021). No cash collateral was posted by counterparties with the Company at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~

2021.

3837

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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 ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020:~~2021:


Effect of Derivative Instruments	Effect of Derivative Instruments	Amount of gain (loss) recognized in OCI 1				Amount of gain (loss) recognized in income 2				Income Statement Classification	Effect of Derivative Instruments	Amount of gain (loss) recognized in OCI 1				Amount of gain (loss) recognized in income 2				Income Statement Classification
		Three Months Ended				Three Months Ended						Three Months Ended				Three Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020			In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Derivatives designated as hedging instruments:	Derivatives designated as hedging instruments:										Derivatives designated as hedging instruments:
Fair value hedges:

Excluded components 3		$	—	$	3	$	—	$	—	Interest expense and amortization of debt discount

Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate contracts	Interest rate contracts	5		—		(2)		(1)		Interest expense and amortization of debt discount	Interest rate contracts	$	108	$	(44)	$	(2)	$	(2)	Interest expense and amortization of debt discount
Foreign currency contracts	Foreign currency contracts	4		(12)		(3)		(1)		Cost of sales	Foreign currency contracts	4		1		3		(4)		Cost of sales

Commodity contracts	Commodity contracts	37		42		21		(4)		Cost of sales	Commodity contracts	80		41		107		(2)		Cost of sales
Net foreign investment hedges:	Net foreign investment hedges:										Net foreign investment hedges:
Foreign currency contracts	Foreign currency contracts	20		(19)		—		—			Foreign currency contracts	49		3		—		—
Excluded components 3	Excluded components 3	12		—		1		2		Sundry income (expense) - net	Excluded components 3	5		3		11		3		Sundry income (expense) - net
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments	$	78	$	14	$	17	$	(4)		Total derivatives designated as hedging instruments	$	246	$	4	$	119	$	(5)
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Interest rate contracts	Interest rate contracts	$	—	$	—	$	(2)	$	(3)	Interest expense and amortization of debt discount	Interest rate contracts	$	—	$	—	$	—	$	(1)	Interest expense and amortization of debt discount
Foreign currency contracts	Foreign currency contracts	—		—		(84)		(5)		Sundry income (expense) - net	Foreign currency contracts	—		—		(191)		(5)		Sundry income (expense) - net
Commodity contracts	Commodity contracts	—		—		(12)		(7)		Cost of sales	Commodity contracts	—		—		7		(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 derivatives	Total derivatives	$	78	$	14	$	(81)	$	(19)		Total derivatives	$	246	$	4	$	(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.

3938

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Effect of Derivative Instruments	Effect of Derivative Instruments	Amount of gain (loss) recognized in OCI 1				Amount of gain (loss) recognized in income 2				Income Statement Classification	Effect of Derivative Instruments	Amount of gain (loss) recognized in OCI 1				Amount of gain (loss) recognized in income 2				Income Statement Classification
		Nine Months Ended				Nine Months Ended						Six Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020			In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 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 contracts	Interest 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	2		10		—		—		Interest expense and amortization of debt discount	Excluded components 4	—		2		—		—		Interest expense and amortization of debt discount
Cash flow hedges:	Cash flow hedges:										Cash flow hedges:
Interest rate contracts	Interest rate contracts	(39)		—		(7)		(1)		Interest expense and amortization of debt discount	Interest rate contracts	207		(44)		(5)		(5)		Interest expense and amortization of debt discount
Foreign currency contracts	Foreign currency contracts	10		(9)		(15)		8		Cost of sales	Foreign currency contracts	6		6		6		(12)		Cost of sales

Commodity contracts	Commodity contracts	143		(23)		32		(32)		Cost of sales	Commodity contracts	287		106		141		11		Cost of sales
Net foreign investment hedges:	Net foreign investment hedges:										Net foreign investment hedges:
Foreign currency contracts	Foreign currency contracts	33		(3)		—		—			Foreign currency contracts	47		13		—		—
Excluded components 4	Excluded components 4	20		27		5		18		Sundry income (expense) - net	Excluded components 4	34		8		23		4		Sundry income (expense) - net
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments	$	169	$	2	$	(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 contracts	Interest rate contracts	$	—	$	—	$	(5)	$	(10)	Interest expense and amortization of debt discount	Interest rate contracts	$	—	$	—	$	(1)	$	(3)	Interest expense and amortization of debt discount
Foreign currency contracts	Foreign currency contracts	—		—		(202)		(15)		Sundry income (expense) - net	Foreign currency contracts	—		—		(276)		(118)		Sundry income (expense) - net
Commodity contracts	Commodity contracts	—		—		(47)		10		Cost of sales	Commodity 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 derivatives	Total derivatives	$	169	$	2	$	(264)	$	2		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 ~~amounts~~gain (loss) expected to be reclassified from AOCL to income within the next 12 months:


Expected Reclassifications from AOCL within the next 12 months	~~Sep~~Jun 30, ~~2021~~2022
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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Table of Contents

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 ~~2020~~2021 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 Basis	Basis of Fair Value Measurements on a Recurring Basis	Sep 30, 2021								Dec 31, 2020				Basis of Fair Value Measurements on a Recurring Basis		Jun 30, 2022								Dec 31, 2021
		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Items (Level 1)		Significant Other Observable Inputs (Level 2)				Total	Basis of Fair Value Measurements on a Recurring Basis	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
In millions	In millions													Total
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 funds	Money 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 bonds	Corporate bonds	39		1,213		—		1,252		28		908		936			Corporate bonds	32		1,094		—		1,126		44		1,280		—		1,324
Derivatives relating to: 5
Derivatives relating to: 6																	Derivatives relating to: 6
Interest rates	Interest rates	—		182		—		182		—		44		44			Interest rates	—		501		—		501		—		145		—		145
Foreign currency	Foreign currency	—		138		—		138		—		113		113			Foreign currency	—		375		—		375		—		165		—		165
Commodities	Commodities	20		527		—		547		8		173		181			Commodities	19		699		—		718		15		307		—		322
Total assets at fair value	Total 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 rates	Interest rates	—		348		—		348		—		185		185			Interest rates	—		334		—		334		—		284		—		284
Foreign currency	Foreign currency	—		167		—		167		—		128		128			Foreign currency	—		400		—		400		—		137		—		137
Commodities	Commodities	47		429		—		476		7		201		208			Commodities	46		571		—		617		37		257		—		294
Total liabilities at fair value	Total liabilities at fair value	$	47	$	17,914	$	225	$	18,186	$	7	$	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 ~~September~~June 30, ~~2021 ($111~~2022 ($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 ~~September~~June 30, ~~2021~~2022 ($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 ~~2020~~2021 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020:~~2021:


Assets and Liabilities of Consolidated VIEs	Assets and Liabilities of Consolidated VIEs	Sep 30, 2021			Dec 31, 2020			Assets and Liabilities of Consolidated VIEs	Jun 30, 2022			Dec 31, 2021
In millions
Cash and cash equivalents	Cash and cash equivalents			$	49		$	26	Cash and cash equivalents		$	44		$	40
Other current assets	Other current assets	38			44			Other current assets	35			40
Net property	Net property	187			232			Net property	167			184
Other noncurrent assets	Other noncurrent assets	15			17			Other noncurrent assets	14			15
Total assets 1	Total assets 1	$	289		$	319		Total assets 1	$	260		$	279
Current liabilities	Current liabilities	$	51		$	73		Current liabilities	$	40		$	37
Long-term debt	Long-term debt	4			6			Long-term debt	1			3
Other noncurrent obligations	Other noncurrent obligations	14			18			Other noncurrent obligations	11			13
Total liabilities 2	Total liabilities 2	$	69		$	97		Total liabilities 2	$	52		$	53

1.All assets were restricted at ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020.~~2021.

2.All liabilities were nonrecourse at ~~September~~June 30, ~~2021~~2022 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 ~~September~~June 30, ~~2021~~2022 and December 31, ~~2020~~2021 are adjusted for intercompany eliminations.

Nonconsolidated VIEs

The following table summarizes the carrying amounts of assets included in the consolidated balance sheets at ~~September~~June 30, ~~2021~~2022 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 VIEs

Sep 30, 2021

Dec 31, 2020

Carrying Amounts of Assets Related to Nonconsolidated VIEs

Jun 30, 2022

Dec 31, 2021

In millions

Description of asset

In millions

Description of asset

Silicon 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 Cash Dividends Declared and Paid	TDCC Cash Dividends Declared and Paid	Three Months Ended				Nine Months Ended				TDCC Cash Dividends Declared and Paid	Three Months Ended				Six Months Ended
		Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020			Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
In millions	In millions									In millions
Cash dividends declared and paid	Cash dividends declared and paid	$	919	$	513	$	2,361	$	1,685	Cash dividends declared and paid	$	1,333	$	739	$	2,454	$	1,442

At ~~September~~June 30, ~~2021~~2022 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 Information	Segment Information	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Materials & Coatings		Corp.		Total		Segment Information	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Materials & Coatings		Corp.		Total
In millions	In millions	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Materials & Coatings		Corp.		Total		In millions	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Materials & Coatings		Corp.		Total
Three months ended Sep 30, 2021
Three months ended Jun 30, 2022												Three months ended Jun 30, 2022
Net sales												Net sales	$	8,233	$	4,370	$	3,003	$	58	$	15,664
Equity in earnings (losses) of nonconsolidated affiliates												Equity in earnings (losses) of nonconsolidated affiliates	$	138	$	57	$	2	$	(2)	$	195
Dow Inc. Operating EBIT 1												Dow Inc. Operating EBIT 1	$	1,436	$	426	$	561	$	(48)	$	2,375
Three months ended Jun 30, 2021												Three months ended Jun 30, 2021
Net sales	Net 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 affiliates	Equity in earnings of nonconsolidated affiliates	$	124	$	122	$	3	$	—	$	249	Equity in earnings of nonconsolidated affiliates	$	130	$	144	$	—	$	4	$	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, 2022												Six months ended Jun 30, 2022
Net sales	Net 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 affiliates	Equity in earnings (losses) of nonconsolidated affiliates	$	71	$	(13)	$	1	$	1	$	60	Equity in earnings (losses) of nonconsolidated affiliates	$	248	$	119	$	5	$	(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, 2021												Six months ended Jun 30, 2021
Net sales	Net 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 affiliates	Equity in earnings of nonconsolidated affiliates	$	360	$	381	$	5	$	5	$	751	Equity in earnings of nonconsolidated affiliates	$	236	$	259	$	2	$	5	$	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)	$	4	$	(22)	$	(124)
Dow Inc. Operating EBIT 1		$	1,545	$	59	$	264	$	(207)	$	1,661

1.Operating EBIT for TDCC for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 and ~~2020~~2021 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 EBIT		Three Months Ended				Nine Months Ended
Reconciliation of "Net income" to Operating EBIT										Reconciliation of "Net income" to Operating EBIT	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Net income (loss)		$	1,706	$	(1)	$	4,644	$	40
Net income										Net income	$	1,681	$	1,932	$	3,233	$	2,938
+ Provision for income taxes	+ Provision for income taxes	542		43		1,383		215		+ Provision for income taxes	488		524		991		841
Income before income taxes	Income before income taxes	$	2,248	$	42	$	6,027	$	255	Income before income taxes	$	2,169	$	2,456	$	4,224	$	3,779
- Interest income	- Interest income	14		6		35		27		- Interest income	36		13		64		21
+ Interest expense and amortization of debt discount	+ Interest expense and amortization of debt discount	178		202		561		617		+ Interest expense and amortization of debt discount	165		187		332		383
- Significant items	- Significant items	(474)		(523)		(715)		(816)		- Significant items	(77)		(198)		(302)		(241)
Operating EBIT	Operating 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 Segment	Significant Items by Segment	Three Months Ended Sep 30, 2021										Nine Months Ended Sep 30, 2021										Significant Items by Segment	Three Months Ended Jun 30, 2022										Six Months Ended Jun 30, 2022
		Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total		Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total			Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total		Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total
In millions	In millions																					In 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)		—		—		—		4		4
Total	Total	$	—	$	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 acceleration~~Digital Acceleration program.

2.Includes ~~Board approved restructuring plans, including~~ costs associated with implementing the Company's 2020 Restructuring ~~Program, and asset~~Program.

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 Segment Three Months Ended Sep 30, 2020 Nine Months Ended Sep 30, 2020
Pack. & Spec. Plastics Ind. Interm. & Infrast. Perf. Mat. & Coatings Corp. Total Pack. & Spec. Plastics Ind. Interm. & Infrast. Perf. Mat. & Coatings Corp. 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
— — — — — 6 — — — 6
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 Segment	Three Months Ended Jun 30, 2021										Six Months Ended Jun 30, 2021
Significant Items by Segment	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total		Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total
In millions	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total		Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total
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.

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.

~~STATEMENTS ON COVID-19~~Russia and ~~U.S. GULF COAST FREEZE~~Ukraine Conflict

~~COVID-19~~

~~Additional information regarding actions taken by Dow since the onset of the pandemic can be found~~In February 2022, Russia invaded Ukraine resulting in the ~~combined~~United States, Canada, the European Union and other countries imposing economic sanctions on Russia. Dow ~~Inc.~~is monitoring and ~~TDCC Annual Report on Form 10-K~~evaluating 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 produced~~additional 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 shutdowns~~supply 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 half~~the 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 workforce~~operations.

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 continues~~fully complying with the sanctions implemented against Russia and the efforts of the international community to ~~encourage~~reestablish peace and safeguard democracy. Dow is prioritizing the safety and security of its ~~workforce to practice safe behaviors both~~colleagues 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 ~~workplace~~country. Dow has also stopped all investments in Russia and ~~while away~~is 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 ~~work~~materials 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 continues~~the 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 2021~~is also providing assistance with ~~sequential momentum~~evacuation, financial assistance, housing and other support to help employees and their families in Ukraine and is ~~well-positioned~~activating similar processes for ~~continued profitable growth~~the 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 recovery~~Ukraine 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 on~~2022, the ~~U.S. Gulf Coast~~Company recorded pretax asset related charges of $186 million due to the Russia and ~~in particular across~~Ukraine 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 and~~Company's remaining net asset exposure is not significant.

OUTLOOK

Dow continues to ~~work diligently~~see 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 ~~September~~June 30, ~~2021:~~2022:

•The Company reported net sales in the ~~third~~second quarter of ~~2021~~2022 of ~~$14.8~~$15.7 billion, up ~~53 percent from $9.7 billion in the third quarter of 2020, and up 7~~13 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 ~~third~~second quarter of ~~2020~~2021 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 compared~~2021 with ~~the third quarter of 2020 with increases~~an increase in Packaging & Specialty Plastics (up 5 percent) ~~and Performance Materials & Coatings (up 2 percent)~~, ~~partially~~which was offset by ~~a decrease~~decreases in Industrial Intermediates & Infrastructure (down 46 percent) and Performance Materials & Coatings (down 3 percent). Volume ~~increased~~decreased 2 percent compared with the ~~second~~first quarter of ~~2021.~~2022.

•Currency had ~~a favorable~~an unfavorable impact of 13 percent on net sales compared with the ~~third~~second 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 ~~third~~second quarter of 2022, compared with $278 million in the second quarter of 2021, ~~compared with $60 million~~primarily 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 ~~third~~second quarter of ~~2021,~~2022, compared with ~~a net loss of $25~~$1,901 million and $1,914 million in the ~~third~~second quarter of ~~2020.~~2021. Earnings per share for Dow Inc. was ~~$2.23~~$2.26 per share in the ~~third~~second quarter of ~~2021,~~2022, compared with ~~a loss of $0.04~~$2.51 per share in the ~~third~~second quarter of ~~2020.~~2021.

•Cash provided by operating activities - continuing operations was ~~$2.7~~$1.9 billion in the ~~third~~second quarter of ~~2021, up $958~~2022, down $165 million compared with the same period last ~~year and an increase of $698 million compared with~~year. 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 billion~~Inc. 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 ~~September~~June 10, ~~2021,~~2022, to shareholders of record as of ~~August~~May 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, Dow~~Effective 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 ~~that~~a credit rating upgrade for TDCC from Baa2 to Baa1, affirmed its ~~Board declared~~P-2 rating and maintained a ~~dividend~~stable 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 Ended Nine Months Ended
In millions Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 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 sales 78.3 % 86.2 % 79.8 % 87.0 %
Research and development ("R&D") expenses $ 210 $ 193 $ 632 $ 554
Percent of net sales 1.4 % 2.0 % 1.6 % 2.0 %
Selling, general and administrative ("SG&A") expenses $ 403 $ 372 $ 1,209 $ 1,063
Percent of net sales 2.7 % 3.8 % 3.0 % 3.8 %
Effective tax rate 24.1 % 102.4 % 22.9 % 84.3 %
Net income (loss) available for Dow Inc. common stockholders $ 1,683 $ (25) $ 4,575 $ (11)

Selected Financial Data - TDCC Three Months Ended Nine Months Ended
In millions Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 30, 2020
Net sales $ 14,837 $ 9,712 $ 40,604 $ 27,836
COS $ 11,610 $ 8,371 $ 32,410 $ 24,209
Percent of net sales 78.3 % 86.2 % 79.8 % 87.0 %
R&D expenses $ 210 $ 193 $ 632 $ 554
Percent of net sales 1.4 % 2.0 % 1.6 % 2.0 %
SG&A expenses $ 403 $ 372 $ 1,209 $ 1,062
Percent of net sales 2.7 % 3.8 % 3.0 % 3.8 %
Effective tax rate 24.2 % 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 Results	Summary of Sales Results	Three Months Ended				Nine Months Ended				Summary of Sales Results	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Net sales	Net 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 Region	Sales Variances by Operating Segment and Geographic Region																Sales Variances by Operating Segment and Geographic Region
		Three Months Ended Sep 30, 2021							Nine Months Ended Sep 30, 2021									Three Months Ended Jun 30, 2022								Six Months Ended Jun 30, 2022
		Local Price & Product Mix		Currency		Volume			Total		Local Price & Product Mix		Currency		Volume				Total			Local Price & Product Mix		Currency		Volume			Total		Local Price & Product Mix		Currency		Volume		Total
Percentage change from prior year	Percentage change from prior year							Total									Percentage change from prior year	Local Price & Product Mix										Currency
Packaging & Specialty Plastics	Packaging & Specialty Plastics	63	%	1	%	5	%		69	%	52	%	3	%	4	%			59	%	Packaging & Specialty Plastics	14	%	(3)	%	5	%		16	%	20	%	(3)	%	3	%	20	%
Industrial Intermediates & Infrastructure	Industrial Intermediates & Infrastructure	49		2		(4)			47		41		3		—				44		Industrial Intermediates & Infrastructure	14		(4)		(6)			4		21		(4)		(3)		14
Performance Materials & Coatings	Performance Materials & Coatings	23		1		2			26		14		3		3				20		Performance Materials & Coatings	28		(3)		(3)			22		34		(3)		1		32
Total	Total	50	%	1	%	2	%		53	%	40	%	3	%	3	%			46	%	Total	16	%	(3)	%	—	%		13	%	22	%	(3)	%	1	%	20	%
Total, excluding the Hydrocarbons & Energy business	Total, excluding the Hydrocarbons & Energy business	45	%	1	%	(1)	%		45	%	36	%	3	%	—	%			39	%	Total, excluding the Hydrocarbons & Energy business	14	%	(4)	%	(2)	%		8	%	21	%	(3)	%	(1)	%	17	%
U.S. & Canada	U.S. & Canada	56	%	—	%	5	%		61	%	44	%	—	%	2	%			46	%	U.S. & Canada	13	%	—	%	3	%		16	%	19	%	—	%	7	%	26	%
EMEAI	EMEAI	55		2		3			60		45		6		5				56		EMEAI	24		(9)		(4)			11		31		(8)		(4)		19
Asia Pacific	Asia Pacific	28		2		(6)			24		24		3		—				27		Asia Pacific	11		(3)		—			8		16		(2)		(2)		12
Latin America	Latin America	60		—		(1)			59		51		—		—				51		Latin America	8		1		8			17		16		—		5		21
Total	Total	50	%	1	%	2	%		53	%	40	%	3	%	3	%			46	%	Total	16	%	(3)	%	—	%		13	%	22	%	(3)	%	1	%	20	%

Net sales in the ~~third~~second quarter of ~~2021~~2022 were ~~$14.8~~$15.7 billion, up 5313 percent from ~~$9.7~~$13.9 billion in the ~~third~~second quarter of ~~2020,~~2021, with local price up 5016 percent, volume ~~up 2 percent~~flat and ~~a favorable~~an 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 ~~favorably~~unfavorably 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 ~~nine~~six months of ~~2021~~2022 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 favorable~~an 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 to~~driven 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 flat~~decreased 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 ~~favorably~~unfavorably 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

~~COS~~Cost of sales ("COS") was ~~$11.6~~$12.9 billion in the ~~third~~second 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 quarter~~first six months of ~~2020,~~2021, primarily due to increased sales volume and higher ~~feedstock,~~feedstocks, energy and other raw material costs, and logistics costs. ~~For~~The second quarter of 2022 included $44 million ($41 million in the ~~first nine months~~second quarter of ~~2021, COS was $32.4 billion, up from $24.2 billion~~2021) and $82 million in the first ~~nine~~six 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 for~~in the first ~~nine~~six months of 2021) of costs associated with implementing the Company's digital acceleration program (related to Corporate). ~~COS~~Cost of sales as a percentage of net sales in the ~~third~~second quarter of ~~2021~~2022 was ~~78.3~~82.3 percent ~~(86.2~~(77.3 percent in the ~~third~~second quarter of ~~2020)~~2021) and ~~79.8~~81.8 percent for the first ~~nine~~six months of ~~2021 (87.0~~2022 (80.7 percent for the first ~~nine~~six months of ~~2020)~~2021).

Research and Development Expenses

Research and development ("R&D&D") expenses totaled ~~$210~~$217 million in the ~~third~~second quarter of ~~2021,~~2022, compared with ~~$193~~$228 million in the ~~third~~second 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 ~~nine~~six months of ~~2021~~2022 were ~~$632~~$435 million, compared with ~~$554~~$422 million in the first ~~nine~~six 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 by~~due 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 ~~third~~second quarter of ~~2021,~~2022, compared with ~~$372~~$440 million in the ~~third~~second 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 ~~nine~~six months of ~~2021,~~2022, SG&A expenses were ~~$1,209~~$933 million, compared with ~~$1,063~~$806 million in the first ~~nine~~six 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 by~~due 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 ~~third~~first quarter of ~~2021 and 2020.~~2021. In the first ~~nine~~six months of ~~2021,~~2022, amortization of intangibles was ~~$301~~$173 million, compared with ~~$300~~$201 million in the first ~~nine~~six 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

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 for~~with 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, impacting~~activities. 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 ~~third~~second quarter of 2022, compared with $278 million in the second quarter of 2021, ~~compared with equity earnings of $60 million~~primarily 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 ~~nine~~six months of ~~2021,~~2022, compared with ~~equity losses of $124~~$502 million in the first ~~nine~~six months of ~~2020. The improvement from the prior year was~~2021, primarily due to lower equity earnings at Sadara ~~compared with equity losses~~Chemical 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 ~~September~~June 30, ~~2021,~~2022, Sundry income (expense) - net was ~~expense~~income 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 ~~September~~June 30, ~~2020.~~2021. The ~~third~~second quarter of ~~2021~~2022 included ~~a $472~~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~~Corporate). 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" in~~Corteva, Inc. ("Corteva") as part of the ~~consolidated statements of cash flows). This was partially offset by non-operating pension~~separation and ~~postretirement benefit plan credits and a $54 million gain related to an arbitration award~~distribution (related to ~~Industrial Intermediates & Infrastructure)~~Corporate). The ~~third~~second quarter of ~~2020~~2021 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 ~~sale~~sales 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 ~~nine~~six months of ~~2020~~2021 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. These~~credits 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, 16~~In 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 ~~third~~second quarter of ~~2021,~~2022, compared with ~~$202~~$187 million in the ~~third~~second quarter of ~~2020.~~2021. Interest expense and amortization of debt discount was ~~$561~~$332 million in the first ~~nine~~six months of ~~2021,~~2022, compared with ~~$617~~$383 million in the first ~~nine~~six 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 ~~third~~second quarter of ~~2021~~2022 was ~~24.1~~22.5 percent and ~~24.2~~22.4 percent for Dow Inc. and TDCC, respectively, compared with ~~102.4~~21.3 percent and 21.1 percent for the ~~third~~second quarter of ~~2020.~~2021. For the first ~~nine~~six months of ~~2021,~~2022, the effective tax rate was ~~22.9~~23.5 percent for Dow Inc. and TDCC, compared with ~~84.3~~22.3 percent and 22.2 percent for Dow Inc. and TDCC, respectively, for the first ~~nine~~six 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 months~~recognition of ~~2021 was favorably impacted by geographic mix of earnings and higher equity earnings. The~~uncertain tax ~~rate~~positions 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 ~~third~~second quarter of ~~2021,~~2022, compared with ~~a net loss of $25~~$1,901 million, or ~~$0.04~~$2.51 per share, in the ~~third~~second 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 ~~nine~~six months of ~~2021,~~2022, compared with ~~a net loss of $11~~$2,892 million, or ~~$0.02~~$3.83 per share, in the first ~~nine~~six 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 ~~third~~second quarter of ~~2021,~~2022, compared with ~~a net loss of $25~~$1,914 million in the ~~third~~second quarter of ~~2020.~~2021. Net income available for the TDCC common stockholder was ~~$4,576~~$3,228 million in the first ~~nine~~six months of ~~2021,~~2022, compared with ~~a loss of $11~~$2,897 million in the first ~~nine~~six months of ~~2020.~~2021. TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS

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 work~~technologies. These differentiators, plus collaboration at the customer’s design table, ~~throughout~~enable the ~~value chain~~segment to deliver more reliable, durable, higher-performing solutions designed for recyclability and ~~durable, higher performing,~~enhanced plastics circularity and ~~more sustainable plastics to~~sustainability. 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 ~~transition~~and 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 and~~ownership, 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 Plastics	Three Months Ended				Six Months Ended
In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 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 Plastics	Three Months Ended		Six Months Ended
Percentage change from prior year	Jun 30, 2022		Jun 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix	14	%	20	%
Currency	(3)		(3)
Volume	5		3

Total	16	%	20	%

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Packaging & Specialty Plastics Three Months Ended Nine Months Ended
In millions Sep 30, 2021 Sep 30, 2020 Sep 30, 2021 Sep 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 Plastics Three Months Ended Nine Months Ended
Percentage change from prior year Sep 30, 2021 Sep 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix 63 % 52 %
Currency 1 3
Volume 5 4
Total 69 % 59 %

Packaging & Specialty Plastics net sales were ~~$7,736~~$8,233 million in the ~~third~~second quarter of ~~2021,~~2022, up 6916 percent from net sales of ~~$4,565~~$7,121 million in the ~~third~~second 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 ~~nine~~six 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 ~~offsetting~~offset 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 ~~nine~~six months of ~~2021, up $3,651~~2022, down $572 million from Operating EBIT of ~~$1,545~~$3,242 million in the first ~~nine~~six months of ~~2020.~~2021. Operating EBIT ~~increased primarily~~decreased due to ~~integrated margin expansion~~higher 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‑class~~world-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, ~~adhesives~~mobility 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.

~~Table of Contents~~


Industrial Intermediates & Infrastructure	Industrial Intermediates & Infrastructure	Three Months Ended				Nine Months Ended				Industrial Intermediates & Infrastructure	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Net sales	Net sales	$	4,481	$	3,058	$	12,303	$	8,520	Net sales	$	4,370	$	4,215	$	8,894	$	7,822
Operating EBIT	Operating EBIT	$	713	$	104	$	1,687	$	59	Operating EBIT	$	426	$	648	$	1,087	$	974
Equity earnings (losses)		$	122	$	(13)	$	381	$	(202)
Equity earnings										Equity earnings	$	57	$	144	$	119	$	259

Industrial Intermediates & Infrastructure Three Months Ended Nine Months Ended
Percentage change from prior year Sep 30, 2021 Sep 30, 2021
Change in Net Sales from Prior Period due to:
Local price & product mix 49 % 41 %
Currency 2 3
Volume (4) —
Total 47 % 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 & Infrastructure	Three Months Ended		Six Months Ended
Percentage change from prior year	Jun 30, 2022		Jun 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix	14	%	21	%
Currency	(4)		(4)
Volume	(6)		(3)

Total	4	%	14	%

Industrial Intermediates & Infrastructure net sales were ~~$12,303~~$4,370 million in the ~~first nine months~~second quarter of ~~2021,~~2022, up 444 percent from ~~net sales of $8,520~~$4,215 million in the ~~first nine months~~second quarter of ~~2020, driven by an increase in~~2021, with local price ~~of 41~~up 14 percent, volume down 6 percent, and ~~a favorable~~an 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 impacted~~had 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 ~~EMEAI~~agricultural, 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 by~~primarily due to lower supply ~~constraints which more than offset strengthening~~availability 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 ~~nine~~six months of ~~2021,~~2022, up ~~$1,628~~$113 million from Operating EBIT of ~~$59~~$974 million in the first ~~nine~~six months of ~~2020.~~2021. Operating EBIT increased primarily due to ~~margin expansion from strong supply~~local price increases in both businesses and ~~demand dynamics~~was partially offset by increases in ~~Polyurethanes & Construction Chemicals~~raw material and ~~higher~~energy costs and lower equity earnings at Sadara and the ~~Kuwait~~Map 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 ~~infrastructure~~mobility 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, ~~offerings~~market-driven and sustainable innovations to customers.


Performance Materials & Coatings	Performance Materials & Coatings	Three Months Ended				Nine Months Ended				Performance Materials & Coatings	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Net sales	Net sales	$	2,526	$	2,002	$	7,114	$	5,922	Net sales	$	3,003	$	2,465	$	6,052	$	4,588
Operating EBIT	Operating EBIT	$	284	$	75	$	571	$	264	Operating EBIT	$	561	$	225	$	1,156	$	287
Equity earnings	Equity earnings	$	3	$	1	$	5	$	4	Equity earnings	$	2	$	—	$	5	$	2


Performance Materials & Coatings	Performance Materials & Coatings	Three Months Ended		Nine Months Ended		Performance Materials & Coatings	Three Months Ended		Six Months Ended
Percentage change from prior year	Percentage change from prior year	Sep 30, 2021		Sep 30, 2021		Percentage change from prior year	Jun 30, 2022		Jun 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 mix	Local price & product mix	23	%	14	%	Local price & product mix	28	%	34	%
Currency	Currency	1		3		Currency	(3)		(3)
Volume	Volume	2		3		Volume	(3)		1

Total	Total	26	%	20	%	Total	22	%	32	%

Performance Materials & Coatings net sales were ~~$2,526~~$3,003 million in the ~~third~~second quarter of ~~2021,~~2022, up 2622 percent from net sales of ~~$2,002~~$2,465 million in the ~~third~~second quarter of ~~2020,~~2021, with local price up 2328 percent, volume ~~up 2~~down 3 percent and ~~a favorable~~an unfavorable currency impact of 13 percent. Local price increased in both businesses and across all geographic ~~regions. Local price increased in Consumer Solutions primarily~~regions due to favorable supply and demand dynamics ~~in siloxanes. Local price increased in Coatings & Performance Monomers primarily in response to~~and higher raw material ~~costs and favorable supply and demand dynamics.~~prices. Volume ~~increased~~decreased in Consumer Solutions in Asia Pacific, EMEAI and Latin America, which ~~was~~were partially offset by ~~a decrease~~strong consumer demand in ~~Coatings~~the 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 than~~impacted 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 quarter~~first six months of ~~2021,~~2022, up ~~$209~~$869 million from Operating EBIT of ~~$75~~$287 million in the ~~third quarter~~first six months of ~~2020.~~2021. Operating EBIT increased primarily due to margin expansion and higher volume in Consumer Solutions.

~~Performance Materials & Coatings net sales we~~re $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.

~~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.


Corporate	Corporate	Three Months Ended				Nine Months Ended				Corporate	Three Months Ended				Six Months Ended
In millions	In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020		In millions	Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
Net sales	Net sales	$	94	$	87	$	248	$	219	Net sales	$	58	$	84	$	122	$	154
Operating EBIT	Operating EBIT	$	(65)	$	(65)	$	(186)	$	(207)	Operating EBIT	$	(48)	$	(59)	$	(119)	$	(121)
Equity earnings (losses)	Equity earnings (losses)	$	—	$	1	$	5	$	(22)	Equity earnings (losses)	$	(2)	$	4	$	(3)	$	5

Net sales for Corporate, which primarily relate to the Company's insurance operations, were ~~$94~~$58 million in the ~~third~~second quarter of ~~2021, an increase~~2022, a decrease from net sales of ~~$87~~$84 million in the ~~third~~second quarter of ~~2020.~~2021. Net sales were ~~$248~~$122 million in the first ~~nine~~six months of ~~2021, up~~2022, a decrease from net sales of ~~$219~~$154 million in the first ~~nine~~six months of ~~2020.~~2021.

Operating EBIT was a loss of ~~$65~~$48 million in the ~~third~~second 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 ~~nine~~six months of ~~2021,~~2022, compared with a loss of ~~$207~~$121 million in the first ~~nine~~six 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 ~~September~~June 30, ~~2021~~2022 and ~~$5,104~~$2,988 million at December 31, ~~2020,~~2021, of which ~~$1,699~~$1,397 million at ~~September~~June 30, ~~2021~~2022 and ~~$862~~$1,745 million at December 31, ~~2020~~2021 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 cash~~Cash 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 ~~September~~June 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 Summary	Cash Flow Summary	Dow Inc.				TDCC				Cash Flow Summary	Dow Inc.				TDCC
		Nine Months Ended				Nine Months Ended					Six Months Ended				Six Months Ended
		Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020			Jun 30, 2022		Jun 30, 2021		Jun 30, 2022		Jun 30, 2021
In millions
Cash provided by (used for):	Cash provided by (used for):										Cash provided by (used for):
Operating activities - continuing operations	Operating 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 operations	Operating activities - discontinued operations	(78)		—		—		—		Operating activities - discontinued operations	(11)		(80)		—		—
Operating activities	Operating activities	4,434		4,596		4,634		4,604		Operating activities	3,457		1,713		3,493		1,912
Investing activities	Investing activities	(1,535)		(616)		(1,535)		(616)		Investing activities	(763)		(768)		(763)		(768)
Financing activities	Financing 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 cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(57)		4		(57)		4		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(162)		(12)		(162)		(12)
Summary	Summary									Summary
Increase (decrease) in cash, cash equivalents and restricted cash		(2,132)		2,175		(2,132)		2,175
Decrease in cash, cash equivalents and restricted cash										Decrease in cash, cash equivalents and restricted cash	(564)		(1,567)		(564)		(1,567)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	5,108		2,380		5,108		2,380		Cash, cash equivalents and restricted cash at beginning of period	3,033		5,108		3,033		5,108
Cash, cash equivalents and restricted cash at end of period	Cash, 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		6		65		6		Less: Restricted cash and cash equivalents, included in "Other current assets"	102		50		102		50
Cash and cash equivalents at end of period	Cash 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 ~~nine~~six months of ~~2021~~2022 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 ~~nine~~six months of ~~2020~~2021 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 items~~which were partially offset by elective pension ~~contributions.~~contributions, cash used for working capital requirements and performance-based compensation payments.


Net Working Capital	Net Working Capital	Dow Inc.				TDCC				Net Working Capital	Dow Inc.				TDCC
		Sep 30, 2021		Dec 31, 2020		Sep 30, 2021		Dec 31, 2020			Jun 30, 2022		Dec 31, 2021		Jun 30, 2022		Dec 31, 2021
In millions	In millions									In millions
Current assets	Current assets	$	20,393	$	19,084	$	20,359	$	18,998	Current assets	$	21,769	$	20,848	$	21,733	$	20,837
Current liabilities	Current liabilities	12,793		11,108		12,505		10,574		Current liabilities	13,309		13,226		13,156		13,046
Net working capital	Net working capital	$	7,600	$	7,976	$	7,854	$	8,424	Net working capital	$	8,460	$	7,622	$	8,577	$	7,791
Current ratio	Current ratio	1.59:1		1.72:1		1.63:1		1.80:1		Current ratio	1.64:1		1.58:1		1.65:1		1.60:1


Working Capital Metrics	Working Capital Metrics	Three Months Ended						Working Capital Metrics	Three Months Ended
		Sep 30, 2021		Jun 30, 2021		Sep 30, 2020			Jun 30, 2022		Mar 31, 2022		Jun 30, 2021

Days sales outstanding in trade receivables	Days sales outstanding in trade receivables		41		39		43		Days sales outstanding in trade receivables	43		42		41
Days sales in inventory	Days sales in inventory	56		56		63		Days sales in inventory	56		55		56
Days payables outstanding	Days payables outstanding	58		55		58		Days payables outstanding	58		60		55

Cash used for operating activities from discontinued operations in the first ~~nine~~six 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 ~~nine~~six 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 ~~nine~~six months of ~~2021,~~2022, compared with ~~$955~~$622 million in the first ~~nine~~six months of ~~2020.~~2021. The Company expects full year capital spending in ~~2021~~2022 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 ~~nine~~six months of ~~2021 included~~2022 was primarily for payments on long-term debt, ~~and transaction financing, debt issuance and other costs,~~ which ~~were~~was 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 ~~outflows~~outflow for dividends paid to stockholders and purchases of treasury ~~stock and~~stock. TDCC included a cash outflow for dividends paid to Dow Inc. Cash used for financing activities in the first ~~nine~~six months of ~~2020~~2021 included payments on long-term debt, ~~changes in short-term notes payable and transaction financing, debt issuance and other costs,~~ which ~~were~~was partially offset by proceeds from issuance of ~~long-term debt.~~common stock. In addition, Dow Inc. included a cash ~~outflows~~outflow for dividends paid to ~~common~~ stockholders and purchases of treasury ~~stock and~~stock. TDCC included a cash ~~outflows~~outflow 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 flow~~Free 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 flow~~Cash 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 ~~From~~from Operations)

Dow defines ~~cash flow conversion~~Cash Flow Conversion (Operating EBITDA to ~~cash flow~~Cash Flow from ~~operations)~~Operations) as "Cash provided by operating activities - continuing operations," divided by Operating EBITDA. Management believes ~~cash flow conversion~~Cash 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 Flow	Reconciliation of Free Cash Flow	Nine Months Ended						Reconciliation of Free Cash Flow	Six Months Ended
		Sep 30, 2021			Sep 30, 2020				Jun 30, 2022			Jun 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 expenditures	Capital 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 ~~nine~~six 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 Ended						Reconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow from Operations)	Six Months Ended
		Sep 30, 2021			Sep 30, 2020				Jun 30, 2022			Jun 30, 2021
In millions
Net income (GAAP)	Net income (GAAP)			$	4,644		$	40	Net income (GAAP)		$	3,233		$	2,938
+ Provision for income taxes	+ Provision for income taxes	1,383			215			+ Provision for income taxes	991			841
Income before income taxes	Income before income taxes	$	6,027		$	255		Income before income taxes	$	4,224		$	3,779
- Interest income	- Interest income	35			27			- Interest income	64			21
+ Interest expense and amortization of debt discount	+ Interest expense and amortization of debt discount	561			617			+ Interest expense and amortization of debt discount	332			383
- Significant items ¹	- Significant items ¹	(715)			(816)			- Significant items ¹	(302)			(241)
Operating EBIT (non-GAAP)	Operating EBIT (non-GAAP)	$	7,268		$	1,661		Operating EBIT (non-GAAP)	$	4,794		$	4,382
+ Depreciation and amortization	+ Depreciation and amortization	2,187			2,148			+ Depreciation and amortization	1,436			1,462
Operating EBITDA (non-GAAP)	Operating EBITDA (non-GAAP)	$	9,455		$	3,809		Operating 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		$	4,596		Cash 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 ~~nine~~six months ended ~~September~~June 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 costs~~Digital Acceleration program and ~~asset related charges - net;~~2020 Restructuring Program, a loss on early extinguishment of ~~debt; litigation related charges, awards~~debt 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 ~~nine~~six 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 ~~September~~June 30, ~~2021.~~2022. Cash and committed and available forms of liquidity were ~~$12.4~~$12.2 billion at ~~September~~June 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 ~~September~~June 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 ~~September~~June 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 ~~September~~June 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 no~~In 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, see~~See 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 ~~September~~June 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 ~~September~~June 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 Debt	Total Debt	Dow Inc.						TDCC						Total Debt	Dow Inc.						TDCC
		Sep 30, 2021			Dec 31, 2020			Sep 30, 2021			Dec 31, 2020				Jun 30, 2022			Dec 31, 2021			Jun 30, 2022			Dec 31, 2021
In millions
Notes payable	Notes payable			$	270		$	156		$	270		$	156	Notes payable		$	295		$	161		$	295		$	161
Long-term debt due within one year	Long-term debt due within one year	291			460			291			460			Long-term debt due within one year	361			231			361			231
Long-term debt	Long-term debt	14,027			16,491			14,027			16,491			Long-term debt	13,065			14,280			13,065			14,280
Gross debt	Gross debt	$	14,588		$	17,107		$	14,588		$	17,107		Gross debt	$	13,721		$	14,672		$	13,721		$	14,672
- Cash and cash equivalents	- Cash and cash equivalents	2,911			5,104			2,911			5,104			- Cash and cash equivalents	2,367			2,988			2,367			2,988
- Marketable securities 1	- Marketable securities 1	141			45			141			45			- Marketable securities 1	169			245			169			245
Net debt	Net debt	$	11,536		$	11,958		$	11,536		$	11,958		Net debt	$	11,185		$	11,439		$	11,185		$	11,439
Total equity	Total equity	$	17,028		$	13,005		$	17,393		$	13,569		Total equity	$	19,507		$	18,739		$	19,754		$	19,029

Gross debt as a percent of total capitalization	Gross debt as a percent of total capitalization	46.1		%	56.8		%	45.6		%	55.8		%	Gross debt as a percent of total capitalization	41.3		%	43.9		%	41.0		%	43.5		%
Net debt as a percent of total capitalization	Net debt as a percent of total capitalization	40.4		%	47.9		%	39.9		%	46.8		%	Net debt as a percent of total capitalization	36.4		%	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 ~~3.15~~3.625 percent notes due May ~~2024 and $811 million aggregate principal amount of 3.50 percent notes due October 2024.~~2026.

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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 ~~0.65~~0.70 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 ~~0.44~~0.38 to 1.00 at ~~September~~June 30, ~~2021.~~2022. Management believes TDCC was in compliance with all of its covenants and default provisions at ~~September~~June 30, ~~2021.~~2022. For information on TDCC's debt covenants and default provisions, see Note 15 to the Consolidated Financial Statements included in the ~~2020~~2021 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 ~~nine~~six 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 ~~September~~June 30, ~~2021,~~2022, TDCC's credit ratings were as follows:


Credit Ratings	Long-Term Rating	Short-Term Rating	Outlook
Fitch Ratings	BBB+	F2	Positive
Moody’s Investors Service	Baa1	P-2	Stable
Standard & Poor’s	BBB	A-2	~~Stable~~
~~Moody’s Investors Service~~	~~Baa2~~	~~P-2~~	~~Stable~~
~~Fitch Ratings~~	~~BBB+~~	F2	~~Stable~~Positive

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 ~~reaffirmed~~affirmed TDCC’s BBB+ and F2 rating, and revised its outlook to positive from ~~negative~~stable. 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 was~~These credit agencies' decisions were made as part of ~~Fitch’s~~their 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 reflects~~reflect the ~~expectation for an ongoing macroeconomic recovery, the Company’s~~Company's supportive financial policies and ~~the strengthening of its~~strong 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 Date

Record Date

Payment Date

Amount (per share)

February ~~11, 2021~~10, 2022

February ~~26, 2021~~28, 2022

March ~~12, 2021~~11, 2022

0.70

April ~~15, 2021~~13, 2022

May ~~28, 2021~~31, 2022

June ~~11, 2021~~10, 2022

0.70

~~August 12, 2021~~

~~August 31, 2021~~

~~September 10, 2021~~

~~0.70~~

~~October 14, 2021~~

~~November 30, 2021~~

~~December 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 ~~September~~June 30, ~~2021,~~2022, TDCC declared and paid a dividend to Dow Inc. of ~~$919~~$1,333 million ($~~2,361~~2,454 million for the ~~nine~~six months ended ~~September~~June 30, ~~2021)~~2022). At ~~September~~June 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~~$800 million of its common stock in the ~~third~~second quarter of ~~2021~~2022 ($~~600~~1,400 million in the first ~~nine~~six months of ~~2021)~~2022). At ~~September~~June 30, ~~2021,~~2022, approximately ~~$1,775~~$2,975 million of the new share repurchase program authorization remained available for repurchases. ~~The~~As previously announced, the Company intends to, at a minimum, repurchase shares to cover ~~dilution and will continue~~dilution. With the announcement of the new share repurchase program, the Company may from time to ~~evaluate value creating~~time expand its share repurchases ~~as economic~~beyond dilution, based on a number of factors including macroeconomic conditions, ~~develop. The~~free cash flow generation, and the Dow share price. Any share repurchases, when coupled with the Company's dividends, ~~intend~~is intended to ~~ensure that total~~implement 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 changes~~expects to ~~the design of~~contribute 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 ~~September~~June 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 ~~2020~~2021 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 quarter~~end 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 quarter~~end of 2022. Restructuring implementation costs totaled ~~$16~~$10 million in the ~~third~~second quarter of ~~2021~~2022 ($4720 million in the first ~~nine~~six 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~~$51 million in the ~~third~~second quarter of ~~2021~~2022 ($~~121~~92 million in the first ~~nine~~six 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 ~~2020~~2021 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, 2021		Payments Due In
Contractual Obligations at Jun 30, 2022												Contractual Obligations at Jun 30, 2022	Payments Due In
In millions	In millions	2021		2022-2023		2024-2025		2026 and beyond		Total		In millions	2022		2023-2024		2025-2026		2027 and beyond		Total

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 ~~September~~June 30, ~~2021,~~2022, and includes ~~$110~~$56 million of various floating rate notes.

~~Includes imputed interest~~Table 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).

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 ~~2020~~2021 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 ~~2020~~2021 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 Activity	Asbestos-Related Claim Activity	2021	2020	Asbestos-Related Claim Activity	2022	2021
Claims unresolved at Jan 1	Claims unresolved at Jan 1	9,126	11,117	Claims unresolved at Jan 1	8,747	9,126
Claims filed	Claims filed	3,177	3,623	Claims filed	2,388	2,081
Claims settled, dismissed or otherwise resolved	Claims settled, dismissed or otherwise resolved	(3,340)	(5,099)	Claims settled, dismissed or otherwise resolved	(2,275)	(2,184)
Claims unresolved at Sep 30		8,963	9,641
Claims unresolved at Jun 30				Claims unresolved at Jun 30	8,860	9,023
Claimants with claims against both Union Carbide and Amchem	Claimants 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 30		6,651	6,473
Individual claimants at Jun 30				Individual claimants at Jun 30	6,754	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 ~~Statements~~Statements; 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 ~~nine~~six 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 ~~September~~June 30, ~~2021:~~2022:

Issuer Purchases of Equity Securities Total 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)
Period Total number of shares purchased Average price paid per share
July 2021 590,309 $ 61.57 590,309 $ 2,139
August 2021 4,145,582 $ 62.42 4,145,582 $ 1,880
September 2021 1,674,600 $ 62.64 1,674,600 $ 1,775
Third quarter 2021 6,410,491 $ 62.40 6,410,491 $ 1,775


Issuer Purchases of Equity Securities				Total 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)
Period	Total number of shares purchased	Average price paid per share
April 2022	1,153,050	$	67.64	1,153,050	$	3,697
May 2022	8,057,999	$	67.74	8,057,999	$	3,151
June 2022	2,598,049	$	67.81	2,598,049	$	2,975
Second quarter 2022	11,809,098	$	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
			4.3						Dow 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.
			31.1 *						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			31.2 *						Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
			32.1 *						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			32.2 *						Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			101.INS						The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
			101.SCH						Inline XBRL Taxonomy Extension Schema Document.
			101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.
			101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.
			101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.
			101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.
			104						Cover 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: ~~October~~July 22, ~~2021~~2022


/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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Selected Financial Data - Dow Inc.	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2021			Sep 30, 2020			Sep 30, 2021			Sep 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 sales	78.3		%	86.2		%	79.8		%	87.0		%

Research and development ("R&D") expenses	$	210		$	193		$	632		$	554
Percent of net sales	1.4		%	2.0		%	1.6		%	2.0		%

Selling, general and administrative ("SG&A") expenses	$	403		$	372		$	1,209		$	1,063
Percent of net sales	2.7		%	3.8		%	3.0		%	3.8		%

Effective tax rate	24.1		%	102.4		%	22.9		%	84.3		%

Net income (loss) available for Dow Inc. common stockholders	$	1,683		$	(25)		$	4,575		$	(11)


Selected Financial Data - TDCC	Three Months Ended						Nine Months Ended
In millions	Sep 30, 2021			Sep 30, 2020			Sep 30, 2021			Sep 30, 2020
Net sales	$	14,837		$	9,712		$	40,604		$	27,836

COS	$	11,610		$	8,371		$	32,410		$	24,209
Percent of net sales	78.3		%	86.2		%	79.8		%	87.0		%

R&D expenses	$	210		$	193		$	632		$	554
Percent of net sales	1.4		%	2.0		%	1.6		%	2.0		%

SG&A expenses	$	403		$	372		$	1,209		$	1,062
Percent of net sales	2.7		%	3.8		%	3.0		%	3.8		%

Effective tax rate	24.2		%	102.4		%	22.9		%	84.3		%

Net income (loss) available for The Dow Chemical Company common stockholder	$	1,679		$	(25)		$	4,576		$	(11)