What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-01 compared with 2022-02-04 · 375 added, 843 removed, 2258 unchanged (35% of the section changed)

28 unchanged sentences

The Company establishes a liability for unrecognized tax benefits that do not meet this threshold.

evaluation of each uncertain tax position requires management to apply specialized skill, knowledge, and significant judgment related to the identified position.

The evaluation of each uncertain tax position requires management to apply specialized skill, knowledge, and significant judgment related to the identified position.

The Company’s liability for unrecognized tax benefits and related accrued interest and penalties as of December 31, 2022 was $520 million and $498 million, respectively.

67 unchanged sentences

Amortization of intangibles 336 388 401

Restructuring, goodwill impairment and asset related charges - net 6 708 3,219

Restructuring and asset related charges - net 118 6 708

Integration and separation costs — — 239

3 unchanged sentences

Interest expense and amortization of debt discount 662 731 827

Income (loss) from continuing operations before income taxes 8,145 2,071 ( 1,247 )

Provision for income taxes on continuing operations 1,740 777 470

Income (loss) from continuing operations, net of tax 6,405 1,294 ( 1,717 )

Income from discontinued operations, net of tax — — 445

Net income (loss) 6,405 1,294 ( 1,272 )

Income before income taxes 6,090 8,145 2,071

Provision for income taxes 1,450 1,740 777

Net income 4,640 6,405 1,294

Net income attributable to noncontrolling interests 58 94 69

Net income (loss) available for Dow Inc.

Net income available for Dow Inc.

common stockholders $ 4,582 $ 6,311 $ 1,225

Per common share data:

Earnings (loss) per common share from continuing operations - basic $ 8.44 $ 1.64 $ ( 2.42 )

Earnings per common share from discontinued operations - basic — — 0.58

Earnings (loss) per common share - basic $ 8.44 $ 1.64 $ ( 1.84 )

Earnings (loss) per common share from continuing operations - diluted $ 8.38 $ 1.64 $ ( 2.42 )

Earnings per common share from discontinued operations - diluted — — 0.58

Earnings (loss) per common share - diluted $ 8.38 $ 1.64 $ ( 1.84 )

Earnings per common share - basic $ 6.32 $ 8.44 $ 1.64

Earnings per common share - diluted $ 6.28 $ 8.38 $ 1.64

Weighted-average common shares outstanding - basic 721.0 743.6 740.5

4 unchanged sentences

(In millions) For the years ended Dec 31, 2022 2021 2020

Net income (loss) $ 6,405 $ 1,294 $ ( 1,272 )

Net income $ 4,640 $ 6,405 $ 1,294

Other comprehensive income (loss), net of tax

4 unchanged sentences

Total other comprehensive income (loss) 1,838 1,878 ( 609 )

Comprehensive income (loss) 8,283 685 ( 2,426 )

Comprehensive income 6,478 8,283 685

Comprehensive income attributable to noncontrolling interests, net of tax 58 94 69

Comprehensive income (loss) attributable to Dow Inc.

Comprehensive income attributable to Dow Inc.

$ 6,420 $ 8,189 $ 616

64 unchanged sentences

(In millions) For the years ended Dec 31, 2022 2021 2020

2021 2020 2019

Operating Activities

Net income (loss) $ 6,405 $ 1,294 $ ( 1,272 )

Income from discontinued operations, net of tax — — 445

Income (loss) from continuing operations, net of tax 6,405 1,294 ( 1,717 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 4,640 $ 6,405 $ 1,294

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 2,758 2,842 2,874

Provision (credit) for deferred income tax 278 258 ( 228 )

Provision for deferred income tax 79 278 258

Earnings of nonconsolidated affiliates less than (in excess of) dividends received 696 ( 651 ) 443

2 unchanged sentences

Net gain on sales of assets, businesses and investments ( 19 ) ( 105 ) ( 802 )

Restructuring, goodwill impairment and asset related charges - net 6 708 3,219

Restructuring and asset related charges - net 118 6 708

Other net loss 212 921 318

5 unchanged sentences

Cash provided by operating activities - continuing operations 7,486 7,069 6,252

Cash provided by (used for) operating activities - discontinued operations ( 60 ) ( 26 ) 217

Cash used for operating activities - discontinued operations ( 11 ) ( 60 ) ( 26 )

Cash provided by operating activities 7,475 7,009 6,226

7 unchanged sentences

Distributions and loan repayments from nonconsolidated affiliates 52 51 7

Proceeds from sales of ownership interests in nonconsolidated affiliates 11 — —

Purchases of investments ( 1,366 ) ( 1,366 ) ( 1,203 )

1 unchanged sentence

Other investing activities, net ( 50 ) ( 10 ) 29

Cash used for investing activities - continuing operations ( 2,914 ) ( 841 ) ( 2,158 )

Cash used for investing activities - discontinued operations — — ( 34 )

Cash used for investing activities ( 2,970 ) ( 2,914 ) ( 841 )

10 unchanged sentences

Distributions to noncontrolling interests ( 83 ) ( 73 ) ( 62 )

Purchases of noncontrolling interests — — ( 297 )

Dividends paid to stockholders ( 2,006 ) ( 2,073 ) ( 2,071 )

Dividends paid to DowDuPont Inc.

Settlements and transfers related to separation from DowDuPont Inc.

Cash used for financing activities - continuing operations ( 6,071 ) ( 2,764 ) ( 4,077 )

Cash used for financing activities - discontinued operations — — ( 18 )

Cash used for financing activities ( 3,361 ) ( 6,071 ) ( 2,764 )

9 unchanged sentences

(In millions, except per share amounts) For the years ended Dec 31, 2022 2021 2020

Balance at beginning of year $ 8 $ 8 $ —

Common stock issued — — 8

Balance at end of year 8 8 8

Balance at beginning and end of year $ 8 $ 8 $ 8

Additional Paid-in Capital

1 unchanged sentence

Common stock issued / sold 212 320 108

Issuance of parent company stock - DowDuPont Inc.

Stock-based compensation and allocation of ESOP shares 258 236 162

Treasury stock issuances - compensation and benefit plans ( 79 ) — —

Other ( 2 ) — —

2 unchanged sentences

Balance at beginning of year 20,623 16,361 17,045

Net income (loss) available for Dow Inc.'s common stockholders 6,311 1,225 ( 1,359 )

Net income available for Dow Inc.'s common stockholders 4,582 6,311 1,225

Dividends to stockholders ( 2,006 ) ( 2,073 ) ( 2,071 )

Dividends to DowDuPont Inc.

Common control transaction — 46 177

Adoption of accounting standards — — ( 151 )

Other ( 19 ) ( 22 ) ( 15 )

3 unchanged sentences

Other comprehensive income (loss) 1,838 1,878 ( 609 )

Common control transaction — — 793

Balance at end of year ( 7,139 ) ( 8,977 ) ( 10,855 )

1 unchanged sentence

Balance at beginning of year ( 15 ) ( 49 ) ( 91 )

Stock-based compensation and allocation of ESOP shares 34 42 45

ESOP shares acquired — — ( 2 )

Allocation of ESOP shares 15 34 42

Balance at end of year — ( 15 ) ( 49 )

2 unchanged sentences

Treasury stock purchases ( 2,325 ) ( 1,000 ) ( 125 )

Treasury stock issuances - compensation and benefit plans 79 — —

Balance at end of year ( 3,871 ) ( 1,625 ) ( 625 )

12 unchanged sentences

Amortization of intangibles 336 388 401

Restructuring, goodwill impairment and asset related charges - net 6 708 3,219

Restructuring and asset related charges - net 118 6 708

Integration and separation costs — — 239

3 unchanged sentences

Interest expense and amortization of debt discount 662 731 827

Income (loss) from continuing operations before income taxes 8,106 2,081 ( 1,125 )

Provision for income taxes on continuing operations 1,738 777 470

Income (loss) from continuing operations, net of tax 6,368 1,304 ( 1,595 )

Income from discontinued operations, net of tax — — 445

Net income (loss) 6,368 1,304 ( 1,150 )

Income before income taxes 6,091 8,106 2,081

Provision for income taxes 1,450 1,738 777

Net income 4,641 6,368 1,304

Net income attributable to noncontrolling interests 58 94 69

Net income (loss) available for The Dow Chemical Company common stockholder $ 6,274 $ 1,235 $ ( 1,237 )

Net income available for The Dow Chemical Company common stockholder $ 4,583 $ 6,274 $ 1,235

See Notes to the Consolidated Financial Statements.

2 unchanged sentences

(In millions) For the years ended Dec 31, 2022 2021 2020

Net income (loss) $ 6,368 $ 1,304 $ ( 1,150 )

Net income $ 4,641 $ 6,368 $ 1,304

Other comprehensive income (loss), net of tax

4 unchanged sentences

Total other comprehensive income (loss) 1,838 1,878 ( 609 )

Comprehensive income (loss) 8,246 695 ( 2,304 )

Comprehensive income 6,479 8,246 695

Comprehensive income attributable to noncontrolling interests, net of tax 58 94 69

Comprehensive income (loss) attributable to The Dow Chemical Company $ 8,152 $ 626 $ ( 2,403 )

Comprehensive income attributable to The Dow Chemical Company $ 6,421 $ 8,152 $ 626

See Notes to the Consolidated Financial Statements.

57 unchanged sentences

(In millions) For the years ended Dec 31, 2022 2021 2020

2021 2020 2019

Operating Activities

Net income (loss) $ 6,368 $ 1,304 $ ( 1,150 )

Income from discontinued operations, net of tax — — 445

Income (loss) from continuing operations, net of tax 6,368 1,304 ( 1,595 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Net income $ 4,641 $ 6,368 $ 1,304

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 2,758 2,842 2,874

Provision (credit) for deferred income tax 278 258 ( 228 )

Provision for deferred income tax 80 278 258

Earnings of nonconsolidated affiliates less than (in excess of) dividends received 696 ( 651 ) 443

2 unchanged sentences

Net gain on sales of assets, businesses and investments ( 19 ) ( 105 ) ( 802 )

Restructuring, goodwill impairment and asset related charges - net 6 708 3,219

Restructuring and asset related charges - net 118 6 708

Other net loss 221 927 320

4 unchanged sentences

Other assets and liabilities, net ( 1,043 ) 157 589

Cash provided by operating activities - continuing operations 7,200 6,263 5,706

Cash provided by operating activities - discontinued operations — — 371

Cash provided by operating activities 7,519 7,200 6,263

7 unchanged sentences

Distributions and loan repayments from nonconsolidated affiliates 52 51 7

Proceeds from sales of ownership interests in nonconsolidated affiliates 11 — —

Purchases of investments ( 1,366 ) ( 1,366 ) ( 1,203 )

1 unchanged sentence

Other investing activities, net ( 50 ) ( 10 ) 29

Cash used for investing activities - continuing operations ( 2,914 ) ( 841 ) ( 2,158 )

Cash used for investing activities - discontinued operations — — ( 34 )

Cash used for investing activities ( 2,970 ) ( 2,914 ) ( 841 )

9 unchanged sentences

Distributions to noncontrolling interests ( 83 ) ( 73 ) ( 62 )

Purchases of noncontrolling interests — — ( 297 )

Dividends paid to DowDuPont Inc.

Dividends paid to Dow Inc.

( 4,375 ) ( 3,264 ) ( 2,233 )

Settlements and transfers related to separation from DowDuPont Inc.

Cash used for financing activities - continuing operations ( 6,262 ) ( 2,801 ) ( 4,224 )

Cash used for financing activities - discontinued operations — — ( 18 )

Cash used for financing activities ( 3,405 ) ( 6,262 ) ( 2,801 )

13 unchanged sentences

Issuance of parent company stock - Dow Inc.

Issuance of parent company stock - DowDuPont Inc.

Stock-based compensation and allocation of ESOP shares 258 236 162

3 unchanged sentences

Balance at beginning of year 19,288 16,300 17,313

Net income (loss) available for The Dow Chemical Company's common stockholder 6,274 1,235 ( 1,237 )

Net income available for The Dow Chemical Company's common stockholder 4,583 6,274 1,235

Dividends to Dow Inc.

( 4,375 ) ( 3,264 ) ( 2,233 )

Dividends to DowDuPont Inc.

Common control transaction — — ( 16,009 )

Adoption of accounting standards — — ( 151 )

Other ( 24 ) ( 22 ) ( 15 )

3 unchanged sentences

Other comprehensive income (loss) 1,838 1,878 ( 609 )

Common control transaction — — 793

Balance at end of year ( 7,139 ) ( 8,977 ) ( 10,855 )

1 unchanged sentence

Balance at beginning of year ( 15 ) ( 49 ) ( 91 )

Stock-based compensation and allocation of ESOP shares 34 42 45

ESOP shares acquired — — ( 2 )

Allocation of ESOP shares 15 34 42

Balance at end of year — ( 15 ) ( 49 )

8 unchanged sentences

2 Recent Accounting Guidance

3 Separation from DowDuPont

4 Divestitures

6 Restructuring, Goodwill Impairment and Asset Related Charges - Net

5 Restructuring and Asset Related Charges - Net

6 Supplementary Information

17 unchanged sentences

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Merger and Separation

On April 1, 2019, DowDuPont Inc.

(“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc.

or "DuPont") completed the separation of its materials science business and Dow Inc.

became the direct parent company of The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the “Company”).

The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 (the "Merger Agreement").

du Pont de Nemours and Company and its consolidated subsidiaries (“Historical DuPont”) each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”).

Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups:

agriculture, materials science and specialty products.

was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

See Note 3 for additional information.

Principles of Consolidation and Basis of Presentation

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Investments in nonconsolidated affiliates (20-50 percent owned companies or less than 20 percent owned companies over which significant influence is exercised) are primarily accounted for using the equity method.

Effective April 1, 2019, Dow Inc.

owns all of the outstanding common shares of TDCC.

TDCC is deemed the predecessor to Dow Inc.

and the historical results of TDCC are deemed the historical results of Dow Inc.

for periods prior to and including March 31, 2019.

As a result of the parent/subsidiary relationship between Dow Inc.

2 unchanged sentences

and TDCC, except where otherwise noted.

As of the effective date and time of the distribution, DowDuPont no longer beneficially owned any equity interest in Dow and no longer consolidated Dow and its consolidated subsidiaries into its financial results.

The consolidated financial results of Dow for the applicable periods presented reflect the distribution of TDCC’s agricultural sciences business (“AgCo”) and specialty products business (“SpecCo”) as discontinued operations, as well as the receipt of Historical DuPont’s ethylene and ethylene copolymers businesses (other than its ethylene acrylic elastomers business) (“ECP”) as a common control transaction from the closing of the Merger on August 31, 2017 ("Merger Date").

Transactions between TDCC and Dow Inc.

are treated as related party transactions for TDCC.

See Note 24 for additional information.

3 unchanged sentences

See Note 25 for additional information.

From the Merger Date through the separation, transactions between DowDuPont, TDCC and Historical DuPont and their affiliates were treated as related party transactions.

Transactions between TDCC and Historical DuPont primarily consisted of the sale and procurement of certain raw materials that were consumed in each company's manufacturing process.

Transactions between TDCC and Dow Inc.

are treated as related party transactions for TDCC.

See Note 25 for additional information.

Throughout this Annual Report on Form 10-K, unless otherwise indicated, amounts and activity are presented on a continuing operations basis.

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.

Certain reclassifications of prior period amounts have been made to conform with the current year presentation.

Use of Estimates in Financial Statement Preparation

102 unchanged sentences

These severance costs are accrued once management commits to a plan of termination and it becomes probable that employees will be entitled to benefits at amounts that can be reasonably estimated.

Integration and Separation Costs

The Company classifies expenses related to the Merger and separation as "Integration and separation costs" in the consolidated statements of income.

Merger and separation related costs include:

post-Merger integration expenses, costs incurred for the separation of AgCo and SpecCo and costs related to the integration of ECP.

Integration and separation costs primarily consist of financial adviser, information technology, legal, accounting, consulting and other professional advisory fees associated with preparation and execution of these activities.

Integration and separation costs related to the Merger and separation were completed as of December 31, 2020.

The Company accounts for income taxes using the asset and liability method.

9 unchanged sentences

The calculation of diluted earnings per common share reflects the effect of all potential common shares that were outstanding during the respective periods, unless the effect of doing so is antidilutive.

Adoption of Accounting Standards

Effective January 1, 2019, the Company adopted Accounting Standards Update ("ASU") 2016-02, “Leases (Topic 842),” and the associated ASUs (collectively, "Topic 842") and added the accounting policy on leases discussed in the section above.

Adoption of the new standard resulted in the recording of operating lease ROU assets and lease liabilities of $ 2.3 billion at January 1, 2019.

The net impact to “Retained earnings” was an increase of $ 32 million and was primarily a result of the recognition of a deferred gain associated with a prior sale-leaseback transaction.

The impact is reflected in the "Adoption of accounting standards" line in the consolidated statements of equity of both Dow Inc.

See Note 17 for additional information.

In addition, the consolidated financial statements reflect the impact of the adoption of ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)," and the associated ASUs (collectively, "Topic 606") at January 1, 2019 by certain nonconsolidated affiliates of the Company, which were subsequently distributed as part of the separation from DowDuPont.

The net impact was reflected in assets and liabilities of discontinued operations with a corresponding reduction to "Retained earnings" of $ 183 million in the consolidated balance sheets at January 1, 2019.

The impact is reflected in the "Adoption of accounting standards" line in the consolidated statements of equity of both Dow Inc.

TDCC Dividends

Effective with the Merger, TDCC no longer had publicly traded common stock.

TDCC's common shares were owned solely by its parent company, DowDuPont, prior to separation, and TDCC's Board of Directors ("Board") determined whether or not there would be a dividend distribution to DowDuPont.

Effective with the separation from DowDuPont, TDCC became a wholly owned subsidiary of Dow Inc.

and TDCC's Board determines whether or not there will be a dividend distribution to Dow Inc.

TDCC is a wholly owned subsidiary of Dow Inc.

and TDCC's Board of Directors determines whether or not there will be a dividend distribution to Dow Inc.

See Notes 17 and 24 for additional information.

1 unchanged sentence

Recently Adopted Accounting Guidance

In the first quarter of 2021, the Company adopted Accounting Standards Update 2019-12, "Income Taxes (Topic 740):

In the first quarter of 2021, the Company adopted Accounting Standards Update ("ASU") 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 3 – SEPARATION FROM DOWDUPONT

Effective August 31, 2017, TDCC and Historical DuPont completed the merger of equals transaction contemplated by the Merger Agreement, by and among TDCC, Historical DuPont, DowDuPont, Diamond Merger Sub, Inc.

and Orion Merger Sub, Inc.

Pursuant to the Merger Agreement, (i) Diamond Merger Sub, Inc.

was merged with and into TDCC, with TDCC surviving the merger as a subsidiary of DowDuPont (the "Diamond Merger") and (ii) Orion Merger Sub, Inc.

was merged with and into Historical DuPont, with Historical DuPont surviving the merger as a subsidiary of DowDuPont (the "Orion Merger" and, together with the Diamond Merger, the "Mergers").

Following the consummation of the Mergers, each of TDCC and Historical DuPont became subsidiaries of DowDuPont.

Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups:

agriculture, materials science and specialty products.

was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

On April 1, 2019, DowDuPont completed the previously announced separation of its materials science business.

The separation was effected by way of a pro rata distribution of all of the then-issued and outstanding shares of Dow Inc.

common stock to DowDuPont stockholders of record as of the close of business, Eastern Time, on March 21, 2019 (the “Record Date”).

The shareholders of record of DowDuPont received one share of Dow Inc.

common stock, par value $ 0.01 per share, for every three shares of DowDuPont common stock, par value $ 0.01 per share, held as of the Record Date.

No fractional shares of Dow Inc.

common stock were issued.

Instead, cash in lieu of any fractional shares was paid to DowDuPont registered shareholders.

The number of shares of Dow Inc.

common stock issued on April 1, 2019 was 748.8 million shares.

is now an independent, publicly traded company and Dow Inc.

common stock is listed on the NYSE under the symbol “DOW.” Dow Inc.

common stock began regular-way trading on April 2, 2019, the first day following the distribution.

Effective April 1, 2019, TDCC became a wholly owned subsidiary of Dow Inc.

As of the effective date and time of the distribution, DowDuPont did not beneficially own any equity interest in Dow and no longer consolidated Dow and its consolidated subsidiaries into its financial results.

Beginning in the second quarter of 2019, Dow’s consolidated financial results reflect the results of Dow Inc.

and its consolidated subsidiaries - that is, TDCC after giving effect to the distribution of AgCo and SpecCo and the receipt of ECP.

The consolidated financial results of Dow for periods prior to April 1, 2019, reflect the distribution of AgCo and SpecCo as discontinued operations for each period presented as well as reflect the receipt of ECP as a common control transaction from the closing of the Merger on August 31, 2017.

On April 1, 2019, Dow Inc.

received a cash contribution of $ 2,024 million from DowDuPont as part of the internal reorganization and business realignment steps between Dow Inc., TDCC and DowDuPont.

recognized a reduction to "Retained earnings" of $ 14,806 million in 2019 as a result of the cash contribution, the distribution of AgCo and SpecCo, and other separation related adjustments.

TDCC recognized a reduction to "Retained earnings" of $ 16,009 million in 2019 as a result of the distribution of AgCo and SpecCo.

Receipt of ECP

As the receipt of ECP was accounted for as a transfer between entities under common control, the consolidated financial statements have been retrospectively adjusted to reflect the receipt of ECP from the closing of the Merger on August 31, 2017.

All intercompany transactions have been eliminated in consolidation.

Distribution of AgCo and SpecCo

Upon distribution, the Company retrospectively adjusted the previously issued consolidated financial statements and presented AgCo and SpecCo as discontinued operations based on the guidance in ASC 205-20 “Discontinued Operations” (“ASC 205-20”).

The results of operations of AgCo and SpecCo are presented as discontinued operations in the consolidated statements of income and are summarized in the following table:

Results of Operations of AgCo and SpecCo 2019 1

Net sales $ 2,953

Cost of sales 1,804

Research and development expenses 175

Selling, general and administrative expenses 262

Amortization of intangibles 61

Restructuring and asset related charges - net 78

Equity in earnings of nonconsolidated affiliates 28

Sundry income (expense) - net ( 18 )

Interest income 3

Interest expense and amortization of debt discount 7

Income from discontinued operations before income taxes $ 579

Provision for income taxes 134

Income from discontinued operations, net of tax $ 445

Results through March 31, 2019.

Agreements Related to the Separation and Distribution

In connection with the separation, Dow Inc.

entered into certain agreements with 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 the separation, 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 are primarily reflected in the consolidated financial statements of Dow Inc.

In 2019, the Company recorded pretax charges related to the Agreements of $ 69 million in "Sundry income (expense) - net" and $ 24 million in "Integration and separation costs" in the consolidated statements of income of Dow Inc., related to Corporate.

At December 31, 2021, the Company had no assets ($ 77 million at December 31, 2020) included in "Other current assets" and $ 20 million ($ 33 million at December 31, 2020) included in "Noncurrent receivables" and liabilities of $ 148 million ($ 412 million at December 31, 2020) included in "Accrued and other current liabilities" and $ 39 million ($ 46 million at December 31, 2020) included in "Other noncurrent obligations" in the consolidated balance sheets of Dow Inc.

Any adjustments to these assets and liabilities in subsequent periods will be recorded in Dow Inc.'s results of operations.

In addition, the Company deferred approximately $ 400 million of the cash distribution received from DowDuPont at separation and recorded an associated liability with an offset to "Retained earnings" in the consolidated balance sheets of Dow Inc.

At December 31, 2021, $ 15 million ($ 103 million at December 31, 2020) of this liability was recorded in "Accrued and other current liabilities" and $ 96 million ($ 96 million at December 31, 2020) was recorded in "Other noncurrent obligations" in the consolidated balance sheets of Dow Inc.

In the fourth quarter of 2021, due to changes in certain underlying exposures, Dow Inc.

reversed $ 46 million of the liability.

Based on notices received in the fourth quarter of 2020, Dow Inc.

reversed $ 177 million of the liability.

The impact of the reversals are reflected in the "Common control transaction" line in the consolidated statements of equity of Dow Inc.

The final resolution of the remaining liability is uncertain and any subsequent adjustments to the carrying value of this liability will be reflected in equity of Dow Inc.

In 2021, Dow Inc.

made net cash payments of $ 60 million ($ 18 million in 2020 and $ 215 million in 2019) related to the Agreements, recorded in "Cash flows from operating activities - discontinued operations" in the Dow Inc.

consolidated statements of cash flows.

The Company also received $ 144 million in 2021 (insignificant in 2020 and $ 98 million in 2019) related to the Agreements, recorded in "Other assets and liabilities, net" within "Cash flows from operating activities - continuing operations" in the Dow Inc.

consolidated statements of cash flows.

Continuing Involvement

The Company has certain product and service agreements with DuPont and Corteva that were considered intercompany transactions prior to the separation, but are trade transactions subsequent to the separation.

These transactions have been retrospectively reclassified as trade transactions in the consolidated financial statements.

Based on the Company’s assessment of the specific factors identified in ASC Topic 205, “Presentation of Financial Statements,” the Company concluded that these agreements do not constitute significant continuing involvement in AgCo or SpecCo.

Integration and Separation Costs

Integration and separation costs, which reflect costs related to post-Merger integration and business separation activities, were $ 239 million in 2020 and $ 1,063 million and $ 1,039 million for Dow Inc.

and TDCC, respectively, in 2019.

Integration and separation costs related to post-Merger integration and business separation activities were completed as of December 31, 2020.

The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Accounting Guidance Issued But Not Adopted at December 31, 2022

In September 2022, the Financial Accounting Standards Board issued ASU 2022-04, "Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations," which requires disclosures intended to enhance the transparency of supplier finance programs.

The amendments in this ASU require buyers in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

The amendments should be applied retrospectively to each period in which a balance sheet is presented, except for disclosure of rollforward information, which should be applied prospectively.

The ASU only requires disclosures related to the Company's supplier finance

programs and does not affect the recognition, measurement or financial statement presentation of supplier finance program obligations.

The Company expects to adopt the new disclosure requirements in the first quarter of 2023, with the exception of the annual requirement to disclose rollforward information, which the Company expects to early adopt and present prospectively beginning in the 2023 annual financial statements.

NOTE 3 – REVENUE

The majority of the Company's revenue is derived from product sales.

In 2021, 99 percent of the Company's revenue related to product sales ( 99 percent in 2020 and 98 percent in 2019).

In 2022, 99 percent of the Company's revenue related to product sales ( 99 percent in 2021 and 2020).

The remaining sales were primarily related to the Company's insurance operations and licensing of patents and technologies.

Disaggregation of Revenue

Dow 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 2022 2021 2020

Hydrocarbons & Energy $ 9,414 $ 8,149 $ 4,271

Packaging and Specialty Plastics 19,846 19,979 14,030

Packaging & Specialty Plastics $ 29,260 $ 28,128 $ 18,301

Industrial Solutions $ 5,682 $ 5,139 $ 3,929

Polyurethanes & Construction Chemicals 10,907 11,700 8,080

Others 17 12 12

Industrial Intermediates & Infrastructure $ 16,606 $ 16,851 $ 12,021

Coatings & Performance Monomers $ 4,051 $ 4,050 $ 3,258

Consumer Solutions 6,713 5,622 4,693

Performance Materials & Coatings $ 10,764 $ 9,672 $ 7,951

Corporate $ 272 $ 317 $ 269

Total $ 56,902 $ 54,968 $ 38,542

Net Trade Sales by Geographic Region 2022 2021 2020

& Canada $ 20,945 $ 19,613 $ 13,582

19,631 19,746 12,969

Asia Pacific 10,344 10,043 8,165

Latin America 5,982 5,566 3,826

Total $ 56,902 $ 54,968 $ 38,542

Europe, Middle East, Africa and India.

Product Sales

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Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

The Company elected to use the practical expedient to expense cash and non-cash sales incentives, as the amortization period for the costs to obtain the contract would have been one year or less.

Company elected to use the practical expedient to expense cash and non-cash sales incentives, as the amortization period for the costs to obtain the contract would have been one year or less.

Certain long-term contracts include a series of distinct goods that are delivered continuously to the customer through a pipeline (e.g., feedstocks).

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These payments are included in "Accrued and other current liabilities" and "Other noncurrent obligations" in the consolidated balance sheets.

Disaggregation of Revenue

See details in the tables below:

Net Trade Sales by Segment and Business 2021 2020 2019

Hydrocarbons & Energy $ 8,149 $ 4,271 $ 5,357

Packaging and Specialty Plastics 19,979 14,030 14,888

Packaging & Specialty Plastics $ 28,128 $ 18,301 $ 20,245

Industrial Solutions $ 5,139 $ 3,929 $ 4,310

Polyurethanes & Construction Chemicals 11,700 8,080 9,117

Others 12 12 13

Industrial Intermediates & Infrastructure $ 16,851 $ 12,021 $ 13,440

Coatings & Performance Monomers $ 4,050 $ 3,258 $ 3,517

Consumer Solutions 5,622 4,693 5,406

Performance Materials & Coatings $ 9,672 $ 7,951 $ 8,923

Corporate $ 317 $ 269 $ 343

Total $ 54,968 $ 38,542 $ 42,951

Net Trade Sales by Geographic Region 2021 2020 2019

& Canada $ 19,613 $ 13,582 $ 15,549

19,746 12,969 14,612

Asia Pacific 10,043 8,165 8,676

Latin America 5,566 3,826 4,114

Total $ 54,968 $ 38,542 $ 42,951

Europe, Middle East, Africa and India.

Contract Assets and Liabilities

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"Contract liabilities - noncurrent" includes advance payments that 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 2021 from amounts included in contract liabilities at the beginning of the period was approximately $ 295 million (approximately $ 145 million in 2020 and 2019).

In 2021, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming unconditional was approximately $ 35 million (approximately $ 25 million in 2020).

The Company did not recognize any asset impairment charges related to contract assets in 2021, 2020 or 2019.

Revenue recognized in 2022 from amounts included in contract liabilities at the beginning of the period was approximately $ 250 million (approximately $ 295 million in 2021 and $ 145 million in 2020).

In 2022, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming

unconditional was approximately $ 15 million (approximately $ 35 million in 2021).

Asset impairment charges related to contract assets in 2022 were insignificant (no impairment charges in 2021 or 2020).

The following table summarizes the contract assets and liabilities at December 31, 2022 and 2021:

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Accrued and other current liabilities $ 275 $ 209

Contract liabilities - noncurrent Other noncurrent obligations $ 1,925 $ 1,915

The decrease from December 31, 2020 to December 31, 2021 was due to recognition of deferred royalty payments.

Contract liabilities - noncurrent 2

Other noncurrent obligations $ 1,725 $ 1,925

The increase from December 31, 2021 to December 31, 2022 was due to the reclassification of deferred royalty payments from noncurrent to current.

The decrease from December 31, 2021 to December 31, 2022 was due to the recognition of revenue on long-term product supply agreements and the reclassification of deferred royalty payments from noncurrent to current.

NOTE 4 – DIVESTITURES

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As a result, the divestiture is not reported as discontinued operations.

NOTE 6 – RESTRUCTURING, GOODWILL IMPAIRMENT AND ASSET RELATED CHARGES - NET

The "Restructuring, goodwill impairment and asset related charges - net" line in the consolidated statements of income is used to record charges for restructuring programs, goodwill impairments, and other asset related charges, which includes other asset impairments.

NOTE 5 – RESTRUCTURING AND ASSET RELATED CHARGES - NET

The "Restructuring and asset related charges - net" line in the consolidated statements of income is used to record charges for restructuring programs and other asset related charges, which includes other asset impairments.

Restructuring Programs

2020 Restructuring Program

On September 29, 2020, the 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.

On September 29, 2020, the Dow Inc.

Board 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 was designed to reduce structural costs and enable the Company to further enhance competitiveness while the COVID-19 economic recovery gained traction.

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Severance benefits are provided to employees primarily under Dow's ongoing benefit arrangements and are accrued against the Corporate segment once management commits to a plan of termination.

The actions related to the 2020 Restructuring Program were substantially complete by the end of 2021, except for certain cash payments expected to be made in 2022.

The actions related to the 2020 Restructuring Program were substantially complete by the end of 2021, with the exception of certain cash payments that will continue into 2023.

In the third quarter of 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.

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Reserve balance at Dec 31, 2021 $ 104 $ — $ 64 $ 168

Cash payments ( 88 ) — ( 11 ) ( 99 )

Reserve balance at Dec 31, 2022 $ 16 $ — $ 53 $ 69

At December 31, 2022, $ 22 million ($ 112 million at December 31, 2021) of the reserve balance was included in "Accrued and other current liabilities" and $ 47 million ($ 56 million at December 31, 2021) was included in "Other noncurrent obligations" in the consolidated balance sheets.

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• Industrial Intermediates & Infrastructure recorded a charge of $ 22 million to rationalize its asset footprint by shutting down certain amines and solvents facilities in the United States and Europe as well as select, small-scale downstream polyurethanes manufacturing facilities.

• Performance Materials & Coatings recorded a charge of $ 116 million to shut down manufacturing assets, primarily related to small-scale coatings reactors, and will also rationalize its upstream asset footprint in Europe and the U.S.

• Performance Materials & Coatings recorded a charge of $ 116 million for shutting down manufacturing assets, primarily related to small-scale coatings reactors, and also rationalized its upstream asset footprint in Europe and the U.S.

& Canada by adjusting the supply of siloxane and silicon metal to balance to regional needs.

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The 2020 Restructuring Program included charges of $ 10 million for costs associated with exit and disposal activities in 2021, which included contract termination fees and environmental remediation, impacting Packaging & Specialty Plastics ($ 8 million) and Performance Materials & Coatings ($ 2 million).

DowDuPont Cost Synergy Program

In September and November 2017, 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.

The Company expected (prior to the impact of any discontinued operations) to record total pretax restructuring charges of approximately $ 1.3 billion, which included initial estimates of approximately $ 525 million to $ 575 million of severance and related benefit costs, $ 400 million to $ 440 million of asset write-downs and write-offs, and $ 290 million to $ 310 million of costs associated with exit and disposal activities.

The restructuring charges below reflect charges from continuing operations.

The Company recorded pretax restructuring charges of $ 292 million in 2019, consisting of severance and related benefit costs of $ 123 million, assets write-downs and write-offs of $ 143 million and costs associated with exit and disposal activities of $ 26 million.

In 2020, the Company recorded pretax restructuring charges of $ 86 million and reduced pretax restructuring charges by $ 6 million in 2021, both for severance and related benefit costs.

Cash expenditures related to the Synergy Program were substantially complete at December 31, 2020.

At December 31, 2021, $ 4 million was included in "Accrued and other current liabilities" ($ 21 million at December 31, 2020) and $ 10 million ($ 13 million at December 31, 2020) was included in "Other noncurrent obligations" in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $ 955 million inception-to-date under the Synergy Program on a continuing operations basis, consisting of severance and related benefit costs of $ 647 million, asset write-downs and write-offs of $ 263 million and costs associated with exit and disposal activities of $ 45 million.

Asset Write-downs and Write-offs

The restructuring charges related to the write-down and write-off of assets in 2019 under the Synergy Program were as follows:

• The Company recorded a charge of $ 143 million for other miscellaneous asset write-downs and write-offs, including the shutdown of several small manufacturing facilities and the write-off of non-manufacturing assets and certain corporate facilities.

The charge related to Industrial Intermediates & Infrastructure ($ 2 million), Performance Materials & Coatings ($ 28 million) and Corporate ($ 113 million).

These manufacturing facilities were substantially shut down by the end of 2020.

There were no restructuring charges related to the write-down and write-off of assets in 2020 and 2021 under the Synergy Program.

Costs Associated with Exit and Disposal Activities

The restructuring charges for costs associated with exit and disposal activities, including contract cancellation penalties and environmental remediation liabilities, totaled $ 26 million in 2019 and zero in 2020 and 2021.

The Company expects to incur additional costs in the future related to its restructuring activities.

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These costs cannot be reasonably estimated at this time.

2019 Goodwill Impairment

Upon completion of the goodwill impairment testing in the fourth quarter of 2019, the Company determined the fair value of the Coatings & Performance Monomers reporting unit was lower than its carrying amount.

As a result, the Company recorded an impairment charge of $ 1,039 million in the fourth quarter of 2019, related to Performance Materials & Coatings.

See Note 13 for additional information.

Asset Related Charges

In 2022, the Company recorded pretax asset related charges of $ 118 million due to the Russia and Ukraine conflict and the expectation that certain assets would 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 in 2022 were as follows:

$ 8 million in Packaging & Specialty Plastics, $ 73 million in Industrial Intermediates & Infrastructure, $ 6 million in Performance Materials & Coatings and $ 31 million in Corporate.

In 2020, the Company recognized pretax impairment charges of $ 49 million, including additional pretax impairment charges for capital additions made to a bio-ethanol manufacturing facility in Santa Vitoria, Minas Gerais, Brazil ("Santa Vitoria"), which was impaired in 2017 and divested in 2020, as well as charges for miscellaneous write-offs and write-downs of non-manufacturing assets and the write-down of certain corporate leased equipment.

1 unchanged sentence

See Note 22 for additional information.

On August 13, 2019, the Company entered into a definitive agreement to sell its acetone derivatives business to ALTIVIA Ketones & Additives, LLC.

The transaction closed on November 1, 2019 and included the Company's acetone derivatives related inventory and production assets, located in Institute, West Virginia, in addition to the site infrastructure, land, utilities and certain railcars.

The Company remains at the Institute site as a tenant.

As a result of the planned transaction, the Company recognized a pretax impairment charge of $ 75 million in the third quarter of 2019, related to Packaging & Specialty Plastics ($ 24 million) and Corporate ($ 51 million).

See Note 23 for additional information.

In the fourth quarter of 2019, upon completion of an evaluation of its equity method investment in Sadara Chemical Company ("Sadara") for other-than-temporary impairment, the Company determined that its investment in Sadara was other-than-temporarily impaired and it was written down to zero.

Additionally, as part of Dow's evaluation of Sadara, the Company reserved certain of its notes and accounts receivable with Sadara due to uncertainty on the timing of collection.

As a result, the Company recorded a $ 1,755 million charge, related to Packaging & Specialty Plastics ($ 370 million), Industrial Intermediates & Infrastructure ($ 1,168 million) and Corporate ($ 217 million).

See Notes 12 and 23 for additional information.

In 2019, the Company recognized pretax impairment charges of $ 58 million related primarily to capital additions at Santa Vitoria, and related to Packaging & Specialty Plastics ($ 44 million), Performance Materials & Coatings ($ 9 million) and Corporate ($ 5 million).

See Note 23 for additional information.

Subsequent Event

On January 25, 2023, the Dow Inc.

Board approved restructuring actions to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the global recessionary environment and to enhance its agility and long-term competitiveness across the economic cycle.

This program includes a global workforce cost reduction, decreasing turnaround spending, actions to rationalize the Company’s manufacturing assets, which includes asset write-down and write-off charges and related contract termination fees.

The Company will record a charge in the first quarter of 2023 for costs associated with these activities.

In total, these costs are expected to be in the range of $ 550 million to $ 725 million and will consist of severance and related benefit costs ranging from $ 330 million to $ 425 million in connection with a global workforce reduction of approximately 2,000 roles;

costs associated with exit and disposal activities ranging from $ 20 million to $ 50 million;

and asset write-downs and write-offs ranging from $ 200 million to $ 250 million.

Future cash payments related to severance costs, contract termination fees and environmental remediation costs are anticipated to be approximately $ 450 million to $ 550 million and will be paid out primarily over the next two years.

NOTE 6 – SUPPLEMENTARY INFORMATION

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$ 358 $ 332 $ 103 $ 358 $ 332 $ 103

Foreign exchange gains (losses) ( 8 ) ( 62 ) 91 ( 13 ) ( 65 ) 77

Foreign exchange losses 2

( 117 ) ( 8 ) ( 62 ) ( 126 ) ( 13 ) ( 65 )

Loss on early extinguishment of debt 3

1 unchanged sentence

Gain on sales of other assets and investments 78 105 48 78 105 48

Luxi arbitration award 3

Indemnification and other transaction related costs 4

4 30 ( 21 ) — ( 2 ) ( 11 )

Indemnification and other transaction related credits (costs) 4

Luxi arbitration award 5

— 54 — — 54 —

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— — 499 — — 499

Gain related to Nova ethylene asset matter 3

Gain related to Nova legal matter 5

321 — 544 321 — 544

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60 — 5 60 — 5

Loss on Dow Silicones commercial creditor matters 3

— — ( 50 ) — — ( 50 )

Other - net 31 10 84 31 3 82

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See Note 19 for additional information.

See Note 15 for additional information.

Foreign exchange losses in 2022 relate primarily to exposures in the Argentinian peso.

See Note 14 for additional information.

Primarily related to charges associated with agreements entered into with DuPont and Corteva as part of the separation and distribution.

See Note 15 for additional information.

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The year ended December 31, 2020 primarily relates to a loss on the divestiture of a bio-ethanol manufacturing facility in Brazil, related to Packaging & Specialty Plastics.

The year ended December 31, 2019 includes post-closing adjustments on previous divestitures, related to Corporate.

See Note 4 for additional information.

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No other components of "Accrued and other current liabilities" were more than 5 percent of total current liabilities.

Other Investments

The Company has investments in company-owned life insurance policies ("COLI"), 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' 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 December 31, 2021.

In the first nine months of 2020, the Company monetized $ 211 million of its existing COLI policies' value.

In the fourth quarter of 2020, the Company repaid all existing drawdowns against the cash surrender value, which resulted in no monetization of its existing COLI policies' value at December 31, 2020.

The repayments were reflected in "Purchases of investments" in the consolidated statements of cash flows.

Supplemental Cash Flow Information

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The financial statements for Dow Inc.

and TDCC are substantially similar, including the reporting of current and deferred tax expense (benefit), provision for income taxes on continuing operations, and deferred tax asset and liability balances.

and TDCC are substantially similar, including the reporting of current and deferred tax expense (benefit), provision for income taxes, and deferred tax asset and liability balances.

As a result, the following income tax discussion pertains to Dow Inc.

Geographic Allocation of Income and Provision for Income Taxes on Continuing Operations

Geographic Allocation of Income and Provision for Income Taxes

In millions 2022 2021 2020

Income (loss) from continuing operations before income taxes

$ 1,523 $ ( 681 ) $ ( 1,196 )

6,622 2,752 ( 51 )

Income (loss) from continuing operations before income taxes $ 8,145 $ 2,071 $ ( 1,247 )

Income (loss) before income taxes

Domestic $ 2,383 $ 1,523 $ ( 681 )

Foreign 3,707 6,622 2,752

Income before income taxes $ 6,090 $ 8,145 $ 2,071

Current tax expense (benefit)

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Total current tax expense $ 1,371 $ 1,462 $ 519

Deferred tax expense (benefit)

Deferred tax expense

Federal $ 63 $ 130 $ 184

1 unchanged sentence

Foreign 15 122 55

Total deferred tax expense (benefit) $ 278 $ 258 $ ( 228 )

Provision for income taxes on continuing operations $ 1,740 $ 777 $ 470

Income (loss) from continuing operations, net of tax $ 6,405 $ 1,294 $ ( 1,717 )

The 2019 amount includes approximately $ 1.4 billion of expense related to goodwill impairment and environmental matters.

See Notes 13 and 16 for additional information.

The 2019 amount includes approximately $ 1.8 billion of expense for Sadara related charges.

See Note 12 for additional information.

Total deferred tax expense $ 79 $ 278 $ 258

Provision for income taxes $ 1,450 $ 1,740 $ 777

Net income $ 4,640 $ 6,405 $ 1,294

Reconciliation to U.S.

9 unchanged sentences

Changes in valuation allowances ( 2.8 ) 2.6 12.6

Impact of tax reform 3

Federal tax accrual adjustment 2

1 unchanged sentence

State and local income taxes 2.8 0.2 0.3

Sadara related charges 5

Goodwill impairment 6

Other - net 2.3 — ( 0.7 )

Effective tax rate 23.8 % 21.4 % 37.5 %

Certain prior year rates have been adjusted to conform with the current year presentation.

The 2020 impact relates to the divestiture of a bio-ethanol manufacturing facility in Brazil.

See Note 5 for additional information.

Includes the impact of tax reform in Switzerland and the United States.

The 2021 impact represents a capital loss incurred on an internal restructuring fully offset by a valuation allowance reported in "Changes in valuation allowances" line item.

The 2019 impact primarily relates to the favorable impact of the restoration of tax basis in assets, driven by a court judgment that did not involve the Company.

See Note 12 for additional information.

See Note 13 for additional information.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020 in the United States.

While the CARES Act had no significant impact on the Company's provision for income taxes on continuing operations in 2020, the Company filed a tax loss carryback claim for $ 291 million in accordance with the provisions of the CARES Act in 2020.

This resulted in an increase in "Accounts and notes receivable - other" and a decrease in "Deferred income tax assets" in the consolidated balance sheets.

In 2021, the Company received $ 247 million of the tax loss carryback claim with the residual balance expected to be received in 2022.

In the fourth quarter of 2020, a valuation allowance of $ 260 million was recorded in the United States, primarily due to filing of the final combined Dow and DuPont tax return and related unutilized foreign tax credits.

In 2021, the Company's strong earnings and revised projections resulted in a reversal of the valuation allowance.

Deferred Tax Balances at Dec 31 2022 2021

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Total $ 4,234 $ 4,384 $ 5,382 $ 4,530

Certain prior year balances have been adjusted to conform with the current year presentation.

Operating Loss and Tax Credit Carryforwards at Dec 31 2022 2021

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It is not practicable to calculate the unrecognized deferred tax liability on undistributed earnings.

Prior to the separation, TDCC and its consolidated subsidiaries were included in DowDuPont's consolidated federal income tax group and consolidated tax return.

Generally, the consolidated tax liability of the DowDuPont U.S.

tax group for each year was apportioned among the members of the consolidated group based on each member’s separate taxable income.

TDCC and DuPont intend that, to the extent federal and/or state corporate income tax liabilities are reduced through the utilization of tax attributes of the other, settlement of any receivable and payable generated from the use of the other party’s sub-group attributes will be in accordance with a tax sharing agreement and/or tax matters agreement.

At December 31, 2021, the Company had a receivable of zero related to the tax sharing agreement ($ 261 million at December 31, 2020), included in "Other current assets" in the consolidated balance sheets.

Balances related to the tax matters agreement are further discussed in Note 3.

The following table provides a reconciliation of the Company's unrecognized tax benefits:

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Total unrecognized tax benefits that, if recognized, would impact the effective tax rate $ 520 $ 501 $ 285

Total amount of interest and penalties expense (benefit) recognized in "Provision for income taxes on continuing operations" $ 359 $ 84 $ ( 11 )

Total amount of interest and penalties expense (benefit) recognized in "Provision for income taxes" $ ( 27 ) $ 359 $ 84

Total accrual for interest and penalties recognized in the consolidated balance sheets $ 498 $ 502 $ 144

The 2022 impacts primarily relate to the settlement of uncertain tax positions in multiple foreign jurisdictions.

The 2021 impacts primarily relate to an increase in uncertain tax positions due to controversy in multiple jurisdictions related to various prior year cross-border matters.

The Company files tax returns in the multiple jurisdictions.

The Company files tax returns in multiple jurisdictions.

These returns are subject to examination and possible challenge by the tax authorities.

Open tax years are indicated in the table below.

Tax Years Subject to Examination by Major Tax Jurisdiction at Dec 31, 2021 Earliest Open Year

Argentina 2014

The Netherlands 2019

Switzerland 2016

United States:

Federal income tax 2007

State and local income tax 2004

Open years contain matters that could be subject to differing interpretations of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of income tax credits for a given audit cycle.

The ultimate resolution of such uncertainties is not expected to have a material impact on the Company's results of operations.

The earliest open tax years are 2004 for state income taxes and 2007 for federal income taxes in the United States and 2011 in foreign jurisdictions.

NOTE 8 - EARNINGS PER SHARE CALCULATIONS

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In accordance with the accounting guidance for earnings per share, 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 2021 2020 2019

Income (loss) from continuing operations, net of tax $ 6,405 $ 1,294 $ ( 1,717 )

Net income attributable to noncontrolling interests - continuing operations ( 94 ) ( 69 ) ( 74 )

Net income attributable to participating securities - continuing operations 1

( 32 ) ( 9 ) ( 6 )

Income (loss) from continuing operations attributable to common stockholders $ 6,279 $ 1,216 $ ( 1,797 )

Income from discontinued operations, net of tax $ — $ — $ 445

Net income attributable to noncontrolling interests - discontinued operations — — ( 13 )

Income from discontinued operations attributable to common stockholders $ — $ — $ 432

Net income (loss) attributable to common stockholders $ 6,279 $ 1,216 $ ( 1,365 )

Earnings (Loss) Per Share Calculations - Basic 2021 2020 2019

Dollars per share

Income (loss) from continuing operations attributable to common stockholders $ 8.44 $ 1.64 $ ( 2.42 )

Income from discontinued operations, net of tax — — 0.58

Net income (loss) attributable to common stockholders $ 8.44 $ 1.64 $ ( 1.84 )

Earnings (Loss) Per Share Calculations - Diluted 2021 2020 2019

Net Income for Earnings Per Share Calculations 2022 2021 2020

Net income $ 4,640 $ 6,405 $ 1,294

Net income attributable to noncontrolling interests 58 94 69

Net income attributable to participating securities 1

Net income attributable to common stockholders $ 4,558 $ 6,279 $ 1,216

Restricted stock units are considered participating securities due to the Company's practice of paying dividend equivalents on unvested shares.

Earnings Per Share - Basic and Diluted 2022 2021 2020

Dollars per share

Income (loss) from continuing operations attributable to common stockholders $ 8.38 $ 1.64 $ ( 2.42 )

Income from discontinued operations, net of tax — — 0.58

Net income (loss) attributable to common stockholders $ 8.38 $ 1.64 $ ( 1.84 )

Earnings per common share - basic $ 6.32 $ 8.44 $ 1.64

Earnings per common share - diluted $ 6.28 $ 8.38 $ 1.64

Share Count Information 2022 2021 2020

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Weighted-average common shares outstanding - diluted 725.6 749.0 742.3

749.0 742.3 742.5

Stock options and restricted stock units excluded from EPS calculations 1

5.8 14.2 20.8

Restricted stock units are considered participating securities due to the Company's practice of paying dividend equivalents on unvested shares.

The year ended December 31, 2019 reflected a loss from continuing operations, and as such, the basic share count was used for purposes of calculating earnings per share on a diluted basis.

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.

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Total inventories $ 6,988 $ 7,372

Inventories valued on the LIFO basis represented 27 percent of the total inventories at December 31, 2021 and 30 percent of the total inventories at December 31, 2020.

Inventories valued on the LIFO basis represented 27 percent of the total inventories at December 31, 2022 and December 31, 2021.

NOTE 10 – PROPERTY

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The Company has a 35 percent equity interest in this joint venture and has been, and continues to be, responsible for marketing the majority of Sadara’s products through the Company’s established sales channels.

In 2021, Dow and the Saudi Arabian Oil Company agreed to 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 will not impact equity earnings, but is expected to reduce the Company's sales of Sadara products over the five year period.

The Company’s investment in Sadara was $ 1,464 million less than Dow’s proportionate share of the carrying value of the underlying net assets held by Sadara at December 31, 2022 ($ 1,541 million less at December 31, 2021).

This basis difference is primarily attributed to the long-lived assets of Sadara and is being amortized over the remaining useful lives of the assets.

At December 31, 2021, the Company had an investment balance in Sadara of $ 416 million included in “Investment in nonconsolidated affiliates” (negative $ 22 million at December 31, 2020 included in “Other noncurrent obligations”) in the Company’s consolidated balance sheets.

This basis difference, which resulted from the 2019 impairment of the investment, is primarily attributed to the long-lived assets of Sadara and is being amortized over the remaining useful lives of the assets.

At December 31, 2022, the Company had an investment balance in Sadara of $ 322 million ($ 416 million at December 31, 2021) included in “Investment in nonconsolidated affiliates” in the Company’s consolidated balance sheets.

See Note 15 for additional information related to guarantees.

In 2019, the Company recorded impairment charges related to its investment in Sadara.

The joint venture achieved full commercial operations of all its facilities in 2017.

In December 2018, the joint venture successfully completed its Creditors Reliability Test, an extensive operational testing program designed to demonstrate the reliability of the joint venture’s full chemical complex by operating at high rates for an extended period of time.

While Sadara had reached these operational milestones and had been generating positive EBITDA (a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization), the joint venture had yet to report positive net income.

During the fourth quarter of 2019, Sadara tested its long-lived assets for impairment using long-term cash flow projections.

Sadara’s U.S.

GAAP impairment test utilized an undiscounted cash flow methodology, under which Sadara concluded its long-lived assets were recoverable.

Due to Sadara's financial condition and its long-lived asset impairment test, Dow evaluated its equity method investment in Sadara for other-than-temporary impairment.

The Company utilized a discounted cash flow methodology to measure the estimated fair value of its investment in Sadara, which was estimated to be zero (see Note 23 for additional information on the fair value measurement).

The Company determined the decline in value of its investment in Sadara was other-than-temporary due to Sadara’s financial performance since becoming commercially operational in 2017 and uncertainty around prospects for recovery in Sadara’s financial condition.

In addition, the Company reserved certain accounts and notes receivable and accrued interest balances associated with Sadara due to uncertainty around the timing of collection.

In total, the Company recorded a $ 1,755 million pretax charge in the fourth quarter of 2019 related to Sadara, included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of

income and related to Packaging & Specialty Plastics ($ 370 million), Industrial Intermediates & Infrastructure ($ 1,168 million) and Corporate ($ 217 million).

In 2020, the Company loaned $ 333 million to Sadara that was accounted for as in substance common stock and classified as "Investment in nonconsolidated affiliates" in the Company's consolidated balance sheets.

The Company loaned $ 473 million to Sadara and converted $ 380 million of the notes and accounts receivable into equity during 2019.

At December 31, 2022 and 2021, the Company's note receivable with Sadara was zero .

At December 31, 2021, the Company had an investment balance in EQUATE of $ 115 million included in “Investment in nonconsolidated affiliates” (negative $ 147 million at December 31, 2020 included in "Other noncurrent obligations") in the consolidated balance sheets.

At December 31, 2022, the Company had a negative investment balance in EQUATE of $ 144 million classified as "Other noncurrent obligations" ($ 115 million at December 31, 2021 included in “Investment in nonconsolidated affiliates”) in the consolidated balance sheets.

The Company's investment in EQUATE was $ 447 million less than the Company's proportionate share of EQUATE's underlying net assets at December 31, 2022 ($ 458 million less at December 31, 2021), which represents the difference between the fair values of certain MEGlobal assets acquired by EQUATE and the Company's related valuation on a U.S.

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Sales of these products to MEGlobal represented 1 percent of total net sales in 2022, 2021 and 2020.

Sales of ethylene to MEGlobal are reflected in the Packaging & Specialty Plastics segment and represented 2 percent of the segment's sales in 2021 ( 2 percent in 2020 and 1 percent in 2019).

Sales of ethylene to MEGlobal are reflected in the Packaging & Specialty Plastics segment and represented 2 percent of the segment's sales in 2022, 2021 and 2020.

Sales of ethylene glycol to MEGlobal are reflected in the Industrial Intermediates & Infrastructure segment and represented 1 percent of the segment's sales in 2022, 2021 and 2020.

1 unchanged sentence

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.

Purchases of Sadara products represented 9 percent of "Cost of sales" in 2021 ( 8 percent in 2020 and 2019).

Purchases of Sadara products represented 7 percent of "Cost of sales" in 2022 ( 9 percent in 2021 and 8 percent in 2020).

The Company purchases products from The SCG-Dow Group, primarily for marketing and distribution in Asia Pacific.

Purchases of products from The SCG-Dow Group represented 3 percent of "Cost of sales" in 2021 ( 3 percent in 2020 and 2 percent in 2019).

Purchases of products from The SCG-Dow Group represented 3 percent of "Cost of sales" in 2022, 2021 and 2020.

Sales to and purchases from other nonconsolidated affiliates were not material to the consolidated financial statements.

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Gross profit $ 1,246 $ 3,219 $ 619

Income (loss) from continuing operations, net of tax $ 2,013 $ ( 461 ) $ ( 277 )

Income (loss), net of tax $ ( 91 ) $ 2,013 $ ( 461 )

The results in this table include purchase and sale activity between certain principal nonconsolidated affiliates and the Company, as previously discussed in the "Transactions with Nonconsolidated Affiliates" section.

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Foreign currency impact ( 10 ) ( 4 ) ( 130 ) ( 144 )

Sale of rail infrastructure ( 2 ) — — ( 2 )

Sale of marine and terminal infrastructure ( 4 ) ( 4 ) — ( 8 )

Balance at Dec 31, 2021 $ 5,105 $ 1,096 $ 2,563 $ 8,764

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Balance at Dec 31, 2022 $ 5,100 $ 1,093 $ 2,451 $ 8,644

The separation from DowDuPont did not impact the composition of the Company's six reporting units:

Coatings & Performance Monomers, Consumer Solutions, Hydrocarbons & Energy, Industrial Solutions, Packaging and Specialty Plastics and Polyurethanes & Construction Chemicals.

The ECP businesses received as part of the separation from DowDuPont are included in the Hydrocarbons & Energy and Packaging and Specialty Plastics reporting units.

At December 31, 2021, goodwill was carried by all reporting units except Coatings & Performance Monomers (“C&PM”).

At December 31, 2022, goodwill was carried by all reporting units except Coatings & Performance Monomers.

Goodwill Impairments

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In 2022, the Company performed qualitative testing for all reporting units that carried goodwill.

Based on the results of the qualitative testing, the Company did not perform quantitative testing on any reporting units ( one in 2020 and two in 2019).

Based on the results of the qualitative testing, the Company did not perform quantitative testing on any reporting units in 2022 and 2021.

Quantitative testing was performed for one reporting unit in 2020.

The qualitative testing on the reporting units indicated that it was not more likely than not that fair value was less than the carrying value for the reporting units.

The quantitative testing conducted in 2020 concluded that no goodwill impairments existed.

Upon completion of the quantitative testing in the fourth quarter of 2019, the Company determined the C&PM reporting unit was impaired.

During 2019, the C&PM reporting unit did not consistently meet expected financial performance targets, primarily due to the industry’s increased captive use of coatings products, which led to volume reductions;

reduced margins for products across the portfolio due to changes in customer buying patterns and supply and demand balances;

as well as a continuous trend of customer consolidation in end-markets, which reduced growth opportunities.

As a result, the C&PM reporting unit lowered its future revenue and profitability projections.

The fair value of the C&PM reporting unit was determined using a discounted cash flow methodology that reflected reductions in projected revenue growth rates due to lower sales volume and price assumptions, as well as reductions to future growth rates.

These discounted cash flows did not support the carrying value of the C&PM reporting unit.

As a result, the Company recorded a goodwill impairment charge of $ 1,039 million in the fourth quarter of 2019, included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income and related to the Performance Materials & Coatings segment.

The carrying value of the C&PM reporting unit's goodwill was zero at December 31, 2019.

No other goodwill impairments were identified as a result of the 2019 testing.

Other Intangible Assets

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Amount Accum Amort Net

Intangible assets with finite lives:

Intangible assets:

Developed technology 1

$ 2,651 $ ( 2,025 ) $ 626 $ 2,654 $ ( 1,871 ) $ 783

Software 1,358 ( 962 ) 396 1,396 ( 945 ) 451

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Customer-related 3,103 ( 1,690 ) 1,413 3,204 ( 1,565 ) 1,639

Total other intangible assets, finite lives $ 7,589 $ ( 4,725 ) $ 2,864 $ 7,780 $ ( 4,428 ) $ 3,352

In-process research and development 17 — 17 — — —

Total other intangible assets $ 7,464 $ ( 5,022 ) $ 2,442 $ 7,606 $ ( 4,725 ) $ 2,881

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

Amortization Expense from Continuing Operations 2021 2020 2019

Includes $ 17 million gross carrying amount in 2022 and 2021 for in-process research and development that has not yet commercialized.

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

Amortization Expense 2022 2021 2020

Other intangible assets, excluding software $ 336 $ 388 $ 401

Software, included in "Cost of sales" $ 80 $ 90 $ 96

Total estimated amortization expense from continuing operations for the next five fiscal years, including amounts expected to be capitalized, is as follows:

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

Estimated Amortization Expense for Next Five Years

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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").

The Company maintains committed accounts receivable facilities with various financial institutions, including in the United States (“U.S.

Program”) and in Europe (“Europe Program” and together with the U.S.

Program, "the Programs"), which are both set to expire in November 2025.

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.

Program and up to € 500 million for the Europe 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.

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See Note 15 for additional information related to guarantees.

There were no receivables sold under the Programs during the years ended December 31, 2021 and 2020.

In 2022, the Company sold $ 391 million ( zero in 2021) of receivables under the Programs.

NOTE 14 – NOTES PAYABLE, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES

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In millions 2022 2021

Commercial paper $ 299 $ —

Notes payable to banks and other lenders 63 161

Total notes payable $ 362 $ 161

Year-end average interest rates 6.55 % 5.78 %

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Final maturity 2026 — % — 3.63 % 750

Final maturity 2025 5.63 % 333 5.13 % 625

Final maturity 2026 3.63 % 750 3.63 % 750

Final maturity 2028 and thereafter 1

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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 fourth quarter of 2022, the Company issued $ 1.5 billion of senior unsecured notes.

The offering included $ 600 million aggregate principal amount of 6.30 percent notes due 2033 and $ 900 million aggregate principal amount of 6.90 percent notes due 2053.

In 2022, the Company issued an aggregate principal amount of $ 167 million of InterNotes®.

Additionally, the Company repaid $ 121 million of long-term debt at maturity and approximately $ 3 million of long-term debt was repaid by consolidated variable interest entities.

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.

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Additionally, the Company repaid $ 134 million of long-term debt at maturity and approximately $ 29 million of long-term debt was repaid by consolidated variable interest entities.

2019 Activity

In 2019, the Company issued $ 2 billion of senior unsecured notes in an offering under Rule 144A of the Securities Act of 1933.

The offering included $ 750 million aggregate principal amount of 4.80 percent notes due 2049;

$ 750 million aggregate principal amount of 3.625 percent notes due 2026;

and $ 500 million aggregate principal amount of 3.15 percent notes due 2024.

In addition, the Company redeemed $ 1.5 billion of 4.25 percent notes with maturity in 2020 and $ 1.25 billion of 4.125 percent notes with maturity in 2021.

As a result, the Company recognized a pretax loss of $ 100 million on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.

The Company also issued an aggregate principal amount of $ 277 million of InterNotes® and redeemed an aggregate principal amount of $ 122 million at maturity.

Approximately $ 149 million of long-term debt (net of $ 16 million of issuances) was repaid by consolidated variable interest entities.

In 2019, Dow Silicones voluntarily repaid $ 2.5 billion of principal under the Term Loan Facility.

As a result, Dow Silicones recognized a pretax loss of $ 2 million on the early extinguishment of debt, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.

In October 2019, TDCC launched exchange offers for $ 4 billion of all the outstanding, unregistered senior notes that were issued in private offerings on November 30, 2018 and May 20, 2019, for identical, registered notes under the Securities Act of 1933 (the “Exchange Offers”).

The Exchange Offers were with respect to the Company’s 3.15 percent notes due 2024, 4.55 percent notes due 2025, 3.625 percent notes due 2026, 4.80 percent notes due 2028, 5.55 percent notes due 2048 and 4.80 percent notes due 2049, and fulfilled the Company’s obligations contained in the registration rights agreements entered into in connection with the issuance of the aforementioned notes.

Available Credit Facilities

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Five Year Competitive Advance and Revolving Credit Facility $ 5,000 $ 5,000 November 2027 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 300 300 September 2023 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 1

500 500 November 2024 Floating rate

Bilateral Revolving Credit Facility 100 100 March 2025 Floating rate

Bilateral Revolving Credit Facility 200 200 September 2025 Floating rate

Bilateral Revolving Credit Facility 250 250 September 2025 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 300 300 November 2025 Floating rate

Bilateral Revolving Credit Facility 100 100 March 2026 Floating rate

Bilateral Revolving Credit Facility 250 250 March 2025 Floating rate

Bilateral Revolving Credit Facility 150 150 November 2026 Floating rate

Bilateral Revolving Credit Facility 200 200 November 2026 Floating rate

Bilateral Revolving Credit Facility 250 250 March 2027 Floating rate

Bilateral Revolving Credit Facility 100 100 May 2027 Floating rate

Bilateral Revolving Credit Facility 350 350 June 2027 Floating rate

Bilateral Revolving Credit Facility 200 200 September 2027 Floating rate

Bilateral Revolving Credit Facility 100 100 October 2027 Floating rate

Bilateral Revolving Credit Facility 100 100 November 2027 Floating rate

Total Committed and Available Credit Facilities $ 8,400 $ 8,400

Assumes the option to extend the bilateral revolving credit facility will be exercised.

Letters of Credit

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Failure of TDCC to comply with any of the covenants or default provisions could result in a default under the applicable credit agreement which would allow the lenders to not fund future loan requests and to accelerate the due date of the outstanding principal and accrued interest on any outstanding indebtedness.

On April 1, 2019, DowDuPont completed the separation of its materials science business and Dow Inc.

became the direct parent company of TDCC.

In conjunction with the separation, Dow Inc.

is obligated, substantially concurrently with the issuance of any guarantee in respect of outstanding or committed indebtedness under TDCC's Revolving Credit Agreement, to enter into a supplemental indenture with TDCC and the trustee under TDCC’s existing 2008 base indenture governing certain notes issued by TDCC.

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In addition, the Company recorded indemnification assets of $ 50 million related to Dow Silicones' environmental matters.

The Company recognized a pretax charge, net of indemnifications, of $ 56 million, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings ($ 52 million) and Corporate ($ 4 million).

The Company recognized a pretax charge, net of indemnifications, of $ 56 million, included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings ($ 52 million) and Corporate ($ 4 million).

See Note 5 for additional information.

In the third quarter of 2019, the Company recorded a pretax charge related to environmental remediation matters at a number of current and historical locations.

The charge primarily resulted from:

the culmination of long-standing negotiations and discussions with regulators and agencies, including technical studies supporting higher cost estimates for final or staged remediation plans;

the Company’s evaluation of the cost required to manage remediation activities at sites affected by Dow’s separation from DowDuPont and related agreements with Corteva and DuPont;

and, the Company’s review of its closure strategies and obligations to monitor ongoing operations and maintenance activities.

In addition, the Company recorded indemnification assets of $ 48 million related to Dow Silicones’ environmental matters.

The Company recognized a pretax charge, net of indemnifications, of $ 399 million related to these environmental matters, included in “Cost of sales” in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 5 million), Industrial Intermediates & Infrastructure ($ 8 million), Performance Materials & Coatings ($ 50 million) and Corporate ($ 336 million).

The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years ended December 31, 2022 and 2021:

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In January 2015, the Company and the EPA entered into an order to address remediation of the Floodplain.

The remedial work is expected to continue over the next two years as river levels allow.

The remedial work is expected to continue as river levels allow.

The remainder of the Saginaw River and the Saginaw Bay are designated as a second Operable Unit and the work associated with that unit may also be geographically segmented.

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Dow also has entered into a separate order to perform a limited remedial action for certain properties located within the second Operable Unit.

In 2022, the Company implemented the limited remedial action in the second Operable Unit.

Alternative Dispute Resolution Process

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Fish and Wildlife Service, the U.S.

Bureau of Indian Affairs and the Saginaw-Chippewa Indian Tribe of Michigan) have been engaged in negotiations to seek to resolve potential governmental claims against the Company for natural resource damages related to historical off-site contamination associated with the City of Midland, the Tittabawassee and Saginaw Rivers and the Saginaw Bay.

historical off-site contamination associated with the City of Midland, the Tittabawassee and Saginaw Rivers and the Saginaw Bay.

The Company and the governmental parties started meeting in the fall of 2005 and entered into a Confidentiality Agreement in December 2005.

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The consent decree further requires the Company to complete 13 additional environmental restoration projects which are valued by the trustees at approximately $ 77 million, to be conducted over the next several years.

In 2021, the Company, working with the trustees, advanced the design plans for several of the Company required environmental restoration projects with implementation in progress for one of the projects.

In 2022, the first environmental restoration project was opened to the public.

The Company continues to work with the trustees on the remaining projects.

At December 31, 2022, the accrual for these off-site matters was $ 92 million (included in the total accrued obligation of $ 1,192 million).

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Estimating the Asbestos-Related Liability

Based on a study completed by Ankura Consulting Group, LLC ("Ankura") in January 2003, Union Carbide increased its December 31, 2002, asbestos-related liability for pending and future claims for a 15-year period ending in 2017 to $ 2.2 billion, excluding future defense and processing costs.

In subsequent years, Union Carbide compared current asbestos claim and resolution activity to the results of the most recent Ankura study at each balance sheet date to determine whether the accrual continued to be appropriate.

In 2016, Ankura completed a study to provide estimates for the undiscounted cost of disposing of pending and future claims against Union Carbide and Amchem through the terminal year of 2049, including a reasonable forecast of future defense and processing costs.

Based on the study and Union Carbide’s internal review of asbestos claim and resolution activity, Union Carbide determined estimating the liability through the terminal year of 2049 was more appropriate due to increased knowledge and data about the costs to resolve claims and diminished volatility in filing rates.

Union Carbide and the Company also determined that estimating and accruing a liability for future asbestos-related defense and processing costs was more appropriate as such costs represent expenditures related to legacy activities that do not contribute to current or future revenue generating activities of Union Carbide and the Company and is also reflective of the manner in which Union Carbide manages its asbestos-related exposure, including careful monitoring of the correlation between defense spending and resolution costs.

As a result, in the fourth quarter of 2016, Union Carbide recorded a $ 1,113 million increase in its asbestos-related liability for pending and future claims, including future defense and processing costs.

Union Carbide has engaged Ankura Consulting Group, LLC ("Ankura") to perform periodic studies to estimate the undiscounted cost of disposing of pending and future claims against Union Carbide and Amchem through the terminal year of 2049, including a reasonable forecast of future defense and processing costs.

Each October, Union Carbide requests Ankura to review its historical asbestos claim and resolution activity through the third quarter of the current year, including asbestos-related defense and processing costs, to determine the appropriateness of updating the most recent study.

In December 2019, Ankura stated that an update of its December 2018 study would not provide a more likely estimate of future events than the estimate reflected in the study and, therefore, the estimate in the study remained applicable.

Based on Union Carbide's internal review process and Ankura's response, Union Carbide determined that no change to the accrual was required.

At each balance sheet date, Union Carbide also compares current asbestos claim and resolution activity, including asbestos-related defense and processing costs, to the results of the most recent Ankura study to determine whether the accrual continues to be appropriate.

In December 2020, Ankura completed a study of Union Carbide's historical asbestos claim and resolution activity through September 30, 2020, including asbestos-related defense and processing costs, and provided estimates for the undiscounted cost of disposing of pending and future claims against Union Carbide and Amchem through the terminal year of 2049.

Based on the study and Union Carbide's internal review process, it was determined that no adjustment to the accrual was required.

At December 31, 2020, the asbestos-related liability for pending and future claims against Union Carbide and Amchem, including future asbestos-related defense and processing costs, was $ 1,098 million, and approximately 22 percent of the recorded liability related to pending claims and approximately 78 percent related to future claims.

In December 2021, Ankura stated that an update of its December 2020 study would not provide a more likely estimate of future events than the estimate reflected in the study and, therefore, the estimate in the study remained applicable.

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At December 31, 2021, the asbestos-related liability for pending and future claims against Union Carbide and Amchem, including future asbestos-related defense and processing costs, was $ 1,016 million, and approximately 25 percent of the recorded liability related to pending claims and approximately 75 percent related to future claims.

In December 2022, Ankura completed a study of Union Carbide's historical asbestos claim and resolution activity through September 30, 2022, including asbestos-related defense and processing costs, and provided estimates for the undiscounted cost of disposing of pending and future claims against Union Carbide and Amchem through the terminal year of 2049.

Based on the study and Union Carbide's internal review process, it was determined that no adjustment to the accrual was required.

At December 31, 2022, the asbestos-related liability for pending and future claims against Union Carbide and Amchem, including future asbestos-related defense and processing costs, was $ 947 million, and approximately 23 percent of the recorded liability related to pending claims and approximately 77 percent related to future claims.

The Company's management believes the amounts recorded by Union Carbide for the asbestos-related liability, including defense and processing costs, reflect reasonable and probable estimates of the liability based upon current, known facts.

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As of June 1, 2016, Dow Silicones is a wholly owned subsidiary of the Company.

Breast Implant and Other Product Liability Claims

Under the Plan, a product liability settlement program administered by an independent claims office (the “Settlement Facility”) was created to resolve breast implant and other product liability claims.

Product liability claimants rejecting the settlement program in favor of pursuing litigation must bring suit against a litigation facility (the “Litigation Facility”).

Under the Plan, total payments committed by Dow Silicones to resolving product liability claims are capped at a maximum $ 2,350 million net present value (“NPV”) determined as of the Effective Date using a discount rate of 7 percent (approximately $ 4,081 million undiscounted at December 31, 2021).

Of this amount, no more than $ 400 million NPV determined as of the Effective Date can be used to fund the Litigation Facility.

Dow Silicones had an obligation to fund the Settlement Facility and the Litigation Facility over a 16-year period, commencing at the Effective Date.

At December 31, 2021, Dow Silicones and its insurers have made life-to-date payments of $ 1,792 million to the Settlement Facility and Dow Silicones is currently making payments to fund the Settlement Facility.

Under the Plan, a product liability settlement program administered by an independent claims office and funded by Dow Silicones (the “Settlement Facility”) was created to resolve breast implant and other product liability claims.

Product liability claimants rejecting the settlement program in favor of pursuing litigation must bring suit against a litigation facility (the "Litigation Facility") that is also funded by Dow Silicones.

At December 31, 2022, Dow Silicones and its insurers have made life-to-date payments of $ 1,846 million to the Settlement Facility and Litigation Facility and Dow Silicones is currently making additional payments to fund the Settlement Facility.

In accordance with ASC Topic 450 "Accounting for Contingencies," the Company records a liability for breast implant and other product liability claims (“Implant Liability”), which reflects the estimated impact of the settlement of pending claims.

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All claims have been received and are being processed.

Based on the claims filed at and before the deadline, Dow Silicones estimates that it will be obligated to contribute an additional $ 130 million to the Settlement Facility at December 31, 2021 ($ 160 million at December 31, 2020) which was included in “Accrued and other current liabilities” and "Other noncurrent obligations" in the consolidated balance sheets.

In the third quarter of 2019, with the assistance of a third party consultant ("Consultant"), Dow Silicones updated its Implant Liability estimate, primarily reflecting a decrease in Class 16 claims, a decrease resulting from the passage of time, decreased claim filing activity and administrative costs compared with the previous estimate, and an increase in investment income resulting from insurance proceeds.

Based on the Consultant's updated estimate and Dow Silicones own review of claim filing activity, Dow Silicones determined that an adjustment to the Implant Liability was required.

Accordingly, in the third quarter of 2019, Dow Silicones decreased its Implant Liability $ 98 million and decreased its corresponding Class 16 receivable $ 13 million, both included in “Sundry income (expense) - net” in the consolidated statements of income and related to Corporate.

The estimate was updated again in the second quarter of 2020 with the assistance of the Consultant, which primarily reflected decreased administrative costs compared with the previous estimate and an increase in investment income resulting from insurance proceeds.

Dow Silicones is not aware of circumstances that would change the factors used in estimating the Implant Liability and believes the recorded liability reflects the best estimate of the remaining funding obligations under the Plan;

however, the estimate relies upon a number of significant assumptions, including:

future acceptance rates, disease mix, and payment values will be materially consistent with historical experience;

no material negative outcomes in future controversies or disputes over Plan interpretation will occur;

and the Plan will not be modified.

If actual outcomes related to any of these assumptions prove to be materially different, the future liability to fund the Plan may be materially different than the amount estimated.

Commercial Creditor Issues

The Plan provides that each of Dow Silicones commercial creditors (the “Commercial Creditors”) would receive in cash the sum of (a) an amount equal to the principal amount of their claims and (b) interest on such claims.

Upon the Plan becoming effective, Dow Silicones paid approximately $ 1,500 million to the Commercial Creditors, representing principal and an amount of interest that Dow Silicones considers undisputed.

On August 19, 2019, Dow Silicones entered into a settlement agreement with the Commercial Creditors related to the remaining disputed portion, obligating Dow Silicones to pay $ 172 million, inclusive of the Commercial Creditors' legal costs.

The settlement was approved by the District Court.

As a result of the settlement agreement, in the third quarter of 2019, the Company recorded a pretax charge of $ 50 million, net of indemnifications of $ 37 million, included in "Sundry Income (expense) - net" in the consolidated statements of income and related to Corporate.

The settlement was paid to the Commercial Creditors in the fourth quarter of 2019.

The litigation is now concluded.

The amounts recorded by Dow Silicones for the Chapter 11 related matters described above were based upon current, known facts, which management believes reflect reasonable and probable estimates of the liability.

However, future events could cause the actual costs for Dow Silicones to be higher or lower than those projected or those recorded.

Any such events could result in an increase or decrease in the recorded liability.

In the fourth quarter of 2022, with the assistance of a third party consultant, Dow Silicones updated its Implant Liability estimate to reflect the reduced uncertainty of the Company's liability for unpaid claims, the decrease in claims filing activity and the passage of time.

Accordingly, Dow Silicones decreased its Implant Liability by $60 million, which was included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.

Based on the new estimate related to claims filed at and before the claim filing deadline, Dow Silicones estimates that it will be obligated to contribute an additional $ 16 million to the Settlement Facility at December 31, 2022 ($ 130 million at December 31, 2021) which was included in “Accrued and other current liabilities” and "Other noncurrent obligations" in the consolidated balance sheets.

Dow Silicones believes the recorded liability reflects the best estimate of the remaining funding obligations under the Plan and is not aware of circumstances based on current, known facts that would significantly change the Implant Liability estimate.

Other Litigation Matters

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Indemnifications with Corning

In connection with the June 1, 2016 ownership restructure of Dow Silicones, the Company is indemnified by Corning for at least 50 percent of future losses associated with certain pre-closing liabilities, including the Implant Liability, Commercial Creditors issues and certain environmental matters described in the preceding sections, subject to certain conditions and limits.

In connection with the June 1, 2016 ownership restructure of Dow Silicones, the Company is indemnified by Corning for at least 50 percent of future losses associated with certain pre-closing liabilities, including the Implant Liability and certain environmental matters described in the preceding sections, subject to certain conditions and limits.

The maximum amount of indemnified losses which may be recovered are subject to a cap that declines over time.

Indemnified losses are capped at $ 1 billion between May 31, 2018 and May 31, 2023, and no recoveries are permitted after May 31, 2023.

Indemnified losses are capped at $ 1 billion between May 31, 2018 and May 31, 2023, and no recoveries are permitted on claims initially submitted after May 31, 2023.

The Company had indemnification assets of $ 98 million at December 31, 2022 ($ 95 million at December 31, 2021), which was included in "Other current assets" and "Noncurrent receivables" in the consolidated balance sheets.

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Nova appealed to the Canadian Federal Court of Appeal, which affirmed the Federal Court decision in August 2016.

Nova then sought leave to appeal its loss to the Supreme Court of Canada ("Court"), which dismissed Nova’s petition in April 2017.

As a result, Nova has exhausted all appeal rights on the merits, and it is undisputed that Nova owes the Company the profits it earned from its infringing sales as determined in the trial for the damages phase.

Nova then sought leave to appeal its loss to the Supreme Court of Canada ("Canadian Supreme Court"), which dismissed Nova’s petition in April 2017.

As a result, Nova exhausted all appeal rights on the merits, and it was undisputed that Nova owed the Company the profits it earned from its infringing sales as determined in the trial for the damages phase.

In April 2017, the Federal Court issued a Public Judgment in the damages phase, which detailed its conclusions on how to calculate the profits to be awarded to the Company.

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dollars) to the Company, plus pre- and post-judgment interest, for which the Company received payment of $ 501 million from Nova in July 2017.

Although Nova is appealing portions of the damages judgment, certain portions of it are indisputable and can be retained by the Company regardless of the outcome of any further appeals by Nova.

Although Nova was appealing portions of the damages judgment, certain portions of it were indisputable and could be retained by the Company regardless of the outcome of any further appeals by Nova.

As a result of these actions and in accordance with ASC Topic 450-30 "Gain Contingencies," the Company recorded a $ 160 million pretax gain in the second quarter of 2017.

On September 15, 2020, the Canadian Federal Court of Appeal dismissed Nova's appeal of the damages judgment, thus affirming the trial court's decision in its entirety.

In November 2020, Nova filed an application for leave to appeal this decision to the Court.

In May 2021, the Court granted Nova's application for leave and agreed to review the damages judgment.

The Court will hear oral argument on the matter in the first half of 2022 and the Company expects a decision by the end of 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 December 31, 2021, the Company had $ 341 million ($ 341 million at December 31, 2020) included in "Accrued and other current liabilities" related to the disputed portion of the damages judgment.

In November 2020, Nova filed an application for leave to appeal this decision to the Canadian Supreme Court.

In November 2022, the Canadian Supreme Court dismissed Nova's appeal, thereby exhausting all of Nova's appeal rights for the damages judgment.

As a result, the Company recorded a pretax gain of $ 341 million in the fourth quarter of 2022 for the previously disputed portion of the damages judgment, of which $ 321 million was included in "Sundry income (expense) - net," related to Packaging & Specialty Plastics, and $ 20 million was included in "Selling, general and administrative expenses" in the consolidated statements of income.

At December 31, 2021, the Company had $ 341 million included in "Accrued and other current liabilities" related to the previously disputed portion of the damages judgment ( zero at December 31, 2022).

Gain Contingency - Dow v.

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The Court of the Queen's Bench in Alberta, Canada, which initially ruled in June 2018, found that Nova failed to operate the ethylene asset at full capacity for more than ten years, and furthermore, that Nova violated several contractual agreements related to the Company receiving its share of the asset’s ethylene production.

These actions resulted in reduced productivity and sales for the Company.

Nova has appealed the judgment, however, certain portions of it are not in dispute and are owed to the Company regardless of the outcome of Nova's appeal.

As a result of these actions and in accordance with ASC Topic 450-30 “Gain Contingencies,” the Company recorded a $ 186 million pretax gain in the third quarter of 2019, of which $ 170 million was included in "Sundry income (expense) - net" and $ 16 million was included in "Selling, general and administrative expenses" in the consolidated statements of income and related to Packaging & Specialty Plastics.

These actions deprived the Company of millions of pounds of ethylene.

Nova appealed the judgment, however, certain portions of it are no longer in dispute and can be retained by the Company regardless of the outcome of any further appeals by Nova.

As a result and in accordance with ASC Topic 450-30 “Gain Contingencies,” the Company recorded a $ 186 million pretax gain in the third quarter of 2019.

In October 2019, Nova paid $ 1.08 billion Canadian dollars (equivalent to approximately $ 0.8 billion U.S.

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On September 16, 2020, the Court of Appeal of Alberta issued its decision, affirming the trial court's liability finding, upholding the majority of Dow's damages and requiring the trial court to recalculate a portion of damages.

In the fourth quarter of 2020, Nova chose not to petition the Court to review the appellate court decision, making additional portions of the ruling in Dow’s favor final and no longer subject to dispute.

In the fourth quarter of 2020, Nova chose not to petition the Canadian Supreme Court to review the appellate court decision, making additional portions of the ruling in Dow’s favor final and no longer subject to dispute.

As a result, the Company recorded a $ 552 million pretax gain in the fourth quarter of 2020, of which $ 538 million was included in "Sundry income (expense) - net" and $ 14 million was included in "Selling, general and administrative expenses" in the consolidated statements of income and related to Packaging & Specialty Plastics.

At December 31, 2022, $ 323 million ($ 323 million at December 31, 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.

Dow continues to seek an award of additional damages for the period from 2013 through 2018 to account for the ethylene shortfall during those years.

The damages hearing began in the trial court in November 2021 that would resolve the impact of the appellate ruling and quantify Dow's damages for the 2013-2018 period.

Dow has also filed a new lawsuit in the same Alberta, Canada court to account for damages due to lost ethylene after June 2018.

Luxi Chemical Group Breach of Contract Matter

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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.

As a result, in 2021, the Company recorded a pretax gain of $ 67 million 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 recorded in “Cost of sales” in the consolidated statements of income.

At December 31, 2021, related tax credits available and expected to be applied to future required federal tax payments totaled $ 52 million.

The Company has not received a final ruling related to its remaining lawsuit.

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 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 2022 and $ 67 million in 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 gains were recorded in “Cost of sales” in the

consolidated statements of income.

At December 31, 2022, related tax credits available and expected to be applied to future required federal tax payments totaled $ 126 million ($ 52 million at December 31, 2021).

Purchase Commitments

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Guarantees 2038 $ 1,236 $ 200 2038 $ 1,273 $ 220

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 $ 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.

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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 one year to less than 17 years.

The majority of the Company’s guarantees relate to debt of nonconsolidated affiliates, which have expiration dates ranging from less than one year to 16 years.

The Company’s current expectation is that future payment or performance related to the non-performance of others is considered remote.

TDCC has entered into guarantee agreements related to Sadara, a nonconsolidated affiliate.

The total of an Islamic bond and additional project financing (collectively “Total Project Financing”) obtained by Sadara was approximately $ 12.5 billion, of which $ 9.6 billion of Total Project Financing debt was outstanding at December 31, 2021 ($ 9.9 billion at December 31, 2020).

In November 2020, the remaining project completion conditions related to the Total Project Financing guarantees were fulfilled and the Company's guarantee obligations terminated.

Subsequently, the Company provided a new guarantee in the form of a letter of credit for its share of one future debt service schedule payment up to $ 220 million.

The guarantee was in proportion to the Company’s 35 percent ownership interest in Sadara and was in effect until Sadara reached an agreement with its lenders to re-profile its outstanding project financing debt in the first quarter of 2021, at which time it was cancelled.

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, proportionate to the Company's 35 percent ownership interest.

Sadara reached an agreement with its lenders to re-profile its outstanding project financing debt in the first quarter of 2021.

In conjunction with the debt re-profiling, TDCC entered into a guarantee of up to approximately $ 1.3 billion of Sadara’s debt, proportionate to the Company's 35 percent ownership interest.

The debt re-profiling 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.

In addition, as part of the debt re-profiling, Sadara established a new $ 500 million 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.

Based on Sadara's current forecasted cash flows,

the Company does not expect Sadara to draw on the facility.

As a result of these actions, TDCC does not expect to provide any shareholder loans or equity contributions to Sadara in 2022.

As part of the debt re-profiling, Sadara established a $ 500 million revolving credit facility guaranteed by Dow, which would be used to fund Dow’s pro-rata share of any potential shortfall during the grace period.

Based on Sadara's forecasted cash flows and no significant scheduled debt repayments until 2026, the Company does not expect Sadara to draw on the facility.

See Note 11 for additional information.

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Under this process, as demolition projects are identified and approved, reasonable estimates are determined for the time frames during which any related asset retirement obligations are expected to be settled.

For those assets where a range of potential settlement dates may be reasonably estimated, obligations are recorded.

For those assets where a range of potential settlement dates may be reasonably estimated, obligations

are recorded.

The Company routinely reviews all changes to items under consideration for demolition to determine if an adjustment to the value of the asset retirement obligation is required.

The Company has recognized asset retirement obligations for the following activities:

demolition and remediation activities at manufacturing sites primarily in Europe, Canada, United States, Japan, United Arab Emirates and Brazil;

demolition and remediation activities at manufacturing sites primarily in Europe, the United States, Canada, Japan, the United Arab Emirates and Brazil;

and capping activities at landfill sites in the United States, Brazil and Canada.

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Revisions in estimated cash flows ( 9 ) ( 1 )

Other — ( 5 )

Balance at Dec 31 $ 119 $ 118

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In 2021, $ 193 million of leased assets were reclassified from Operating leases to Finance leases due to an amendment that extended the term of the agreement.

2019 includes $ 2.3 billion related to the adoption of Topic 842.

See Note 1 for additional information.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at December 31, 2022 and 2021.

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In 2021, the Company executed buy-outs of certain leased assets for $ 687 million.

The lease buy-outs reduced “Operating lease right-of-use assets” by $ 166 million and reduced “Operating lease liabilities - current” and “Operating lease liabilities - noncurrent” by $ 44 million and $ 158 million, respectively.

The lease buyouts reduced “Operating lease right-of-use assets” by $ 166 million and reduced “Operating lease liabilities - current” and “Operating lease liabilities - noncurrent” by $ 44 million and $ 158 million, respectively.

The Company recognized a pretax loss related to the lease buy-outs of $ 37 million included in “Sundry income (expense) - net” in the consolidated statements of income.

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NOTE 17 – STOCKHOLDERS’ EQUITY

was incorporated in 2018 with 100 authorized and issued shares of common stock, par value $ 0.01 per share, owned solely by its parent company, DowDuPont.

In the first quarter of 2019, in connection with the separation and distribution of DowDuPont’s materials science business, the number of authorized shares of common stock was increased to 5,000,000,000 shares, par value $ 0.01 per share, and Dow Inc.'s 100 shares of issued common stock were recapitalized into 748,771,240 shares of common stock.

Dow Inc.'s common stock was solely owned by DowDuPont through March 31, 2019, and on April 1, 2019, Dow Inc.

On April 1, 2019, Dow Inc.

became an independent, publicly traded company.

common stock is listed on the NYSE under the symbol “DOW.” See Note 3 for additional information.

The principal market for Dow Inc.'s common stock is the New York Stock Exchange, traded under the symbol “DOW.” 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"), owning all of the outstanding common shares of TDCC.

The Company may issue shares of Dow Inc.

common stock out of treasury stock or as new shares of common stock for options exercised and for the release of restricted stock units ("RSUs"), performance stock units ("PSUs") and the Employee Stock Purchase Plan ("ESPP") program.

Common stock shares issued to employees and non-employee directors was approximately 8.2 million in 2021 ( 4.8 million in 2020).

Subsequent to the separation from DowDuPont, the number of new Dow Inc.

common stock shares issued to employees and non-employee directors was approximately 2.5 million in 2019.

common stock out of treasury stock or as new shares of common stock for options exercised and for the release of restricted stock units ("RSUs"), performance stock units ("PSUs"), the Employee Stock Purchase Plan ("ESPP") and the Employees' Savings Plan (the "Savings Plan").

Common stock shares issued to employees and non-employee directors was approximately 7.5 million in 2022 ( 8.2 million in 2021 and 4.8 million in 2020).

See Note 20 for additional information on the Company's equity awards.

Effective with the Merger and through March 31, 2019, TDCC had 100 authorized and issued shares of common stock, par value $ 0.01 per share, owned solely by DowDuPont.

Effective with the separation from DowDuPont, TDCC became a wholly owned subsidiary of Dow Inc., which now holds all 100 authorized and issued shares of common stock of TDCC.

See Note 3 for additional information.

Retained Earnings

There are no significant restrictions limiting Dow Inc.’s ability to pay dividends.

declared dividends of $ 2.80 per share in 2021 ($ 2.80 per share in 2020 and $ 2.10 per share in 2019, subsequent to the separation from DowDuPont).

declared dividends of $ 2.80 per share in 2022, 2021 and 2020.

Undistributed earnings of nonconsolidated affiliates included in retained earnings were $ 669 million at December 31, 2022 and $ 1,155 million at December 31, 2021.

Effective with the Merger, TDCC no longer had publicly traded common stock.

TDCC's common shares were owned solely by DowDuPont, prior to the separation on April 1, 2019, and TDCC's Board determined whether or not there would be a dividend distribution to DowDuPont.

Effective with the separation from DowDuPont on April 1, 2019, TDCC became a wholly owned subsidiary of Dow Inc.

and TDCC's Board determines whether or not there will be a dividend distribution to Dow Inc.

TDCC's Board determines whether or not there will be a dividend distribution to Dow Inc.

TDCC declared and paid dividends to Dow Inc.

of $ 4,375 million in 2022, $ 3,264 million in 2021 and $ 2,233 million in 2020.

In 2019, TDCC declared and paid dividends to DowDuPont of $ 535 million.

Employee Stock Ownership Plan

The Dow Employee Stock Ownership Plan (the “ESOP”) is an integral part of The Dow Chemical Company Employees’ Savings Plan (the “Savings Plan”).

A significant majority of full-time employees in the United States are eligible to participate in the Savings Plan.

The Company uses the ESOP to provide its matching contribution in the form of stock to Plan participants.

Effective with the Merger, shares of TDCC Common Stock held by the ESOP were converted into shares of DowDuPont Common Stock at a ratio of 1:1.

Effective with the separation from DowDuPont, the DowDuPont Common Stock held by the ESOP received a Dow Inc.

Common Stock share dividend at a ratio of 3:1, resulting in the ESOP holding both DowDuPont and Dow Inc.

Subsequent to the separation from DowDuPont, the ESOP independent fiduciary sold the DowDuPont shares and purchased additional Dow Inc.

shares with the proceeds.

In connection with the acquisition of Rohm and Haas on April 1, 2009, the Rohm and Haas Employee Stock Ownership Plan (the "Rohm and Haas ESOP") was merged into the Savings Plan, and the Company assumed the $ 78 million balance of debt at 9.8 percent interest with final maturity in 2020 that was used to finance share purchases by the Rohm and Haas ESOP in 1990.

The debt was fully repaid in 2020 which resulted in an outstanding balance of zero at December 31, 2020.

Dividends on unallocated shares held by the ESOP are used by the ESOP to make debt service payments and to purchase additional shares if dividends exceed the debt service payments.

Dividends on allocated shares are used by the ESOP to make debt service payments to the extent needed;

otherwise, they are paid to the Savings Plan participants.

Shares are released for allocation to participants based on the ratio of the current year’s debt service to the sum of the principal and interest payments over the life of the loan.

The shares are allocated to Plan participants in accordance with the terms of the Savings Plan.

The unallocated shares are excluded from the Company's earnings per share calculation.

The Dow Employee Stock Ownership Plan (the “ESOP”) allocated the remaining shares in 2022 and no shares remain unallocated at December 31, 2022.

Unallocated shares at December 31, 2021 and 2020 were excluded from the Company's earnings per share calculation.

Compensation expense for allocated shares is recorded at the fair value of the shares on the date of allocation.

Compensation expense reflected in income from continuing operations for ESOP shares was $ 77 million in 2021, $ 72 million in 2020 and $ 77 million in 2019.

At December 31, 2021, 4.0 million shares out of a total 4.5 million shares held by the ESOP had been allocated to participants’ accounts and 0.5 million shares, at a fair value of $ 29 million, were considered unearned.

Compensation expense reflected in income before income taxes for ESOP shares allocated was $ 31 million in 2022, $ 77 million in 2021 and $ 72 million in 2020.

At December 31, 2022, all remaining unallocated ESOP shares were allocated to plan participants.

Treasury Stock

On April 1, 2019, Dow Inc.'s Board 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.

In 2021, Dow Inc.

repurchased $ 1.0 billion of Dow Inc.

common stock ($ 125 million in 2020 and $ 500 million in 2019).

On April 1, 2019, the Dow Inc.

Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $ 3.0 billion for 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, the Dow Inc.

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.

In 2022, the Company repurchased $ 2,325 million of its common stock ($ 1,000 million in 2021 and $ 125 million in 2020).

At December 31, 2022, $ 2.0 billion of the share repurchase program authorization remained available for repurchases.

The Company may issue shares of Dow Inc.

common stock out of treasury stock or as new shares of common stock for options exercised and for the release of RSUs, PSUs and ESPP.

The Company did not issue any treasury shares to employees and non-employee directors under its stock-based compensation programs for the years ended December 31, 2021, 2020 and 2019.

See Note 21 for additional information on changes to the Company's equity awards in connection with the separation from DowDuPont.

The Company began issuing treasury shares to satisfy its obligations to make matching contributions to plan participants under The Dow Employees' Savings Plan in the first quarter of 2022.

The Company issued 1.5 million treasury shares under its compensation and benefit plans in 2022.

Compensation expense for issued shares is recorded at the fair value of the shares on the date of issuance.

Compensation expense reflected in income before income taxes for treasury shares issued was $ 94 million in 2022.

The following table provides a reconciliation of Dow Inc.

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Balance at Jan 1, 2020 751,228,644 9,729,834

Impact of recapitalization 748,771,140 —

Repurchased — 3,073,469

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Balance at Jan 1, 2022 764,226,882 29,011,573

7,451,643 ( 1,499,610 )

Repurchased — 39,286,642

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Other comprehensive income (loss), net of tax ( 579 ) ( 425 ) 205

Impact of common control transaction 4

Ending balance $ ( 1,934 ) $ ( 1,355 ) $ ( 930 )

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Other comprehensive income (loss), net of tax 2,457 2,225 ( 778 )

Impact of common control transaction 4

Ending balance $ ( 4,877 ) $ ( 7,334 ) $ ( 9,559 )

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(Gains) losses reclassified from AOCL to net income 5

Tax expense (benefit) 2

( 313 ) ( 38 ) 30

Tax expense (benefit) 2

Net (gains) losses reclassified from AOCL to net income ( 279 ) ( 35 ) 21

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Reclassified to "Net sales" and "Sundry income (expense) - net."

Reclassified to "Provision for income taxes on continuing operations."

Reclassified to "Provision for income taxes."

Reclassified to "Sundry income (expense) - net."

Reclassified to "Retained earnings" as a result of the separation from DowDuPont on April 1, 2019.

See Note 3 for additional information.

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.

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Balance at Jan 1 $ 574 $ 570 $ 553

Net income attributable to noncontrolling interests - continuing operations 94 69 74

Net income attributable to noncontrolling interests - discontinued operations — — 13

Net income attributable to noncontrolling interests 1

Distributions to noncontrolling interests 2

( 76 ) ( 66 ) ( 55 )

Impact of common control transaction 2

Purchase of noncontrolling interests 3

Deconsolidation of noncontrolling interests 3

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Balance at Dec 31 $ 529 $ 574 $ 570

Distributions to noncontrolling interests are net of $ 7 million in 2021 ($ 7 million in 2020 and 2019) in dividends paid to a joint venture, which were reclassified to "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated statements of income.

Also includes amounts attributable to discontinued operations of $ 7 million in 2019.

Related to the separation from DowDuPont.

See Note 3 for additional information.

Related to the acquisition of full ownership in a propylene oxide manufacturing joint venture, which occurred on October 1, 2019.

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.

As a result of this arrangement, the carrying value of the noncontrolling interest was removed, and “Additional paid-in capital” was adjusted by $ 38 million.

Distributions to noncontrolling interests are net of $ 7 million in 2022, 2021 and 2020 in dividends paid to a joint venture, which were reclassified to "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated statements of income.

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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The Company's funding policy is to contribute to the plans when pension laws and/or economics either require or encourage funding.

On March 4, 2021, the Company elected to contribute $ 1 billion to its U.S.

tax-qualified pension plans.

Total global pension contributions were $ 235 million in 2022, which includes contributions necessary to fund benefit payments for the Company's unfunded pension plans.

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Effect of foreign exchange rates ( 496 ) ( 397 ) — —

Settlements — ( 11 ) — —

Fair value of plan assets at end of year $ 21,231 $ 28,167 $ — $ —

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Pretax balance in accumulated other comprehensive loss at end of year $ 6,929 $ 9,822 $ ( 523 ) $ ( 221 )

The 2020 impact relates primarily to the transfer of benefit obligations in the U.S.

The 2022 impact primarily relates to the transfer of benefit obligations in the U.S.

through the purchase of annuity contracts from an insurance company.

The 2021 impact primarily relates to the freeze of pensionable compensation and credited service amounts for employees that participate in the U.S.

The 2020 impact relates to pension plan curtailments of a European plan resulting from the 2020 Restructuring Program and the settlement of certain plan obligations of a U.S.

non-qualified pension plan resulting from lump-sum payments.

The 2020 impact relates to the purchase of annuity contracts associated with the transfer of benefit obligations to an insurance company.

The 2022 impact relates to the purchase of an annuity contract associated with the transfer of benefit obligations to an insurance company.

A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2022 was due to the change in weighted-average discount rates, which increased from 2.57 percent at December 31, 2021 to 5.18 percent at December 31, 2022.

A significant component of the overall increase in the Company's benefit obligation for the year ended December 31, 2020 was due to the change in weighted-average discount rates, which decreased from 2.81 percent at December 31, 2019 to 2.20 percent at December 31, 2020.

A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2021 was due to the change in weighted-average discount rates, which increased from 2.20 percent at December 31, 2020 to 2.57 percent at December 31, 2021.

The accumulated benefit obligation for all significant pension plans was $ 22.6 billion and $ 32.5 billion at December 31, 2022 and 2021, respectively.

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Net periodic benefit costs $ 23 $ 39 $ 271 $ 17 $ 24 $ 37

discontinued operations — — 21 — — —

Net periodic benefit costs - continuing operations $ 39 $ 271 $ 144 $ 24 $ 37 $ 34

Changes in plan assets and benefit obligations recognized in other comprehensive (income) loss:

Net (gain) loss $ ( 2,231 ) $ ( 1,980 ) $ 1,753 $ ( 317 ) $ ( 98 ) $ 8

Prior service cost 2 8 — — — —

Prior service cost (credit) ( 25 ) 2 8 — — —

Amortization of prior service credit 21 22 19 — — —

Amortization of unrecognized gain (loss) ( 658 ) ( 822 ) ( 773 ) 15 6 10

Common control transaction 2

— — ( 112 ) — — —

Curtailment and settlement gain (loss) 1

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non-qualified pension plan resulting from lump-sum payments.

The 2019 impact relates to plan curtailments and associated special termination benefits resulting from the reduction in plan participation due to the separation from DowDuPont.

The 2019 impact is the result of the Company's separation from DowDuPont.

Except for plan curtailment costs related to the 2020 Restructuring Program, which are included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income, non-service cost components of net periodic benefit cost are included in "Sundry income (expense) - net" in the consolidated statements of income.

Except for plan curtailment costs related to the 2020 Restructuring Program, which are included in "Restructuring and asset related charges - net" in the consolidated statements of income, non-service cost components of net periodic benefit cost are included in "Sundry income (expense) - net" in the consolidated statements of income.

See Notes 5 and 6 for additional information.

Estimated Future Benefit Payments

The estimated future benefit payments of continuing operations, reflecting expected future service, as appropriate, are presented in the following table:

Estimated Future Benefit Payments at Dec 31, 2021 Defined Benefit Pension Plans Other Postretirement Benefit Plans

The estimated future benefit payments, reflecting expected future service, as appropriate, are presented in the following table:

Estimated Future Benefit Payments at Dec 31, 2022

Defined Benefit Pension Plans Other Postretirement Benefit Plans

2023 $ 1,597 $ 90

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The weighted-average target allocation for plan assets of the Company's pension plans is summarized as follows:

Target Allocation for Plan Assets at Dec 31, 2021 Target Allocation

Target Allocation for Plan Assets at Dec 31, 2022

Target Allocation

Asset Category

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equity securities $ 1,855 $ 1,845 $ 7 $ 3 $ 4,117 $ 4,097 $ 18 $ 2

$ 4,117 $ 4,097 $ 18 $ 2 $ 3,934 $ 3,911 $ 22 $ 1

equity securities 2,120 1,924 193 3 4,559 3,935 620 4

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Total $ 21,231 $ 28,167

common stock was directly held at December 31, 2021 or December 31, 2020.

Primarily receivables for investment securities sold.

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Actual return on assets:

Relating to assets sold during 2020 — — ( 11 ) — ( 11 )

Relating to assets held at Dec 31, 2021 1 — ( 11 ) — ( 10 )

Purchases, sales and settlements, net ( 5 ) ( 1 ) 3 ( 2 ) ( 5 )

Transfers out of Level 3, net 3 1 — — 4

Balance at Dec 31, 2021 $ 6 $ 1 $ 5 $ — $ 12

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Purchases, sales and settlements, net — — 6 — 6

Transfers into Level 3, net 6 — — — 6

Balance at Dec 31, 2022 $ 6 $ 1 $ 5 $ — $ 12

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employees may participate in defined contribution plans by contributing a portion of their compensation, which is partially matched by the Company.

Defined contribution plans also cover employees in some subsidiaries in other countries, including China, Brazil, The Netherlands, Canada, Korea, Spain and the United Kingdom.

Expense of continuing operations recognized for all defined contribution plans was $ 165 million in 2021, $ 156 million in 2020 and $ 163 million in 2019.

Defined contribution plans also cover employees in some subsidiaries in other countries, including Brazil, The Netherlands, Canada, Korea, Spain and the United Kingdom.

Expense recognized for all defined contribution plans was $ 150 million in 2022, $ 165 million in 2021 and $ 156 million in 2020.

On March 4, 2021, the Company announced changes to its U.S.

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Effective January 1, 2022, contributions to U.S.

tax-qualified and non-qualified defined contribution plans will be harmonized across the Company's U.S.

tax-qualified and non-qualified defined contribution plans were harmonized across the Company's U.S.

eligible employee population.

The new matching contribution will allow all eligible U.S.

The new matching contribution allows all eligible U.S.

employees to receive matching contributions of up to 5 percent of their eligible compensation.

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The Company also grants stock-based compensation to employees and non-employee directors under stock incentive plans, in the form of stock options, stock appreciation rights, PSUs and RSUs.

In connection with the Merger, on August 31, 2017 ("Conversion Date"), all outstanding TDCC stock options and RSU awards were converted into stock options and RSU awards with respect to DowDuPont common stock.

The stock options and RSU awards had the same terms and conditions under the applicable plans and award agreements prior to the Merger.

All outstanding and nonvested PSU awards were converted into RSU awards with respect to DowDuPont common stock at the greater of the applicable performance target or the actual performance as of the effective time of the Merger.

Changes in the fair value of liability instruments are recognized as compensation expense each quarter.

TDCC and Historical DuPont did not merge their stock-based compensation plans as a result of the Merger.

TDCC and Historical DuPont stock-based compensation plans were assumed by DowDuPont and continued in place with the ability to grant and issue DowDuPont common stock until separation.

In connection with the separation on April 1, 2019, outstanding stock options, RSU and PSU awards were converted to Dow Inc.

denominated awards under the “Employer Method,” or DowDuPont denominated awards under the “Shareholder Method,” and adjusted to maintain the intrinsic value of those awards before and after the date of the separation.

In connection with the Corteva separation transaction on June 3, 2019, the outstanding DowDuPont denominated stock options, RSU and PSU awards were converted to Corteva and DuPont denominated awards and adjusted to maintain the intrinsic value of those awards before and after the date of the Corteva separation.

The awards have the same terms and conditions under the applicable plans and award agreements prior to the separation transactions.

The conversions of stock awards resulted in no incremental compensation expense.

Approximately 5,000 employees were impacted by the conversion on April 1, 2019 in connection with Dow Inc.'s separation from DowDuPont.

Approximately 4,000 employees were impacted by the conversion on June 3, 2019 in connection with the Corteva separation transaction.

The total stock-based compensation expense included in continuing operations in the consolidated statements of income was $ 276 million, $ 171 million and $ 158 million in 2021, 2020 and 2019, respectively.

The total stock-based compensation expense included in the consolidated statements of income was $ 211 million, $ 276 million and $ 171 million in 2022, 2021 and 2020, respectively.

The income tax benefits related to stock-based compensation arrangements were $ 47 million, $ 62 million and $ 39 million in 2022, 2021 and 2020, respectively.

Amounts disclosed throughout the remainder of this footnote are inclusive of activity attributable to both continuing operations and discontinued operations, as the impact of discontinued operations is not significant.

Accounting for Stock-Based Compensation

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The Company has historically granted equity awards under various plans (the "Prior Plans").

On February 9, 2012, the Board authorized The Dow Chemical Company 2012 Stock Incentive Plan (the "2012 Plan"), which was approved by stockholders at TDCC's annual meeting on May 10, 2012 ("2012 Plan Effective Date") and became effective on that date.

On February 13, 2014, the Board adopted The Dow Chemical Company Amended and Restated 2012 Stock Incentive Plan (the "2012 Restated Plan").

On February 9, 2012, the TDCC Board authorized The Dow Chemical Company 2012 Stock Incentive Plan (the "2012 Plan"), which was approved by stockholders at TDCC's annual meeting on May 10, 2012 ("2012 Plan Effective Date") and became effective on that date.

On February 13, 2014, the TDCC Board adopted The Dow Chemical Company Amended and Restated 2012 Stock Incentive Plan (the "2012 Restated Plan").

The 2012 Restated Plan was approved by stockholders at TDCC's annual meeting on May 15, 2014, and became effective on that date.

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Includes the fair value of shares vested in prior years and delivered in the reporting year.

In 2021, the Company did not settle any RSU's in cash (approximately 85,000 RSUs settled in cash for $ 4 million in 2020 and 341,000 RSUs settled in cash for $ 19 million in 2019).

In 2022, the Company did not settle any RSUs in cash ( zero RSUs settled in cash in 2021 and 85,000 RSUs settled in cash for $ 4 million in 2020).

Total unrecognized compensation cost related to RSU awards of $ 86 million at December 31, 2022 is expected to be recognized over a weighted-average period of 2.09 years.

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The Company grants PSUs to certain employees.

The grants vest when the Company attains specified performance targets, such as return on capital, cumulative cash from operations and relative total shareholder return, over a predetermined period, generally one year to three years .

The grants vest when the Company attains specified performance targets, such as return on capital, cumulative cash from operations, environmental, social and governance metrics, and relative total shareholder return, over a predetermined period, generally one year to three years .

Performance and payouts are determined independently for each metric.

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2021 Jan 1, 2021 – Dec 31, 2023 1,223 $ 61.48

2019 Apr 1, 2019 – Dec 31, 2021 1,173 $ 57.58

2020 Jan 1, 2020 – Dec 31, 2022 1,426 $ 48.35

At the end of the performance period, the actual number of shares issued can range from zero to 200 percent of target shares granted for the 2022 and 2021 awards and can range from zero to 100 percent of the target shares granted for the 2020 award.

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Granted 1,157 $ 65.83

( 1,079 ) $ 57.58

Canceled ( 77 ) $ 59.73

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Weighted-average per share.

Includes 226,240 shares that were not delivered at vesting due to the final performance of program.

Additional Information about PSUs

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Employee Stock Purchase Plan

The Board unanimously approved the Dow Inc.

Board unanimously approved the Dow Inc.

2021 Employee Stock Purchase Plan (the "2021 ESPP"), which was approved by the Company's stockholders at the 2021 Annual Meeting of Stockholders held on April 15, 2021.

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The number of shares purchased was determined using the amount contributed by the employee divided by the plan price.

The plan price of the stock was equal to 85 percent of the fair market value (closing price) of the common stock at June 1, 2021 (beginning) or December 3, 2021 (ending) of the offering period, whichever was lower.

In 2021, employees subscribed to the right to purchase approximately 2.3 million shares at a weighted-average price of $ 45.11 per share, under the 2021 ESPP.

The plan price of the stock was equal to 85 percent of the fair market value (closing price) of the common stock at April 1, 2022 (beginning) or October 7, 2022 (ending) of the offering period, whichever was lower.

In 2022, employees subscribed to the right to purchase approximately 2.7 million shares at a weighted-average price of $ 37.75 per share.

The plan price was fixed upon the close of the offering period.

The shares were delivered to employees in the fourth quarter of 2022.

In 2021, employees subscribed to the right to purchase approximately 2.3 million shares at a weighted-average price of $ 45.11 per share.

The plan price was fixed upon the close of the offering period.

The shares were delivered to employees in the fourth quarter of 2021.

Additional Information about Employee Stock Purchase Plan

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Equity securities with a readily determinable fair value.

Cost includes fair value hedge adjustment gains of $ 47 million at December 31, 2021 and $ 69 million at December 31, 2020 on $ 2,279 million of debt at December 31, 2021 and $ 3,314 million of debt at December 31, 2020.

Cost includes fair value hedge adjustment gains of $ 46 million at December 31, 2022 and $ 47 million at December 31, 2021 on $ 2,279 million of debt at December 31, 2022 and December 31, 2021.

Presented net of cash collateral where master netting arrangements allow.

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There were no material adjustments to the carrying value of the not readily determinable investments for impairment or observable price changes for the year ended December 31, 2022.

The net unrealized loss recognized in earnings on equity securities totaled $ 13 million for the year ended December 31, 2021 ($ 32 million net unrealized gain for the year ended December 31, 2020).

The net unrealized loss recognized in earnings on equity securities totaled $ 8 million for the year ended December 31, 2022 ($ 13 million net unrealized loss for the year ended December 31, 2021).

Investments in Equity Securities Dec 31, 2022 Dec 31, 2021

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derivatives used for this purpose are not designated as hedges.

The potential impact of creating such additional exposures is not material to the Company’s results.

The potential impact of creating such additional exposure is not material to the Company’s results.

Accounting guidance requires companies to recognize all derivative instruments as either assets or liabilities at fair value.

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Derivative Instruments

The notional amounts of the Company's derivative instruments presented on a net basis at December 31, 2021 and 2020, were as follows:

Notional Amounts - Net Dec 31, 2021 Dec 31, 2020

The notional amounts of the Company's derivative instruments at December 31, 2022 and 2021, were as follows:

Notional Amounts 1

Dec 31, 2022 Dec 31, 2021

Derivatives designated as hedging instruments

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Foreign currency contracts $ 8,837 $ 8,234

The notional amounts of the Company's commodity derivatives presented on a net basis at December 31, 2021 and 2020, were as follows:

Commodity Notionals - Net Dec 31, 2021 Dec 31, 2020 Notional Volume Unit

Notional amounts represent the absolute value of open derivative positions at the end of the period.

Multi-leg option positions are reflected at the maximum notional position at expiration.

The notional amounts of the Company's commodity derivatives at December 31, 2022 and 2021, were as follows:

Commodity Notionals 1

Dec 31, 2022 Dec 31, 2021 Notional Volume Unit

Derivatives designated as hedging instruments

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Power derivatives — 3.3 thousands of megawatt hours

Notional amounts represent the net volume of open derivative positions outstanding at the end of the period.

Maturity Dates of Derivatives Designated as Hedging Instruments Year

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Interest rate contracts Other current assets $ 351 $ ( 246 ) $ 105

Interest rate contracts Deferred charges and other assets 130 ( 130 ) —

Foreign currency contracts Other current assets 58 ( 39 ) 19

Foreign currency contracts Deferred charges and other assets 117 ( 89 ) 28

Commodity contracts Other current assets 199 ( 148 ) 51

Commodity contracts Deferred charges and other assets 9 ( 2 ) 7

Total $ 608 $ ( 433 ) $ 175

Derivatives not designated as hedging instruments

Interest rate contracts Other current assets $ 1 $ — $ 1

Foreign currency contracts Other current assets $ 146 $ ( 50 ) $ 96

Foreign currency contracts Deferred charges and other assets 1 ( 1 ) —

Commodity contracts Other current assets 22 ( 1 ) 21

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Interest rate contracts Accrued and other current liabilities $ 246 $ ( 246 ) $ —

Interest rate contracts Other noncurrent obligations 192 ( 130 ) 62

Foreign currency contracts Accrued and other current liabilities 58 ( 39 ) 19

Foreign currency contracts Other noncurrent obligations 90 ( 89 ) 1

Commodity contracts Accrued and other current liabilities 258 ( 198 ) 60

Commodity contracts Other noncurrent obligations 2 ( 2 ) —

Total $ 562 $ ( 483 ) $ 79

Derivatives not designated as hedging instruments

Interest rate contracts Accrued and other current liabilities $ 59 $ — $ 59

Foreign currency contracts Accrued and other current liabilities $ 61 $ ( 50 ) $ 11

Foreign currency contracts Other noncurrent obligations 1 ( 1 ) —

Commodity contracts Accrued and other current liabilities 12 ( 11 ) 1

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Interest rate contracts Other current assets $ 14 $ ( 14 ) $ —

Interest rate contracts Deferred charges and other assets 130 ( 130 ) —

Foreign currency contracts Other current assets 24 ( 13 ) 11

Foreign currency contracts Deferred charges and other assets 117 ( 89 ) 28

Commodity contracts Other current assets 305 ( 173 ) 132

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Derivatives not designated as hedging instruments

Interest rate contracts Deferred charges and other assets $ 41 $ — $ 41

Interest rate contracts Other current assets $ 1 $ — $ 1

Foreign currency contracts Other current assets 23 ( 16 ) 7

Foreign currency contracts Deferred charges and other assets 1 ( 1 ) —

Commodity contracts Other current assets 8 ( 5 ) 3

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Interest rate contracts Accrued and other current liabilities $ 33 $ ( 14 ) $ 19

Interest rate contracts Other noncurrent obligations 192 ( 130 ) 62

Foreign currency contracts Accrued and other current liabilities 15 ( 13 ) 2

Foreign currency contracts Other noncurrent obligations 90 ( 89 ) 1

Commodity contracts Accrued and other current liabilities 267 ( 192 ) 75

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Derivatives not designated as hedging instruments

Interest rate contracts Other noncurrent obligations $ 178 $ — $ 178

Interest rate contracts Accrued and other current liabilities $ 59 $ — $ 59

Foreign currency contracts Accrued and other current liabilities 31 ( 16 ) 15

Foreign currency contracts Other noncurrent obligations 1 ( 1 ) —

Commodity contracts Accrued and other current liabilities 25 ( 8 ) 17

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The Company posted cash collateral of $ 80 million at December 31, 2022 ($ 71 million at December 31, 2021).

No cash collateral was posted by counterparties with the Company at December 31, 2021 and December 31, 2020).

Cash collateral of $ 2 million was posted by counterparties with the Company at December 31, 2022 ( zero at December 31, 2021).

The following table summarizes the gain (loss) of derivative instruments in the consolidated statements of income and comprehensive income for the years ended December 31, 2022, 2021 and 2020:

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Foreign currency contracts 5 13 ( 20 ) 13 ( 15 ) 3 Cost of sales

Foreign currency contracts — — 10 — — 8 Sundry income (expense) - net

Commodity contracts 166 133 ( 8 ) 310 62 ( 31 ) Cost of sales

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The excluded components are related to the time value of the derivatives designated as hedges.

The following table provides the net after-tax amounts to be reclassified from AOCL to income within the next 12 months:

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

Expected Reclassifications from AOCL within the next 12 months Dec 31,

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Basis of Fair Value Measurements on a Recurring Basis Dec 31, 2022 Dec 31, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Total

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Assets at fair value:

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10 — — 10 20 — — 20

Nonconsolidated affiliates 4

— — 7 7 — — — —

Debt securities:

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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.

Estimated asset for an investment in a limited liability company included in "Investment in nonconsolidated affiliates" in the consolidated balance sheets.

Treasury obligations, U.S.

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There were no transfers between Levels 1 and 2 in the years ended December 31, 2022 and 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 an investment in a limited liability company, accounted for as an investment in nonconsolidated affiliates.

There was no unfunded commitment on the investment at December 31, 2022.

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.

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See Note 15 for further information on guarantees classified as Level 3 measurements.

The following table summarizes the changes in fair value measurements using Level 3 inputs for the year ended December 31, 2021:

Fair Value Measurements Using Level 3 Inputs for Accrued Liability of Sadara Guarantee

at Dec 31, 2021

The following table summarizes the changes in fair value measurements using Level 3 inputs for the years ended December 31, 2022 and 2021:

Fair Value Measurements Using Level 3 Inputs for Accrued Liability of Sadara Guarantee at Dec 31, 2022 2021

Balance at Jan 1 $ ( 220 ) $ —

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Fair Value Measurements on a Nonrecurring Basis

The following table summarizes the bases used to measure certain assets at fair value on a nonrecurring basis in the consolidated balance sheets in 2021, 2020 and 2019:

The following table summarizes the bases used to measure certain assets at fair value on a nonrecurring basis in the consolidated balance sheets:

Basis of Fair Value Measurements on a Nonrecurring Basis at Dec 31 (Level 3) Total Losses

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Long-lived assets and other assets $ 121 $ ( 245 )

Assets at fair value:

Long-lived assets, other assets and equity method investments $ 162 $ ( 2,031 )

Goodwill $ — $ ( 1,039 )

2022 Fair Value Measurements on a Nonrecurring Basis

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2021 Fair Value Measurements on a Nonrecurring Basis

The Company's fair value measurements on a nonrecurring basis were insignificant in 2021.

2020 Fair Value Measurements on a Nonrecurring Basis

As part of the 2020 Restructuring Program, the Company has or will shut down and write off several small manufacturing facilities and miscellaneous assets around the world.

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In addition, impairments of leased, non-manufacturing facilities, which were classified as Level 3 measurements, resulted in a write-down of right-of-use assets to a fair value of $ 110 million using unobservable inputs.

The impairment charges related to the 2020 Restructuring Program, totaling $ 196 million, were included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 11 million), Industrial Intermediates & Infrastructure ($ 22 million), Performance Materials & Coatings ($ 116 million) and Corporate ($ 47 million).

The impairment charges related to the 2020 Restructuring Program, totaling $ 196 million, were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 11 million), Industrial Intermediates & Infrastructure ($ 22 million), Performance Materials & Coatings ($ 116 million) and Corporate ($ 47 million).

In 2020, the Company recognized impairment charges of $ 30 million related to the write-down of a non-manufacturing asset and certain corporate leased equipment and the write-off of a capital project.

The assets, classified as Level 3 measurements, were valued at $ 11 million using unobservable inputs.

The impairment charges were included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings ($ 15 million) and Corporate ($ 15 million).

The impairment charges were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Performance Materials & Coatings ($ 15 million) and Corporate ($ 15 million).

In 2020, the Company recognized an additional pretax impairment charge of $ 19 million related to capital additions made to a bio-ethanol manufacturing facility in Santa Vitoria, Minas Gerais, Brazil, which was impaired in 2017.

The assets were written down to zero in 2020.

The impairment charge was included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income and related to Packaging & Specialty Plastics.

The impairment charge was included in “Restructuring and asset related charges - net” in the consolidated statements of income and related to Packaging & Specialty Plastics.

On September 29, 2020, the Company divested the bio-ethanol manufacturing facility.

See Note 6 for additional information.

2019 Fair Value Measurements on a Nonrecurring Basis

As part of the Synergy Program, the Company has or will shut down and write-off several small manufacturing facilities, non-manufacturing assets and certain corporate facilities around the world.

In 2019, manufacturing facilities associated with this plan were written down to zero.

The impairment charges related to the Synergy Program, totaling $ 143 million, were included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Industrial Intermediates & Infrastructure ($ 2 million), Performance Materials & Coatings ($ 28 million) and Corporate ($ 113 million).

In 2019, the Company recognized an additional pretax impairment charge of $ 44 million related to capital additions made to Santa Vitoria, which was impaired in 2017.

The assets were written down to zero in 2019.

The impairment charge was included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income and related to Packaging & Specialty Plastics.

In 2019, the Company recognized impairment charges of $ 14 million related to non-manufacturing assets.

The assets, classified as Level 3 measurements, were valued at $ 10 million using unobservable inputs.

In 2019, the Company recognized an impairment charge of $ 75 million resulting from the planned divestiture of its acetone derivatives business to ALTIVIA Ketones & Additives, LLC.

The assets, classified as Level 3 measurements and valued using unobservable inputs, were written down to zero in 2019, except for inventory, which was sold at the lower of cost or market.

The impairment charge was included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 24 million) and Corporate ($ 51 million).

In the fourth quarter of 2019, the Company performed its annual goodwill impairment testing utilizing a discounted cash flow methodology as its valuation technique.

As a result, the Company determined the fair value of the C&PM reporting unit was lower than its carrying amount and recorded an impairment charge of $ 1,039 million, included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income and related to Performance Materials & Coatings.

See Note 13 for additional information on the impairment charge.

In the fourth quarter of 2019, the Company concluded that its equity method investment in Sadara, classified as a Level 3 measurement and valued using unobservable inputs, was other-than-temporarily impaired and written down to zero.

Additionally, the Company reserved certain accounts and notes receivable and accrued interest balances due to uncertainty on the timing of collection.

As a result, the Company recorded a $ 1,755 million charge related to Sadara.

The charge was included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 370 million), Industrial Intermediates & Infrastructure ($ 1,168 million) and Corporate ($ 217 million).

See Note 12 for additional information.

See Note 5 for additional information on the Company's restructuring activities.

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The Company's variable interests in these joint ventures relate to arrangements between the joint ventures and the Company, involving the majority of the output on take-or-pay terms with pricing ensuring a guaranteed return to the joint ventures.

The Company was a 50 percent indirect owner in a propylene oxide ("PO") manufacturing joint venture in Asia Pacific.

The Company had a variable interest in this joint venture relating to arrangements between the joint venture and the Company involving the majority of the output on take-or-pay terms, with pricing ensuring a guaranteed return to the joint venture.

On April 30, 2019, the Company executed an agreement to acquire full ownership in the PO manufacturing joint venture.

The transaction closed on October 1, 2019, for a cash purchase price of $ 331 million.

Approximately half of the purchase price was attributed to the Company’s proportionate equity interest in the entity that owned the PO manufacturing joint venture, which was accounted for under the equity method of accounting, and was classified as "Investments in and loans to nonconsolidated affiliates" in the consolidated statements of cash flows.

The remaining $ 166 million was classified as "Purchases of noncontrolling interests" in the consolidated statements of cash flows.

Ethylene Storage Joint Venture

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NOTE 24 – RELATED PARTY TRANSACTIONS

Effective with the separation from DowDuPont on April 1, 2019, TDCC became a wholly owned subsidiary of Dow Inc.

and reported transactions with Dow Inc.

as related party transactions.

From the Merger Date through March 31, 2019, TDCC reported transactions with DowDuPont and Historical DuPont and its affiliates as related party transactions.

TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by Dow Inc.'s Board from time to time, as well as certain governance expenses.

TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by the Dow Inc.

Board from time to time, as well as certain governance expenses.

Funding is accomplished through intercompany loans.

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was insignificant.

Pursuant to the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017, and prior to the separation from DowDuPont, TDCC committed to fund a portion of DowDuPont's dividends paid to common stockholders and certain governance expenses.

In 2019, TDCC declared and paid dividends to DowDuPont of $ 535 million.

Historical DuPont and its Affiliates

Prior to the separation from DowDuPont, TDCC sold to and procured from Historical DuPont and its affiliates certain raw materials that were consumed in each company's manufacturing process.

The following table presents revenue earned and expenses incurred related to transactions with Historical DuPont and its affiliates:

Sales to Historical DuPont and its Affiliates 2019

Net sales $ 12

Cost of sales $ 9

Purchases from Historical DuPont and its affiliates were insignificant for 2019.

NOTE 25 – SEGMENTS AND GEOGRAPHIC REGIONS

Dow combines global breadth;

asset integration and scale;

focused innovation and materials science expertise;

leading business positions;

and environmental, social and governance (ESG) leadership to achieve profitable growth and deliver a sustainable future.

The Company’s ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company in the world.

Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated, science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure, mobility and consumer applications.

Dow operates 104 manufacturing sites in 31 countries and employs approximately 35,700 people.

The Company conducts its worldwide operations through six global businesses which are organized into the following operating segments:

Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and Performance Materials & Coatings.

Corporate contains the reconciliation between the totals for the operating segments and the Company's totals.

The Company did not aggregate any operating segments when determining its reportable segments.

The Company reports geographic information for the following regions:

& Canada, Asia Pacific, Latin America and EMEAI.

The Company transfers ethylene to its downstream derivative businesses at market prices.

The Company also allocated costs previously assigned to AgCo and SpecCo ("stranded costs") to the operating segments.

Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT (for the years ended December 31, 2021 and 2020) and pro forma Operating EBIT (for the year ended December 31, 2019) as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources.

The Company defines Operating EBIT as earnings (i.e., "Income (loss) from continuing operations before income taxes") before interest, excluding the impact of significant items.

The Company defines pro forma Operating EBIT as earnings (i.e., "Income (loss) from continuing operations before income taxes") before interest, plus pro forma adjustments, excluding the impact of significant items.

Operating EBIT and pro forma Operating EBIT by segment include all operating items relating to the businesses;

items that principally apply to Dow as a whole are assigned to Corporate.

The Company also presents pro forma net sales for the year ended December 31, 2019 in this footnote as it is included in management's measure of segment performance and is regularly reviewed by the CODM.

Pro forma net sales includes the impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont.

Corporate Profile

Dow conducts its worldwide operations through global businesses which are reflected in the following reportable segments:

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.

These differentiators, plus collaboration at the customer’s design table, enable the segment to deliver more reliable, durable, higher-performing solutions designed for recyclability and enhanced plastics circularity and 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.

This segment 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, The Kuwait Olefins Company K.S.C.C.

("TKOC"), Map Ta Phut and Sadara, all joint ventures of the Company.

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, world-class technology, research and development 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 appliance, building and construction, mobility and transportation, adhesive and lubricant applications, among others.

This segment includes a portion of the Company's share of the results of EQUATE, TKOC, Map Ta Phut and Sadara.

Performance Materials & Coatings

The Performance Materials & Coatings operating segment includes industry-leading franchises that deliver a wide array of solutions into consumer, infrastructure and 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, market-driven and sustainable innovations to customers.

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.

Sales are attributed to geographic region based on customer location;

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Long-lived assets $ 13,833 $ 2,813 $ 3,593 $ 20,239

See Part I, Item 1.

Business for further discussion of the Company's segments.

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 ("CODM") 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 Pack.

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Net sales $ 29,260 $ 16,606 $ 10,764 $ 272 $ 56,902

Restructuring and asset related charges (credits) - net 1

Restructuring and asset related charges - net 1

8 73 6 31 118

Equity in earnings of nonconsolidated affiliates 490 471 7 7 975

Equity in earnings (losses) of nonconsolidated affiliates 359 ( 91 ) 10 ( 10 ) 268

Operating EBIT 2

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Net sales $ 28,128 $ 16,851 $ 9,672 $ 317 $ 54,968

Restructuring and asset related charges - net 1

Restructuring and asset related charges (credits) - net 1

8 1 10 ( 13 ) 6

Equity in earnings (losses) of nonconsolidated affiliates 173 ( 166 ) 6 ( 31 ) ( 18 )

Equity in earnings of nonconsolidated affiliates 490 471 7 7 975

Operating EBIT 2

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Net sales $ 18,301 $ 12,021 $ 7,951 $ 269 $ 38,542

Pro forma net sales 20,245 13,449 8,961 343 42,998

Restructuring, goodwill impairment and asset related charges - net 1

Restructuring and asset related charges - net 1

30 22 192 464 708

Equity in earnings (losses) of nonconsolidated affiliates 173 ( 166 ) 6 ( 31 ) ( 18 )

Pro forma Operating EBIT 3

Operating EBIT 2

2,325 355 314 ( 279 ) 2,715

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Capital expenditures 678 268 306 — 1,252

See Note 6 for information regarding the Company's restructuring programs, goodwill impairment and other asset related charges.

See Note 5 for information regarding the Company's restructuring programs and other asset related charges.

Operating EBIT for TDCC in 2022, 2021 and 2020 is substantially the same as that of Dow Inc.

and therefore is not disclosed separately in the table above.

A reconciliation of "Income from continuing operations, net of tax" to Operating EBIT is provided on the following page.

Pro forma Operating EBIT for TDCC in 2019 is substantially the same as that of Dow Inc.

and therefore is not disclosed separately in the table above.

A reconciliation of "Income (loss) from continuing operations, net of tax" to pro forma Operating EBIT is provided on the following page.

Reconciliation of "Income from continuing operations, net of tax" to Operating EBIT 2021 2020

Income from continuing operations, net of tax $ 6,405 $ 1,294

+ Provision for income taxes on continuing operations 1,740 777

Income from continuing operations before income taxes $ 8,145 $ 2,071

A reconciliation of "Net income" to Operating EBIT is provided in the following table.

Reconciliation of "Net income" to Operating EBIT 2022 2021 2020

Net income $ 4,640 $ 6,405 $ 1,294

+ Provision for income taxes 1,450 1,740 777

Income before income taxes $ 6,090 $ 8,145 $ 2,071

- Interest income 173 55 38

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Operating EBIT $ 6,590 $ 9,533 $ 2,715

Reconciliation of "Income (loss) from continuing operations, net of tax" to Pro Forma Operating EBIT 2019

Income (loss) from continuing operations, net of tax $ ( 1,717 )

+ Provision for income taxes on continuing operations 470

Income (loss) from continuing operations before income taxes $ ( 1,247 )

- Interest income 81

+ Interest expense and amortization of debt discount 933

+ Pro forma adjustments 1

- Significant items ( 4,682 )

Pro forma Operating EBIT $ 4,352

Pro forma adjustments include:

(1) the margin impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont, (2) the removal of the amortization of ECP's inventory step-up recognized in connection with the Merger and (3) the elimination of the impact of events directly attributable to the Merger, internal reorganization and business realignment, separation, distribution and other related transactions (e.g., one-time transaction costs).

The following tables summarize the pretax impact of significant items by segment that are excluded from Operating EBIT and pro forma Operating EBIT:

Significant Items by Segment for 2021 Pack.

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

Significant Items by Segment for 2022

Plastics Ind.

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— — — ( 40 ) ( 40 )

Russia / Ukraine conflict charges 3

( 8 ) ( 73 ) ( 6 ) ( 31 ) ( 118 )

Loss on early extinguishment of debt 4

— — — ( 8 ) ( 8 )

Net gain on divestitures and asset sale 4

Litigation related charges, awards and adjustments 5

321 — — 60 381

Indemnification and other transaction related costs 6

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Includes costs associated with implementing the Company's Digital Acceleration program.

Includes Board approved restructuring plans, including costs associated with implementing the Company's 2020 Restructuring Program, and asset-related charges, which include other asset impairments.

Includes costs associated with implementing the Company's 2020 Restructuring Program.

Asset related charges due to the Russia and Ukraine conflict.

See Note 5 for additional information.

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See Note 14 for additional information.

Includes post-closing adjustments on a previous divestiture.

Related to an arbitration award received from Luxi Chemical Group Co., Ltd.

Includes a gain associated with a legal matter with Nova Chemicals Corporation and a gain related to an adjustment of the Dow Silicones breast implant liability.

See Note 15 for additional information.

Primarily related to charges associated with agreements entered into with DuPont and Corteva 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 3 for additional information.

Significant Items by Segment for 2020 Pack.

Significant Items by Segment for 2021

Plastics Ind.

Materials & Coatings Corp.

Integration and separation costs 1

Digitalization program costs 1

$ — $ — $ — $ ( 169 ) $ ( 169 )

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( 8 ) ( 1 ) ( 10 ) ( 50 ) ( 69 )

Warranty accrual adjustment of exited business 3

Net gain on divestitures and asset sale 4

52 61 — 604 717

Litigation related charges, awards and adjustments 5

544 — — — 544

Loss on early extinguishment of debt 3

— — — ( 574 ) ( 574 )

Net gain on divestitures and asset sale 4

Litigation related charges, awards and adjustments 5

Indemnification and other transaction related costs 6

— — — ( 21 ) ( 21 )

Total $ 8 $ 53 $ ( 10 ) $ ( 763 ) $ ( 712 )

Costs related to business separation activities.

Includes Board approved restructuring plans, including costs associated with implementing the Company's 2020 Restructuring Program, and asset-related charges, which include other asset impairments.

Includes costs associated with implementing the Company's Digital Acceleration program.

Includes costs associated with implementing the Company's 2020 Restructuring Program, and asset-related charges, which include other asset impairments.

See Note 5 for additional information.

Includes an adjustment to the warranty accrual of an exited business.

Primarily related to a gain on the sale of rail infrastructure in the U.S.

and Canada and a gain on the sale of marine and terminal operations and assets in the U.S.

See Notes 5 and 7 for additional information.

Includes recognition of gains associated with a legal matter with Nova.

The Company redeemed outstanding long-term debt resulting in a loss on early extinguishment.

See Note 14 for additional information.

The Company retired outstanding long-term debt resulting in a loss on early extinguishment.

Includes post-closing adjustments on a previous divestiture.

Related to an arbitration award received from Luxi Chemical Group Co., Ltd.

See Note 15 for additional information.

See Note 3 for additional information.

Significant Items by Segment for 2019 Pack.

Significant Items by Segment for 2020

Plastics Ind.

2 unchanged sentences

$ — $ — $ — $ ( 239 ) $ ( 239 )

Restructuring, goodwill impairment and asset related charges - net 2

Restructuring, implementation costs and asset related charges - net 2

( 30 ) ( 22 ) ( 192 ) ( 474 ) ( 718 )

Warranty accrual adjustment of exited business 3

Environmental charges 4

Net gain on divestitures and asset sale 4

52 61 — 604 717

Loss on divestitures 5

Litigation related charges, awards and adjustments 5

544 — — — 544

1 unchanged sentence

— — — ( 149 ) ( 149 )

Litigation related charges, awards and adjustments 7

170 — — 35 205

Indemnification and other transaction related costs 7

1 unchanged sentence

Total $ 566 $ 39 $ ( 192 ) $ ( 268 ) $ 145

Costs related to post-Merger integration and business separation activities.

Excludes one-time transaction costs directly attributable to the Merger.

Includes Board approved restructuring plans and asset related charges (see Note 6 for additional information);

a charge related to Sadara (see Note 12 for additional information) and an impairment charge related to goodwill associated with the Coatings & Performance Monomers reporting unit (see Note 13 for additional information).

Includes an adjustment to the warranty accrual of an exited business.

Related to environmental remediation, primarily resulting from the culmination of long-standing negotiations with regulators and/or agencies and review of additional costs to manage ongoing remediation activities resulting from Dow’s separation from DowDuPont and related agreements with Corteva and DuPont.

Costs related to business separation activities.

Includes costs associated with implementing the Company's 2020 Restructuring Program, and asset-related charges, which include other asset impairments.

See Note 5 for additional information.

Includes post-closing adjustments on previous divestitures.

The Company retired outstanding long-term debt resulting in a loss on early extinguishment.

Includes an adjustment to the warranty accrual of an exited business.

Primarily related to a gain on the sale of rail infrastructure in the U.S.

and Canada and a gain on the sale of marine and terminal operations and assets in the U.S.

See Notes 4 and 6 for additional information.

Includes recognition of gains associated with a legal matter with Nova.

See Note 15 for additional information.

Includes a gain associated with a legal matter with Nova, as well as a gain related to an adjustment of the Implant Liability and a charge related to the settlement of the Commercial Creditor matters.

The Company redeemed outstanding long-term debt resulting in a loss on early extinguishment.

See Note 14 for additional information.

Includes charges primarily associated with agreements entered into with DuPont and Corteva 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.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data