What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-01-31 compared with 2023-02-01 · 411 added, 524 removed, 2109 unchanged (31% of the section changed)

6 unchanged sentences

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 31, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

17 unchanged sentences

When an uncertain tax position is identified by management, the Company must evaluate if it is more likely than not, based on the technical merits, that the uncertain tax position will be sustained upon examination.

The Company recognizes a benefit for tax positions using the highest cumulative tax benefit that is more likely than not to be realized.

The Company recognizes a benefit for tax positions using the highest cumulative tax benefit that is more likely than not to be

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

14 unchanged sentences

Midland, Michigan

February 1, 2023

January 31, 2024

We have served as the Company's auditor since 1905.

4 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated January 31, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

19 unchanged sentences

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

The evaluation of each uncertain tax position requires management to apply specialized skill, knowledge, and significant

judgment related to the identified position.

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, 2023 was $513 million and $561 million, respectively.

12 unchanged sentences

Midland, Michigan

February 1, 2023

January 31, 2024

We have served as the Company's auditor since 1905.

8 unchanged sentences

Restructuring and asset related charges - net 528 118 6

Integration and separation costs — — 239

Equity in earnings (losses) of nonconsolidated affiliates ( 119 ) 268 975

3 unchanged sentences

Income before income taxes 656 6,090 8,145

Provision for income taxes 1,450 1,740 777

Provision (credit) for income taxes ( 4 ) 1,450 1,740

Net income 660 4,640 6,405

13 unchanged sentences

Other comprehensive income (loss), net of tax

Unrealized gains (losses) on investments ( 312 ) ( 45 ) 40

Unrealized losses on investments — ( 312 ) ( 45 )

Cumulative translation adjustments 43 ( 579 ) ( 425 )

58 unchanged sentences

Accumulated other comprehensive loss ( 7,681 ) ( 7,139 )

Unearned ESOP shares — ( 15 )

Treasury stock at cost (2023:

14 unchanged sentences

Depreciation and amortization 2,611 2,758 2,842

Provision for deferred income tax 79 278 258

Provision (credit) for deferred income tax ( 1,222 ) 79 278

Earnings of nonconsolidated affiliates less than (in excess of) dividends received 387 696 ( 651 )

10 unchanged sentences

Cash provided by operating activities - continuing operations 5,164 7,486 7,069

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

Cash provided by (used for) operating activities - discontinued operations 32 ( 11 ) ( 60 )

Cash provided by operating activities 5,196 7,475 7,009

3 unchanged sentences

Purchases of previously leased assets ( 7 ) ( 7 ) ( 694 )

Proceeds from sales of property and businesses, net of cash divested 32 68 929

Proceeds from sales of property, businesses and consolidated companies, net of cash divested 95 32 68

Acquisitions of property and businesses, net of cash acquired ( 114 ) ( 228 ) ( 129 )

12 unchanged sentences

Payments on long-term debt ( 446 ) ( 1,006 ) ( 2,771 )

Collections on securitization programs 18 — —

Purchases of treasury stock ( 625 ) ( 2,325 ) ( 1,000 )

57 unchanged sentences

Restructuring and asset related charges - net 528 118 6

Integration and separation costs — — 239

Equity in earnings (losses) of nonconsolidated affiliates ( 119 ) 268 975

3 unchanged sentences

Income before income taxes 623 6,091 8,106

Provision for income taxes 1,450 1,738 777

Provision (credit) for income taxes ( 4 ) 1,450 1,738

Net income 627 4,641 6,368

7 unchanged sentences

Other comprehensive income (loss), net of tax

Unrealized gains (losses) on investments ( 312 ) ( 45 ) 40

Unrealized losses on investments — ( 312 ) ( 45 )

Cumulative translation adjustments 43 ( 579 ) ( 425 )

55 unchanged sentences

Accumulated other comprehensive loss ( 7,681 ) ( 7,139 )

Unearned ESOP shares — ( 15 )

The Dow Chemical Company’s stockholder's equity 18,905 20,960

10 unchanged sentences

Depreciation and amortization 2,611 2,758 2,842

Provision for deferred income tax 80 278 258

Provision (credit) for deferred income tax ( 1,222 ) 80 278

Earnings of nonconsolidated affiliates less than (in excess of) dividends received 387 696 ( 651 )

14 unchanged sentences

Purchases of previously leased assets ( 7 ) ( 7 ) ( 694 )

Proceeds from sales of property and businesses, net of cash divested 32 68 929

Proceeds from sales of property, businesses and consolidated companies, net of cash divested 95 32 68

Acquisitions of property and businesses, net of cash acquired ( 114 ) ( 228 ) ( 129 )

12 unchanged sentences

Payments on long-term debt ( 446 ) ( 1,006 ) ( 2,771 )

Collections on securitization programs 18 — —

Proceeds from issuance of stock 188 212 320

46 unchanged sentences

2 Recent Accounting Guidance

4 Divestitures

4 Restructuring and Asset Related Charges - Net

82 unchanged sentences

and average cost, and is used consistently from year to year.

At December 31, 2022, approximately 27 percent, 64 percent and 9 percent of the Company's inventories were accounted for under the LIFO, FIFO and average cost methods, respectively.

At December 31, 2021, approximately 27 percent, 65 percent and 8 percent of the Company's inventories were accounted for under the LIFO, FIFO and average cost methods, respectively.

See Note 8 for additional information.

The Company routinely exchanges and swaps raw materials and finished goods with other companies to reduce delivery time, freight and other transportation costs.

3 unchanged sentences

Depreciation is based on the estimated service lives of depreciable assets and is calculated using the straight-line method.

Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service.

Fully depreciated assets are retained in property and accumulated depreciation accounts until they are disposed.

In the case of disposals, assets and related accumulated depreciation are removed from the accounts, and the net amounts, less proceeds from disposal, are included in income.

Impairment and Disposal of Long-Lived Assets

The Company evaluates long-lived assets (property, finite-lived intangible assets and right-of-use assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company evaluates long-lived assets (property, finite-lived intangible assets and lease right-of-use assets) for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

When undiscounted future cash flows are not expected to be sufficient to recover an asset’s carrying amount, the asset is written down to its fair value based on bids received from third parties or a discounted cash flow analysis based on market participant assumptions.

13 unchanged sentences

The fair values of obligations are recorded as liabilities on a discounted basis and are accreted over time for the change in present value.

Costs associated with the liabilities are capitalized and amortized over the estimated remaining useful life of the asset, generally for periods of 10 years or less.

Costs associated with the liabilities are capitalized and amortized over the estimated remaining useful life of the assets.

Investments in debt securities, primarily held by the Company's insurance operations, are classified as trading, available-for-sale or held-to-maturity.

30 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.

Government Assistance

The Company receives grants, subsidies and incentives (collectively "incentives") from governments in various jurisdictions in support of its operations and capital projects.

The incentives are recorded when there is reasonable assurance that the Company will comply with the terms and conditions attached to the incentives and that the incentives will be received.

Incentives are recognized on a systematic basis over the periods in which the related cost or expenditures occur and are included in the Company's financial statements as reductions of "Cost of sales" or "Research and development expenses" in the Company’s consolidated statements of income or as a reduction of "Property" in the consolidated balance sheets.

In 2023, the Company received $ 183 million of government incentives primarily related to the cost of energy used in the Company’s production processes ($ 260 million in 2022).

These incentives, from various governments, are typically based on level of energy consumption and are recorded as a reduction to "Cost of sales" in the consolidated statements of income and as "Accounts and notes receivable - Other" until received or as a reduction to "Accounts payable - Trade" in the consolidated balance sheets.

Other forms of government assistance received by the Company in 2023 and 2022 were not material.

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

15 unchanged sentences

Recently Adopted Accounting Guidance

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 Company's consolidated financial statements.

In 2023, the Company adopted the disclosure requirements of Accounting Standards Update ("ASU") 2022-04, "Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations," including early adoption of the requirement to disclose rollforward information on a prospective basis.

The ASU, which is intended to enhance the transparency of supplier finance programs, requires 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.

See Note 5 for disclosures related to the Company's supplier finance program.

Accounting Guidance Issued But Not Adopted at December 31, 2023

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.

In March 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-02, "Investments — Equity Method and Joint Ventures (Topic 323):

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." The amendments permit reporting entities to elect to account for their tax equity investments using the proportional amortization method if certain conditions are met.

Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the income tax credits and other income tax benefits received and recognizes the net amortization and income tax credits and other income tax benefits in the income statement as a component of income tax expense (benefit).

The amendments also require certain disclosures in annual and interim reporting periods about an entity's tax credit programs.

The new standard is effective for public companies for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, and the amendments must be applied on either a modified retrospective or a retrospective basis.

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.

The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole.

The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures.

The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted.

Although the ASU only requires additional disclosures about the Company's operating segments, the Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740):

Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures.

The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories.

A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions.

The amendments also remove certain disclosures that are no longer considered cost beneficial.

The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted.

Although the ASU only modifies the Company's required income tax disclosures, the Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

NOTE 3 – REVENUE

33 unchanged sentences

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

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.

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.

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

16 unchanged sentences

Remaining performance obligations represent the transaction price allocated to unsatisfied or partially unsatisfied performance obligations.

At December 31, 2022, the Company had unfulfilled performance obligations of $ 840 million ($ 829 million at December 31, 2021) related to the licensing of technology and expects revenue to be recognized for the remaining performance obligations over the next six years.

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

At December 31, 2023, the Company had unfulfilled performance obligations of $ 744 million ($ 840 million at December 31, 2022) related to the licensing of technology and expects revenue to be recognized for the remaining performance obligations over the next seven years.

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

The Company has received advance payments from customers related to long-term supply agreements that are deferred and recognized over the life of the contract, with remaining contract terms that range up to 21 years.

9 unchanged sentences

Revenue recognized in 2023 from amounts included in contract liabilities at the beginning of the period was approximately $ 315 million (approximately $ 250 million in 2022 and $ 295 million in 2021).

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:

In 2023, the amount of contract assets reclassified to receivables as a result of the right to the transaction consideration becoming unconditional was approximately $ 45 million (approximately $ 15 million in 2022).

The Company did not recognize any asset impairment charges related to contract assets in 2023 (immaterial in 2022 and no impairment charges in 2021).

The following table summarizes contract assets and liabilities at December 31, 2023 and 2022:

Contract Assets and Liabilities at Dec 31 Balance Sheet Classification 2023 2022

6 unchanged sentences

Other noncurrent obligations $ 1,642 $ 1,725

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

Divestiture of Rail Infrastructure Operations and Assets

On September 30, 2020, TDCC sold its rail infrastructure operations and assets, including existing agreements to provide rail services to unrelated third parties, at six sites in the U.S.

& Canada to an affiliate of Watco Companies, L.L.C.

for cash proceeds of $ 303 million, net of costs to sell and other adjustments and subject to customary post-closing adjustments.

These assets are located at TDCC’s sites in Plaquemine and St.

Charles, Louisiana;

Freeport and Seadrift, Texas;

and Fort Saskatchewan and Prentiss, Alberta, Canada.

Divested operations included property with a net book value of $ 68 million and goodwill of $ 2 million ($ 16 million related to Packaging & Specialty Plastics and $ 54 million related to Corporate).

TDCC retained ownership of the sites and underlying real property where the divested operations are located.

TDCC and the buyer entered into mutual long-term service agreements designed to ensure the continuation of rail services for TDCC's existing operations at each site.

The rail-service agreements include variable fees that have an initial term of 25 years.

TDCC recognized a pretax gain of $ 233 million on the sale ($ 48 million related to Packaging & Specialty Plastics and $ 185 million related to Corporate), included in "Sundry income (expense) - net" in the consolidated statements of income.

The Company evaluated the divestiture of the rail infrastructure operations and assets and determined it did not represent a strategic shift that had a major effect on the Company’s operations and financial results and did not qualify as an individually significant component of the Company.

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

Divestiture of Marine and Terminal Operations and Assets

On December 1, 2020, TDCC sold certain U.S.

Gulf Coast marine and terminal operations and assets, including existing agreements to provide marine and terminal services to unrelated third parties, at three U.S.

sites to an affiliate of Royal Vopak for cash proceeds of $ 600 million, net of costs to sell and other adjustments and subject to customary post-closing adjustments.

These assets are located at TDCC's sites in Plaquemine and St.

Charles, Louisiana, and Freeport, Texas.

Divested operations included property with a net book value of $ 93 million and goodwill of $ 8 million ($ 7 million related to Packaging & Specialty Plastics, $ 17 million related to Industrial Intermediates & Infrastructure and $ 77 million related to Corporate).

TDCC retained ownership of the sites and the underlying real property where the divested operations are located.

TDCC and the buyer entered into mutual long-term service agreements designed to ensure the continuation of marine and terminal services for TDCC's existing operations at each site.

The marine and terminal service agreements include fixed and variable fees that have initial terms of up to 25 years.

In the fourth quarter of 2020, TDCC recognized a pretax gain of $ 499 million on the sale ($ 17 million related to Packaging & Specialty Plastics, $ 61 million related to Industrial Intermediates & Infrastructure and $ 421 million related to Corporate), included in "Sundry income (expense) - net" in the consolidated statements of income.

The Company evaluated the divestiture of the marine and terminal operations and assets and determined it did not represent a strategic shift that had a major effect on the Company’s operations and financial results and did not qualify as an individually significant component of the Company.

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

The decrease from December 31, 2022 to December 31, 2023 was primarily due to recognition of deferred royalty payments.

The decrease from December 31, 2022 to December 31, 2023 was primarily due to recognition of revenue on long-term product supply agreements.

NOTE 4 – RESTRUCTURING AND ASSET RELATED CHARGES - NET

2 unchanged sentences

2023 Restructuring Program

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.

This program included a global workforce cost reduction of approximately 6 percent and actions to rationalize the Company's manufacturing assets, which included asset write-down and write-off charges, related contract termination fees and environmental remediation costs ("2020 Restructuring Program").

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, 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.

In the fourth quarter of 2020, the Company recorded net favorable pretax restructuring credits of $ 1 million related to asset write-downs and write-offs and $ 1 million related to costs associated with exit and disposal activities (related to Performance Materials & Coatings and Corporate).

The adjustment to costs associated with exit and disposal activities included curtailment costs associated with a defined benefit pension plan.

See Note 19 for additional information.

In 2021, the Company recorded pretax restructuring charges of $ 12 million for asset write-downs and write-offs and $ 10 million for costs associated with exit and disposal activities.

In addition, the Company reduced pretax restructuring charges by $ 10 million for severance and related benefit costs.

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

2020 Restructuring Program Severance and Related Benefit Costs Asset Write-downs and Write-offs Costs Associated with Exit and Disposal Activities Total

Packaging & Specialty Plastics $ — $ 11 $ — $ 11

Industrial Intermediates & Infrastructure — 22 — 22

Performance Materials & Coatings — 116 61 177

Corporate 297 47 19 363

Total restructuring charges $ 297 $ 196 $ 80 $ 573

Charges against the reserve — ( 196 ) ( 5 ) ( 201 )

Cash payments ( 8 ) — — ( 8 )

Reserve balance at Dec 31, 2020 $ 289 $ — $ 75 $ 364

On January 25, 2023, the 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.

As a result of these actions the Company recorded pretax restructuring charges of $ 541 million in the first quarter of 2023, additional pretax restructuring charges of $ 8 million in the second quarter of 2023, and a $ 14 million net credit adjustment in the fourth quarter of 2023.

These actions are expected to be substantially complete by the end of 2024.

The following table summarizes the activities related to the 2023 Restructuring Program, including segment information:

2023 Restructuring Program Severance and Related Benefit Costs Asset Write-downs and Write-offs Total

Packaging & Specialty Plastics $ — $ 1 $ 1

6 unchanged sentences

Reserve balance at Dec 31, 2023 $ 122 $ — $ 122

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.

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

At December 31, 2023, $ 101 million of the reserve balance was included in "Accrued and other current liabilities" and $ 21 million was included in "Other noncurrent obligations" in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $ 535 million inception-to-date under the 2023 Restructuring Program, consisting of severance and related benefit costs of $ 344 million and asset write-downs and write-offs of $ 191 million.

Severance and Related Benefit Costs

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 2023 Restructuring Program included a charge for severance and related benefit costs of $ 344 million for a global workforce reduction of approximately 2,000 employees.

The majority of separations occurred by the end of the second quarter of 2023 with the remaining occurring primarily through the end of 2024.

Asset Write-downs and Write-offs

The 2020 Restructuring Program included charges related to the write-down and write-off of assets totaling $ 196 million in 2020.

The 2023 Restructuring Program included charges related to the write-down and write-off of assets totaling $ 191 million.

Details regarding the asset write-downs and write-offs are as follows:

• Packaging & Specialty Plastics recorded a charge of $ 11 million to rationalize its production capacity by shutting down a small-scale production unit.

• 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 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.

• Corporate recorded a charge of $ 47 million related to the write-down of leased, non-manufacturing facilities and the write-down of miscellaneous assets.

The 2020 Restructuring Program included charges related to the write-down and write-off of assets totaling $ 12 million in 2021, which included additional write-down and write-off of assets related to the actions listed above, impacting Industrial Intermediates & Infrastructure ($ 1 million) and Performance Materials & Coatings ($ 8 million), and the write-down of an additional non-manufacturing facility impacting Corporate ($ 3 million).

Shut down related activities for impacted facilities were substantially complete by the end of 2021.

Costs Associated with Exit and Disposal Activities

The 2020 Restructuring Program included charges of $ 80 million for costs associated with exit and disposal activities in 2020, which included $ 19 million for contract termination fees related to the asset actions listed above, impacting Performance Materials & Coatings ($ 9 million) and Corporate ($ 10 million), as well as $ 56 million for environmental remediation, impacting Performance Materials & Coatings ($ 52 million) and Corporate ($ 4 million) and $ 5 million related to curtailment costs associated with a defined benefit pension plan, impacting Corporate.

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).

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

Future costs are expected to include demolition costs related to closed facilities and restructuring implementation costs.

These costs will be recognized as incurred.

The Company also expects to incur additional employee-related costs, including involuntary termination benefits, related to its other optimization activities.

These costs cannot be reasonably estimated at this time.

• Industrial Intermediates & Infrastructure charges relate to the shutdown of certain polyurethanes assets and the write-off of other assets.

The majority of the impacted facilities are expected to be shutdown by the end of 2024.

• Performance Materials & Coatings recorded charges to rationalize its asset footprint by shutting down certain coatings assets.

These facilities are expected to be shutdown by the end of 2024.

• Corporate recorded charges related to the write-down of Company owned and leased, non-manufacturing facilities, primarily related to office space rationalization.

Restructuring implementation costs, primarily decommissioning and demolition activities related to asset actions and costs associated with the Company's productivity and efficiency actions, are expected to result in additional cash expenditures of approximately $ 285 million, primarily through the end of 2024.

Asset Related Charges

In 2023, the Company recorded pretax asset related credits of $ 7 million in Corporate related to a prior restructuring program.

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.

2 unchanged sentences

$ 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.

The impairment charges related to Packaging & Specialty Plastics ($ 19 million), Performance Materials & Coatings ($ 15 million) and Corporate ($ 15 million).

See Note 22 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 5 – SUPPLEMENTARY INFORMATION

Sundry Income (Expense) – Net Dow Inc.

In millions 2022 2021 2020 2022 2021 2020

Non-operating pension and other postretirement benefit plan net credits 1

Sundry Income (Expense) – Net 2023 2022 2021

Non-operating pension and other postretirement benefit plan net (cost) credits 1

$ ( 264 ) $ 358 $ 332

1 unchanged sentence

( 340 ) ( 117 ) ( 8 )

Loss on early extinguishment of debt 3

( 8 ) ( 574 ) ( 149 ) ( 8 ) ( 574 ) ( 149 )

Gain on sales of other assets and investments 3

Indemnification and other transaction related costs 4

4 30 ( 21 ) — ( 2 ) ( 11 )

Luxi arbitration award 5

— 54 — — 54 —

Gain (loss) on divestitures and asset sale 6

— 16 (15) — 16 (15)

Gain on divestiture of rail infrastructure operations and assets 7

— — 233 — — 233

Gain on divestiture of marine and terminal operations and assets 7

Asset impairments and related costs 4

Gain (loss) on early extinguishment of debt 5

5 ( 8 ) ( 574 )

Indemnification and other transaction related costs 6

Gain related to Nova legal matter 7

321 — 544 321 — 544

Dow Silicones breast implant liability adjustment — 60 —

60 — 5 60 — 5

Luxi arbitration award 7

Gain on divestitures and asset sale 8

Other - net 125 31 10

Total sundry income (expense) – net $ ( 280 ) $ 727 $ ( 35 )

See Note 19 for additional information.

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

The year ended December 31, 2023, includes pretax pension settlement charges of $ 642 million related to the transfer of certain plan benefit obligations to insurance companies.

See Note 18 for additional information about the Company's pension and other postretirement plans, including pension settlement charges.

Foreign exchange losses in 2023 relate primarily to exposures in the Argentine peso, including $ 109 million related to the devaluation of the Argentine peso by the Argentina government in December 2023.

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

The year ended December 31, 2023, includes gains associated with the sale of shares of a previously impaired equity method investment.

Certain obligations associated with a previously impaired equity method investment.

See Note 13 for additional information.

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

Primarily related to charges associated with agreements entered into with DuPont de Nemours, Inc.

("DuPont") and Corteva, Inc.

("Corteva") as part of the separation and distribution.

See Note 14 for additional information.

The year ended December 31, 2021, includes post-closing adjustments on a previous divestiture, related to Packaging & Specialty Plastics.

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.

See Note 4 for additional information.

Sundry income (expense) - net for TDCC for the years ended December 31, 2023, 2022 and 2021, is substantially the same as that of Dow Inc., with the primary difference related to indemnification and other transaction related costs recorded on Dow Inc.

Therefore, TDCC sundry income (expense) - net is not disclosed separately.

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, as provided below:

Investments in Company-Owned Life Insurance Dec 31, 2023 Dec 31, 2022

Gross cash value $ 623 $ 708

Existing drawdowns 1

Investments in company-owned life insurance 2

Classified as "Proceeds from sales and maturities of investments" in the consolidated statements of cash flows.

Classified as "Other investments" in the consolidated balance sheets.

The Company has the ability to monetize its investment in its COLI policies as an additional source of liquidity.

At December 31, 2023, the Company had monetized $ 97 million of its existing COLI policies' value ( zero at December 31, 2022).

Supplier Finance Program

The Company facilitates a supply chain financing (“SCF”) program in the ordinary course of business in order to extend payment terms with vendors.

Under the terms of this program, a vendor can voluntarily enter into an agreement with a participating financial intermediary to sell its receivables due from the Company.

The vendor receives payment from the financial intermediary, and the Company pays the financial intermediary on the terms originally negotiated with the vendor, which generally range from 90 to 120 days.

The vendor negotiates the terms of the agreements directly with the financial intermediary and the Company is not a party to that agreement.

The financial intermediary may allow the participating vendor to utilize the Company’s creditworthiness in establishing credit spreads and associated costs, which may provide the vendor with more favorable terms than they would be able to secure on their own.

The Company does not provide guarantees related to the SCF program.

At December 31, 2023, outstanding obligations confirmed as valid under the SCF program were $ 285 million ($ 267 million at December 31, 2022), included in “Accounts payable – Trade” in the consolidated balance sheets.

The following table summarizes the outstanding obligations confirmed as valid under the SCF program for the year ended December 31, 2023:

Supplier Finance Program Activity 2023

Confirmed obligations outstanding at Jan 1 $ 267

Invoices confirmed to financial intermediary 1,308

Confirmed invoices paid to financial intermediary ( 1,290 )

Confirmed obligations outstanding at Dec 31 $ 285

Accrued and Other Current Liabilities

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

Geographic Allocation of Income and Provision for Income Taxes

Geographic Allocation of Income and Provision (Credit) for Income Taxes

In millions 2023 2022 2021

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Total current tax expense $ 1,218 $ 1,371 $ 1,462

Deferred tax expense

Deferred tax expense (benefit)

Federal $ ( 445 ) $ 63 $ 130

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Foreign ( 780 ) 15 122

Total deferred tax expense $ 79 $ 278 $ 258

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

Total deferred tax expense (benefit) $ ( 1,222 ) $ 79 $ 278

Provision (credit) for income taxes $ ( 4 ) $ 1,450 $ 1,740

Net income $ 660 $ 4,640 $ 6,405

8 unchanged sentences

Unrecognized tax benefits 33.1 1.3 4.7

Divestitures 1

Changes in valuation allowances 18.8 ( 2.8 ) 2.6

Federal tax accrual adjustment ( 21.2 ) 0.6 ( 5.3 )

0.6 ( 5.3 ) 0.3

State and local income taxes 3.0 2.8 0.2

Change in tax basis in foreign assets 1

Other - net 1.2 2.3 —

Effective tax rate ( 0.6 ) % 23.8 % 21.4 %

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

See Note 5 for additional information.

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 2023 impact primarily represents the initial recognition of tax basis in intangible assets in foreign jurisdictions and the related valuation allowance.

Deferred Tax Balances at Dec 31 2023 2022

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Intangibles 1

2,090 331 36 415

Inventory 114 272 129 278

3 unchanged sentences

Valuation allowances 1

( 2,948 ) — ( 1,269 ) —

Total $ 5,219 $ 4,132 $ 4,234 $ 4,384

The change in 2023 primarily represents the initial recognition of tax basis in intangible assets in foreign jurisdictions and the related valuation allowance.

Operating Loss and Tax Credit Carryforwards at Dec 31 2023 2022

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Decreases due to expiration of statutes of limitations ( 11 ) — ( 1 )

Foreign exchange gain ( 1 ) ( 2 ) —

Foreign exchange loss (gain) 5 ( 1 ) ( 2 )

Total unrecognized tax benefits at Dec 31 $ 513 $ 520 $ 580

2 unchanged sentences

Total accrual for interest and penalties recognized in the consolidated balance sheets $ 561 $ 498 $ 502

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 multiple jurisdictions.

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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.

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

NOTE 7 - EARNINGS PER SHARE CALCULATIONS

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Total inventories $ 6,076 $ 6,988

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

At December 31, 2023, approximately 29 percent, 60 percent and 11 percent of the Company's inventories were accounted for under the LIFO, FIFO and average cost methods, respectively.

At December 31, 2022, approximately 27 percent, 64 percent and 9 percent of the Company's inventories were accounted for under the LIFO, FIFO and average cost methods, respectively.

NOTE 9 – PROPERTY

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Included in "Earnings of nonconsolidated affiliates less than (in excess of) dividends received" in the consolidated statements of cash flows.

Except for AFSI, the nonconsolidated affiliates in which the Company has investments are privately held companies;

The nonconsolidated affiliates in which the Company has investments are privately held companies;

therefore, quoted market prices are not available.

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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.

At December 31, 2023, the Company had a negative investment balance in Sadara of $ 128 million classified as "Other noncurrent obligations" ($ 322 million at December 31, 2022 included in “Investment in nonconsolidated affiliates”) in the Company’s consolidated balance sheets.

See Note 14 for additional information related to guarantees.

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.

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

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.

At December 31, 2023, the Company had a negative investment balance in EQUATE of $ 101 million classified as "Other noncurrent obligations" ($ 144 million at December 31, 2022) in the consolidated balance sheets.

The Company's investment in EQUATE was $ 432 million less than the Company's proportionate share of EQUATE's underlying net assets at December 31, 2023 ($ 447 million less at December 31, 2022), 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.

A basis difference of $ 111 million at December 31, 2023 ($ 126 million at December 31, 2022), is being amortized over the remaining useful lives of the assets and the remainder is considered a permanent difference.

At December 31, 2022 and 2021, the Company had an investment balance in AFSI of zero .

At December 31, 2022, the Company's investment in AFSI was $ 72 million less than the Company's proportionate share of AFSI's underlying net assets ($ 96 million less at December 31, 2021).

This amount primarily relates to an other-than-temporary decline in the Company's investment in AFSI.

At December 31, 2022 and 2021, the Company held a 40 percent ownership interest in AFSI.

At March 31, 2023, the Company's previously impaired investment in AFSI was converted to cash upon completion of the AFSI shareholder-approved go-private transaction.

The Company had an investment balance in AFSI of zero at December 31, 2023 and 2022.

At December 31, 2022, the Company's investment in AFSI was $ 72 million less than the Company's proportionate share of AFSI's underlying net assets.

At December 31, 2023, the Company held no ownership interest in AFSI ( 40 percent ownership interest in AFSI at December 31, 2022).

Transactions with Nonconsolidated Affiliates

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Purchases of Sadara products represented 6 percent of "Cost of sales" in 2023 ( 7 percent in 2022 and 9 percent in 2021).

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 2022, 2021 and 2020.

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

Purchases of products from The SCGC-Dow Group represented 3 percent of "Cost of sales" in 2023, 2022 and 2021.

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

17 unchanged sentences

Sadara Chemical Company Saudi Arabia 35.00 % 35.00 % 35.00 %

The SCG-Dow Group:

The SCGC-Dow Group:

Siam Polyethylene Company Limited Thailand 50.00 % 50.00 % 50.00 %

5 unchanged sentences

Investment in Principal Nonconsolidated Affiliates at Dec 31 2023 2022

Investment in nonconsolidated affiliates $ 1,116 $ 1,621

Investment in principal nonconsolidated affiliates $ 754 $ 1,116

Other noncurrent obligations ( 229 ) ( 144 )

32 unchanged sentences

Based on the results of the qualitative testing, the Company did not perform quantitative testing on any reporting units in 2023, 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.

Other Intangible Assets

6 unchanged sentences

Developed technology $ 2,634 $ ( 2,181 ) $ 453 $ 2,651 $ ( 2,025 ) $ 626

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

Software 1,352 ( 981 ) 371 1,358 ( 962 ) 396

2 unchanged sentences

Total other intangible assets $ 7,446 $ ( 5,374 ) $ 2,072 $ 7,464 $ ( 5,022 ) $ 2,442

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:

6 unchanged sentences

Accounts Receivable 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.

The Company maintains accounts receivable facilities with various financial institutions, with committed and uncommitted facilities in the United States and a committed accounts receivable facility in Europe (collectively, "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.

Program and up to € 500 million for the Europe Program.

committed facility, and € 500 million for the Europe committed facility.

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.

1 unchanged sentence

See Note 14 for additional information related to guarantees.

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

In 2023, the Company sold $ 112 million of receivables under the Programs ($ 391 million in 2022).

Beginning in 2023, the Company has access to an accounts receivable discounting facility that covers receivables generated from sales in EMEAI.

Under the terms of the discounting facility, the Company retains no interest in the transferred receivables once sold and receivables are transferred with limited recourse.

In 2023, the Company sold $ 91 million of receivables into the facility.

NOTE 13 – NOTES PAYABLE, LONG-TERM DEBT AND AVAILABLE CREDIT FACILITIES

5 unchanged sentences

Year-end average interest rates 1

33.84 % 6.55 %

The average interest rate increase from 2022 to 2023 is primarily due to interest rates in Argentina.

Long-Term Debt at Dec 31 2023 Average Rate 2023 2022

3 unchanged sentences

Final maturity 2028 4.80 % 600 4.80 % 600

Final maturity 2026 — % — 3.63 % 750

Final maturity 2029 and thereafter 1

3 unchanged sentences

InterNotes ® , varying maturities through 2053

4.12 % 595 3.87 % 543

Finance lease obligations 2

9 unchanged sentences

2023 Activity

In the fourth quarter of 2023, the Company redeemed $ 23 million aggregate principal amount of 2.100 percent notes due November 2030, $ 14 million aggregate principal amount of 4.625 percent notes due October 2044, and $ 1 million aggregate principal amount of 4.375 percent notes due November 2042.

As a result of the redemption, the Company recognized a pretax gain on the early extinguishment of debt of $ 5 million, included in "Sundry income (expense) - net" in the consolidated statements of income and related to Corporate.

In 2023, the Company issued an aggregate principal amount of $ 80 million of InterNotes ® .

Additionally, the Company repaid $ 250 million of long-term debt at maturity and approximately $ 3 million of long-term debt was repaid by consolidated variable interest entities.

2022 Activity

In the second quarter of 2022, the Company redeemed $ 750 million aggregate principal amount of 3.625 percent notes due May 2026.

15 unchanged sentences

Additionally, the Company repaid $ 259 million of long-term debt at maturity and approximately $ 25 million of long-term debt was repaid by consolidated variable interest entities.

2020 Activity

In February 2020, the Company issued € 2.25 billion aggregate principal amount of notes (“Euro Notes”).

The Euro Notes included € 1.0 billion aggregate principal amount of 0.50 percent notes due 2027, € 750 million aggregate principal amount of 1.125 percent notes due 2032 and € 500 million aggregate principal amount of 1.875 percent notes due 2040.

The Euro Notes have a weighted average coupon rate of approximately 1.0 percent.

With the net proceeds from the issuance of the Euro Notes, Dow Silicones voluntarily repaid $ 750 million of principal under a certain third party credit agreement ("Term Loan Facility”).

In addition, the Company redeemed $ 1.25 billion of 3.0 percent notes issued by the Company with maturity in 2022.

As a result, the Company recognized a pretax loss of $ 85 million on the early extinguishment of debt, included in “Sundry income (expense) – net” in the consolidated statements of income and related to Corporate.

In the first quarter of 2020, the Company withdrew $ 800 million under various uncommitted bilateral credit arrangements, which were subsequently repaid in the second quarter of 2020.

In August 2020, the Company issued $ 2.0 billion aggregate principal amount of notes.

The notes included $ 850 million aggregate principal amount of 2.1 percent notes due 2030 and $ 1.15 billion aggregate principal amount of 3.6 percent notes due 2050 (together, the "Notes" ).

With the net proceeds from the issuance of the Notes, Dow Silicones voluntarily repaid the remaining $ 1.25 billion outstanding principal balance under the Term Loan Facility.

In September 2020, the Company also used $ 556 million of aggregate proceeds from the Notes to fund cash tender offers for certain of its debt securities and certain debt securities of Union Carbide.

In total, $ 493 million aggregate principal amount was tendered and retired.

These actions resulted in a pretax loss of $ 62 million on the early extinguishment of debt included in "Sundry income (expense) – net" in the consolidated statements of income and related to Corporate.

In 2020, the Company also issued an aggregate principal amount of $ 190 million of InterNotes® and redeemed an aggregate principal amount of $ 180 million at maturity.

In addition, the Company voluntarily repaid an aggregate principal amount of $ 400 million of InterNotes® with various maturities.

As a result, the Company recognized a pretax loss on the early extinguishment of debt of $ 2 million, included in “Sundry income (expense) – net” in the consolidated statements of income and related to Corporate.

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.

Available Credit Facilities

3 unchanged sentences

Five Year Competitive Advance and Revolving Credit Facility $ 5,000 $ 5,000 November 2028 Floating rate

Bilateral Revolving Credit Facility 300 300 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 375 375 October 2024 Floating rate

Bilateral Revolving Credit Facility 100 100 March 2025 Floating rate

3 unchanged sentences

Bilateral Revolving Credit Facility 300 300 November 2025 Floating rate

Bilateral Revolving Credit Facility 300 300 February 2026 Floating rate

Bilateral Revolving Credit Facility 100 100 March 2026 Floating rate

7 unchanged sentences

Bilateral Revolving Credit Facility 100 100 November 2027 Floating rate

Bilateral Revolving Credit Facility 300 300 May 2028 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

31 unchanged sentences

As new or additional information becomes available and/or certain spending trends become known, management will evaluate such information in determination of the current estimate of the environmental liability.

As part of the Company's 2020 Restructuring Program, in the third quarter of 2020, the Company recorded a pretax charge related to environmental remediation matters.

This charge resulted from the Company's evaluation of the costs required to manage remediation activities at sites Dow will permanently shut down as part of its 2020 Restructuring Program.

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 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.

The following table summarizes the activity in the Company's accrued obligations for environmental matters for the years ended December 31, 2023 and 2022:

25 unchanged sentences

Dow has received from the EPA a Notice of Completion of Work for three of these six orders and the Company continues the long-term monitoring requirements.

In 2023, Dow started evaluation of the final geographic segment of the first Operable Unit.

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.

In 2022, the Company implemented the limited remedial action in the second Operable Unit and, in 2023, submitted a Completion Report for those limited remedial actions.

Alternative Dispute Resolution Process

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Fish and Wildlife Service, the U.S.

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

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.

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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These funds were paid in December 2020.

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

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

To date, three projects have been completed, including two environmental restoration projects/public amenities opened to the public.

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

13 unchanged sentences

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.

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.

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 that study and, therefore, the estimate in that 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 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.

1 unchanged sentence

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.

In December 2023, Ankura stated that an update of its December 2022 study would not provide a more likely estimate of future events than the estimate reflected in that study and, therefore, the estimate in that study remained applicable.

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

At December 31, 2023, the asbestos-related liability for pending and future claims against Union Carbide and Amchem, including future asbestos-related defense and processing costs, was $ 867 million, and approximately 25 percent of the recorded liability related to pending claims and approximately 75 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.

3 unchanged sentences

As a result, it is reasonably possible that an additional cost of disposing of Union Carbide's asbestos-related claims, including future defense and processing costs, could have a material impact on the Company's results of operations and cash flows for a particular period and on the consolidated financial position.

Dow Silicones Chapter 11 Related Matters

In 1995, Dow Silicones, then a 50:50 joint venture between the Company and Corning Incorporated ("Corning"), voluntarily filed for protection under Chapter 11 of the U.S.

Bankruptcy Code in order to resolve Dow Silicones’ breast implant liabilities and related matters (the “Chapter 11 Proceeding”).

Dow Silicones emerged from the Chapter 11 Proceeding on June 1, 2004 (the “Effective Date”) and is implementing the Joint Plan of Reorganization (the “Plan”).

The Plan provides funding for the resolution of breast implant and other product liability litigation covered by the Chapter 11 Proceeding.

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

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.

The claim filing deadline passed in June 2019.

All claims have been received and are being processed.

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.

Groundwater Contamination

The Company is the subject of various complaints related to alleged groundwater contamination based on decades-old sales and applications of certain agricultural chemical products ("Legacy Liabilities").

The costs associated with these Legacy Liabilities were previously covered by insurance policies that have since been depleted.

In the first quarter of 2023, the Company completed a study of the Legacy Liabilities now deemed to be probable and estimable based on the public reporting of sampling data and historical information to develop a reasonable estimate of the cost of pending and future claims.

As a result, the Company recorded a pretax charge of $ 177 million, included in "Cost of sales" in the consolidated statements of income and related to Industrial Intermediates & Infrastructure.

At December 31, 2023, the total liability related to such alleged Legacy Liabilities settlements was $ 232 million, which was included in “Accrued and other current liabilities” and "Other noncurrent obligations" in the consolidated balance sheets.

The Company is also the subject of other groundwater contamination complaints, including claims related to1,4-dioxane.

The Company continues to defend itself in this litigation and it has determined that the Company's exposure to liability, if any, is not currently probable or estimable.

Other Litigation Matters

2 unchanged sentences

All such claims are being contested.

The Company has an active risk management program consisting of numerous insurance policies secured from many carriers at various times.

The Company has an active risk management program consisting of numerous insurance policies

secured from many carriers at various times.

These policies may provide coverage that could be utilized to minimize the financial impact, if any, of certain contingencies described above.

It is the opinion of the Company’s management that the possibility is remote that the aggregate of all such other claims and lawsuits will have a material adverse impact on the results of operations, financial condition and cash flows of the Company.

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 and certain environmental matters described in the preceding sections, subject to certain conditions and limits.

Indemnifications with Corning Incorporated ("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, 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.

11 unchanged sentences

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.

In June 2017, the Federal Court ordered Nova to pay $ 645 million Canadian dollars (equivalent to $ 495 million U.S.

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

In June 2017, the Federal Court ordered Nova to pay $ 645 million Canadian dollars to the Company, plus pre- and post-judgment interest, for which the Company received payment equivalent to $ 501 million U.S.

dollars in July 2017.

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.

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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.

Nova Chemicals Corporation Ethylene Asset Matter

On September 18, 2019, the Court of the Queen’s Bench in Alberta, Canada, signed a judgment ordering Nova to pay the Company $ 1.43 billion Canadian dollars (equivalent to approximately $ 1.08 billion U.S.

dollars) by October 11, 2019, for damages the Company incurred through 2012 related to the companies’ jointly-owned ethylene asset in Joffre, Alberta, Canada.

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.

On September 18, 2019, the Court of the King's Bench in Alberta, Canada, signed a judgment ordering Nova to pay the Company $ 1.43 billion Canadian dollars (equivalent to approximately $ 1.08 billion U.S.

dollars) by October 11, 2019, for damages the Company incurred through 2012 related to the companies’ jointly-owned ethylene asset in Joffre, Alberta, Canada, which has been received by the Company.

The Court of the King'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 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.

dollars) directly to the Company, and remitted $ 347 million Canadian dollars to the Canada Revenue Agency ("CRA") for the tax account of one of the Company's subsidiaries.

The Company sought a refund of the entire amount remitted to CRA.

On March 31, 2020, the Company received the full refund from CRA, equivalent to $ 259 million U.S.

In preparation for the June 2020 appellate hearing on the case, Nova provided the Court of the Queen's Bench in Alberta, Canada, an updated schedule of the financial impact of the issues on appeal, which explained that even if Nova prevails on all appeal issues, the Company would still be entitled to retain an amount in excess of the gain recognized in 2019.

As a result, the Company recorded an $ 18 million pretax gain in the second quarter of 2020, of which $ 12 million was included in "Selling, general and administrative expenses" and $ 6 million was include d in "Sundry income (expense) - net" in the consolidated statements of income and related to Packaging & Specialty Plastics.

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 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.

Nova appealed the judgment;

however, certain portions were no longer in dispute and would 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 2019.

In 2020 and 2023, f urther actions by Nova and/or related court decisions upholding the majority of Dow's damages made additional portions of the ruling in Dow's favor final and no longer subject to dispute.

As a result, the Company recorded additional pretax gains of $ 570 million in 2020 and $ 122 million in 2023.

In 2023, $ 106 million of the pretax gain was included in "Sundry income (expense) - net," related to Packaging & Specialty Plastics, and $ 16 million was included in "Selling, general and administrative expenses" in the consolidated statements of income.

At December 31, 2023, $ 201 million ($ 323 million at December 31, 2022) 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 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.

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

the parties are awaiting the court's ruling.

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

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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.

The pretax gains were recorded in “Cost of sales” in the consolidated statements of income.

At December 31, 2023, related tax credits available and expected to be applied to future required federal tax payments totaled $ 114 million ($ 126 million at December 31, 2022).

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Recorded Liability Final

Expiration Maximum Future Payments Recorded Liability

Expiration Maximum Future Payments 1

Recorded Liability

Guarantees 2038 $ 1,385 $ 196 2038 $ 1,236 $ 200

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 $ 298 million at December 31, 2023 ($ 393 million at December 31, 2022).

Based on Sadara's current forecasted cash flows, the Company does not expect to be required to perform under the guarantees.

The Company does not expect to be required to perform under the guarantees.

Guarantees arise during the ordinary course of business from relationships with customers, committed accounts receivable facilities and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others (via delivery of cash or other assets) if specified triggering events occur.

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The majority of the Company’s guarantees relate to debt of nonconsolidated affiliates, which have expiration dates ranging from less than one year to 15 years.

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

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.

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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.

See Note 10 for additional information on Dow's investment in Sadara.

Asset Retirement Obligations

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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, the United States, Canada, Japan, the United Arab Emirates and Brazil;

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

The Company has also recognized conditional asset retirement obligations related to asbestos encapsulation as a result of planned demolition and remediation activities at manufacturing and administrative sites primarily in the United States, Europe, Japan and Argentina.

The Company has recognized asset retirement obligations for the demolition and remediation activities at manufacturing sites primarily in Europe, the United States, Canada, Japan, Brazil, China, Singapore and United Arab Emirates, and capping activities at landfill sites in the United States, Brazil and Canada.

The aggregate carrying amount of conditional asset retirement obligations recognized by the Company (included in the asset retirement obligations balance shown below) was $ 21 million at December 31, 2023 ($ 11 million at December 31, 2022).

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Revisions in estimated cash flows 1 ( 9 )

Other ( 7 ) 2

Balance at Dec 31 $ 140 $ 119

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With respect to lease liabilities, operating lease liabilities are included in "Operating lease liabilities - current" and "Operating lease liabilities - noncurrent," and finance lease liabilities are included in "Long-term debt due within one year" and "Long-Term Debt" in the consolidated balance sheets.

Dow routinely leases sales and administrative offices, power plants, production facilities, warehouses and tanks for product storage, aircraft, motor vehicles, railcars, computers, office machines and equipment.

Dow routinely leases sales and administrative offices, power plants, production facilities, warehouses and tanks for product storage, aircraft, motor vehicles, railcars, office machines and equipment.

Some leases contain renewal provisions, purchase options and escalation clauses and the terms for these leased assets vary depending on the lease agreement.

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In 2023, $ 98 million of leased assets were reclassified from Operating leases to Finance leases due to an amendment that extended the term of the agreement.

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.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at December 31, 2023 and 2022:

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Total lease liabilities $ 2,234 $ 2,074

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

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.

The lease buy-outs are included in “Purchases of previously leased assets” in the consolidated statements of cash flows.

Additionally, in 2021, the Company amended an agreement to extend leases of certain assets.

In 2023, the Company amended an agreement to extend leases of certain assets.

The amendment and related remeasurement resulted in a reclassification of $ 47 million from "Operating lease liabilities - noncurrent" to "Long-Term Debt" and $ 10 million from "Operating lease liabilities - current" to "Long-term debt due within one year." In addition to the reclassifications, the amendment increased "Long-Term Debt" by $ 61 million and decreased "Long-term debt due within one year" by $ 4 million.

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Total present value of lease liabilities $ 1,361 $ 873

At December 31, 2022, Dow had additional leases of approximately $ 142 million, primarily for equipment, which had not yet commenced.

These leases are expected to commence in 2023 and 2025, with lease terms of up to 16 years.

At December 31, 2023, Dow had additional leases of approximately $ 359 million, primarily for buildings and equipment, which had not yet commenced.

These leases are expected to commence between 2024 and 2026, with lease terms of up to 20 years.

Dow provides guarantees related to certain leased assets, specifying the residual value that will be available to the lessor at lease termination through the sale of the assets to the lessee or third parties.

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NOTE 16 – STOCKHOLDERS’ EQUITY

On April 1, 2019, Dow Inc.

became an independent, publicly traded company.

The principal market for Dow Inc.'s common stock is the New York Stock Exchange, traded under the symbol “DOW.” Dow Inc.

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declared dividends of $ 2.80 per share in 2023, 2022 and 2021.

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

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

Undistributed earnings of nonconsolidated affiliates included in retained earnings was $ 684 million at December 31, 2023 and $ 669 million at December 31, 2022.

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

TDCC declared and paid dividends to Dow Inc.

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Employee Stock Ownership Plan

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.

The Dow Employee Stock Ownership Plan (the “ESOP”) allocated the remaining shares in 2022 and no shares remained unallocated at December 31, 2022 and December 31, 2023.

Unallocated shares at December 31, 2021, 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 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.

As all remaining ESOP shares were allocated in 2022, there was no compensation expense recorded in 2023 for allocated ESOP shares.

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

Treasury Stock

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.

On April 1, 2019, the 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.

On April 13, 2022, the 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 2023, the Company repurchased $ 625 million of its common stock ($ 2,325 million in 2022 and $ 1,000 million in 2021).

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

Excise tax for repurchased shares was $ 2 million in 2023 ( zero in 2022 and 2021), and was included in treasury stock at cost.

At December 31, 2023, $ 1,425 million of the share repurchase program authorization remained available for repurchases.

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.

The Company issued 2.3 million treasury shares under its compensation and benefit plans in 2023 and 1.5 million 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.

Compensation expense reflected in income before income taxes for treasury shares issued was $ 120 million in 2023 and $ 94 million in 2022.

The following table provides a reconciliation of Dow Inc.

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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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( 81 ) ( 76 ) ( 66 )

Deconsolidation of noncontrolling interests 3

Cumulative translation adjustments ( 19 ) ( 28 ) ( 25 )

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See Note 4 for additional information.

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.

Distributions to noncontrolling interests are net of $ 8 million in 2023 ($ 7 million in 2022 and 2021) in dividends paid to a joint venture, which were reclassified to "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated statements of income.

NOTE 18 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Defined Benefit Pension Plans

The Company has both funded and unfunded defined benefit pension plans that cover employees in the United States and a number of other countries.

tax-qualified plan covering the parent company is the largest plan.

Benefits for employees hired before January 1, 2008, are based on length of service and the employee’s three highest consecutive years of compensation.

Employees hired after January 1, 2008, earn benefits that are based on a set percentage of annual pay, plus interest.

The Company has both funded and unfunded defined benefit pension plans in the United States and a number of other countries.

tax-qualified plan administered by the parent company is the largest plan.

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

tax-qualified and non-qualified pension plans.

Effective December 31, 2023 ("Effective Date"), the Company will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in its U.S.

tax-qualified and non-qualified pension plans, which covered substantially all U.S.

As a result, effective December 31, 2023, the Company froze the pensionable compensation and credited service amounts used to calculate pension benefits for substantially all employees who participate in its U.S.

tax-qualified and non-qualified retirement programs (collectively, the "U.S.

As a result, at the Effective Date and subject to any bargaining obligations required by law, active participants of the U.S.

Plans will not accrue additional benefits for future service and compensation.

Plans"), and, therefore, impacted employees will not accrue additional benefits for future service and compensation.

In connection with these plan amendments, the Company remeasured its U.S.

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

Plans in the first quarter of 2021, which resulted in a pretax actuarial gain of $ 1,268 million, included in other comprehensive income and a pretax curtailment gain of $ 19 million.

Separately, in the fourth quarter of 2023, certain Company pension plans in the United States and Canada purchased or converted to nonparticipating group annuity contracts from certain insurance companies, irrevocably transferring approximately $ 1,681 million of benefit obligations and $ 1,617 million of related plan assets to the insurers.

These transactions did not require any cash funding from the Company and did not impact the pension benefits of participants.

As a result of these transactions, the Company recognized pretax, non-cash settlement charges of $ 642 million in 2023, primarily related to the accelerated recognition of a portion of the accumulated actuarial losses of the plans, recorded in “Sundry income (expense) – net” in the consolidated statements of income and related to Corporate.

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

Total global pension contributions were $ 142 million in 2023, which includes contributions necessary to fund benefit payments for the Company's unfunded pension plans.

Additionally, in the second quarter of 2023, the Company received a pension plan reversion of approximately $ 90 million for a portion of the excess funding of one of its plans in Europe, included in "Other assets and liabilities, net" in the consolidated statements of cash flows.

The Company expects to contribute approximately $ 150 million to its pension plans in 2024.

The weighted-average assumptions used to determine pension plan obligations and net periodic benefit costs for all plans are summarized in the table below:

The weighted-average assumptions used to determine pension plan obligations and net periodic benefit cost for all plans are summarized in the table below:

Weighted-Average Assumptions for All Pension Plans Benefit Obligations

at Dec 31 Net Periodic Benefit Costs

at Dec 31 Net Periodic Benefit Cost

for the Year Ended

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Expected return on plan assets 6.62 % 6.68 % 6.86 %

The weighted-average assumptions used to determine pension plan obligations and net periodic benefit costs for U.S.

The weighted-average assumptions used to determine pension plan obligations and net periodic benefit cost for U.S.

plans are summarized in the table below:

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Pension Plans Benefit Obligations

at Dec 31 Net Periodic Benefit Costs

at Dec 31 Net Periodic Benefit Cost

for the Year Ended

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The Company does not expect to contribute assets to its other postretirement benefit plan trusts in 2024.

The weighted-average assumptions used to determine other postretirement benefit plan obligations and net periodic benefit costs for the U.S.

The weighted-average assumptions used to determine other postretirement benefit plan obligations and net periodic benefit cost for the U.S.

plans are provided below:

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Other Postretirement Benefits Plans Benefit Obligations

at Dec 31 Net Periodic Benefit Costs

at Dec 31 Net Periodic Benefit Cost

for the Year Ended

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The Company’s historical experience with the pension fund asset performance is also considered.

The Company uses the spot rate approach to determine the discount rate utilized to measure the service cost and interest cost components of net periodic pension and other postretirement benefit costs for the U.S.

and other selected countries.

Under the spot rate approach, the Company calculates service cost and interest cost by applying individual spot rates from the Willis Towers Watson RATE:Link yield curve (based on high-quality corporate bond yields) for each selected country to the separate expected cash flow components of service cost and interest cost.

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RATE:Link 60-90 corporate yield curve (based on 60th to 90th percentile high-quality corporate bond yields) to arrive at the plan’s obligations as of the measurement date.

The Company’s mortality assumption used for the US plans is a benefit-weighted version of the Society of Actuaries’ RP-2014 base table with future rates of mortality improvement based on a modified version of the assumptions used in the Social Security Administration’s 2021 trustees report.

The Company’s mortality assumption used for the U.S.

plans is a benefit-weighted version of the Society of Actuaries’ RP-2014 base table with future rates of mortality improvement based on a modified version of the assumptions used in the Social Security Administration’s 2021 trustees report.

Summarized information on the Company's pension and other postretirement benefit plans is as follows:

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Effect of foreign exchange rates 279 ( 600 ) 1 ( 5 )

Termination benefits/curtailments/settlements 2

Termination benefits/settlements 2

( 1,777 ) ( 1 ) — —

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Benefits paid ( 1,385 ) ( 1,539 ) — —

Settlements 3

( 1,777 ) — — —

( 73 ) ( 592 ) — —

Effect of foreign exchange rates 259 ( 496 ) — —

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Pretax balance in accumulated other comprehensive loss at end of year $ 7,625 $ 6,929 $ ( 402 ) $ ( 523 )

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 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.

The 2022 impact relates to the transfer of certain benefit obligations in the United States through the purchase of annuity contracts from an insurance company.

The 2023 impact primarily relates to the transfer of certain pension benefit obligations in the United States and Canada through the purchase of or conversion to annuity contracts from insurance companies, triggering settlement accounting.

The 2023 impact primarily relates to the purchase of annuity contracts associated with the transfer of certain pension benefit obligations to insurance companies, triggering settlement accounting.

The 2023 impact primarily relates to a reversion of pension plan funds for a portion of the excess funding of one of its plans in Europe.

The 2022 impact primarily relates to the purchase of annuity contracts associated with the transfer of certain pension benefit obligations to insurance companies.

A significant component of the overall decrease in the Company's benefit obligation for the year ended December 31, 2023, was due to the irrevocable transfer of certain benefit obligations to third-party insurance companies, partially offset by the change in weighted-average discount rates, which decreased from 5.18 percent at December 31, 2022, to 4.73 percent at December 31, 2023.

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.

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Fair value of plan assets $ 15,060 $ 15,723

Net Periodic Benefit Costs for All Significant Plans for the Year Ended Dec 31 Defined Benefit Pension Plans Other Postretirement Benefit Plans

Net Periodic Benefit Cost (Credit) for All Significant Plans for the Year Ended Dec 31 Defined Benefit Pension Plans Other Postretirement Benefit Plans

In millions 2023 2022 2021 2023 2022 2021

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642 — ( 18 ) — — —

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

Net periodic benefit cost (credit) $ 548 $ 23 $ 39 $ ( 8 ) $ 17 $ 24

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

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Total recognized in net periodic benefit cost and other comprehensive (income) loss $ 1,244 $ ( 2,870 ) $ ( 2,721 ) $ 113 $ ( 285 ) $ ( 68 )

The 2023 impact relates to the settlement of certain pension benefit obligations in the United States and Canada through the purchase of or conversion to annuity contracts from insurance companies.

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.

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.

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

See Note 5 for additional information.

Estimated Future Benefit Payments

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Total $ 14,195 $ 767

Plan assets consist primarily of equity and fixed income securities of U.S.

and foreign issuers, and include alternative investments, such as real estate, private equity and absolute return strategies.

Plan assets consist primarily of equity and fixed income securities of United States and foreign issuers, and include alternative investments, such as real estate, private equity and absolute return strategies.

Plan assets totaled $ 19.6 billion at December 31, 2023 and $ 21.2 billion at December 31, 2022 and included no directly held common stock of Dow Inc.

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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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Purchases, sales and settlements, net ( 2 ) — — — ( 2 )

Transfers into Level 3, net 6 — — — 6

Balance at Dec 31, 2023 $ 5 $ 1 $ 1 $ — $ 7

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eligible employee population.

The new matching contribution allows all eligible U.S.

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

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").

On February 9, 2012, the TDCC Board of Directors 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 of Directors 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 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 $ 89 million at December 31, 2023 is expected to be recognized over a weighted-average period of 1.83 years.

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Year Performance Period

2023 Dec 18, 2023 – Dec 18, 2026 13 $ 54.25

2023 Jan 1, 2023 – Dec 31, 2025 1,233 $ 64.04

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2021 Jan 1, 2021 – Dec 31, 2023 1,223 $ 61.48

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.

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 Jan 1 - Dec 31, 2023, 2022 and 2021 awards, and zero to 100 percent of target shares granted for the Dec 18, 2023 - Dec 18, 2026 awards.

Weighted-average per share.

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Granted 1,247 $ 63.94

( 1,079 ) $ 57.58

Vested ( 1,355 ) $ 48.35

Canceled ( 107 ) $ 63.90

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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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Total fair value of PSUs vested and delivered 1

$ 77 $ 51 $ —

Related tax benefit $ 17 $ 11 $ —

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Total cash paid to settle PSUs 3

$ 21 $ 10 $ —

Includes the fair value of shares vested in prior years and delivered in the reporting year.

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Employee Stock Purchase Plan

Board unanimously approved the Dow Inc.

The 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 April 1, 2022 (beginning) or October 7, 2022 (ending) of the offering period, whichever was lower.

The plan price of the stock was equal to 85 percent of the fair market value (closing price) of the common stock at May 1, 2023 (beginning) or November 3, 2023 (ending) of the offering period, whichever was lower.

In 2023, employees subscribed to the right to purchase approximately 2.6 million shares at a weighted-average price of $ 42.27 per share.

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NOTE 20 – FINANCIAL INSTRUMENTS

The following table summarizes the fair value of financial instruments at December 31, 2022 and 2021:

Fair Value of Financial Instruments at Dec 31 2022 2021

In millions Cost Gain Loss Fair Value Cost Gain Loss Fair Value

Cash equivalents:

Held-to-maturity securities 1

$ 872 $ — $ — $ 872 $ 317 $ — $ — $ 317

Money market funds 355 — — 355 489 — — 489

Total cash equivalents $ 1,227 $ — $ — $ 1,227 $ 806 $ — $ — $ 806

Marketable securities 2

$ 927 $ 12 $ — $ 939 $ 237 $ 8 $ — $ 245

Other investments:

Debt securities:

Government debt 3

$ 754 $ 1 $ ( 133 ) $ 622 $ 746 $ 17 $ ( 28 ) $ 735

Corporate bonds 1,274 10 ( 159 ) 1,125 1,251 93 ( 20 ) 1,324

Total debt securities $ 2,028 $ 11 $ ( 292 ) $ 1,747 $ 1,997 $ 110 $ ( 48 ) $ 2,059

Equity securities 4

5 5 — 10 7 13 — 20

Total other investments $ 2,033 $ 16 $ ( 292 ) $ 1,757 $ 2,004 $ 123 $ ( 48 ) $ 2,079

Total cash equivalents, marketable securities and other investments $ 4,187 $ 28 $ ( 292 ) $ 3,923 $ 3,047 $ 131 $ ( 48 ) $ 3,130

Long-term debt including debt due within one year 5

$ ( 15,060 ) $ 1,683 $ ( 498 ) $ ( 13,875 ) $ ( 14,511 ) $ 27 $ ( 2,641 ) $ ( 17,125 )

Derivatives relating to:

Interest rates 6

$ — $ 105 $ — $ 105 $ — $ 1 $ ( 140 ) $ ( 139 )

Foreign currency — 115 ( 30 ) 85 — 46 ( 18 ) 28

Commodities 6

— 72 ( 61 ) 11 — 142 ( 92 ) 50

Total derivatives $ — $ 292 $ ( 91 ) $ 201 $ — $ 189 $ ( 250 ) $ ( 61 )

The Company's held-to-maturity securities primarily included treasury bills and time deposits.

The Company's investments in marketable securities are included in "Other current assets" in the consolidated balance sheets.

Treasury obligations, U.S.

agency obligations, U.S.

agency mortgage-backed securities and other municipalities’ obligations.

Equity securities with a readily determinable fair value.

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.

Cost approximates fair value for all other financial instruments.

Refer to Note 21 for a summary of the fair value of financial instruments at December 31, 2023 and 2022.

Debt Securities

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Total $ 2,138 $ 1,860

Includes marketable securities with maturities of less than one year.

Portfolio managers regularly review the Company’s holdings to determine if any investments in debt securities are other-than-temporarily impaired.

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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, 2023.

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).

The net unrealized gain recognized in earnings on equity securities totaled $ 7 million for the year ended December 31, 2023 ($ 8 million net unrealized loss for the year ended December 31, 2022).

Investments in Equity Securities Dec 31, 2023 Dec 31, 2022

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The Company does not anticipate losses from credit risk, and the net cash requirements arising from counterparty risk associated with risk management activities are not expected to be material in 2024.

The Company revises its strategies as market conditions dictate and management reviews its overall financial strategies and the impacts from using derivatives in its risk management program with the Company’s senior leadership who also reviews these strategies with the Dow Inc.

Board and/or relevant committees thereof.

Derivative Instruments

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Hydrocarbon derivatives 1.4 — million barrels of oil equivalent

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.

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The portion of the mark-to-market effects of the foreign currency contracts is recorded in AOCL;

it is reclassified to income in the same period or periods that the underlying item affects income.

it is reclassified to income in the same period or periods that the underlying item affects income, except for amounts excluded from the assessment of effectiveness that are recognized in earnings through an amortization approach.

Commodity swaps, futures and option contracts with maturities of not more than 60 months are utilized and designated as cash flow hedges of forecasted commodity purchases.

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The following tables provide the fair value and balance sheet classification of derivative instruments at December 31, 2023 and 2022:

Fair Value of Derivative Instruments Dec 31, 2022

In millions Balance Sheet Classification Gross Counterparty and Cash Collateral Netting 1

Net Amounts Included in Consolidated Balance Sheets

Asset derivatives

Derivatives designated as hedging instruments

Interest rate contracts Other current assets $ 351 $ ( 246 ) $ 105

Foreign currency contracts Other current assets 58 ( 39 ) 19

Commodity contracts Other current assets 199 ( 148 ) 51

Total $ 608 $ ( 433 ) $ 175

Derivatives not designated as hedging instruments

Foreign currency contracts Other current assets $ 146 $ ( 50 ) $ 96

Commodity contracts Other current assets 22 ( 1 ) 21

Total $ 168 $ ( 51 ) $ 117

Total asset derivatives $ 776 $ ( 484 ) $ 292

Liability derivatives

Derivatives designated as hedging instruments

Interest rate contracts Accrued and other current liabilities $ 246 $ ( 246 ) $ —

Foreign currency contracts Accrued and other current liabilities 58 ( 39 ) 19

Commodity contracts Accrued and other current liabilities 258 ( 198 ) 60

Total $ 562 $ ( 483 ) $ 79

Derivatives not designated as hedging instruments

Foreign currency contracts Accrued and other current liabilities $ 61 $ ( 50 ) $ 11

Commodity contracts Accrued and other current liabilities 12 ( 11 ) 1

Total $ 73 $ ( 61 ) $ 12

Total liability derivatives $ 635 $ ( 544 ) $ 91

Counterparty and cash collateral amounts represent the estimated net settlement amount when applying netting and set-off rights included in master netting arrangements between the Company and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.

Fair Value of Derivative Instruments Dec 31, 2021

In millions Balance Sheet Classification Gross Counterparty and Cash Collateral Netting 1

Net Amounts Included in Consolidated Balance Sheets

Fair Value of Derivative Instruments Dec 31, 2023 Dec 31, 2022

In millions Gross Counterparty and Cash Collateral Netting 1

Gross Counterparty and Cash Collateral Netting 1

Asset derivatives

Derivatives designated as hedging instruments

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

Commodity contracts Deferred charges and other assets 9 ( 2 ) 7

Interest rate contracts 3

$ 73 $ ( 73 ) $ — $ 351 $ ( 246 ) $ 105

Interest rate contracts 4

59 ( 56 ) 3 — — —

Foreign currency contracts 3

21 ( 5 ) 16 58 ( 39 ) 19

Foreign currency contracts 4

Commodity contracts 3

27 ( 21 ) 6 199 ( 148 ) 51

Commodity contracts 4

2 ( 1 ) 1 — — —

Total $ 187 $ ( 156 ) $ 31 $ 608 $ ( 433 ) $ 175

Derivatives not designated as hedging instruments

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

Interest rate contracts 3

$ 4 $ ( 3 ) $ 1 $ — $ — $ —

Foreign currency contracts 3

33 ( 16 ) 17 146 ( 50 ) 96

Commodity contracts 3

33 ( 28 ) 5 22 ( 1 ) 21

Total $ 70 $ ( 47 ) $ 23 $ 168 $ ( 51 ) $ 117

2 unchanged sentences

Derivatives designated as hedging instruments

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

Commodity contracts Other noncurrent obligations 2 ( 2 ) —

Interest rate contracts 5

$ 95 $ ( 73 ) $ 22 $ 246 $ ( 246 ) $ —

Interest rate contracts 6

56 ( 56 ) — — — —

Foreign currency contracts 5

8 ( 5 ) 3 58 ( 39 ) 19

Commodity contracts 5

34 ( 22 ) 12 258 ( 198 ) 60

Commodity contracts 6

2 ( 1 ) 1 — — —

Total $ 195 $ ( 157 ) $ 38 $ 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 31 ( 16 ) 15

Foreign currency contracts Other noncurrent obligations 1 ( 1 ) —

Commodity contracts Accrued and other current liabilities 25 ( 8 ) 17

Interest rate contracts 5

$ 3 $ ( 3 ) $ — $ — $ — $ —

Foreign currency contracts 5

38 ( 16 ) 22 61 ( 50 ) 11

Commodity contracts 5

34 ( 28 ) 6 12 ( 11 ) 1

Total $ 75 $ ( 47 ) $ 28 $ 73 $ ( 61 ) $ 12

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Represents the net amounts included in the consolidated balance sheets.

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

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

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

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

Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted.

1 unchanged sentence

The Company posted cash collateral of $ 22 million at December 31, 2023 ($ 80 million at December 31, 2022).

Cash collateral of $ 2 million was posted by counterparties with the Company at December 31, 2022 ( zero at December 31, 2021).

No cash collateral was posted by counterparties with the Company at December 31, 2023 ($ 2 million at December 31, 2022).

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, 2023, 2022 and 2021:

Effect of Derivative Instruments Amount of gain (loss) recognized in OCI 1

Amount of gain (loss) recognized in income 2

Income Statement Classification

Effect of Derivative Instruments Gain (loss) recognized in OCI 1

Gain (loss) recognized in income 2

In millions 2023 2022 2021 2023 2022 2021

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Fair value hedges:

Interest rate contracts $ — $ — $ — $ — $ ( 25 ) $ 69 Interest expense and amortization of debt discount 3

Interest rate contracts 3, 4

$ — $ — $ — $ — $ — $ ( 25 )

Excluded components 3, 5

— 2 7 — — — Interest expense and amortization of debt discount

( 18 ) — 2 — — —

Cash flow hedges:

Interest rate contracts 239 ( 62 ) — ( 10 ) ( 9 ) ( 2 ) Interest expense and amortization of debt discount

Foreign currency contracts 5 13 ( 20 ) 13 ( 15 ) 3 Cost of sales

Commodity contracts 166 133 ( 8 ) 310 62 ( 31 ) Cost of sales

Interest rate contracts 3

5 239 ( 62 ) ( 10 ) ( 10 ) ( 9 )

Foreign currency contracts 6

20 5 13 2 13 ( 15 )

Commodity contracts 6

( 152 ) 166 133 ( 242 ) 310 62

Excluded components 5, 6

( 4 ) — — — — —

Net foreign investment hedges:

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Excluded components 5, 7

59 54 27 44 11 20 Sundry income (expense) - net

36 59 54 29 44 11

Total derivatives designated as hedging instruments $ ( 53 ) $ 503 $ 171 $ ( 221 ) $ 357 $ 24

Derivatives not designated as hedging instruments:

Interest rate contracts $ — $ — $ — $ ( 1 ) $ ( 8 ) $ ( 16 ) Interest expense and amortization of debt discount

Foreign currency contracts — — — ( 249 ) ( 253 ) 28 Sundry income (expense) - net

Commodity contracts — — — 48 ( 46 ) 11 Cost of sales

Interest rate contracts 3

$ — $ — $ — $ — $ ( 1 ) $ ( 8 )

Foreign currency contracts 7

— — — ( 156 ) ( 249 ) ( 253 )

Commodity contracts 6

— — — 1 48 ( 46 )

Total return swap 6

Total derivatives not designated as hedging instruments $ — $ — $ — $ ( 141 ) $ ( 202 ) $ ( 307 )

2 unchanged sentences

Pretax amounts.

Included in "Interest expense and amortization of debt discount" in the consolidated statements of income.

Gain (loss) recognized in income of derivatives is offset by gain (loss) recognized in income of the hedged item.

The excluded components are related to the time value of the derivatives designated as hedges.

Included in "Cost of sales" in the consolidated statements of income.

Included in "Sundry income (expense) - net" in the consolidated statements of income.

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

4 unchanged sentences

Foreign currency contracts $ 2

Excluded components $ ( 3 )

Net foreign investment hedges:

3 unchanged sentences

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

Basis of Fair Value Measurements on a Recurring Basis Dec 31, 2022 Dec 31, 2021

Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Fair Value Measurements on a Recurring Basis Dec 31, 2023 Dec 31, 2022

Fair Value Level Cost Gain Loss Fair Value Cost Gain Loss Fair Value

Assets at fair value:

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Held-to-maturity securities 1

$ — $ 872 $ — $ 872 $ — $ 317 $ — $ 317

Money market funds — 355 — 355 — 489 — 489

Level 2 $ 485 $ — $ — $ 485 $ 872 $ — $ — $ 872

Money market funds Level 2 663 — — 663 355 — — 355

Marketable securities 2

— 939 — 939 — 245 — 245

Equity securities 3

10 — — 10 20 — — 20

Level 2 1,361 — ( 61 ) 1,300 927 12 — 939

Nonconsolidated affiliates 3

— — 7 7 — — — —

Other investments:

Debt securities:

Government debt 5

— 622 — 622 — 735 — 735

Corporate bonds 35 1,090 — 1,125 44 1,280 — 1,324

Level 2 766 3 ( 107 ) 662 754 1 ( 133 ) 622

Corporate bonds Level 1 24 — ( 3 ) 21 38 — ( 3 ) 35

Corporate bonds Level 2 1,148 17 ( 99 ) 1,066 1,236 10 ( 156 ) 1,090

Corporate bonds Level 3 200 — ( 89 ) 111 — — — —

Equity securities 4, 6

Level 1 5 12 — 17 5 5 — 10

Derivatives relating to:

Interest rates — 351 — 351 — 145 — 145

Foreign currency — 204 — 204 — 165 — 165

Commodities 63 158 — 221 15 307 — 322

Interest rates Level 2 — 136 — 136 — 351 — 351

Foreign currency Level 2 — 59 — 59 — 204 — 204

Commodities Level 1 — 2 — 2 — 63 — 63

Commodities Level 2 — 60 — 60 — 158 — 158

Total assets at fair value $ 4,589 $ 4,706

1 unchanged sentence

Long-term debt including debt due within one year 8

$ — $ 13,875 $ — $ 13,875 $ — $ 17,125 $ — $ 17,125

Level 2 $ ( 15,024 ) $ 1,089 $ ( 747 ) $ ( 14,682 ) $ ( 15,060 ) $ 1,683 $ ( 498 ) $ ( 13,875 )

Guarantee liability 9

— — 199 199 — — 220 220

Level 3 ( 178 ) ( 199 )

Derivatives relating to:

Interest rates — 246 — 246 — 284 — 284

Foreign currency — 119 — 119 — 137 — 137

Commodities 103 167 — 270 37 257 — 294

Interest rates Level 2 — — ( 154 ) ( 154 ) — — ( 246 ) ( 246 )

Foreign currency Level 2 — — ( 46 ) ( 46 ) — — ( 119 ) ( 119 )

Commodities Level 1 — — ( 2 ) ( 2 ) — — ( 103 ) ( 103 )

Commodities Level 2 — — ( 68 ) ( 68 ) — — ( 167 ) ( 167 )

Total liabilities at fair value $ ( 15,130 ) $ ( 14,709 )

1 unchanged sentence

The Company's investments in marketable securities are included in "Other current assets" in the consolidated balance sheets.

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.

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.

Treasury obligations, U.S.

1 unchanged sentence

agency mortgage-backed securities and other municipalities' obligations.

Equity securities with a readily determinable fair value.

See Note 20 for the classification of derivatives in the consolidated balance sheets.

Cost includes fair value hedge adjustment gains of $ 49 million at December 31, 2023 and $ 46 million at December 31, 2022 on $ 4,479 million of debt at December 31, 2023 and $ 2,279 million of debt at December 31, 2022.

See Note 20 for information on fair value measurements of long-term debt.

1 unchanged sentence

See Note 14 for additional information.

Cost approximates fair value for all other financial instruments.

For assets and liabilities classified as Level 1 measurements (measured using quoted prices in active markets), total fair value is either the price of the most recent trade at the time of the market close or the official close price, as defined by the exchange on which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs.

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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.

The Level 3 asset value represents the fair value of an investment in a corporate bond, accounted for as a debt security and an investment in a limited liability company, accounted for as an investment in nonconsolidated affiliates.

There was no unfunded commitment on the investment in a limited liability company at December 31, 2023 and 2022.

The following table summarizes the changes in fair value measurements of the investment in a corporate bond using Level 3 inputs for the year ended December 31, 2023:

Fair Value Measurements Using Level 3 Inputs for Investment in Corporate Bond at Dec 31, 2023

Balance at Jan 1 $ —

Recognition of asset 1

Loss included in AOCL 2

Balance at Dec 31 $ 111

Included in "Other investments" in the consolidated balance sheets.

Included in "Accumulated other comprehensive loss" in the consolidated balance sheets.

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.

7 unchanged sentences

Balance at Jan 1 $ ( 199 ) $ ( 220 )

Recognition of liability 1

Gain included in earnings 1

Balance at Dec 31 $ ( 178 ) $ ( 199 )

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

Included in "Equity in earnings (losses) of nonconsolidated affiliates" in the consolidated income statements.

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2023 Fair Value Measurements on a Nonrecurring Basis

The Company's fair value measurements on a nonrecurring basis were insignificant in 2022.

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.

As part of the 2023 Restructuring Program, the Company has or will shut down a number of manufacturing facilities, corporate facilities and miscellaneous assets around the world.

The assets associated with this plan were written down to zero.

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.

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 $ 9 million using unobservable inputs.

The impairment charges related to the 2023 Restructuring Program, totaling $ 191 million, were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics ($ 1 million), Industrial Intermediates & Infrastructure ($ 50 million), Performance Materials & Coatings ($ 49 million) and Corporate ($ 91 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 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 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 4 for additional information on the Company's restructuring activities.

The Company's fair value measurements on a nonrecurring basis were insignificant in 2022 and 2021.

NOTE 22 – VARIABLE INTEREST ENTITIES

9 unchanged sentences

The Company provides the joint venture with operation and maintenance services and utilities.

Accounts Receivable Monetization

The Company holds a variable interest in an entity created to monetize accounts receivable of select European entities.

The Company is the primary beneficiary of this entity as a result of holding subordinated notes while maintaining servicing responsibilities for the accounts receivable.

Assets and Liabilities of Consolidated VIEs

10 unchanged sentences

Current liabilities $ 26 $ 30

Long-term debt — 3

Other noncurrent obligations 12 12

Total liabilities 2

All assets were restricted at December 31, 2022 and 2021.

Restricted assets totaled $216 million and $227 million at December 31, 2023 and 2022, respectively.

All liabilities were nonrecourse at December 31, 2023 and 2022.

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As a result of the pricing mechanisms of these agreements, these entities are determined to be VIEs.

The Company is not the primary beneficiary, as it does not hold the power to direct the activities that most significantly impact the economic performance of these entities;

Company is not the primary beneficiary, as it does not hold the power to direct the activities that most significantly impact the economic performance of these entities;

therefore, the entities are accounted for under the equity method of accounting.

2 unchanged sentences

NOTE 23 – RELATED PARTY TRANSACTIONS

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.

TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by the Board from time to time, as well as certain governance expenses.

Funding is accomplished through intercompany loans.

TDCC's Board reviews and determines a dividend distribution to Dow Inc.

TDCC's Board of Directors reviews and determines a dividend distribution to Dow Inc.

to settle the intercompany loans.

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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.

Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT as this is the manner in which the 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.

15 unchanged sentences

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

5 unchanged sentences

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

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Net income $ 660 $ 4,640 $ 6,405

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

+ Provision (credit) for income taxes ( 4 ) 1,450 1,740

Income before income taxes $ 656 $ 6,090 $ 8,145

7 unchanged sentences

Materials & Coatings Corp.

Restructuring, implementation and efficiency costs, and asset related charges - net 1

$ ( 1 ) $ ( 50 ) $ ( 67 ) $ ( 623 ) $ ( 741 )

Litigation related charges, awards and adjustments 2

106 ( 177 ) — — ( 71 )

Argentine peso devaluation 3

( 52 ) ( 16 ) — ( 109 ) ( 177 )

Pension settlement charges 4

— — — ( 642 ) ( 642 )

Indemnification and other transaction related costs 5

Total $ 53 $ ( 243 ) $ ( 67 ) $ ( 1,348 ) $ ( 1,605 )

Includes restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program, partially offset by a credit related to a prior restructuring program.

Also includes certain gains and losses associated with previously impaired equity investments.

Includes a loss associated with legacy agricultural products groundwater contamination matters, partially offset by a gain associated with a legal matter with Nova Chemicals Corporation.

See Note 14 for additional information.

Foreign currency losses and inventory valuation impacts related to the devaluation of the Argentine peso by the Argentina government in December 2023.

Non-cash settlement charges related to the purchase of nonparticipating group annuity contracts for certain Company pension plans in the United States and Canada.

See Note 18 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.

Significant Items by Segment for 2022

Plastics Ind.

Materials & Coatings Corp.

Digitalization program costs 1

41 unchanged sentences

Significant Items by Segment for 2020

Plastics Ind.

Materials & Coatings Corp.

Integration and separation costs 1

$ — $ — $ — $ ( 239 ) $ ( 239 )

Restructuring, implementation costs and asset related charges - net 2

( 30 ) ( 22 ) ( 192 ) ( 474 ) ( 718 )

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 6

— — — ( 149 ) ( 149 )

Indemnification and other transaction related costs 7

— — — ( 21 ) ( 21 )

Total $ 566 $ 39 $ ( 192 ) $ ( 268 ) $ 145

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 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.

The Company redeemed outstanding long-term debt resulting in a loss on early extinguishment.

See Note 14 for additional information.

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