DOW INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

October 21, 2022 at 07:49 am EDT

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

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

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

Russia and Ukraine Conflict
In February 2022, Russia invaded Ukraine resulting in the United States, Canada,
the European Union and other countries imposing economic sanctions on Russia.
Dow is monitoring and evaluating the broader economic impact, including
sanctions imposed, the potential for additional sanctions and any responses from
Russia that could directly affect the Company's supply chain, business partners
or customers. At the time of this filing, the conflict between Russia and
Ukraine has not had and is not expected to have a material impact on the
Company's financial condition or results of operations.

In the first quarter of 2022, the Company recorded pretax asset related charges
of $186 million due to the Russia and Ukraine conflict and the expectation that
certain assets will not be recoverable. The Company's remaining net asset
exposure is not significant.

OUTLOOK


In the near-term, Dow expects the macro environment to remain dynamic. As a
result, Dow has outlined a playbook of actions that have the potential to
deliver more than $1 billion in cost savings in 2023 while Dow continues to
leverage its scale, geographic diversity and feedstock and derivative
flexibility. Dow remains focused on advancing its decarbonize and grow strategy
with higher-return investments that will extend its competitive advantages and
industry leadership positions. Dow's strong financial position and balance sheet
as well as its continued focus on cash flow generation give it ample flexibility
to execute on its capital allocation priorities, including attractive
shareholder remuneration, as it maximizes value creation over the longer-term.

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OVERVIEW
The following is a summary of the results for the three months ended
September 30, 2022:

•The Company reported net sales in the third quarter of 2022 of $14.1 billion,
down 5 percent from $14.8 billion in the third quarter of 2021, with decreases
in Packaging & Specialty Plastics and Industrial Intermediates & Infrastructure,
partially offset by an increase in Performance Materials & Coatings. Net sales
decreased in the U.S. & Canada and Europe, Middle East, Africa and India
("EMEAI"), were flat in Asia Pacific and increased in Latin America. Net sales
were down 10 percent from $15.7 billion in the second quarter of 2022, with
decreases across all operating segments and geographic regions.

•Local price increased 3 percent compared with the third quarter of 2021 with a
decrease in Packaging & Specialty Plastics (down 2 percent) which was more than
offset by increases in Industrial Intermediates & Infrastructure (up 5 percent)
and Performance Materials & Coatings (up 15 percent). Local price increased in
all geographic regions, except the U.S. & Canada, compared with the third
quarter of 2021. Local price decreased 6 percent compared with the second
quarter of 2022.

•Volume decreased 4 percent compared with the third quarter of 2021. Volume was
flat in Packaging & Specialty Plastics and decreased in Industrial Intermediates
& Infrastructure (down 9 percent) and Performance Materials & Coatings (down
5 percent). Volume decreased 12 percent in EMEAI, which was partially offset by
2 percent increases in the U.S. & Canada and Asia Pacific. Volume decreased
3 percent compared with the second quarter of 2022.

•Currency had an unfavorable impact of 4 percent on net sales compared with the
third quarter of 2021, driven by EMEAI (down 10 percent) and Asia Pacific (down
4 percent).

•Equity in losses of nonconsolidated affiliates was $58 million in the third
quarter of 2022, compared with equity in earnings of nonconsolidated affiliates
of $249 million in the third quarter of 2021, primarily due to margin
compression in polyurethanes at Sadara Chemical Company ("Sadara") and
monoethylene glycol ("MEG") at the Kuwait joint ventures.

•Net income available for Dow Inc. and TDCC common stockholder(s) was
$739 million and $747 million, respectively, in the third quarter of 2022,
compared with $1,683 million and $1,679 million in the third quarter of 2021.
Earnings per share for Dow Inc. was $1.02 per share in the third quarter of
2022, compared with $2.23 per share in the third quarter of 2021. These
decreases reflect margin compression due to higher energy costs, primarily in
EMEAI.

•Cash provided by operating activities - continuing operations was $1.9 billion
in the third quarter of 2022, down $779 million compared with the same period
last year. Compared with the second quarter of 2022, cash provided by operating
activities - continuing operations increased $84 million.

•Dow Inc. repurchased $800 million of the Company's common stock in the third quarter of 2022.



•On August 10, 2022, Dow Inc. announced that its Board of Directors ("Board")
declared a dividend of $0.70 per share, which was paid on September 9, 2022, to
shareholders of record as of August 31, 2022.

In addition to the highlights above, the following events occurred subsequent to the third quarter of 2022:



•On October 13, 2022, Dow Inc. announced that its Board declared a dividend of
$0.70 per share, payable on December 9, 2022, to shareholders of record as of
November 30, 2022.

•On October 17, 2022 Dow Inc. announced it will accelerate the sustainability
targets the Company set in 2020 by expanding its Stop the Waste target to a
Transform the Waste target. By 2030, Dow will transform plastic waste and other
forms of alternative feedstock to commercialize 3 million metric tons of
circular and renewable plastics solutions annually.




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RESULTS OF OPERATIONS

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



Summary of Sales Results         Three Months Ended               Nine Months Ended
In millions                 Sep 30, 2022    Sep 30, 2021    Sep 30, 2022    Sep 30, 2021
Net sales                  $      14,115   $      14,837   $      45,043   $      40,604

Sales Variances by Operating Segment and Geographic Region


                                             Three Months Ended Sep 30, 2022                          Nine Months Ended Sep 30, 2022
                                     Local Price &                                                    Local Price &

Percentage change from prior year Product Mix Currency Volume Total Product Mix Currency Volume

Total


Packaging & Specialty Plastics                (2) %            (3) %           -  %            (5) %           12  %            (3) %           2  %            11  %
Industrial Intermediates &
Infrastructure                                 5               (5)            (9)              (9)             15               (5)            (5)               5
Performance Materials & Coatings              15               (5)            (5)               5              29               (4)            (3)              22
Total                                          3  %            (4) %          (4) %            (5) %           16  %            (4) %          (1) %            11  %
Total, excluding the Hydrocarbons &
Energy business                                4  %            (4) %          (8) %            (8) %           15  %            (4) %          (3) %             8  %
U.S. & Canada                                 (5) %             -  %           2  %            (3) %           12  %             -  %           3  %            15  %
EMEAI                                         11              (10)           (12)             (11)             24               (9)            (7)               8
Asia Pacific                                   2               (4)             2                -              12               (3)            (1)               8
Latin America                                  1                -              -                1              11                -              3               14
Total                                          3  %            (4) %          (4) %            (5) %           16  %            (4) %          (1) %            11  %



Net sales in the third quarter of 2022 were $14.1 billion, down 5 percent from
$14.8 billion in the third quarter of 2021, with local price up 3 percent,
volume down 4 percent and an unfavorable currency impact of 4 percent. Net sales
decreased in Packaging & Specialty Plastics and Industrial Intermediates &
Infrastructure, which were partially offset by an increase in Performance
Materials & Coatings. Local price decreased in Packaging & Specialty Plastics
(down 2 percent) and increased in Industrial Intermediates & Infrastructure (up
5 percent) and Performance Materials & Coatings (up 15 percent). Volume was flat
in Packaging & Specialty Plastics and decreased in Industrial Intermediates &
Infrastructure (down 9 percent) and Performance Materials & Coatings (down 5
percent). Volume decreased in EMEAI reflecting the impact of inflation and high
energy costs on demand and was partially offset by increases in the U.S. &
Canada and Asia Pacific. Currency unfavorably impacted net sales by 4 percent,
driven by EMEAI (down 10 percent) and Asia Pacific (down 4 percent). Excluding
the Hydrocarbons & Energy business, net sales decreased 8 percent.

Net sales for the first nine months of 2022 were $45.0 billion, up 11 percent
from $40.6 billion in the same period last year, with local price up 16 percent,
volume down 1 percent and an unfavorable currency impact of 4 percent. Net sales
increased in all operating segments and geographic regions. Local price
increased in all operating segments and geographic regions, primarily driven by
tight supply and demand dynamics and increasing raw material prices. Local price
increased in Packaging & Specialty Plastics (up 12 percent), Industrial
Intermediates & Infrastructure (up 15 percent) and Performance Materials &
Coatings (up 29 percent). Volume increased in Packaging & Specialty Plastics (up
2 percent) and decreased in Industrial Intermediates & Infrastructure (down
5 percent) and Performance Materials & Coatings (down 3 percent). Volume
decreases in EMEAI and Asia Pacific were partially offset by increases in the
U.S. & Canada and Latin America. Currency unfavorably impacted net sales by 4
percent compared with the same period last year, driven by EMEAI (down 9
percent) and Asia Pacific (down 3 percent). Excluding the Hydrocarbons & Energy
business, net sales increased 8 percent.

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Cost of Sales
Cost of sales ("COS") was $12.4 billion in the third quarter of 2022, up from
$11.6 billion in the third quarter of 2021, primarily due to higher feedstocks,
energy, other raw material costs, and logistics costs, partially offset by
insurance recoveries related to certain weather-related events in the prior
year. For the first nine months of 2022, COS was $37.7 billion, up from $32.4
billion in the first nine months of 2021, primarily due to higher feedstocks,
energy, other raw material costs, and logistics costs, partially offset by
insurance recoveries related to certain weather-related events in the prior
year. The third quarter of 2022 included $55 million ($36 million in the third
quarter of 2021) and $137 million in the first nine months of 2022 ($106 million
in the first nine months of 2021) of costs associated with implementing the
Company's digital acceleration program (related to Corporate). Cost of sales as
a percentage of net sales in the third quarter of 2022 was 87.7 percent (78.3
percent in the third quarter of 2021) and 83.7 percent for the first nine months
of 2022 (79.8 percent for the first nine months of 2021).

Research and Development Expenses
Research and development ("R&D") expenses totaled $191 million in the third
quarter of 2022, compared with $210 million in the third quarter of 2021. R&D
expenses for the first nine months of 2022 were $626 million, compared with $632
million in the first nine months of 2021. R&D expenses for the three and nine
months ended September 30, 2022 decreased primarily due to lower
performance-based compensation costs and a decrease in fringe benefit expenses
which reflected stock market declines.

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses totaled $356 million in
the third quarter of 2022, compared with $403 million in the third quarter of
2021. SG&A expenses decreased in the third quarter of 2022 due to lower
performance-based compensation costs and a decrease in fringe benefit expenses
which reflected stock market declines. In the first nine months of 2022, SG&A
expenses were $1,289 million, compared with $1,209 million in the first nine
months of 2021. SG&A expenses for the first nine months of 2022 increased
primarily due to higher bad debt reserves which more than offset lower
performance-based compensation costs and a decrease in fringe benefit expenses
which reflected stock market declines.

Amortization of Intangibles
Amortization of intangibles was $83 million in the third quarter of 2022,
compared with $100 million in the third quarter of 2021. In the first nine
months of 2022, amortization of intangibles was $256 million, compared with
$301 million in the first nine months of 2021. See Note 10 to the Consolidated
Financial Statements for additional information on intangible assets.

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

2020 Restructuring Program
Actions related to the restructuring program approved by the Dow. Inc. Board on
September 29, 2020 were substantially complete at the end of 2021, with the
exception of certain cash payments that will continue through 2022 and into
2023. For the nine months ended September 30, 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.
Restructuring charges by segment were as follows: $8 million in Packaging &
Specialty Plastics, $1 million in Industrial Intermediates & Infrastructure,
$10 million in Performance Materials & Coatings and $3 million in Corporate.

Equity in Earnings (Losses) of Nonconsolidated Affiliates
The Company's share of equity in losses of nonconsolidated affiliates was
$58 million in the third quarter of 2022, compared with equity in earnings of
nonconsolidated affiliates of $249 million in the third quarter of 2021,
primarily due to margin compression in polyurethanes at Sadara and MEG at the
Kuwait joint ventures. Equity in earnings of nonconsolidated affiliates was $311
million in the first nine months of 2022, compared with $751 million in the
first nine months of 2021, primarily due to lower equity earnings at Sadara due
to planned maintenance turnaround activity, pandemic-related lockdowns in China
and margin compression in polyurethanes, as well as MEG margin
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Sundry Income (Expense) - Net
Sundry income (expense) - net includes a variety of income and expense items
such as foreign currency exchange gains and losses, dividends from investments,
gains and losses on sales of investments and assets, non-operating pension and
other postretirement benefit plan credits or costs, losses on early
extinguishment of debt and certain litigation matters.

For the three months ended September 30, 2022, Sundry income (expense) - net was
income of $69 million and $73 million for Dow Inc. and TDCC, respectively,
compared with expense of $350 million and $356 million, respectively, for the
three months ended September 30, 2021. The third quarter of 2022 included
non-operating pension and postretirement benefit plan credits and gains on the
sales of assets and investments. These were partially offset by foreign currency
exchange losses. In addition, Dow Inc. included a $7 million loss associated
with agreements entered into with DuPont de Nemours, Inc. ("DuPont") and
Corteva, Inc. ("Corteva") as part of the separation and distribution (related to
Corporate). The third quarter of 2021 included a $472 million loss on the early
extinguishment of debt (related to Corporate). This was partially offset by
non-operating pension and postretirement benefit plan credits and a $54 million
gain related to an arbitration award (related to Industrial Intermediates &
Infrastructure).

For the nine months ended September 30, 2022, Sundry income (expense) - net was
income of $292 million and $287 million for Dow Inc. and TDCC, respectively,
compared with expense of $225 million and $231 million for Dow Inc. and TDCC,
respectively, for the nine months ended September 30, 2021. The first nine
months of 2022 included non-operating pension and postretirement benefit plan
credits and gains on the sales of assets and investments. These were partially
offset by foreign currency exchange losses and an $8 million loss on the early
extinguishment of debt (related to Corporate). In addition, Dow Inc. included a
$3 million loss associated with agreements entered into with DuPont and Corteva
as part of the separation and distribution (related to Corporate). The first
nine months of 2021 included a $574 million loss on the early extinguishment of
debt (related to Corporate) and foreign currency exchange losses. These were
partially offset by non-operating pension and postretirement benefit plan
credits, gains on the sales of assets and investments and a $54 million gain
related to an arbitration award (related to Industrial Intermediates &
Infrastructure). In addition, Dow Inc. included a $5 million loss associated
with agreements entered into with DuPont and Corteva as part of the separation
and distribution (related to Corporate).

Interest Expense and Amortization of Debt Discount
Interest expense and amortization of debt discount was $155 million in the third
quarter of 2022, compared with $178 million in the third quarter of 2021.
Interest expense and amortization of debt discount was $487 million in the first
nine months of 2022, compared with $561 million in the first nine months of
2021. The decrease in interest expense is primarily due to the liability
management actions taken in 2021.

Provision for Income Taxes
The Company's effective tax rate fluctuates based on, among other factors, where
income is earned, the level of income relative to tax attributes and the level
of equity earnings, since most earnings from the Company's equity method
investments are taxed at the joint venture level. The effective tax rate for the
third quarter of 2022 was 24.1 percent and 24.0 percent for Dow Inc. and TDCC,
respectively, compared with 24.1 percent and 24.2 percent for the third quarter
of 2021. For the first nine months of 2022, the effective tax rate was
23.6 percent for Dow Inc. and TDCC, compared with 22.9 percent for the first
nine months of 2021.

Net Income Available for Common Stockholder(s)
Dow Inc.
Net income available for Dow Inc. common stockholders was $739 million, or $1.02
per share, in the third quarter of 2022, compared with $1,683 million, or $2.23
per share, in the third quarter of 2021. Net income available for Dow Inc.
common stockholders was $3,969 million, or $5.41 per share, in the first nine
months of 2022, compared with $4,575 million, or $6.06 per share, in the first
nine months of 2021. See Note 7 to the Consolidated Financial Statements for
details on Dow Inc.'s earnings per share calculations.

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TDCC
Net income available for the TDCC common stockholder was $747 million in the
third quarter of 2022, compared with $1,679 million in the third quarter of
2021. Net income available for the TDCC common stockholder was $3,975 million in
the first nine months of 2022, compared with $4,576 million in the first nine
months of 2021. TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS



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

PACKAGING & SPECIALTY PLASTICS

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

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

Packaging & Specialty Plastics Three Months Ended Nine Months Ended
In millions Sep 30, 2022 Sep 30, 2021 Sep 30, 2022 Sep 30, 2021
Net sales $ 7,327 $ 7,736 $ 23,187 $ 20,939
Operating EBIT $ 785 $ 1,954 $ 3,455 $ 5,196
Equity earnings $ 55 $ 124 $ 303 $ 360

Packaging & Specialty Plastics Three Months Ended Nine Months Ended
Percentage change from prior year Sep 30, 2022 Sep 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix (2) % 12 %
Currency (3) (3)
Volume - 2

Total (5) % 11 %

Packaging & Specialty Plastics net sales were $7,327 million in the third
quarter of 2022, down 5 percent from net sales of $7,736 million in the third
quarter of 2021, with local price down 2 percent, volume flat and an unfavorable
currency impact of 3 percent, primarily in EMEAI. Local price decreased in both
businesses as gains in functional polymers were more than offset by lower
polyethylene prices. Local price decreased in Hydrocarbons & Energy in the U.S.
& Canada which more than offset increases in EMEAI. Local price decreased in
Packaging and Specialty Plastics in the U.S. & Canada and Latin America which
more than offset increases in EMEAI and Asia Pacific.
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Volume increased in Hydrocarbons & Energy, primarily in the U.S. & Canada.
Volume decreased in Packaging and Specialty Plastics in EMEAI, the U.S. & Canada
and Asia Pacific which more than offset an increase in Latin America.

Operating EBIT was $785 million in the third quarter of 2022, down $1,169
million from Operating EBIT of $1,954 million in the third quarter of 2021.
Operating EBIT decreased primarily due to higher raw material and energy costs,
lower selling prices and decreased equity earnings which were partially offset
by insurance recoveries related to certain weather-related events in the prior
year.

Packaging & Specialty Plastics net sales were $23,187 million in the first nine
months of 2022, up 11 percent from net sales of $20,939 million in the first
nine months of 2021, with local price up 12 percent, volume up 2 percent and an
unfavorable currency impact of 3 percent, primarily in EMEAI. Local price
increased in both businesses and all geographic regions. Local price increased
in Hydrocarbons & Energy, primarily in EMEAI and the U.S. & Canada, as prices
for co-products are generally correlated to Brent crude oil prices, which, on
average, increased 50 percent compared with the first nine months of 2021. Local
price increased in Packaging and Specialty Plastics, driven by favorable supply
and demand dynamics in polyethylene and functional polymers, notably in flexible
food and beverage packaging and infrastructure material applications. Volume
increased in Hydrocarbons & Energy, primarily in the U.S. & Canada and EMEAI.
Volume decreased in Packaging and Specialty Plastics in EMEAI, the U.S. & Canada
and Asia Pacific which more than offset an increase in Latin America.

Operating EBIT was $3,455 million in the first nine months of 2022, down $1,741
million from Operating EBIT of $5,196 million in the first nine months of 2021.
Operating EBIT decreased primarily due to higher feedstock and raw material
costs and lower equity earnings, which were partially offset by higher selling
prices and insurance recoveries related to certain weather-related events in the
prior year.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE



The Industrial Intermediates & Infrastructure operating segment consists of two
customer-centric global businesses - Industrial Solutions and Polyurethanes &
Construction Chemicals - that develop important intermediate chemicals that are
essential to manufacturing processes, as well as downstream, customized
materials and formulations that use advanced development technologies. These
businesses primarily produce and market ethylene oxide and propylene oxide
derivatives that are aligned to market segments as diverse as appliances,
coatings, electronics, surfactants for cleaning and sanitization, infrastructure
and oil and gas. The businesses' global scale and reach, world-class technology,
R&D capabilities and materials science expertise enable the Company to be a
premier solutions provider offering customers value-add sustainable solutions to
enhance comfort, energy efficiency, product effectiveness and durability across
a wide range of home comfort and appliance, building and construction, mobility
and transportation, and adhesive and lubricant applications, among others. This
segment also includes a portion of the results of EQUATE, TKOC, Map Ta Phut and
Sadara, all joint ventures of the Company.

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

Industrial Intermediates & Infrastructure                         Three Months Ended                 Nine Months Ended
In millions                                                  Sep 30, 2022     Sep 30, 2021     Sep 30, 2022     Sep 30, 2021
Net sales                                                  $    4,059       $       4,481    $      12,953    $      12,303
Operating EBIT                                             $      167       $         713    $       1,254    $       1,687
Equity earnings (losses)                                   $     (114)      $         122    $           5    $         381



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Industrial Intermediates & Infrastructure                     Three Months Ended     Nine Months Ended
Percentage change from prior year                                Sep 30, 2022           Sep 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix                                                     5  %                  15  %
Currency                                                                     (5)                    (5)
Volume                                                                       (9)                    (5)

Total                                                                        (9) %                   5  %



Industrial Intermediates & Infrastructure net sales were $4,059 million in the
third quarter of 2022, down 9 percent from $4,481 million in the third quarter
of 2021, with local price up 5 percent, volume down 9 percent, and an
unfavorable currency impact of 5 percent. Local price increased in both
businesses and across all geographic regions, except Asia Pacific. Currency had
an unfavorable impact on sales in both businesses, driven by EMEAI and Asia
Pacific. Volume declines in Polyurethanes & Construction Chemicals were
partially offset by gains in Industrial Solutions. Volume increased in
Industrial Solutions in all geographic regions, except Latin America, driven by
strong demand in energy, pharmaceutical, and mobility end-markets and increased
catalyst sales. Volume declines in Polyurethanes & Construction Chemicals in the
U.S. & Canada and EMEAI were driven by inflationary pressure on demand for
consumer durables, industrial, and building and construction applications.

Operating EBIT was $167 million in the third quarter of 2022, down $546 million
from Operating EBIT of $713 million in the third quarter of 2021. Operating EBIT
decreased primarily due to lower demand in EMEAI, margin compression due to
rising raw material and energy costs and lower equity earnings at Sadara and the
Kuwait and Map Ta Phut joint ventures, which were partially offset by higher
selling prices and insurance recoveries related to certain weather-related
events in the prior year.

Industrial Intermediates & Infrastructure net sales were $12,953 million in the
first nine months of 2022, up 5 percent from net sales of $12,303 million in the
first nine months of 2021, with local price up 15 percent, volume down
5 percent, and an unfavorable currency impact of 5 percent. Local price
increased in both businesses and across all geographic regions, primarily driven
by rising raw material and energy prices. Currency had an unfavorable impact on
sales in both businesses, driven by EMEAI and Asia Pacific. Volume in Industrial
Solutions increased in all geographic regions driven by improved supply
availability as the year-ago period was impacted by Winter Storm Uri, and by
strong demand in agricultural, pharmaceutical and energy related applications.
Volume in Polyurethanes & Construction Chemicals decreased in all geographic
regions, except Latin America, primarily due to lower demand, particularly for
consumer durables, combined with reduced supply from planned maintenance
turnaround activity, Sadara and third-party outages.

Operating EBIT was $1,254 million in the first nine months of 2022, down $433
million from Operating EBIT of $1,687 million in the first nine months of 2021.
Operating EBIT decreased primarily due to inflationary pressure on demand,
particularly for consumer durables, margin compression due to higher raw
material and energy costs and lower equity earnings at Sadara and the Kuwait and
Map Ta Phut joint ventures, combined with reduced supply from planned
maintenance turnaround activity and third-party outages, which were partially
offset by local price increases in both businesses and insurance recoveries
related to certain weather-related events in the prior year.

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PERFORMANCE MATERIALS & COATINGS

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

Performance Materials & Coatings                                Three Months Ended                 Nine Months Ended
In millions                                                Sep 30, 2022     Sep 30, 2021     Sep 30, 2022     Sep 30, 2021
Net sales                                                $    2,654       $       2,526    $       8,706    $       7,114
Operating EBIT                                           $      302       $         284    $       1,458    $         571
Equity earnings                                          $        1       $           3    $           6    $           5



Performance Materials & Coatings                            Three Months Ended     Nine Months Ended
Percentage change from prior year                              Sep 30, 2022           Sep 30, 2022
Change in Net Sales from Prior Period due to:
Local price & product mix                                                  15  %                  29  %
Currency                                                                   (5)                    (4)
Volume                                                                     (5)                    (3)

Total                                                                       5  %                  22  %



Performance Materials & Coatings net sales were $2,654 million in the third
quarter of 2022, up 5 percent from net sales of $2,526 million in the third
quarter of 2021, with local price up 15 percent, volume down 5 percent and an
unfavorable currency impact of 5 percent. Local price increased in both
businesses and across all geographic regions. Volume decreased in Consumer
Solutions in EMEAI and the U.S. & Canada, driven by lower demand in siloxanes
and planned maintenance turnaround activity, which was partially offset by
increases in Asia Pacific and Latin America. Volume decreased in Coatings &
Performance Monomers in EMEAI, Asia Pacific and the U.S. & Canada, driven by
lower demand for architectural coatings, which was partially offset by an
increase in Latin America. The unfavorable currency impact was driven by EMEAI
and Asia Pacific.

Operating EBIT was $302 million in the third quarter of 2022, up $18 million
from Operating EBIT of $284 million in the third quarter of 2021. Operating EBIT
increased due to insurance recoveries related to certain weather-related events
in the prior year in Coatings & Performance Monomers and price increases in
Consumer Solutions offset by higher raw material costs.

Performance Materials & Coatings net sales were $8,706 million in the first nine
months of 2022, up 22 percent from net sales of $7,114 million in the first nine
months of 2021, with local price up 29 percent, volume down 3 percent and an
unfavorable currency impact of 4 percent. Local price increased in both
businesses and across all geographic regions due to favorable supply and demand
dynamics and higher raw material prices. Volume decreased in both businesses and
in EMEAI, Latin America and Asia Pacific, which was partially offset by an
increase in the U.S. & Canada. Volume decreased in Consumer Solutions in EMEAI,
the U.S. & Canada and Latin America, which was partially offset by an increase
in Asia Pacific. Volume decreased in Coatings & Performance Monomers in Asia
Pacific and EMEAI, which was partially offset by an increase in the U.S. &
Canada, primarily due to improved supply availability as the year-ago period was
impacted by Winter Storm Uri, and Latin America. The unfavorable currency impact
was driven by EMEAI and Asia Pacific.

Operating EBIT was $1,458 million in the first nine months of 2022, up $887
million from Operating EBIT of $571 million in the first nine months of 2021.
Operating EBIT increased primarily due to margin expansion in Consumer Solutions
and insurance recoveries related to certain weather-related events in the prior
year in Coatings & Performance Monomers.

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CORPORATE

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



Corporate                                                      Three Months Ended               Nine Months Ended
In millions                                              Sep 30, 2022    Sep 30, 2021     Sep 30, 2022     Sep 30, 2021
Net sales                                                $       75    $          94    $      197        $        248
Operating EBIT                                           $      (59)   $         (65)   $     (178)       $       (186)
Equity earnings (losses)                                 $        -    $           -    $       (3)       $          5



Net sales for Corporate, which primarily relate to the Company's insurance
operations, were $75 million in the third quarter of 2022, a decrease from net
sales of $94 million in the third quarter of 2021. Net sales were $197 million
in the first nine months of 2022, a decrease from net sales of $248 million in
the first nine months of 2021.

Operating EBIT was a loss of $59 million in the third quarter of 2022, compared
with a loss of $65 million in the third quarter of 2021. Operating EBIT was a
loss of $178 million in the first nine months of 2022, compared with a loss of
$186 million in the first nine months of 2021. Operating EBIT improved primarily
due to lower costs.

CHANGES IN FINANCIAL CONDITION



The Company had cash and cash equivalents of $2,216 million at September 30,
2022 and $2,988 million at December 31, 2021, of which $1,216 million at
September 30, 2022 and $1,745 million at December 31, 2021 was held by
subsidiaries in foreign countries, including U.S. territories. For each of its
foreign subsidiaries, Dow makes an assertion regarding the amount of earnings
intended for permanent reinvestment, with the balance available to be
repatriated to the United States.

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

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

Cash Flow Summary                                                    Dow Inc.                            TDCC
                                                                 Nine Months Ended                 Nine Months Ended

In millions                                                Sep 30, 2022     Sep 30, 2021     Sep 30, 2022     Sep 30, 2021
Cash provided by (used for):
Operating activities - continuing operations             $       5,408    $       4,512    $       5,441    $       4,634
Operating activities - discontinued operations                     (11)             (78)               -                -
Operating activities                                             5,397            4,434            5,441            4,634
Investing activities                                            (1,339)          (1,535)          (1,339)          (1,535)
Financing activities                                            (4,513)          (4,974)          (4,557)          (5,174)
Effect of exchange rate changes on cash, cash
equivalents and restricted cash                                   (261)             (57)            (261)             (57)

Summary


Decrease in cash, cash equivalents and restricted cash            (716)          (2,132)            (716)          (2,132)

Cash, cash equivalents and restricted cash at beginning of period

                                                        3,033            5,108            3,033            5,108

Cash, cash equivalents and restricted cash at end of period

$       2,317    $

2,976 $ 2,317 $ 2,976 Less: Restricted cash and cash equivalents, included in "Other current assets"

                                             101               65              101               65
Cash and cash equivalents at end of period               $       2,216    $

2,911 $ 2,216 $ 2,911

Cash Flows from Operating Activities
Cash provided by operating activities from continuing operations in the first
nine months of 2022 was primarily driven by the Company's cash earnings and
dividends from equity method investments, which were partially offset by cash
used for working capital requirements and performance-based compensation
payments. Cash provided by operating activities from continuing operations in
the first nine months of 2021 was primarily driven by the Company's cash
earnings and dividends from equity method investments, which were partially
offset by elective pension contributions, cash used for working capital
requirements and performance-based compensation payments.

Net Working Capital Dow Inc. TDCC

In millions Sep 30, 2022 Dec 31, 2021 Sep 30, 2022 Dec 31, 2021
Current assets $ 19,777 $ 20,848 $ 19,739 $ 20,837
Current liabilities 12,315 13,226 12,158 13,046
Net working capital $ 7,462 $ 7,622 $ 7,581 $ 7,791
Current ratio 1.61:1 1.58:1 1.62:1 1.60:1

Working Capital Metrics Three Months Ended

Sep 30, 2022 Jun 30, 2022 Sep 30, 2021
Days sales outstanding in trade receivables 45 43 43
Days sales in inventory 59 56 56
Days payables outstanding 63 58 58

Cash used for operating activities from discontinued operations in the first
nine months of 2022 and 2021 was related to cash payments and receipts Dow Inc.
had with DuPont and Corteva that related to certain agreements and matters
related to the separation from DowDuPont Inc. ("DowDuPont"). See Note 3 to the
Consolidated Financial Statements for additional information.

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Cash Flows from Investing Activities
Cash used for investing activities in the first nine months of 2022 was
primarily for capital expenditures and purchases of investments, which were
partially offset by proceeds from sales and maturities of investments. Cash used
for investing activities in the first nine months of 2021 was primarily for
capital expenditures, purchases of investments and acquisitions of property and
businesses, which were partially offset by proceeds from sales and maturities of
investments.

The Company's capital expenditures were $1,224 million in the first nine months
of 2022, compared with $1,035 million in the first nine months of 2021. The
Company expects full year capital spending in 2022 to be approximately
$1.9 billion. The Company will adjust its spending through the year as economic
conditions evolve.

Cash Flows from Financing Activities
Cash used for financing activities in the first nine months of 2022 was
primarily for payments on long-term debt. In addition, Dow Inc. included cash
outflows for dividends paid to stockholders and purchases of treasury stock.
TDCC included cash outflows for dividends paid to Dow Inc. Cash used for
financing activities in the first nine months of 2021 included payments on
long-term debt and transaction financing, debt issuance and other costs, which
were partially offset by proceeds from issuance of common stock and proceeds
from issuance of short-term debt greater than three months. In addition, Dow
Inc. included cash outflows for dividends paid to stockholders and purchases of
treasury stock. TDCC included cash outflows for dividends paid to Dow Inc. See
Note 12 to the Consolidated Financial Statements for additional information
related to the issuance and retirement of debt.

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

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

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

Reconciliation of Free Cash Flow

Nine Months Ended



In millions                                                                  Sep 30, 2022     Sep 30, 2021
Cash provided by operating activities - continuing operations (GAAP)       $       5,408    $       4,512
Capital expenditures                                                              (1,224)          (1,035)
Free Cash Flow (non-GAAP) 1

$ 4,184 $ 3,477

1.Free cash flow in the first nine months of 2021 reflects a $1 billion elective pension contribution.



Reconciliation of Cash Flow Conversion (Operating EBITDA to Cash Flow from
Operations)                                                                        Nine Months Ended

In millions                                                                 Sep 30, 2022     Sep 30, 2021
Net income (GAAP)                                                          $        3,993 $             4,644
+ Provision for income taxes                                                        1,232               1,383
Income before income taxes                                                 $        5,225 $             6,027
- Interest income                                                                     105                  35
+ Interest expense and amortization of debt discount                                  487                 561
- Significant items ¹                                                               (382)               (715)
Operating EBIT (non-GAAP)                                                  $        5,989 $             7,268
+ Depreciation and amortization                                                     2,104               2,187
Operating EBITDA (non-GAAP)                                                $        8,093 $             9,455

Cash provided by operating activities - continuing operations (GAAP) $ 5,408 $

             4,512

Cash Flow Conversion (Operating EBITDA to cash flow from operations) (non-GAAP) 2

66.8 % 47.7 %

1.The nine months ended September 30, 2022 includes costs associated with
implementing the Company's Digital Acceleration program and 2020 Restructuring
Program, asset related charges due to the Russia and Ukraine conflict, a loss on
the early extinguishment of debt and activity related to the separation from
DowDuPont. The nine months ended September 30, 2021 includes costs associated
with implementing the Company's Digital Acceleration program and 2020
Restructuring Program, a loss on early extinguishment of debt, litigation
related charges, awards and adjustments and activity related to the separation
from DowDuPont. See Note 23 to the Consolidated Financial Statements for
additional information.
2.Cash flow conversion in the first nine months of 2021 reflects a $1 billion
elective pension contribution.

Liquidity & Financial Flexibility
The Company's primary source of incremental liquidity is cash flows from
operating activities. In addition to cash from operating activities, the
Company's current liquidity sources also include TDCC's U.S. and Euromarket
commercial paper programs, committed and uncommitted credit facilities,
committed accounts receivable facilities, a medium-term notes program, a U.S.
retail note program ("InterNotes®") and other debt markets.

The Company continues to maintain a strong financial position with all of its
committed credit facilities undrawn and fully available at September 30, 2022.
Cash and committed and available forms of liquidity were $12 billion at
September 30, 2022. The Company also has no substantive long-term debt
maturities due until 2027. As a well-known seasoned issuer the Company may issue
debt at any time as an additional source of liquidity. Additional details on
sources of liquidity are as follows:

Commercial Paper
TDCC issues promissory notes under its U.S. and Euromarket commercial paper
programs. TDCC had $100 million of commercial paper outstanding at September 30,
2022. TDCC maintains access to the commercial paper market at competitive rates.
Amounts outstanding under TDCC's commercial paper programs during the period may
be greater, or less than, the amount reported at the end of the period.
Subsequent to September 30, 2022, TDCC issued approximately $600 million of
commercial paper.

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Committed Credit Facilities
The Company also has the ability to access liquidity through TDCC's committed
and available credit facilities. At September 30, 2022, TDCC had total committed
and available credit facilities of $8.4 billion. See Note 12 to the Consolidated
Financial Statements for additional information on committed and available
credit facilities.

Committed Accounts Receivable Facilities
In addition to the above committed credit facilities, the Company maintains a
committed accounts receivable facility in the U.S. where eligible trade accounts
receivable, up to $900 million, may be sold at any point in time. The Company
also maintains a committed accounts receivable facility in Europe where eligible
trade accounts receivable, up to €500 million, may be sold at any point in time.
In the third quarter of 2022, the Company sold no receivables under the U.S. and
Europe committed accounts receivable facilities ($391 million in the first nine
months of 2022). See Note 11 to the Consolidated Financial Statements for
additional information.

Company-Owned Life Insurance
The Company has investments in company-owned life insurance ("COLI") policies,
which are recorded at their cash surrender value as of each balance sheet date.
The Company has the ability to monetize its investment in its COLI policies as
an additional source of liquidity. The Company had no outstanding monetization
of its existing COLI policies' surrender value at September 30, 2022. For
additional information, see Note 7 to the Consolidated Financial Statements
included in the 2021 10-K.

Uncommitted Credit Facilities
The Company has entered into various uncommitted bilateral credit arrangements
as a potential source of excess liquidity. These lines can be used to support
short-term liquidity needs and for general purposes, including letters of
credit. The Company had no drawdowns outstanding at September 30, 2022.

Shelf Registration - U.S.
On June 13, 2022, Dow Inc. and TDCC filed a shelf registration statement with
the U.S. Securities and Exchange Commission. The shelf indicates that Dow Inc.
may offer common stock; preferred stock; depositary shares; debt securities;
guarantees; warrants to purchase common stock, preferred stock and debt
securities; and stock purchase contracts and stock purchase units, with pricing
and availability of any such offerings depending on market conditions. The shelf
also indicates that TDCC may offer debt securities, guarantees and warrants to
purchase debt securities, with pricing and availability of any such offerings
depending on market conditions. On July 22, 2022, TDCC filed a prospectus
supplement under this shelf registration to register an undetermined amount of
securities for issuance under InterNotes®. Also, on July 22, 2022, TDCC filed a
prospectus supplement under this shelf registration to register an undetermined
amount of securities for issuance under a medium-term notes program.

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Debt
As the Company continues to maintain its strong balance sheet and financial
flexibility, management is focused on net debt (a non-GAAP financial measure),
as the Company believes this is the best representation of its financial
leverage at this point in time. As shown in the following table, net debt is
equal to total gross debt minus "Cash and cash equivalents" and "Marketable
securities."

Total Debt Dow Inc. TDCC

In millions Sep 30, 2022 Dec 31, 2021 Sep 30, 2022 Dec 31, 2021
Notes payable $ 185 $ 161 $ 185 $ 161
Long-term debt due within one year 364 231 364 231
Long-term debt 12,921 14,280 12,921 14,280
Gross debt $ 13,470 $ 14,672 $ 13,470 $ 14,672
- Cash and cash equivalents 2,216 2,988 2,216 2,988
- Marketable securities 1 148 245 148 245
Net debt $ 11,106 $ 11,439 $ 11,106 $ 11,439
Total equity $ 18,629 $ 18,739 $ 18,877 $ 19,029

Gross debt as a percent of total capitalization 42.0 % 43.9 % 41.6 % 43.5 %
Net debt as a percent of total capitalization 37.3 % 37.9 % 37.0 % 37.5 %

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

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



The Company may at any time repurchase certain debt securities in the open
market or in privately negotiated transactions subject to: the applicable terms
under which any such debt securities were issued, certain internal approvals of
the Company, and applicable laws and regulations of the relevant jurisdiction in
which any such potential transactions might take place. This in no way obligates
the Company to make any such repurchases nor should it be considered an offer to
do so.

TDCC's public debt instruments and primary, private credit agreements contain,
among other provisions, certain customary restrictive covenant and default
provisions. TDCC's most significant debt covenant with regard to its financial
position is the obligation to maintain the ratio of its consolidated
indebtedness to consolidated capitalization at no greater than 0.70 to 1.00 at
any time the aggregate outstanding amount of loans under the Five Year
Competitive Advance and Revolving Credit Facility Agreement ("Revolving Credit
Agreement") equals or exceeds $500 million. The ratio of TDCC's consolidated
indebtedness to consolidated capitalization as defined in the Revolving Credit
Agreement was 0.39 to 1.00 at September 30, 2022. Management believes TDCC was
in compliance with all of its covenants and default provisions at September 30,
2022. For information on TDCC's debt covenants and default provisions, see Note
15 to the Consolidated Financial Statements included in the 2021 10-K. There
were no material changes to the debt covenants and default provisions related to
TDCC's outstanding long-term debt and primary, private credit agreements in the
first nine months of 2022.

While taking into consideration the current economic environment, management expects that the Company will continue to have sufficient liquidity and financial flexibility to meet all of its business obligations.



Credit Ratings
At September 30, 2022, TDCC's credit ratings were as follows:

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




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On May 31, 2022, Moody's Investors Service announced a credit rating upgrade for
TDCC from Baa2 to Baa1, affirmed its P-2 rating and maintained a stable outlook.
On June 8, 2022, Standard & Poor's affirmed TDCC's BBB and A-2 rating, and
revised its outlook to positive from stable. On June 16, 2022, Fitch Ratings
affirmed TDCC's BBB+ and F2 rating, and revised its outlook to positive from
stable. These credit agencies' decisions were made as part of their annual
review process and reflect the Company's supportive financial policies and
strong operating performance.

Dividends

Dow Inc.
Dow Inc. has paid dividends on a quarterly basis since the separation from
DowDuPont and expects to continue to do so, subject to approval by the Dow Inc.
Board. Dividends declared by the Board align to the Company's strategy announced
in 2018 of returning approximately 45 percent of operating net income1 to the
shareholders through the dividend and total shareholder remuneration of
approximately 65 percent, when including share repurchases, over the economic
cycle. The following table summarizes cash dividends declared by the Board and
paid to common stockholders of record by Dow Inc. in 2022:

Dow Inc. Cash Dividends Declared and Paid

Declaration Date Record Date Payment Date Amount (per share)
February 10, 2022 February 28, 2022 March 11, 2022 $ 0.70
April 13, 2022 May 31, 2022 June 10, 2022 $ 0.70
August 10, 2022 August 31, 2022 September 9, 2022 $ 0.70
October 13, 2022 November 30, 2022 December 9, 2022 $ 0.70

TDCC
TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and
share repurchases, as approved by the Dow Inc. Board from time to time, as well
as certain governance expenses. Funding is accomplished through intercompany
loans. TDCC's Board reviews and determines a dividend distribution to Dow Inc.
to settle the intercompany loans. For the three months ended September 30, 2022,
TDCC declared and paid a dividend to Dow Inc. of $1,301 million ($3,755 million
for the nine months ended September 30, 2022). At September 30, 2022, TDCC's
intercompany loan balance with Dow Inc. was insignificant. See Note 22 to the
Consolidated Financial Statements for additional information.

Share Repurchase Program
On April 1, 2019, the Dow Inc. Board ratified the share repurchase program
originally approved on March 15, 2019, authorizing up to $3 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 billion for the repurchase of the Company's common
stock, with no expiration date. The Company repurchased $800 million of its
common stock in the third quarter of 2022 ($2,200 million in the first nine
months of 2022). At September 30, 2022, approximately $2,175 million of the new
share repurchase program authorization remained available for repurchases. As
previously announced, the Company intends to repurchase shares to cover dilution
over the cycle. With the announcement of the new share repurchase program, the
Company may from time to time expand its share repurchases beyond dilution,
based on a number of factors including macroeconomic conditions, free cash flow
generation, and the Dow share price. Any share repurchases, when coupled with
the Company's dividends, are intended to implement the long-term strategy of
ensuring shareholder remuneration is approximately 65 percent over the economic
cycle.

Pension Plans
The Company has both funded and unfunded defined benefit pension plans that
cover employees in the United States and a number of other countries. The
Company's funding policy is to contribute to funded plans when pension laws
and/or economics either require or encourage funding. The Company expects to
contribute approximately $250 million to its pension plans in 2022, of which
$156 million has been contributed through September 30, 2022. See Note 17 to the
Consolidated Financial Statements and Note 20 to the Consolidated Financial
Statements included in the 2021 10-K for additional information related to the
Company's pension plans.

1.Operating net income is a non-GAAP measure that Dow defines as "Net income
available for Dow Inc. common stockholders," excluding the impact of significant
items.
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Restructuring
The actions related to the 2020 Restructuring Program are expected to result in
additional cash expenditures of $92 million, primarily through 2022 and into
2023, consisting of severance and related benefit costs and costs associated
with exit and disposal activities, including contract cancellation penalties and
environmental remediation. Restructuring implementation costs, primarily
decommissioning and demolition activities related to asset actions, are expected
to result in additional cash expenditures of approximately $10 million,
primarily through the end of 2022. Restructuring implementation costs totaled
$11 million in the third quarter of 2022 ($31 million in the first nine months
of 2022).

The Company expects to incur additional costs in the future related to its
restructuring activities, which will be recognized as incurred. The Company also
expects to incur additional employee-related costs, including involuntary
termination benefits related to its other optimization activities. These costs
cannot be reasonably estimated at this time. See Note 5 to the Consolidated
Financial Statements for additional information on the Company's restructuring
activities.

Digital Acceleration
In 2021, Dow announced plans to further advance and expand its digitalization
efforts to deliver long-term value creation by accelerating investment in three
key areas: expanding digital tools to accelerate materials science innovation;
further enhancing the e-commerce buying and fulfillment experience for Dow's
customers; and adopting real-time digital manufacturing insights, operational
data intelligence and demand sensing to enhance the productivity and reliability
of Dow's operations. The Company expects more than $300 million in incremental
annual run rate Operating EBITDA generation by the end of 2025 related to
digital acceleration, with an additional one-time $100 million in structural
working capital efficiency gains, driven in part by enhanced planning from
digital tools. The activities related to digital acceleration are expected to
result in additional cash expenditures of approximately $80 million, primarily
through the end of 2022. Digital acceleration expenses totaled $62 million in
the third quarter of 2022 ($154 million in the first nine months of 2022).

Contractual Obligations
Information related to the Company's contractual obligations, commercial
commitments and expected cash requirements for interest can be found in Notes
15, 16, 17 and 20 to the Consolidated Financial Statements included in the 2021
10-K. With the exception of the items noted below, there have been no material
changes in the Company's contractual obligations since December 31, 2021.

Contractual Obligations at Sep 30, 2022 Payments Due In
2027 and
In millions 2022 2023-2024 2025-2026 beyond Total
Dow Inc.
Long-term debt obligations 1 $ 34 $ 474 $ 465 $ 12,579 $ 13,552
Expected cash requirements for interest 2 $ 151 $ 1,151 $

1,104 $ 7,385 $ 9,791

1.Excludes unamortized debt discount and issuance costs of $267 million. Includes finance lease obligations of $804 million. 2.Cash requirements for interest on long-term debt was calculated using current interest rates at September 30, 2022, and includes $11 million of various floating rate notes.



Off-Balance Sheet Arrangements
Off-balance sheet arrangements are obligations the Company has with
nonconsolidated entities related to transactions, agreements or other
contractual arrangements. The Company holds variable interests in joint ventures
accounted for under the equity method of accounting. The Company is not the
primary beneficiary of these joint ventures and therefore is not required to
consolidate these entities (see Note 21 to the Consolidated Financial
Statements).

Guarantees arise during the ordinary course of business from relationships with
customers, committed accounts receivable facilities and nonconsolidated
affiliates when the Company undertakes an obligation to guarantee the
performance of others if specific triggering events occur. Additional
information related to guarantees can be found in the "Guarantees" section of
Note 13 to the Consolidated Financial Statements.

Fair Value Measurements
See Note 20 to the Consolidated Financial Statements for information concerning
fair value measurements.

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OTHER MATTERS

Critical Accounting Estimates

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

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

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

Asbestos-Related Claim Activity                                  2022      2021
Claims unresolved at Jan 1                                       8,747     9,126
Claims filed                                                     3,662     3,177
Claims settled, dismissed or otherwise resolved                 (5,823)

(3,340)


Claims unresolved at Sep 30                                      6,586

8,963

Claimants with claims against both Union Carbide and Amchem (1,502) (2,312) Individual claimants at Sep 30

                                   5,084

6,651





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

For additional information, see Asbestos-Related Matters of Union Carbide Corporation in Note 13 to the Consolidated Financial Statements; Part II, Item 1. Legal Proceedings; and Note 16 to the Consolidated Financial Statements included in the 2021 10-K.

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