DOW INC. Form 10-K Annual Report Filed 2022-02-04

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

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

For the fiscal year ended December 31, 2021

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

For the transition period from __________to__________


Commission File Number	Exact Name of Registrant as Specified in its Charter, Principal Office Address and Telephone Number	State of Incorporation or Organization	I.R.S. Employer Identification No.
001-38646	Dow Inc.	Delaware	30-1128146
	2211 H.H. Dow Way, Midland, MI 48674
	(989) 636-1000
001-03433	The Dow Chemical Company	Delaware	38-1285128
	2211 H.H. Dow Way, Midland, MI 48674
	(989) 636-1000

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


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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Dow Inc.

☑

Yes

☐

The Dow Chemical Company

☑

Yes

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Dow Inc.

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Yes

☑

The Dow Chemical Company

☐

Yes

☑

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

Dow Inc.

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Yes

☐

The Dow Chemical Company

☑

Yes

☐

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

Dow Inc.

☑

Yes

☐

The Dow Chemical Company

☑

Yes

☐

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

Dow Inc.

Large accelerated filer

☑

Accelerated
filer

Non-
accelerated filer

Smaller reporting company

Emerging growth company

The Dow Chemical Company

Large accelerated filer

Accelerated
filer

Non-
accelerated filer

☑

Smaller reporting company

Emerging growth company

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


			Dow Inc.			☐
			The Dow Chemical Company			☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.


			Dow Inc.			☑
			The Dow Chemical Company			☑

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

Dow Inc.

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Yes

☑

The Dow Chemical Company

☐

Yes

☑

As of June 30, 2021, the aggregate market value of the common stock of Dow Inc. held by non-affiliates of Dow Inc. was approximately $47.1 billion based on the last reported closing price of $63.28 per share as reported on the New York Stock Exchange.

Dow Inc. had 735,747,193 shares of common stock, $0.01 par value, outstanding at January 31, 2022. The Dow Chemical Company had 100 shares of common stock, $0.01 par value, outstanding at January 31, 2022, all of which were held by the registrant’s parent, Dow Inc.

The Dow Chemical Company meets the conditions set forth in General Instruction I(1)(a) and (b) for Form 10-K and therefore is filing this form in the reduced disclosure format.

DOCUMENTS INCORPORATED BY REFERENCE

Dow Inc.: Portions of Dow Inc.'s Proxy Statement for the 2022 Annual Meeting of Stockholders are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of Dow Inc.'s fiscal year ended December 31, 2021.

The Dow Chemical Company: None.

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Dow Inc. and Subsidiaries

The Dow Chemical Company and Subsidiaries

ANNUAL REPORT ON FORM 10-K

For the fiscal year ended December 31, 2021

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		PAGE

PART I
Item 1.	Business.	6
Item 1A.	Risk Factors.	21
Item 1B.	Unresolved Staff Comments.	25
Item 2.	Properties.	26
Item 3.	Legal Proceedings.	27
Item 4.	Mine Safety Disclosures.	27
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	28

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.	68
Item 8.	Financial Statements and Supplementary Data.	69
	Dow Inc. and Subsidiaries:
	Consolidated Statements of Income.	73
	Consolidated Statements of Comprehensive Income.	74
	Consolidated Balance Sheets.	75
	Consolidated Statements of Cash Flows.	76
	Consolidated Statements of Equity.	77
	The Dow Chemical Company and Subsidiaries:
	Consolidated Statements of Income.	78
	Consolidated Statements of Comprehensive Income.	79
	Consolidated Balance Sheets.	80
	Consolidated Statements of Cash Flows.	81
	Consolidated Statements of Equity.	82
	Dow Inc. and Subsidiaries and The Dow Chemical Company and Subsidiaries:
	Notes to the Consolidated Financial Statements.	83
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.	157
Item 9A.	Controls and Procedures.	157
Item 9B.	Other Information.	160
PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	161
Item 11.	Executive Compensation.	161
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	161
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	161
Item 14.	Principal Accounting Fees and Services.	162
PART IV
Item 15.	Exhibits, Financial Statement Schedules.	163
Item 16.	Form 10-K Summary.	166
SIGNATURES		168

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			Dow Inc. and Subsidiaries The Dow Chemical Company and Subsidiaries

This Annual Report on Form 10-K 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"). This Annual Report on Form 10-K reflects the results of Dow and its consolidated subsidiaries, after giving effect to the distribution to DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or "DuPont") of TDCC’s agricultural sciences business (“AgCo”) and specialty products business (“SpecCo”) and the receipt of E. I. du Pont de Nemours and Company and its consolidated subsidiaries' (“Historical DuPont”) ethylene and ethylene copolymers business (other than its ethylene acrylic elastomers business) ("ECP"). The U.S. GAAP consolidated financial results of Dow Inc. and TDCC reflect the distribution of AgCo and SpecCo as discontinued operations for the applicable periods presented as well as the receipt of ECP as a common control transaction from the closing of the merger with Historical DuPont on August 31, 2017. As a result of the parent/subsidiary relationship between Dow Inc. and TDCC, and considering that the financial statements and disclosures of each company are substantially similar, the companies are filing a combined report for this Annual Report on Form 10-K. The information reflected in this 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.

Background

On April 1, 2019, DowDuPont completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC and its consolidated subsidiaries, owning all of the outstanding common shares of TDCC. For filings relating to the period commencing April 1, 2019 and thereafter, TDCC was deemed the predecessor to Dow Inc., and the historical results of TDCC are deemed the historical results of Dow Inc. for periods prior to and including March 31, 2019.

The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and Historical DuPont each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

Forward-looking statements are based on current assumptions and expectations of future events that are subject to risks, uncertainties and other factors that are beyond Dow’s control, which may cause actual results to differ materially from those projected, anticipated or implied in the forward-looking statements and speak only as of the date the statements were made. These factors include, but are not limited to: sales of Dow’s products; Dow’s expenses, future revenues and profitability; the continuing global and regional economic impacts of the coronavirus disease 2019 (“COVID-19”) pandemic and other public health-related risks and events on Dow’s business; capital requirements and need for and availability of financing; unexpected barriers in the development of technology, including with respect to Dow's contemplated capital and operating projects; Dow's ability to realize its commitment to carbon neutrality on the contemplated timeframe; size of the markets for Dow’s products and services and ability to compete in such markets; failure to develop and market new products and optimally manage product life cycles; the rate and degree of market acceptance of Dow’s products; significant litigation and environmental matters and related contingencies and unexpected expenses; the success of competing technologies that are or may become available; the ability to protect Dow’s intellectual property in the United States and abroad; developments related to contemplated restructuring activities and proposed divestitures or acquisitions such as workforce reduction, manufacturing facility and/or asset closure and related exit and disposal activities, and the benefits and costs associated with each of the foregoing; fluctuations in energy and raw material prices; management of process

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safety and product stewardship; changes in relationships with Dow’s significant customers and suppliers; changes in consumer preferences and demand; changes in laws and regulations, political conditions or industry development; global economic and capital markets conditions, such as inflation, market uncertainty, interest and currency exchange rates, and equity and commodity prices; business or supply disruptions; security threats, such as acts of sabotage, terrorism or war; weather events and natural disasters; and disruptions in Dow’s information technology networks and systems.

Risks related to Dow's separation from DowDuPont include, but are not limited to: (i) Dow's failure to achieve in full the anticipated benefits from the separation from DowDuPont; (ii) certain tax risks associated with the separation; (iii) the failure of Dow's pro forma financial information to be a reliable indicator of Dow's future results; (iv) receipt of less favorable terms in the commercial agreements Dow entered into with DuPont de Nemours, Inc. ("DuPont") and Corteva, Inc. (“Corteva”), including restrictions under intellectual property cross-license agreements, than Dow would have received from an unaffiliated third party; and (v) Dow's obligation to indemnify DuPont and/or Corteva for certain liabilities.

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

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			Dow Inc. and Subsidiaries
			The Dow Chemical Company and Subsidiaries
			PART I


ITEM 1. BUSINESS

THE COMPANY

Dow Inc. was incorporated on August 30, 2018, under Delaware law, to serve as a holding company for The Dow Chemical Company and its consolidated subsidiaries ("TDCC" and together with Dow Inc., "Dow" or the "Company"). Dow Inc. operates all of its businesses through TDCC, a wholly owned subsidiary, which was incorporated in 1947 under Delaware law and is the successor to a Michigan corporation, of the same name, organized in 1897. The Company's principal executive offices are located at 2211 H.H. Dow Way, Midland, Michigan 48674.

Available Information

The Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, are available free of charge at www.dow.com/investors, as soon as reasonably practicable after the reports are electronically filed or furnished with the U.S. Securities and Exchange Commission ("SEC"). The SEC maintains a website that contains these reports as well as proxy statements and other information regarding issuers that file electronically. The SEC's website is www.sec.gov. Dow's website and its content are not deemed incorporated by reference into this report.

MERGER AND SEPARATION

The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017 (the "Merger Agreement"). TDCC and E. I. du Pont de Nemours and Company and its consolidated subsidiaries (“Historical DuPont”) each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

The consolidated financial results of Dow for periods prior to April 1, 2019, reflect the distribution of TDCC’s agricultural sciences business (“AgCo”) and specialty products business (“SpecCo”) as discontinued operations for the applicable periods presented as well as reflect the receipt of Historical DuPont’s ethylene and ethylene copolymers businesses (other than its ethylene acrylic elastomers business) (“ECP”) as a common control transaction from the closing of the Merger on August 31, 2017. See Note 3 to the Consolidated Financial Statements and Dow Inc.'s Amendment No. 4 to the Registration Statement on Form 10 filed with the SEC on March 8, 2019, for additional information.

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

ABOUT DOW

Dow combines global breadth; asset integration and scale; focused innovation and materials science expertise; leading business positions; and environmental, social and governance (ESG) leadership to achieve profitable growth and deliver a sustainable future. The Company’s ambition is to become the most innovative, customer centric, inclusive and sustainable materials science company in the world. Dow’s portfolio of plastics, industrial intermediates, coatings and silicones businesses delivers a broad range of differentiated, science-based products and solutions for its customers in high-growth market segments, such as packaging, infrastructure, mobility and consumer applications. Dow operates 104 manufacturing sites in 31 countries and employs approximately 35,700 people.

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BUSINESS SEGMENTS AND PRODUCTS

The Company conducts its worldwide operations through six global businesses which are organized into the following operating segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and Performance Materials & Coatings. Corporate contains the reconciliation between the totals for the operating segments and the Company's totals. The Company did not aggregate any operating segments when determining its reportable segments. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 26 to the Consolidated Financial Statements for additional information concerning the Company’s operating segments,

PACKAGING & SPECIALTY PLASTICS

The Packaging & Specialty Plastics operating segment consists of two highly integrated global businesses: Hydrocarbons & Energy and Packaging and Specialty Plastics. The segment employs the industry’s broadest polyolefin product portfolio, supported by the Company’s proprietary catalyst and manufacturing process technologies. These differentiators, plus collaboration at the customer’s design table, enable the segment to deliver more reliable, durable, higher-performing solutions designed for recyclability and enhanced plastics circularity and sustainability. The segment serves customers, brand owners and ultimately consumers in key markets including food and specialty packaging; industrial and consumer packaging; health and hygiene; caps, closures and pipe applications; consumer durables; mobility and transportation; and infrastructure.

The Company’s unique advantages compared with its competitors include: extensive low-cost feedstock positions around the world; unparalleled scale, global footprint and market reach; world-class manufacturing sites in every geographic region; deep customer and brand owner understanding; portfolio of higher-value functional polymers, such as polyolefin elastomers, semiconductive and jacketing compound solutions and wire and cable insulation; and market-driven application development and technical support.

The segment remains agile by participating in the entire ethylene-to-polyethylene chain integration, enabling the Company to manage market swings with industry-leading feedstock and derivative flexibility, and therefore optimize returns while reducing long-term earnings volatility. The Company’s unrivaled value chain ownership is further strengthened by its Pack Studio locations in every geographic region, which help customers and brand owners deliver faster and more efficient packaging product commercialization through a global network of laboratories, technical experts and testing equipment.

Hydrocarbons & Energy

Hydrocarbons & Energy is a leading global producer of ethylene, a key chemical building block that the Company consumes primarily within the Packaging & Specialty Plastics segment. Ethylene is transferred to downstream derivative businesses at market-based prices, which are generally equivalent to prevailing market prices for large volume purchases. In addition to ethylene, the business is a leading producer of propylene and aromatics products that are used to manufacture materials consumers use every day. The business also produces and procures the power and feedstocks used by the Company’s manufacturing sites.

Packaging and Specialty Plastics

Packaging and Specialty Plastics serves growing, high-value sectors using world-class technology, broad existing product lines, and a rich product pipeline that creates competitive advantages for the entire packaging value chain. The business is a recognized leader in the production, marketing and innovation of polyethylene. The business is also a leader in other ethylene derivatives, such as polyolefin elastomers, ethylene vinyl acetate and ethylene propylene diene monomer ("EPDM") rubber serving mobility and transportation, consumer, wire and cable and construction end-markets. Market growth is expected to be driven by major shifts in population demographics; improving socioeconomic status in emerging geographic regions; consumer and brand owner demand for increased functionality including sustainable offerings through lower-carbon and circular solutions; global efforts to reduce food waste; growth in telecommunications networks; global development of electrical transmission and distribution infrastructure; and renewable energy applications such as wind power and solar (photovoltaic).

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Details on Packaging & Specialty Plastics' 2021 net sales, by business and geographic region, are as follows:

* Europe, Middle East, Africa and India ("EMEAI")

Products

Major applications/market segments and products are listed below by business:

Business

Applications/Market Segments

Major Products

Key Raw Materials

Key Competitors

Hydrocarbons & Energy

Purchaser of feedstocks; production of cost competitive hydrocarbon monomers utilized by Dow's derivative businesses; and energy, principally for use in Dow’s global operations

Ethylene, propylene, benzene, butadiene, octene, aromatics co-products, power, steam, other utilities

Butane, condensate, ethane, naphtha, natural gas, propane

Chevron Phillips Chemical, ExxonMobil, INEOS, LyondellBasell, SABIC, Shell, Sinopec

Packaging and Specialty Plastics

Adhesives; automotive; caps, closures and pipe applications; construction; cosmetics; electrical transmission and distribution; food and supply chain packaging; footwear; health and hygiene; housewares; industrial specialty applications using polyolefin elastomers, ethylene copolymers, and EPDM; irrigation pipe; mobility; photovoltaic encapsulants; sporting goods; telecommunications infrastructure; toys and infant products

Acrylics, bio-based plasticizers, copolymer, elastomers, ethylene copolymer resins, EPDM, ethylene vinyl acetate ("EVA"), methacrylic acid copolymer resins, polyethylene ("PE"), high-density polyethylene ("HDPE"), low-density polyethylene ("LDPE"), linear low-density polyethylene ("LLDPE"), polyolefin plastomers, resin additives and modifiers, semiconductive and jacketing compound solutions and wire and cable insulation

Aliphatic solvent, butene, ethylene, hexene, octene, propylene

Borealis, ExxonMobil, INEOS, Lanxess, LyondellBasell, Nova, SABIC

Joint Ventures:

This segment includes a portion of the Company's share of the results of the following joint ventures:

•EQUATE Petrochemical Company K.S.C.C. (“EQUATE”) - a Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins; owned 42.5 percent by the Company.

•The Kuwait Olefins Company K.S.C.C. (“TKOC”) - a Kuwait-based company that manufactures ethylene and ethylene glycol; owned 42.5 percent by the Company.

•Map Ta Phut Olefins Company Limited (“Map Ta Phut”) - a Thailand-based company that manufactures propylene and ethylene; the Company has an effective ownership of 32.77 percent (of which 20.27 percent is owned directly by the Company and aligned with the Industrial Intermediates & Infrastructure segment and 12.5 percent is owned indirectly through the Company’s equity interest in Siam Polyethylene Company Limited, an entity that is part of The SCG-Dow Group and aligned with the Packaging & Specialty Plastics segment).

•Sadara Chemical Company ("Sadara") - a Saudi Arabian company that manufactures chlorine, ethylene, propylene and aromatics for internal consumption and manufactures and sells polyethylene, ethylene oxide and propylene oxide derivative products, and isocyanates; owned 35 percent by 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.

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This segment also includes the Company's share of the results of the following joint ventures:

•The Kuwait Styrene Company K.S.C.C. - a Kuwait-based company that manufactures styrene monomer; owned 42.5 percent by the Company.

•The SCG-Dow Group - a group of Thailand-based companies (consisting of Siam Polyethylene Company Limited; Siam Polystyrene Company Limited; Siam Styrene Monomer Company Limited; and Siam Synthetic Latex Company Limited) that manufactures polyethylene, polystyrene, styrene, latex and specialty elastomers; owned 50 percent by the Company.

Current and Future Investments

In 2021, the Company completed the addition of a furnace to its ethylene production facility in Alberta, Canada, incrementally expanding capacity by approximately 130,000 metric tons. Dow co-invested in the expansion with a regional customer, evenly sharing project costs and ethylene output, with the additional ethylene to be consumed by existing polyethylene manufacturing assets in the region. Also, the Company completed a new catalyst production facility for key catalysts licensed by Univation Technologies, LLC, a wholly owned subsidiary of the Company.

Additionally, the Company has announced investments over the next several years that are expected to enhance competitiveness. These include:

•Incremental debottleneck projects across its global asset network that will deliver approximately 350 kilotonnes per annum of additional polyethylene, the majority of which will be in the U.S. & Canada.

•Construction of a world-scale polyethylene unit on the U.S. Gulf Coast based on Dow’s proprietary process technologies, to meet consumer-driven demand in specialty packaging, health and hygiene, and industrial and consumer packaging applications.

•Construction of the world's first net-zero carbon emissions (with respect to Scope 1 and 2 carbon dioxide (CO2) emissions, including technology advancements) ethylene and derivatives complex in Alberta, Canada.

The Company's ambition includes becoming the most sustainable materials science company, with a strategy to advance the well-being of humanity by helping lead the transition to a sustainable planet and society. This includes lowering energy and greenhouse gas emissions and further enabling a shift to a circular economy for plastics by focusing on resource efficiency and integrating recycled content and renewable feedstocks into its production processes. As part of that strategy, Dow announced the following in 2021:

•Plans to construct the world's first net-zero carbon emissions (with respect to Scope 1 and 2 carbon dioxide emissions, including technology advancements) ethylene facility and convert the assets at its Fort Saskatchewan site in Alberta, Canada, to create the first net-zero carbon emissions complex with respect to Scope 1 and 2 carbon dioxide emissions. The project would more than triple Dow's ethylene and polyethylene capacity from its Fort Saskatchewan, Alberta site, while retrofitting the site's existing assets to net-zero carbon emissions.

•Dow and Fuenix Ecogy Group expanded upon the companies' initial agreement to scale circular plastics production through advanced recycling with the construction of a second plant in Weert, The Netherlands. The new plant will process 20,000 tonnes of plastic waste into pyrolysis oil feedstocks, which will be used to produce new circular plastic at Dow's Terneuzen site in The Netherlands.

•A partnership with Mura Technology ("Mura") to rapid-scale new advanced recycling solutions. The collaboration will produce circular feedstocks, which are converted into recycled plastics. Mura’s global rollout targets 1 million metric tonnes of recycling capacity by 2025. Dow will be the major off-taker of pyrolysis oil feedstocks made from Mura’s first-of-its-kind plant in Teesside, United Kingdom.

•Finalization of an agreement with Gunvor Petroleum Rotterdam ("Gunvor") to purify pyrolysis oil feedstocks derived from plastic waste. Gunvor began supplying cracker-ready feedstocks to Dow in 2021, which will be used to produce circular plastics for customers.

•Fast-tracking the design, engineering and construction of a market development scale purification unit in Terneuzen, The Netherlands, to provide additional capacity to purify pyrolysis oil feedstocks derived from plastic waste.

•Establishment of a multi-year agreement with New Hope Energy, based in Tyler, Texas, to supply the Company with pyrolysis oil feedstocks derived from plastics recycled in North America. New Hope Energy converts used plastics into pyrolysis oil feedstocks, which Dow will use to produce circular plastics.

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•Dow signed new renewable and cleaner power agreements which are expected to reduce Scope 2 emissions by more than 600,000 metric tons of carbon dioxide equivalent per year.

•Plans to construct a clean hydrogen plant where by-products from core production processes would be converted into hydrogen and carbon dioxide. The carbon dioxide would be captured and stored until alternative technologies develop. Dow will also look for ways to enable usage of the carbon dioxide in its processes rather than storing it. The hydrogen plant is expected to startup in 2026 and would allow Dow's Terneuzen manufacturing site to reduce carbon dioxide emissions by approximately 1.4 million tons per year.

In addition, in 2019, the Company announced the retrofit of one of its Louisiana steam crackers with Dow’s proprietary fluidized catalytic dehydrogenation ("FCDh") technology to produce on-purpose propylene. The FCDh technology retrofit further improves Dow’s ability to continue to source the most advantaged feedstocks, while also producing reliable and cost-efficient on-purpose propylene to supply its integrated derivative units in Louisiana. Dow's FCDh technology reduces capital outlay by up to 40 percent and lowers energy usage and greenhouse gas emissions by up to 20 percent, thereby improving overall sustainability when compared with conventional propane dehydrogenation technologies. The project is expected to begin producing on-purpose propylene in the second half of 2022.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

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

Industrial Solutions

Industrial Solutions provides a broad portfolio of solutions that enable and improve the manufacture of consumer and industrial goods and services. The business’ solutions minimize friction and heat in mechanical processes; manage the oil and water interface; deliver ingredients for maximum effectiveness; facilitate dissolvability; enable product identification; decarbonize oil and gas products; reduce energy and water use in textiles; and provide the foundational building blocks for the development of chemical technologies. The business supports manufacturers across a large variety of end-markets, notably coatings, detergents and cleaners, crop protection, pharmaceuticals, electronics, oil and gas, inks and textiles. The business is a leading producer of purified ethylene oxide, ethylene amines and ethanol amines.

Polyurethanes & Construction Chemicals

Polyurethanes & Construction Chemicals consists of three businesses: Polyurethanes, Chlor-Alkali & Vinyl (“CAV”) and Construction Chemicals. The Polyurethanes business is the world’s largest producer of propylene oxide, propylene glycol and polyether polyols, and a leading producer of aromatic isocyanates and fully formulated polyurethane systems for rigid, semi-rigid and flexible foams, as well as coatings, adhesives, sealants, elastomers and composites that serve energy efficiency, consumer comfort, industrial and enhanced mobility market sectors. The CAV business provides chlorine and caustic soda supply and markets caustic soda, a valuable co-product of the chlor-alkali manufacturing process, and ethylene dichloride and vinyl chloride monomer. The CAV business' assets are predominantly in Western Europe and largely produce materials for internal consumption. The Construction Chemicals business provides cellulose ethers, redispersible latex powders, and acrylic emulsions used as key building blocks for differentiated building and construction materials across many market segments and applications ranging from roofing and flooring to gypsum-, cement-, concrete- and dispersion-based building materials. Both Polyurethanes and Construction Chemicals deliver more sustainable products aligned toward green building markets yielding reduced environmental impacts and lower product intensity compared to traditional offerings.

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Details on Industrial Intermediates & Infrastructures' 2021 net sales, by business and geographic region, are as follows:

Products

Major applications/market segments and products are listed below by business:

Business

Applications/Market Segments

Major Products

Key Raw Materials

Key Competitors

Industrial Solutions

Broad range of products for specialty applications, including pharmaceuticals, agriculture crop protection offerings, aircraft deicing, solvents for coatings, heat transfer fluids for concentrated solar power, construction, solvents for electronics processing, food preservation, fuel markers, industrial and institutional cleaning, infrastructure applications, lubricant additives, paper, transportation and utilities; products for energy markets including exploration, production, transmission, refining, mining and gas processing to optimize supply, improve efficiencies and manage emissions

Butyl glycol ethers, VERSENE™ Chelants, UCAR™ Deicing Fluids, ethanolamines, ethylene oxide ("EO"), ethyleneamines, UCON™ Fluids, DOWANOL™ glycol ethers, DOWTHERM™ Heat Transfer Fluids, higher glycols, isopropanolamines, low-VOC solvents, methoxypolyethylene glycol, methyl isobutyl, polyalkylene glycol, CARBOWAX™ SENTRY™

Polyethylene Glycol, TERGITOL™, TRITON™ and ECOFAST™ Pure Surfactants, demulsifiers, drilling and completion fluids, heat transfer fluids, rheology modifiers, scale inhibitors, shale inhibitors, specialty amine solvents, surfactants, water clarifiers, frothing separating agents

Ethylene, propylene

BASF, Eastman, Hexion, Huntsman, INEOS, LyondellBasell, SABIC, Sasol, Shell

Polyurethanes & Construction Chemicals

Aircraft deicing fluids; alumina, pulp and paper; appliances; automotive; bedding; building and construction; flooring; footwear; heat transfer fluids; hydraulic fluids; infrastructure; mobility; packaging; textiles and transportation; construction; caulks and sealants; cement-based tile adhesives; concrete solutions; elastomeric roof coatings; industrial non-wovens; plasters and renders; roof tiles and siding; sport grounds and tape joint compounds

Aniline, caustic soda, ethylene dichloride ("EDC"), methylene diphenyl diisocyanate (“MDI”), polyether polyols, propylene glycol ("PG"), propylene oxide ("PO"), polyurethane systems, toluene diisocyanate (“TDI”), vinyl chloride monomer ("VCM"), AQUASET™ Acrylic Thermosetting Resins, DOW™ Latex Powder, RHOPLEX™ and PRIMAL™ Acrylic Emulsion Polymers, WALOCEL™ Cellulose Ethers

Aniline, benzene, carbon monoxide, caustic soda, cell effluent, cellulose, chlorine, electric power, ethylene, hydrogen peroxide, propylene, styrene

Arkema, Ashland, BASF, Covestro, Eastman, Huntsman, Wanhua

Joint Ventures

This segment includes a portion of the Company's share of the results of EQUATE, TKOC, Map Ta Phut and Sadara.

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Current and Future Investments

The Company expects to make investments over the next several years to enhance competitiveness in its Polyurethanes & Construction Chemicals and Industrial Solutions businesses. The investments will include alkoxylation capacity expansions and finishing capabilities; investments to support growth in polyurethane systems; and efficiency improvements around the world.

In 2021, the Company completed a debottlenecking project along the U.S. Gulf Coast to increase aniline production by 60,000 tons per year, which will drive higher integrated margins for the portfolio. Also, in the past year, the Company completed key projects aligned to longer-term sustainability goals, including the first industrial-scale production unit aligned to the RENUVA™ Mattress Recycling Program. This project represents a fully circular investment across the value chain highlighting Dow’s materials science solutions to critical challenges facing the industry.

In 2021, the Company expanded polyethylene glycol production with a new facility in St. Charles, Louisiana. This investment supports growth in the pharmaceutical market and increases capacity by 35 metric tons annually. In addition, construction began on a new specialty alkoxylation reactor in Plaquemine, Louisiana. This investment, expected to be completed in the second half of 2022, will add 60 metric tons of annual capacity for the home and personal care market.

In 2021, the Company announced the following:

•Plans to build an integrated MDI distillation and prepolymers facility at its site in Freeport, Texas. This investment supports increasing demand for downstream polyurethane systems products and advances Dow’s leading positions in attractive applications in construction, consumer, and industrial markets that are growing above gross domestic product. The new Freeport MDI facility will replace Dow’s current North America capacity in La Porte, Texas, and will also be capable of supplying an additional 30 percent of product to Dow’s customers. In coordination with the start-up of the new MDI facility expected in 2023, Dow will shut down its polyurethane assets at the La Porte site.

•Plans to increase propylene glycol capacity at its existing joint venture facility in Map Ta Phut, Thailand by 80,000 tons per year – bringing total capacity to 250,000 tons per year. The additional capacity will support customer growth across Asia Pacific and India and is expected to come online in 2024.

•A signed Memorandum of Understanding with the Zhanjiang Economic and Technological Development Zone Administrative Committee (Zhanjiang EDZ) to build the Dow South China Specialties Hub, a multi-year project providing customers local access to Dow’s portfolio of high value products and innovative technologies. The new manufacturing hub would extend Dow’s local reach, further enhancing supply reliability, responsiveness to market needs and customized innovation, and better positions customers for success in markets including mobility, pharmaceuticals, cleaning chemicals, apparel, home and personal care, lubricants and adhesives.

•Dow and Ralph Lauren Corporation released a detailed manual on how to dye cotton more sustainably and more effectively than ever before using ECOFAST™ Pure Sustainable Textile Treatment. Pretreating fabric with ECOFAST™ Pure helps significantly reduce the amount of water, chemicals and energy needed to color cotton, by enabling up to 90 percent less process chemicals, 50 percent less water, 50 percent less dyes and 40 percent less energy without sacrificing color or quality.

•Dow and Orion Chemicals Orgaform together with Eco-mobilier, H&S Anlagentechnik and The Vita Group have inaugurated a pioneering mattress recycling plant as part of the RENUVA™ program. This is a major step forward for the recovery and recycling of polyurethane foam and a significant advancement to close the loop for end-of-life mattresses. At full capacity the plant will process up to 200,000 mattresses per year to address growing mattress waste.

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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.

Coatings & Performance Monomers

Coatings & Performance Monomers consists of two businesses: Coating Materials and Performance Monomers. The Coating Materials business makes critical ingredients and additives that help advance the performance of paints and coatings. The business offers innovative and sustainable products to accelerate paint and coatings performance across diverse market segments, including architectural paints and coatings, as well as industrial coatings applications used in maintenance and protective industries, wood, metal packaging, traffic markings, thermal paper and leather. These products enhance coatings by improving hiding and coverage characteristics, enhancing durability against nature and the elements, lowering or eliminating volatile organic compounds (“VOC”) content, reducing maintenance and improving ease of application. The Performance Monomers business manufactures acrylics-based building blocks needed for the production of coatings, textiles, adhesives and home and personal care products.

Consumer Solutions

Consumer Solutions consists of two businesses: Performance Silicones & Specialty Materials and Silicone Feedstocks & Intermediates. The Performance Silicones & Specialty Materials business delivers an unmatched portfolio of performance-enhancing silicone and specialty materials to meet the diverse needs of customers in fast-growing industries, including building and infrastructure; consumer and electronics; industrial and chemical processing; mobility and transportation; home care; and personal care. It focuses resources on delivering valuable differentiation via market-driven innovations and sustainable solutions, which address lower-carbon footprint and circularity goals while enabling continued growth. The Silicone Feedstocks & Intermediates business focuses on maximizing productivity and optimizing margins by leveraging Dow’s scale and global reach. It is charged with producing silicon metal, siloxanes and intermediates, which are key materials to manufacture differentiated downstream silicone products.

Details on Performance Materials & Coatings' 2021 net sales, by business and geographic region, are as follows:

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Products

Major applications/market segments and products are listed below by business:

Business

Applications/Market Segments

Major Products

Key Raw Materials

Key Competitors

Coatings & Performance Monomers

Acrylic binders for architectural paints and coatings, industrial coatings and paper; adhesives; dispersants; impact modifiers; inks and paints; opacifiers and surfactants for both architectural and industrial applications; plastics additives; processing aids; protective and functional coatings; rheology modifiers

ACOUSTICRYL™ Liquid-Applied Sound Damping Technology; acrylates; ACRYSOL™ Rheology Modifiers; AVANSE™ Acrylic Binders; EVOQUE™ Pre-Composite Polymer; foam cell promoters; FORMASHIELD™ Acrylic Binder; high-quality impact modifiers; MAINCOTE™ Acrylic Epoxy Hybrid; methacrylates; processing aids; RHOPLEX™ Acrylic Resin; TAMOL™ Dispersants; FASTRACK™ Road Marking Resins; vinyl acetate monomers; weatherable acrylic capstock compounds for thermoplastic and thermosetting materials

Acetic acid, acetone, acrylic acid, butyl acrylate, methyl methacrylate, propylene, styrene

Arkema, BASF, Celanese, Evonik, LyondellBasell, Wacker Chemie

Consumer Solutions

Personal care and home care; mobility and transportation; building and infrastructure; consumer and electronics; industrial and chemical processing

Adhesives and sealants; antifoams and surfactants; coatings and controlled release; coupling agents and crosslinkers; fluids, emulsions and dispersions; formulating and processing aids; granulation and binders; oils; polymers and emollients; opacifiers; reagents; resins, gels and powders; rheology modifiers; rubber; solubility enhancers; aerospace composites; surfactants and solvents; encapsulants for solar photovoltaic applications; SILASTIC™ Silicone Elastomers; DOWSIL™ Silicone Products; SYL-OFF™ Silicone Release Coatings; AMPLIFY™ Si PE 1000 Polymer System; bio-based, readily biodegradable SunSpheres™ BIO SPF Booster; ACUSOL™ PRIME 1 Polymer

Hydrochloric acid, methanol, platinum, silica, silicon metal

Elkem, Momentive, Shin-Etsu, Wacker Chemie

Current and Future Investments

The Company continues to make incremental investments in lower-capital, higher-return projects in the silicones franchise to further enhance competitiveness. The investments aim to expand manufacturing capacity of silicone polymers and high-performance sealants among other high-value materials.

In 2021, the Company announced several key growth capital projects to increase capacity of performance silicones and specialty materials. These projects have either come online in 2021 or are expected to start up over the next several years. These include:

•Silicone elastomers and thermally conductive materials meeting growing demand for vehicles, including autonomous and electric vehicles, hybrids and internal combustion engines, that are lighter, safer and have a lower-carbon footprint;

•Silicone polymers and sealants supporting greater design flexibility and enabling safe, sustainable, durable building and infrastructure;

•Silicone engineered materials and pressure sensitive adhesives improving reliability and efficiency in consumer and electronics end-markets; and

•Cationic hydroxyethylcellulose ("CatHEC") polymers and polyethylene glycols ("PEGs") addressing a variety of home and personal care applications.

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.

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RAW MATERIALS

The Company operates in an integrated manufacturing environment. Basic raw materials are processed through many stages to produce a number of products that are sold as finished goods at various points in those processes. The major raw material stream that feeds the production of the Company's finished goods is hydrocarbon-based raw materials. The Company purchases hydrocarbon raw materials including ethane, propane, butane, naphtha and condensate as feedstocks. These raw materials are used in the production of both saleable products and energy. The Company also purchases and sells certain monomers, primarily ethylene and propylene, to balance internal production and internal consumption. The Company purchases natural gas, primarily to generate electricity, and purchases electric power to supplement internal generation. In addition, the Company produces a portion of its electricity needs in Louisiana and Texas; Alberta, Canada; The Netherlands; and Germany.

The Company's primary source of these raw materials are natural gas liquids ("NGLs"), which are derived from natural gas and crude oil production, and naphtha, which is produced during the processing and refining of crude oil. Given recent advancements in shale gas, shale oil and conventional drilling techniques, the Company expects these raw materials to be in abundant supply. The Company's suppliers of these raw materials include regional, international and national oil and gas companies.

The Company purchases raw materials on both short- and long-term contracts. The Company had adequate supplies of raw materials in 2021 and expects to continue to have adequate supplies of raw materials in 2022.

INDUSTRY SEGMENTS AND GEOGRAPHIC REGION RESULTS

See Note 26 to the Consolidated Financial Statements for information regarding net sales, pro forma net sales, Operating EBIT, pro forma Operating EBIT and total assets by segment, as well as net sales and long-lived assets by geographic region.

SIGNIFICANT CUSTOMERS AND PRODUCTS

All products and services are marketed primarily through the Company’s sales force, although in some instances more emphasis is placed on sales through distributors. In 2021, no significant portion of the Company's sales was dependent upon a single customer.

PATENTS, LICENSES AND TRADEMARKS

The Company continually applies for and obtains U.S. and foreign patents and has a substantial number of pending patent applications throughout the world. At December 31, 2021, the Company owned approximately 3,600 active U.S. patents and 21,300 active foreign patents as follows:


Remaining Life of Patents Owned at Dec 31, 2021	United States	Rest of World
Within 5 years	700	3,800
6 to 10 years	1,200	7,400
11 to 15 years	1,500	9,500
16 to 20 years	200	600
Total	3,600	21,300

The Company’s primary purpose in obtaining patents is to protect the results of its research for use in operations and licensing. The Company is party to a substantial number of patent licenses, including intellectual property cross-license agreements and other technology agreements, and also has a substantial number of trademarks and trademark registrations in the United States and in other countries, including the “Dow in Diamond” trademark. Although the Company considers that its patents, licenses and trademarks in the aggregate constitute a valuable asset, it does not regard its business as being materially dependent on any single or group of related patents, licenses or trademarks.

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PRINCIPAL PARTLY OWNED COMPANIES

The Company’s principal nonconsolidated affiliates at December 31, 2021, including direct and indirect ownership interest for each, are listed below:


Principal Nonconsolidated Affiliate	Country	Ownership Interest		Business Description
EQUATE Petrochemical Company K.S.C.C.	Kuwait	42.50	%	Manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins



The Kuwait Olefins Company K.S.C.C.	Kuwait	42.50	%	Manufactures ethylene and ethylene glycol
The Kuwait Styrene Company K.S.C.C.	Kuwait	42.50	%	Manufactures styrene monomer
Map Ta Phut Olefins Company Limited 1	Thailand	32.77	%	Manufactures propylene and ethylene
Sadara Chemical Company 2	Saudi Arabia	35.00	%	Manufactures chlorine, ethylene, propylene and aromatics for internal consumption and manufactures and sells polyethylene, ethylene oxide and propylene oxide derivative products, and isocyanates
The SCG-Dow Group:
Siam Polyethylene Company Limited	Thailand	50.00	%	Manufactures polyethylene
Siam Polystyrene Company Limited	Thailand	50.00	%	Manufactures polystyrene
Siam Styrene Monomer Company Limited	Thailand	50.00	%	Manufactures styrene
Siam Synthetic Latex Company Limited	Thailand	50.00	%	Manufactures latex and specialty elastomers

1.The Company's effective ownership of Map Ta Phut is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited.

2.The Company is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company's established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. In March 2021, Dow and the Saudi Arabian Oil Company agreed to transition the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 and is being implemented over the next five years.

See Note 12 to the Consolidated Financial Statements for additional information regarding nonconsolidated affiliates.

PROTECTION OF THE ENVIRONMENT

The world is at a critical juncture and needs environmental leadership from all sectors. As a leading materials science company, Dow believes it has the responsibility and opportunity to take action and lead the industry in areas that Dow's science and expertise can make a difference. For that reason, Dow has integrated sustainability across its businesses and is collaborating across the globe to make inroads in the transition to a sustainable economy and society. The Company has identified three focus areas where it believes Dow is making a difference to drive industry-wide change:

•Climate Protection - As both a major user of energy and producer of technologies that are essential to a low-carbon future, the Company believes it has a responsibility to act. Dow has set an ambitious target to become carbon neutral by 2050 (Scopes 1+2+3, as defined by the Greenhouse Gas Protocol, plus product benefits) while helping its customers reduce their greenhouse gas emissions by innovating lower-carbon products.

•Circular Economy - As one of the world's largest producers of plastic, Dow is taking a leading role in supporting a more circular economy and ending plastic waste. Dow's "stop the waste" goal is a commitment to invest and/or collaborate in key technologies and infrastructure to significantly increase global recycling. Dow's "close the loop" goal is a commitment to help customers redesign and promote reusable or recyclable packaging applications.

•Safer Materials - As a world-leading materials science company, Dow plays a pivotal role in innovating materials that bring social and environmental value alongside business value. Dow is committed to innovating and bringing safer materials to the market by continuously evaluating and improving how the Company measures, designs, manufactures, reports, and acts on the impact of its products. Dow envisions a future where every material it brings to market is sustainable for people and the planet. To that end, Dow is innovating the sustainable materials of tomorrow by leading candid conversations about product safety and committing to the advancement of open and transparent chemistry with Dow's value chain partners, customers and the public.

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To accelerate the Company's sustainability agenda, Dow announced new, multi-decade targets in 2020 to put the Company on a path to achieve carbon neutrality and eliminate plastic waste. These new targets align to and build upon Dow's 2025 Sustainability Goals – 10-year commitments aimed at magnifying the Company’s positive impact through collaboration with like-minded partners. Targets include reducing the Company's net annual greenhouse gas emissions by an additional 5 million metric tons by 2030, compared with its 2020 baseline, a reduction of approximately 15 percent. This target follows the Company's reduction in greenhouse gas emissions of 15 percent from its 2005 baseline, which was achieved in 2020. The Company also intends to enable 1 million metric tons of plastic to be collected, reused or recycled through direct actions and partnerships by 2030. Dow will also work with customers, brand owners and the value chain to help redesign and promote reusable and recyclable packaging applications to enable 100 percent of Dow products sold into packaging applications to be reusable or recyclable by 2035. The Company's progress in achieving these targets is reviewed regularly by management and with the Environment, Health, Safety & Technology Committee of the Board.

Additional discussion of matters pertaining to the environment is included in Part I, Item 1A. Risk Factors; Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations; and Notes 1 and 16 to the Consolidated Financial Statements. In addition, detailed information on the Company's performance regarding environmental matters and goals is accessible through the Science & Sustainability webpage at www.dow.com/sustainability. Dow's website and its content are not deemed incorporated by reference into this report.

HUMAN CAPITAL

Dow’s ambition – to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world - starts with people. Dow employees create innovative and sustainable materials science solutions to advance the world. Every answer starts with asking the right questions. This is why the diverse, dedicated Dow team collaborates with customers and other stakeholders to find solutions to the world's toughest challenges. The Company's values of Respect for People, Integrity and Protecting Our Planet are fundamental beliefs that are ingrained in each action taken, can never be compromised and are the foundation of the Company's Code of Conduct.

The Company is dedicated to employee health and safety and is invested in fostering a culture of inclusion and continuous learning while supporting its employees through its Total Rewards plans and programs to ensure all Dow employees are respected, valued and encouraged to make their fullest contribution.

Safety, Employee Health and Well-Being

A commitment to safety and employee health is ingrained in Dow’s culture and central to how the Dow team works. Dow uses a comprehensive, integrated operating discipline management system that includes policies, requirements, best practices and procedures associated with health and safety. In 2021, the Company achieved an Occupational Safety and Health Administration ("OSHA") Total Recordable Injury and Illness Rate of 0.14, based upon the number of incidents per 200,000 work hours for employees and contractors globally. This measure, along with a consistent set of globally applied, as well as locally defined, leading indicators of safety performance, are cornerstones of Dow's worker protection program. The Company maintains a robust, globally tracked near-miss program for situations that did not result in an injury, but could have been high consequence had circumstances been slightly different. This data is reviewed regularly by management and the Environment, Health, Safety & Technology Committee of the Dow Inc. Board of Directors ("Board"), is visible to all employees and is built into digital dashboards that include actual injury information for every Dow location around the world.

As part of the Company’s total worker health strategy, employees have access to occupational health services at no cost through on-site, Company-managed clinics at its manufacturing locations or an offsite provider overseen by Dow Occupational Health. In addition to access for occupational health needs, the Company also has a comprehensive well-being strategy, which is framed across four dimensions – physical, mental, community and financial well-being – for an approach that is holistic, global, employee centered and outcome-driven. Key ambitions across the four dimensions focus on elements such as workplace stress, psychological safety, resiliency, workload, healthy eating and activities, and social community and inclusion opportunities.

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Dow maintains active Crisis Management Teams at the corporate level and in each region where the Company operates to ensure appropriate plans are in place in the event of natural disasters or other emergencies, and currently in response to the coronavirus disease 2019 ("COVID-19") pandemic. For additional information on the Company’s response to the COVID-19 pandemic, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Inclusion, Diversity & Equity

At Dow, inclusion, diversity and equity (“ID&E”) is a business imperative evidenced by inclusion serving as a core pillar of the Company's ambition statement. A strategic and intentional focus on ID&E not only enhances the employee experience and satisfaction, but it also supports innovation, customer experience and understanding of the communities the Company serves. In 2021, Dow ranked #19 in the DiversityInc Top 50 Companies for Diversity and for the first time was named to the Fortune 100 Best Companies to Work For® list. These are significant accomplishments that represent only two of the many awards the Company received related to its efforts in ID&E.

Dow's strategic ID&E efforts are directed by its Chief Inclusion Officer and Office of Inclusion, which supports implementation throughout Dow’s businesses, functions and regions. Three Inclusion Councils drive the ID&E strategy from the top of the Company down and across the enterprise:

•The President’s Inclusion Council defines and supports Dow's ID&E strategy from the top.

•A Senior Leaders’ Inclusion Council influences change through senior and mid-level business, geographic and functional leaders.

•A Joint Inclusion Council collaborates to drive maximum employee engagement through Employee Resource Group (“ERG”) leadership.

Dow’s 10 ERGs are representative of the Company’s diverse workforce and help foster an inclusive workplace. Dow’s ERGs are organized around historically underrepresented groups including women, people of color, LGBTQ+ individuals, people with disabilities and veterans, as well as groups both for professionals who are new to the Company and those who are 50 years or older. Senior leaders serve as executive sponsors for each ERG. In 2021, 52 percent of Dow’s workforce and 97 percent of Dow people leaders participated in at least one ERG. Also in 2021, Dow implemented a new Paid Time Off Policy, which provides employees time off to volunteer and engage in ERG activities.

Inclusion and diversity metrics, including ERG participation, global representation of women and U.S. ethnic minority representation in the United States, are published internally on a quarterly basis, are embedded in the same scorecard where Dow’s financial and safety results are measured and are directly connected to leaders’ annual performance and compensation. This data is reviewed regularly by management and with the Compensation and Leadership Development Committee of the Board.

Global pay disparity studies have been conducted at Dow for over 20 years to assess fair treatment between genders and between U.S. ethnic minorities and non-minorities and to ensure Dow’s pay practices are being implemented as intended. As part of Dow’s ID&E efforts, the Company will continue to conduct annual pay gap studies and actively engage with an external partner to further develop and continue to apply best practices.

Total Rewards

To achieve Dow’s ambition to be the most innovative, customer-centric, inclusive and sustainable materials science company in the world, the Company invests in its people, who are at the heart of the Company, through its Total Rewards plans and programs. The Total Rewards plans and programs are structured to attract, retain and motivate Dow’s employees. Dow’s Total Rewards are designed to support all aspects of its employees – their compensation, future, health, life and career. The Company is committed to aligning its strategy and culture with the needs of its employees and optimizing the investment Dow makes in Total Rewards.

As a global company with a diverse team, Dow aims to ensure employees have access to resources that allow them to meet their unique needs. That is why Dow has established three guiding principles that define its Total Rewards strategy: 1) ensuring programs are market competitive, while leading peer companies in equitable and inclusive offerings; 2) providing employees with offerings that align with their preferences; and 3) offering programs that promote fulfilling career and life experiences. Dow adapts its programs for geography-specific requirements, as well as cultural standards and expectations.

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Employee Engagement, Learning and Development

Throughout an employee’s career, the Company supports development through a blend of learning approaches including in-person and virtual trainings, digital learning platforms, on-the-job training and a series of leadership development programs. Annually, all employees have the opportunity to provide feedback on employee experience and offer insights into how to improve Dow’s working culture through a global employee opinion survey. A key component of the survey is an opportunity for employees to provide feedback on the effectiveness of their direct leader. In 2021, 70 percent of employees responded to the annual survey. The feedback received through this annual survey and additional quarterly checkpoint surveys is used to drive actions to improve the overall Dow experience for employees across the Company, as well as to support continuous improvement in leader effectiveness.

At December 31, 2021, the Company permanently employed approximately 35,700 people on a full-time basis.


*			U.S. Minority includes employees who self-identify as Hispanic or Latino, Black or African American, Asian, American Indian or Alaskan Native, Native Hawaiian or other Pacific Islander, or two or more races. Employees who self-identify as White are considered U.S. Non-Minority.

Additional information regarding Dow’s human capital measures can be found in the Company's annual Environmental, Social and Governance ("ESG") Report, as well as Dow's U.S. Equal Employment Opportunity Report (EEO-1), accessible through the Inclusion and Diversity webpage at www.dow.com/diversity. Dow’s website and its content are not deemed incorporated by reference into this report.

OTHER ACTIVITIES

The Company engages in property and casualty insurance and reinsurance primarily through its Liana Limited subsidiaries.

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EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below is information related to the Company's executive officers as of February 4, 2022:


Name, Age	Present Position with Registrant	Year Elected as Executive Officer of Dow Inc.	Other Business Experience since January 1, 2017
Jack Broodo, 63	President, Feedstocks & Energy	2020	Dow Inc.: President, Feedstocks & Energy since February 2020; Business President, Feedstocks & Energy from April 2019 to February 2020. TDCC: President, Feedstocks & Energy since February 2020; Business President, Feedstocks & Energy from February 2016 to February 2020.
Karen S. Carter, 51	Chief Human Resources Officer and Chief Inclusion Officer	2019	Dow Inc.: Chief Human Resources Officer and Chief Inclusion Officer since April 2019. TDCC: Chief Human Resources Officer since October 2018; Chief Inclusion Officer since July 2017; North America Commercial Vice President, Dow Packaging and Specialty Plastics from February 2016 to July 2017.
Diego Donoso, 54	President, Packaging & Specialty Plastics	2020	Dow Inc.: President, Packaging & Specialty Plastics since February 2020; Business President, Packaging & Specialty Plastics from April 2019 to February 2020. TDCC: President, Packaging & Specialty Plastics since February 2020; Business President, Packaging & Specialty Plastics from August 2012 to February 2020.
Ronald C. Edmonds, 64	Controller and Vice President of Controllers and Tax	2019	Dow Inc.: Controller and Vice President of Controllers and Tax since April 2019. TDCC: Controller and Vice President since November 2009; Vice President of Tax since January 2016.
Jim Fitterling, 60	Chairman and Chief Executive Officer	2018	Dow Inc.: Chairman since April 2020; Chief Executive Officer since August 2018. TDCC: Chairman since April 2020; Chief Executive Officer since July 2018; President and Chief Operating Officer from February 2016 to July 2018.
Mauro Gregorio, 59	President, Performance Materials & Coatings	2020	Dow Inc.: President, Performance Materials & Coatings since February 2020; Business President, Performance Materials & Coatings from April 2019 to February 2020. TDCC: President, Performance Materials & Coatings since February 2020; Business President, Consumer Solutions from January 2016 to February 2020.
Jane M. Palmieri, 52	President, Industrial Intermediates & Infrastructure	2020	Dow Inc.: President, Industrial Intermediates & Infrastructure since February 2020; Business President, Polyurethanes and Chlor-Alkali & Vinyl from April 2019 to February 2020. TDCC: President, Industrial Intermediates & Infrastructure since February 2020; Business President, Polyurethanes and Chlor-Alkali & Vinyl from April 2018 to February 2020; Business President, Polyurethanes and Chlor-Alkali from October 2016 to April 2018; Business President, Building and Construction from June 2013 to April 2018.
John M. Sampson, 61	Senior Vice President, Operations, Manufacturing & Engineering	2021	Dow Inc.: Senior Vice President, Operations, Manufacturing & Engineering since October 2020. Olin Corporation: Executive Vice President, Business Operations from April 2019 to September 2020; Vice President, Business Operations from October 2015 to April 2019.
A. N. Sreeram, 54	Senior Vice President of Research & Development and Chief Technology Officer	2019	Dow Inc.: Senior Vice President of Research & Development and Chief Technology Officer since April 2019. TDCC: Chief Technology Officer since October 2015; Senior Vice President of Research & Development since August 2013.
Howard Ungerleider, 53	President and Chief Financial Officer	2018	Dow Inc.: President and Chief Financial Officer since August 2018. TDCC: Chief Financial Officer since October 2014; President since July 2018; Vice Chairman from October 2015 to July 2018.
Amy E. Wilson, 51	General Counsel and Corporate Secretary	2018	Dow Inc.: General Counsel and Corporate Secretary since April 2019; Secretary from August 2018 to April 2019. TDCC: General Counsel since October 2018; Corporate Secretary since February 2015; Associate General Counsel from April 2017 to September 2018; Assistant General Counsel from February 2015 to April 2017; Director of the Office of the Corporate Secretary from August 2013 to October 2018.

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ITEM 1A. RISK FACTORS

The factors described below represent the Company's principal risks.

CLIMATE CHANGE - RELATED RISKS

Climate Change: Climate change-related risks and uncertainties, legal or regulatory responses to climate change and failure to meet the Company’s climate change commitments could negatively impact the Company’s results of operations, financial condition and/or reputation.

The Company is subject to increasing climate-related risks and uncertainties, many of which are outside of its control. Climate change may result in more frequent severe weather events, potential changes in precipitation patterns and extreme variability in weather patterns, which can disrupt the operations of the Company as well as those of its customers, partners and vendors.

The transition to lower greenhouse gas emissions technology, the effects of carbon pricing and changes in public sentiment, regulations, taxes, public mandates or requirements and increases in climate-related lawsuits, insurance premiums and implementation of more robust disaster recovery and business continuity plans could increase costs to maintain or resume the Company’s operations or achieve its sustainability commitments in the expected timeframes, which would negatively impact the Company’s results of operations.

In 2020, the Company announced commitments to reduce its net annual greenhouse gas emissions by an additional 5 million metric tons, or 15 percent compared with its 2020 baseline, by 2030 (the 2020 baseline represents a 15 percent reduction in greenhouse gas emissions since 2005) and its intention to be carbon neutral by 2050 (Scopes 1+2+3, as defined by the Greenhouse Gas Protocol, plus product benefits). Execution and achievement of these commitments within the currently projected costs and expected timeframes are also subject to risks and uncertainties which include, but are not limited to: advancement, availability, development and affordability of technology necessary to achieve these commitments; unforeseen design, operational and technological difficulties; availability of necessary materials and components; adapting products to customer preferences and customer acceptance of sustainable supply chain solutions; changes in public sentiment and political leadership; the Company’s ability to comply with changing regulations, taxes, mandates or requirements related to greenhouse gas emissions or other climate-related matters; and the pace of regional and global recovery from the pandemic caused by coronavirus disease 2019 ("COVID-19"). Given the focus on sustainable investing, if the Company fails to meet its climate change commitments within the committed timeframe and adopt policies and practices to enhance sustainability, the Company’s reputation and its customer and other stakeholder relationships could be negatively impacted and it may be more difficult for the Company to compete effectively or gain access to financing on acceptable terms when needed, which would have an adverse effect on the Company’s results of operations.

COVID-19 PANDEMIC - RELATED RISKS

Public Health Crisis: A public health crisis or global outbreak of disease, including the pandemic caused by COVID-19 has had, and could continue to have, a negative effect on the Company's manufacturing operations, supply chain and workforce, creating business disruptions that could continue to have a substantial negative impact on the Company’s results of operations, financial condition and cash flows.

The pandemic caused by COVID-19 has impacted all geographic regions where Dow products are produced and sold. The global, regional and local spread of COVID-19, including existing and new variants, has resulted in significant global mitigation measures, including government-directed quarantines, social distancing and shelter-in-place mandates, travel restrictions and/or bans, mask and vaccination mandates, restrictions on large gatherings and restricted access to certain corporate facilities and manufacturing sites. Uncertainty with respect to the severity and duration of the COVID-19 pandemic, coupled with oil price fluctuations due in part to the global spread of COVID-19 and the continued increase in global cases, has contributed to the volatility of financial markets. While the severity and duration of the COVID-19 pandemic in key geographic regions and end-markets cannot be reasonably estimated at this time, impacts to the Company include, but are not limited to: fluctuations in the Company’s stock price due to market volatility; a decrease in demand for certain Company products; price declines; reduced profitability; supply chain disruptions impeding the Company’s ability to ship and/or receive product; temporary idling or permanent closure of select manufacturing facilities and/or manufacturing assets; asset impairment charges; interruptions or limitations to manufacturing operations imposed by local, state or federal governments; reduced market liquidity and increased borrowing costs; workforce absenteeism and distraction; labor shortages; customer credit concerns; increased cyber security risk and data accessibility disruptions due to remote working arrangements; workforce reductions and fluctuations in foreign currency markets. Additional risks may include, but are not limited to: shortages of key raw materials; potential impairment in the carrying value of goodwill; additional asset impairment charges; increased obligations related to the Company’s pension and other

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postretirement benefit plans; and tax valuation allowances. Business disruptions and market volatility resulting from the COVID-19 pandemic have had and could have a substantial negative impact on the Company’s results of operations, financial condition and cash flows. The adverse impact of the COVID-19 pandemic on the Company may also have the effect of heightening many of the other risks described in this "Risk Factors" section.

MACROECONOMIC RISKS

Financial Commitments and Credit Markets: Market conditions could reduce the Company's flexibility to respond to changing business conditions or fund capital needs.

Adverse economic conditions could reduce the Company’s flexibility to respond to changing business and economic conditions or to fund capital expenditures or working capital needs. The economic environment could result in a contraction in the availability of credit in the marketplace and reduce sources of liquidity for the Company. This could result in higher borrowing costs.

Global Economic Considerations: The Company operates in a global, competitive environment which gives rise to operating and market risk exposure.

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

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

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

Pension and Other Postretirement Benefits: Increased obligations and expenses related to the Company's defined benefit pension plans and other postretirement benefit plans could negatively impact its financial condition and results of operations.

The Company has defined benefit pension plans and other postretirement benefit plans (the “plans”) in the United States and a number of other countries. The assets of the Company's funded plans are primarily invested in fixed income securities, equity securities of U.S. and foreign issuers and alternative investments, including investments in real estate, private equity and absolute return strategies. Changes in the market value of plan assets, investment returns, discount rates, mortality rates, regulations and the rate of increase in compensation levels may affect the funded status of the Company's plans and could cause volatility in the net periodic benefit cost, future funding requirements of the plans and the funded status of the plans. A significant increase in the Company's obligations or future funding requirements could have a negative impact on the Company's results of operations and cash flows for a particular period and on the Company's financial condition.

Supply/Demand Balance: Earnings generated by the Company's products vary based in part on the balance of supply relative to demand within the industry.

The balance of supply relative to demand within the industry may be significantly impacted by the addition of new capacity, especially for basic commodities where capacity is generally added in large increments as world-scale facilities are built. This may disrupt industry balances and result in downward pressure on prices due to the increase in supply, which could negatively impact the Company’s results of operations.

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LEGAL AND REGULATORY RISKS

Environmental Compliance: The costs of complying with evolving regulatory requirements could negatively impact the Company's financial results. Actual or alleged violations of environmental laws or permit requirements could result in restrictions or prohibitions on plant operations, substantial civil or criminal sanctions, as well as the assessment of strict liability and/or joint and several liability.

The Company is subject to extensive federal, state, local and foreign laws, regulations, rules and ordinances relating to pollution, protection of the environment, climate change, greenhouse gas emissions, and the generation, storage, handling, transportation, treatment, disposal and remediation of hazardous substances and waste materials. In addition, the Company may have costs related to environmental remediation and restoration obligations associated with past and current sites as well as related to its past or current waste disposal practices or other hazardous materials handling. Although management will estimate and accrue liabilities for these obligations, it is reasonably possible that the Company’s ultimate cost with respect to these matters could be significantly higher, which could negatively impact the Company’s financial condition and results of operations. Costs and capital expenditures relating to environmental, health or safety matters are subject to evolving regulatory requirements and depend on the timing of the promulgation and enforcement of specific standards which impose the requirements. Moreover, changes in environmental regulations could inhibit or interrupt the Company’s operations, or require modifications to its facilities. Accordingly, environmental, health or safety regulatory matters could result in significant unanticipated costs or liabilities. For additional information, see Part II, Item 7. Other Matters, Environmental Matters in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Health and Safety: Increased concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on the environment has resulted in more restrictive regulations and could lead to new regulations.

Concerns regarding the safe use of chemicals and plastics in commerce and their potential impact on health and the environment reflect a growing trend in societal demands for increasing levels of product safety and environmental protection. These concerns could manifest themselves in stockholder proposals, preferred purchasing, delays or failures in obtaining or retaining regulatory approvals, delayed product launches, lack of market acceptance and continued pressure for more stringent regulatory intervention and litigation. These concerns could also influence public perceptions, the viability or continued sales of certain of the Company's products, its reputation and the cost to comply with regulations. In addition, terrorist attacks and natural disasters have increased concerns about the security and safety of chemical production and distribution. These concerns could have a negative impact on the Company's results of operations.

Local, state, federal and foreign governments continue to propose new regulations related to the security of chemical plant locations and the transportation of hazardous chemicals, which could result in higher operating costs.

Litigation: The Company is party to a number of claims and lawsuits arising out of the normal course of business with respect to product liability, patent infringement, employment matters, governmental tax and regulation disputes, contract and commercial litigation, and other actions.

Certain of the claims and lawsuits facing the Company purport to be class actions and seek damages in very large amounts. All such claims are contested. With the exception of the possible effect of the asbestos-related liability of Union Carbide Corporation (“Union Carbide”) and Chapter 11 related matters of Dow Silicones Corporation ("Dow Silicones") as described below, it is the opinion of the Company’s management that the possibility is remote that the aggregate of all such claims and lawsuits will have a material adverse impact on the Company’s consolidated financial statements.

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. At December 31, 2021, Union Carbide's total asbestos-related liability, including future defense and processing costs, was $1,016 million ($1,098 million at December 31, 2020).

In 1995, Dow Silicones, a former 50:50 joint venture, voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in order to resolve breast implant liabilities and related matters (the “Chapter 11 Proceeding”). Dow Silicones emerged from the Chapter 11 Proceeding on June 1, 2004, 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. Dow Silicones’ liability for breast implant and other product liability claims was $130 million at December 31, 2021 ($160 million at December 31, 2020). See Note 16 to the Consolidated Financial Statements for additional information on litigation matters.

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Plastic Waste: Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products, a lack of plastic waste collection and recycling infrastructure, or new or more restrictive regulations and rules related to plastic waste could reduce demand for the Company’s plastic products and could negatively impact the Company’s financial results.

Local, state, federal and foreign governments have been increasingly proposing regulations to address the global plastic waste challenge, including, but not limited to, extended producer responsibility fees, a Global Plastics Treaty and bans on non-essential items. These regulations on plastic waste drive demand toward plastic solutions that are recyclable, reusable, made with recycled content and/or renewable raw materials. In addition, without proper waste collection and recycling infrastructure at scale, plastics have faced increased public scrutiny due to negative coverage of plastic waste in the environment, including the world’s oceans and rivers. As Dow is one of the world’s largest producers of plastics, increased pressure on the use of plastics, despite positive carbon benefits and essential functions such as food preservation and medical uses, could cause reduced demand for the Company’s polyethylene products which could negatively impact the Company’s financial condition, results of operations and cash flows.

OPERATIONAL AND STRATEGIC RISKS

Company Strategy: Implementing certain elements of the Company's strategy could negatively impact its financial results.

The Company currently has manufacturing operations, sales and marketing activities, and joint ventures in emerging geographic regions. Activities in these geographic regions are accompanied by uncertainty and risks including: navigating different government regulatory environments; relationships with new, local partners; project funding commitments and guarantees; expropriation, military actions, war, terrorism and political instability; sabotage; uninsurable risks; suppliers not performing as expected resulting in increased risk of extended project timelines; and determining raw material supply and other details regarding product movement. In addition, disruptions to supply chains, distribution chains and/or public and private infrastructure, including those caused by industry capacity constraints, material availability, global logistics delays and constraints arising from, among other things, the transportation capacity of ocean shipping containers and labor availability constraints, could materially and adversely impact our business operations. If the manufacturing operations, supply chains, sales and marketing activities, and/or implementation of these projects is not successful, it could adversely affect the Company’s financial condition, cash flows and results of operations.

Cyber Threat: The risk of loss of the Company’s trade secrets, know-how or other sensitive business information or disruption of operations could negatively impact the Company’s financial results.

Cyber-attacks or security breaches could compromise confidential, business critical information, cause a disruption in the Company’s operations or harm the Company's reputation. The Company has attractive information assets, including trade secrets, know-how and other sensitive, business critical information. While the Company has a comprehensive cyber-security program that is continuously reviewed, maintained and upgraded, a significant cyber-attack could result in the loss of critical business information and/or could negatively impact operations, which could have a negative impact on the Company’s financial results.

Goodwill: An impairment of goodwill could negatively impact the Company’s financial results.

At least annually, the Company assesses goodwill for impairment. If testing indicates that goodwill is impaired, the carrying value is written down based on fair value with a charge against earnings. Where the Company utilizes a discounted cash flow methodology in determining fair value, continued weak demand for a specific product line or business could result in an impairment. Accordingly, any determination requiring the write-off of a significant portion of goodwill could negatively impact the Company's results of operations. See Note 13 to the Consolidated Financial Statements for additional information regarding the Company's goodwill impairment testing.

Operational Event: A significant operational event could negatively impact the Company's results of operations.

As a diversified chemical manufacturing company, the Company's operations, the transportation of products, cyber-attacks, pandemics and other public health-related events or severe weather conditions and other natural phenomena (such as freezing, drought, hurricanes, earthquakes, tsunamis, floods, etc.) could result in an unplanned event that could be significant in scale and could negatively impact operations, neighbors or the public at large, which could have a negative impact on the Company's results of operations.

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Major hurricanes and other weather-related events have caused significant disruption in the Company's operations on the U.S. Gulf Coast, logistics across the region, and the supply of certain raw materials, which had an adverse impact on volume and cost for some of its products. Due to the Company's substantial presence on the U.S. Gulf Coast, similar severe weather conditions or other natural phenomena in the future could negatively impact the Company's results of operations.

Raw Materials: Availability of purchased feedstock and energy, and the volatility of these costs, impact Dow’s operating costs and add variability to earnings.

Purchased feedstock and energy costs account for a substantial portion of the Company’s total production costs and operating expenses. The Company purchases hydrocarbon raw materials including ethane, propane, butane, naphtha and condensate as feedstocks and also purchases certain monomers, primarily ethylene and propylene, to supplement internal production, as well as other raw materials. The Company also purchases natural gas, primarily to generate electricity, and purchases electric power to supplement internal generation.

Feedstock and energy costs generally follow price trends in crude oil and natural gas, which are sometimes volatile. While the Company uses its feedstock flexibility and financial and physical hedging programs to help mitigate feedstock cost increases, the Company is not always able to immediately raise selling prices. Ultimately, the ability to pass on underlying cost increases is dependent on market conditions. Conversely, when feedstock and energy costs decline, selling prices generally decline as well. As a result, volatility in these costs could impact the Company’s results of operations.

The Company has a number of investments on the U.S. Gulf Coast to take advantage of increasing supplies of low-cost natural gas and natural gas liquids ("NGLs") derived from shale gas including: the St. Charles Operations ("SCO-2") ethylene production facility, which commenced operations in December 2012; an on-purpose propylene production facility, which commenced operations in December 2015; an ethylene production facility in Plaquemine, Louisiana, which included expanding the facility’s ethylene production capacity and modifications to enable full ethane cracking flexibility; completion of a new integrated world-scale ethylene production facility and a new ELITE™ Enhanced Polyethylene production facility, both located in Freeport, Texas, in 2017, and a capacity expansion project which brought the facility’s total ethylene capacity to 2,000 kilotonnes per annum in 2020; and, the Company commenced operations in 2018 on its new LDPE production facility and its new NORDEL™ Metallocene EPDM production facility, both located in Plaquemine, Louisiana. As a result of these investments, the Company’s exposure to purchased ethylene and propylene is expected to decline, offset by increased exposure to ethane- and propane-based feedstocks.

While the Company expects abundant and cost-advantaged supplies of NGLs in the United States to persist for the foreseeable future, if NGLs become significantly less advantaged than crude oil-based feedstocks, it could have a negative impact on the Company’s results of operations and future investments. Also, if the Company’s key suppliers of feedstock and energy are unable to provide the raw materials required for production, it could have a negative impact on the Company’s results of operations.

Separation from DowDuPont: Risks related to achieving the anticipated benefits of Dow's separation from DowDuPont.

Risks related to achieving the anticipated benefits of Dow's separation from DowDuPont include, but are not limited to, a number of conditions outside the control of Dow, including risks related to: (i) Dow's failure to achieve in full the anticipated benefits from the separation from DowDuPont; (ii) certain tax risks associated with the separation; (iii) the failure of Dow's pro forma financial information to be a reliable indicator of Dow's future results; (iv) receipt of less favorable terms in the commercial agreements Dow entered into with DuPont and Corteva, Inc. ("Corteva"), including restrictions under intellectual property cross-license agreements, than Dow would have received from an unaffiliated third party; and (v) Dow's obligation to indemnify DuPont and/or Corteva for certain liabilities.


ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

The Company's corporate headquarters are located in Midland, Michigan. The Company's manufacturing, processing, marketing and research and development facilities, as well as regional purchasing offices and distribution centers are located throughout the world. The Company has investments in property, plant and equipment related to global manufacturing operations. Collectively, the Company operates 104 manufacturing sites in 31 countries. The following table includes the major manufacturing sites by operating segment, including consolidated variable interest entities:


Major Manufacturing Sites by Segment	Packaging & Specialty Plastics	Industrial Intermediates & Infrastructure	Performance Materials & Coatings
Location
Bahia Blanca, Argentina	X
Candeias, Brazil	X	X
Canada:
Fort Saskatchewan, Alberta	X
Prentiss, Alberta	X
Zhangjiagang, China	X	X	X
Germany:
Boehlen	X	X
Leuna	X
Schkopau	X	X
Stade		X
Terneuzen, The Netherlands	X	X
Tarragona, Spain	X	X
Map Ta Phut, Thailand		X	X
Barry, United Kingdom			X
United States:
Carrollton, Kentucky			X
Hahnville, Louisiana	X	X	X
Plaquemine, Louisiana	X	X
Midland, Michigan			X
Deer Park, Texas		X	X
Freeport, Texas	X	X	X
Orange, Texas	X
Seadrift, Texas	X	X
Texas City, Texas		X	X

Including the major manufacturing sites, the Company has manufacturing sites and holdings in all geographic regions as follows:


Manufacturing Sites by Region
Asia Pacific			18 manufacturing sites in 10 countries
EMEAI 1			37 manufacturing sites in 15 countries
Latin America			15 manufacturing sites in 4 countries
U.S. & Canada			34 manufacturing sites in 2 countries

1.Europe, Middle East, Africa and India.

Properties of the Company include facilities which, in the opinion of management, are suitable and adequate for their use and will have sufficient capacity for the Company’s current needs and expected near-term growth. All of the Company’s plants are owned or leased, subject to certain easements of other persons which, in the opinion of management, do not substantially interfere with the continued use of such properties or materially affect their value. No title examination of the properties has been made for the purpose of this report. Additional information with respect to the Company's property, plant and equipment and leases is contained in Notes 11, 15 and 17 to the Consolidated Financial Statements.

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ITEM 3. LEGAL PROCEEDINGS

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide Corporation (“Union Carbide”), a wholly owned subsidiary of the Company, is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc.

For additional information, see Part II, Item 7. Other Matters, Asbestos-Related Matters of Union Carbide Corporation in Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Notes 1 and 16 to the Consolidated Financial Statements.

Environmental Proceedings

On August 27, 2019, the U.S. Environmental Protection Agency ("EPA"), U.S. Department of Justice, Texas Environmental Quality Board, and Texas Office of the Attorney General (collectively, the “Government Agencies”) added Performance Materials NA, Inc., a wholly owned subsidiary of the Company, as an additional signatory to an existing draft consent decree relating to alleged environmental violations at the Sabine olefins manufacturing facility in Orange, Texas (the "Orange, TX Facility"). Performance Materials NA, Inc. acquired the Orange, TX Facility in February 2019 and became a subsidiary of the Company in April 2019. The alleged violations were first identified during multimedia environmental inspections that the EPA conducted at the Orange, TX Facility while under prior ownership in March 2009 and December 2015, and involve the management of materials in the Orange, TX Facility’s wastewater treatment system, hazardous waste management, and air emissions, including leak detection and repair. The Government Agencies filed a proposed final consent decree in the U.S. District Court for the Eastern District of Texas on October 13, 2021. On January 27, 2022, the Government Agencies filed a motion asking the court to approve, sign and enter a modified consent decree that reflects the recent merger of Performance Materials NA, Inc. with and into the Company. On January 28, 2022, the modified consent decree was approved by the court and became effective.

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


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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			Dow Inc. and Subsidiaries
			The Dow Chemical Company and Subsidiaries
			PART II


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc.) completed the separation of its materials science business and Dow Inc. became the direct parent company of The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the “Company”), owning all of the outstanding common shares of TDCC. Dow Inc. is now an independent, publicly traded company and Dow Inc. common stock is listed on the New York Stock Exchange under the symbol “DOW.” Dow Inc. common stock began regular-way trading on April 2, 2019.

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 Company’s Board of Directors. Additional dividend information can be found in Note 18 to the Consolidated Financial Statements and Liquidity and Capital Resources in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations.

At January 31, 2022 , there were 71,615 stockholders of record.

See Part III, Item 11. Executive Compensation for information relating to shares authorized for issuance under Dow Inc.'s equity compensation plans.

The Company grants stock-based compensation to employees and non-employee directors under stock incentive plans, in the form of stock options, stock appreciation rights, performance stock units and restricted stock units. See Note 21 to the Consolidated Financial Statements for additional information.

Issuer Purchases of Equity Securities

The following table provides information regarding purchases of Dow Inc. common stock by the Company during the three months ended December 31, 2021. The Company makes such purchases only during open windows subject to its insider trading policy.


Issuer Purchases of Equity Securities				Total number of shares purchased as part of the Company's publicly announced share repurchase program	Approximate dollar value of shares that may yet be purchased under the Company's publicly announced share repurchase program 1 (In millions)
Period	Total number of shares purchased	Average price paid per share
Period	Total number of shares purchased	Average price paid per share
October 2021	1,233,370	$	58.37	1,233,370	$	1,703
November 2021	5,615,034	$	58.42	5,615,034	$	1,375
December 2021	—	$	—	—	$	1,375
Fourth quarter 2021	6,848,404	$	58.41	6,848,404	$	1,375

1.On April 1, 2019, Dow Inc.'s Board of Directors ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3.0 billion to be spent on the repurchase of the Company's common stock, with no expiration date.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On April 1, 2019, DowDuPont Inc. (“DowDuPont” and effective June 3, 2019, n/k/a DuPont de Nemours, Inc. or "DuPont") completed the separation of its materials science business and Dow Inc. became the direct parent company of The Dow Chemical Company and its consolidated subsidiaries (“TDCC” and together with Dow Inc., “Dow” or the “Company”), owning all of the outstanding common shares of TDCC. For filings related to the period commencing April 1, 2019 and thereafter, TDCC was deemed the predecessor to Dow Inc., and the historical results of TDCC are deemed the historical results of Dow Inc. for periods prior to and including March 31, 2019. As a result of the parent/subsidiary relationship between Dow Inc. and TDCC, and considering that the financial statements and disclosures of each company are substantially similar, the companies are filing a combined report for this Annual Report on Form 10-K. The information reflected in the report is equally applicable to both Dow Inc. and TDCC, except where otherwise noted.

The separation was contemplated by the merger of equals transaction effective August 31, 2017, under the Agreement and Plan of Merger, dated as of December 11, 2015, as amended on March 31, 2017. TDCC and E. I. du Pont de Nemours and Company and its consolidated subsidiaries (“Historical DuPont”) each merged with subsidiaries of DowDuPont and, as a result, TDCC and Historical DuPont became subsidiaries of DowDuPont (the “Merger”). Subsequent to the Merger, TDCC and Historical DuPont engaged in a series of internal reorganization and realignment steps to realign their businesses into three subgroups: agriculture, materials science and specialty products. Dow Inc. was formed as a wholly owned subsidiary of DowDuPont to serve as the holding company for the materials science business.

As of the effective date and time of the distribution, DowDuPont did not beneficially own any equity interest in Dow and no longer consolidated Dow and its consolidated subsidiaries into its financial results. The consolidated financial results of Dow for the applicable periods presented reflect the distribution of TDCC’s agricultural sciences business (“AgCo”) and specialty products business (“SpecCo”) as discontinued operations, as well as reflect the receipt of Historical DuPont’s ethylene and ethylene copolymers businesses (other than its ethylene acrylic elastomers business) (“ECP”) as a common control transaction from the closing of the Merger on August 31, 2017 ("Merger Date"). See Note 3 to the Consolidated Financial Statements and Dow Inc.'s Amendment No. 4 to the Registration Statement on Form 10 filed with the U.S. Securities and Exchange Commission ("SEC") on March 8, 2019 for additional information.

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

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

Items Affecting Comparability of Financial Results

As a result of the separation from DowDuPont, pro forma net sales and pro forma Operating EBIT for the year ended December 31, 2019 are provided in this section and based on the consolidated financial statements of TDCC, adjusted to give effect to the separation from DowDuPont as if it had been consummated on January 1, 2017. Pro forma adjustments include (1) the margin impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva, Inc. ("Corteva") in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont, and (2) the elimination of the impact of events directly attributable to the Merger, internal reorganization and business realignment, separation, distribution and other related transactions (e.g., one-time transaction costs). These adjustments impacted the consolidated results as well as the reportable segments. See Note 26 to the Consolidated Financial Statements for a summary of the pro forma adjustments impacting segment measures for the year ended December 31, 2019.

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STATEMENT ON COVID-19 AND U.S. GULF COAST FREEZE

COVID-19

The pandemic caused by coronavirus disease 2019 ("COVID-19") has impacted all geographic regions where Dow products are produced and sold. Throughout this public health crisis, the Company has been focused on the health and safety of its employees, contractors, customers and suppliers around the world and maintaining the safe and reliable operations of its manufacturing sites. Although supply disruptions and related logistics issues have posed challenges across all modes of transportation, the Company’s manufacturing sites have continued to operate during the COVID-19 pandemic, with no significant impact to manufacturing whether through shutdowns or shortages in labor, raw materials or personal protective equipment. Contingency plans remain in place in the event of significant impacts from COVID-19 infection resurgences.

In January 2022, the Company opened all sites and locations to employees, where permitted by local regulations, and continues to require that several health and safety measures be followed. All regions continue to follow on-site workforce restrictions in accordance with government regulations. At the time of this filing, approximately half of Dow’s global workforce is working remotely. The Company continues to encourage its workforce to practice safe behaviors in the workplace and while away from work to help prevent community spread of COVID-19.

The Company is well-positioned for continued profitable growth in the ongoing economic recovery and improving industry cycle. The Company will maintain its disciplined focus on capital allocation priorities as it benefits from an improving cost structure, financial flexibility and a low-cost operating model. Through the ongoing market recovery, Dow has experienced increasing margins as differentiated parts of the portfolio see improved demand and underlying market dynamics, which has enabled a return to pre-COVID-19 sales levels and end-market growth across most businesses.

The Company has continued to maintain a strong financial position and liquidity throughout the economic recession triggered by the COVID-19 pandemic and its ongoing recovery. At December 31, 2021, the Company had cash and committed and available forms of liquidity of $12.6 billion. The Company also has no substantive long-term debt maturities due until 2026.

Additional information regarding the risks associated with the COVID-19 pandemic can be found in this report in Part 1, Item 1A, Risk Factors.

U.S. Gulf Coast Freeze

In the first quarter of 2021, Winter Storm Uri had a broad impact on the U.S. Gulf Coast and in particular across the entire state of Texas, which resulted in widespread utility and raw material supply disruptions and industry-wide production outages. All Dow ethylene production facilities located on the U.S. Gulf Coast were operational by March 31, 2021, along with all sites. As a result of the winter storm, the product and supply chain impacts across the industry created very tight supply dynamics and generated pricing momentum for both raw materials and finished goods. The Company remains close to its customers and continues to work diligently to meet demand needs.

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Table of Contents			Page
About Dow			31
Overview			31
Results of Operations			34
Segment Results			41
Packaging & Specialty Plastics			41
Industrial Intermediates & Infrastructure			43
Performance Materials & Coatings			45
Corporate			46
Outlook			47
Liquidity and Capital Resources			48
Other Matters			57
Critical Accounting Estimates			57
Environmental Matters			61
Asbestos-Related Matters of Union Carbide Corporation			66

ABOUT DOW

In 2021, the Company had annual sales of $55 billion, of which 36 percent of the Company’s sales were to customers in the U.S. & Canada; 36 percent were in Europe, Middle East, Africa and India ("EMEAI"); while the remaining 28 percent were to customers in Asia Pacific and Latin America.

In 2021, the Company and its consolidated subsidiaries did not operate in countries subject to U.S. economic sanctions and export controls as imposed by the U.S. State Department or in countries designated by the U.S. State Department as state sponsors of terrorism, including Cuba, Iran, the Democratic People's Republic of Korea (North Korea), Sudan and Syria. The Company has policies and procedures in place designed to ensure that it and its consolidated subsidiaries remain in compliance with applicable U.S. laws and regulations.

OVERVIEW

The following is a summary of the results from continuing operations for the Company for the year ended December 31, 2021:

The Company reported net sales in 2021 of $55 billion, up 43 percent from $38.5 billion in 2020, with increases across all geographic regions and operating segments, driven by an increase in local price of 40 percent, a volume increase of 1 percent and a favorable currency impact of 2 percent.

Local price increased 40 percent compared with the same period last year, with increases in all operating segments and geographic regions, primarily reflecting price gains due to tight supply and demand dynamics. Local price increased in Packaging & Specialty Plastics (up 50 percent), Industrial Intermediates & Infrastructure (up 40 percent) and Performance Materials & Coatings (up 19 percent).

Volume increased 1 percent compared with 2020, with increases in Packaging & Specialty Plastics (up 2 percent) and Performance Materials & Coatings (up 1 percent), partially offset by a decrease in Industrial Intermediates & Infrastructure (down 2 percent). Volume increased in the U.S. & Canada (up 2 percent) and in EMEAI (up 3 percent), partially offset by decreases in Asia Pacific (down 4 percent) and Latin America (down 3 percent).

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Currency had a favorable impact of 2 percent on net sales compared with 2020, driven by EMEAI (up 4 percent) and Asia Pacific (up 2 percent).

Restructuring and asset related charges - net were $6 million in 2021, compared with $708 million in 2020, primarily reflecting actions taken under the 2020 Restructuring Program.

Equity in earnings of nonconsolidated affiliates was $975 million in 2021, compared with equity losses of $18 million in 2020, primarily driven by margin expansion at Sadara Chemical Company ("Sadara") and the Kuwait and Thai joint ventures.

Sundry income (expense) - net for Dow Inc. and TDCC was expense of $35 million and $79 million, respectively, in 2021, compared with income of $1,269 million and $1,274 million, respectively, in 2020. Sundry income (expense) - net decreased primarily due to losses on the early extinguishment of debt in the current year, compared with gains related to a legal matter, the sale of certain marine and terminal operations and the sale of certain rail infrastructure operations and assets, which were partially offset by losses on the early extinguishment of debt in the prior year.

Net income available for Dow Inc. and TDCC common stockholder(s) was $6,311 million and $6,274 million, respectively, in 2021, compared with $1,225 million and $1,235 million, respectively, in 2020. Earnings per share for Dow Inc. was $8.38 per share in 2021, compared with $1.64 per share in 2020.

In 2021, TDCC redeemed more than $1 billion of certain notes due in 2024 and completed cash tender offers resulting in over $1 billion of aggregate principal amount of certain notes being tendered and retired. The Company's proactive liability management actions to tender and redeem existing notes have resulted in no substantive long-term debt maturities due until 2026.

In 2021, the Company executed strategic buy-outs of certain leased assets for approximately $690 million.

In 2021, Dow Inc. declared and paid dividends to common stockholders of $2.80 per share ($2,073 million).

In 2021, Dow Inc. repurchased $1,000 million of the Company's common stock.

Other notable events and highlights from the year ended December 31, 2021 include:

•Dow received three 2021 BIG Innovation Awards from the Business Intelligence Group for DOWSIL™ TC-3065 Thermally Conductive Gel; DOWSIL™ 993N Structural Glazing Sealant and Catalyst; and the world's first commercial polyurethane-carbon fiber spar cap for the new generation of wind blades.

•Dow was named to Bloomberg’s 2021 Gender-Equality Index.

•Dow was named by the Human Rights Campaign ("HRC") Foundation to its 2021 list of “Best Places to Work for LGBTQ+ Equality.” This marks the Company’s sixteenth consecutive year receiving a perfect score on HRC’s Corporate Equality Index.

•On March 4, 2021, TDCC announced changes to the design of its U.S. tax-qualified and non-qualified retirement programs. Separately, TDCC elected to contribute $1 billion to its U.S. tax-qualified pension plans.

•Dow was recognized with three Manufacturing Leadership Awards by the Manufacturing Leadership Council, a division of the National Association of Manufacturers. Dow’s Manufacturing 4.0 received the Enterprise Integration and Technology Award, the E2E Business Planning Program was awarded the Supply Chain Award, and Accelerating Innovation in Instrumentation & Sensors at Dow Texas Operations received the Industrial Internet of Things Award.

•Dow received a 2021 CIO 100 award from IDG’s CIO for the digitalization of its end-to-end business planning platform.

•On March 25, 2021, Dow Inc. (together with Sadara and the Saudi Arabian Oil Company) completed a debt re-profiling agreement for Sadara with agency creditors and commercial lenders. The re-profiled debt repayment schedule is better aligned to match Sadara's expected future cash flow generation.

•Dow received two 2021 Ringier Technology Innovation Awards in the Plastics Raw Materials & Additives category including: Post-Consumer Recycled resin XUS60921.01 and Carpet tile with INFUSE™ polyolefin backing.

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•Dow was named as one of the 2021 Fortune 100 Best Companies to Work For®; as well as, being recognized by Great Place to Work® in several other countries around the world including: 2021 Best Workplaces™ in Argentina, Colombia and Saudi Arabia.

•On April 13, 2021, Fitch Ratings ("Fitch") reaffirmed TDCC’s BBB+ and F2 rating, and revised its outlook to stable from negative. The decision was made as part of Fitch’s annual review process.

•Effective April 15, 2021, following the Company's Annual Meeting of Stockholders ("2021 Meeting") Dow Inc.'s Board elected Richard K. Davis to serve as Lead Director until the 2022 Annual Meeting of Stockholders. The Company also announced that Debra L. Dial, senior vice president and controller at AT&T Inc., and Luis Alberto Moreno, managing director at Allen & Co, LLC and former president of Inter-American Development Bank Group, were elected to the Board at the 2021 Meeting. Ajay Banga, Jacqueline K. Barton and James A. Bell retired from the Board following the 2021 Meeting as announced on February 11, 2021.

•On April 21, 2021, Dow received a 2021 FutureEdge 50 award for its Predictive Intelligence capability, Dow Polyurethanes’ flagship digitalization initiative. The FutureEdge 50 awards annually recognize 50 organizations pushing the edge of innovation with breakthrough technologies to advance their business for the future.

•Dow received 20 American Chemistry Council Responsible Care® awards for exemplary environmental, health and safety performance. Dow received awards for site safety, minimizing waste, improving energy efficiency, and its COVID-19 response.

•Dow received six 2021 Edison Awards, including five Gold Edison Awards, for breakthrough technologies including: DOWSIL™ CC-8030 UV and Moisture Dual Cure Conformal Coating; DOWSIL™ TC-5515LT Thermally Conductive Gap Filler; DOWSIL™ TC-3065 Thermal Conductive Silicone Gel for 5G Optical Access Infrastructure; DOWSIL™ VE-8001 Flexible Silicone Adhesive by Dow; RHOBARR™ 320 Polyolefin Dispersion; and DOWSIL™ Crystal Clear Spacer. Dow is the first company to receive five Gold Edison Awards in a single year.

•Dow was named to the 2021 DiversityInc Top 50 Companies for Diversity list for the fourth consecutive year. Dow was also included on three of DiversityInc's Specialty Lists including: Top Companies for Employee Resource Groups, Top Companies for People with Disabilities, and Top Companies for ESG.

•Dow was named 2021 Manufacturer of the Year, Large Enterprise, by the Manufacturing Leadership Council, a division of the National Association of Manufacturers. The Manufacturer of the Year Award is given to the company that shows best-in-class achievement.

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

•Dow was named a 2021 honoree and the Materials Sector leader of The Civic 50 by Points of Light, the world’s largest organization committed to inspiring, equipping and engaging people to take action to change their communities and the world.

•On June 24, 2021, Dow Inc. released “INtersections,” its first consolidated Environmental, Social and Governance ("ESG") Report highlighting the Company’s significant progress to fully integrate environmental stewardship and positive social impact throughout its operations, teams, supply chain and communities. This marked Dow's eighteenth year of voluntary reporting on sustainability.

•For the fifth consecutive year, Dow has received a top score on the Disability Equality Index®, placing the Company among the “Best Places to Work for Disability Inclusion” for 2021.

•Dow received the “Best in Enterprise Resilience” certification from Everbridge as a part of their Critical Event Management (CEM) Certification™ Program. This recognition demonstrates Dow’s commitment to implementing best practices for enterprise resilience that keep employees safe and the company running safely, reliably and efficiently.

•Dow was named to Seramount’s 2021 Inclusion Index (formerly known as the Diversity Best Practices Inclusion Index). This is the first year Dow was recognized on the list which includes a total of 45 organizations recognized for creating an inclusive workplace.

•Dow was named one of the "2021 PEOPLE Companies that Care®" for the second consecutive year.

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•Great Place to Work® and Fortune magazine have named Dow one of the 2021 Best Workplaces in Manufacturing & Production™. This is the first time Dow was named to this prestigious list, ranking third on the list.

•Dow won two Sustainability Product of the Year awards in the 2021 Sustainability Awards program of Business Intelligence Group for SPECFLEX™ Microcellular Polyurethane and SYNTEGRA™ Polyurethane Dispersions for Microfiber.

•On October 6, 2021, Dow Inc. held an Investor Day event where it announced the following: investment plans to deliver more than $3 billion of additional underlying EBITDA growth with a clear path to zero-carbon emissions (with respect to Scope 1, 2 and 3 carbon emissions, including offsets from product benefits and technology advancements); new renewable and cleaner power agreements which are expected to reduce Dow's Scope 2 emissions by more than 600,000 metric tons of carbon dioxide equivalent per year; a plan to build the world's first net-zero carbon emissions (with respect to Scope 1 and 2 carbon dioxide emissions, including technology advancements) ethylene and derivatives complex; and expansion of global capabilities for circular plastics, with initial products available for customers in 2022.

•Dow earned multiple Critical Guidance Recognitions for recyclability from the Association of Plastic Recyclers ("APR"), in three product categories. ROBOND™ Adhesives, OPULUX™ Optical Finishes and SURLYN™ Ionomers were each recognized by APR for solving packaging design challenges.

•Dow received two R&D 100 Awards from R&D Magazine for innovative technologies including: DOWSIL™ TC-4060 Thermal Gel and Multi-functional Sorbent Technology ("MUST").

•Five additional Dow sites received International Sustainability & Carbon Certification PLUS recognition for their compliance with rigorous tracking of sustainable feedstocks use.

•DOWSIL™ TC-4060 Thermal Gel was awarded Best Product Innovation and SunSpheres™ BIO SPF Booster was awarded Product with Best Benefit to the Environment and Sustainability from Innovation Commodity Intelligence Services.

•In 2021, CDP (formerly Carbon Disclosure Project, an international non-profit specialized in environmental reporting) improved Dow's climate change score to an A- from a B.

In addition to the highlights above, the following events occurred subsequent to December 31, 2021:

•For the third year, Dow was named to the JUST 100 list. Dow earned the top spot in the Chemicals sector overall and received the number one position in the Workers and Stakeholders & Governance categories versus industry peers.

•Dow received three 2021 BIG Innovation Awards from the Business Intelligence Group for DOWSIL™ TC-2035 CV Adhesive, DOWSIL™ TC-6015 Thermally Conductive Encapsulant and UCARE™ Extreme Polymer.

•Dow was named to Bloomberg’s 2022 Gender-Equality Index for the second consecutive year.

•Dow was named by the Human Rights Campaign ("HRC") Foundation to its 2022 list of “Best Places to Work for LGBTQ+ Equality.” This marks the Company’s seventeenth consecutive year receiving a perfect score on HRC’s Corporate Equality Index.

RESULTS OF OPERATIONS

Net Sales

The following tables summarize net sales, pro forma net sales and sales variance by operating segment and geographic region from the prior year:


Summary of Sales Results
In millions	2021		2020		2019
Net sales	$	54,968	$	38,542	$	42,951
Pro forma net sales	$	—	$	—	$	42,998

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Sales Variances by Operating Segment and Geographic Region - As Reported
	2021						2020
Percentage change from prior year	Local Price & Product Mix		Currency		Volume		Total		Local Price & Product Mix		Currency		Volume		Portfolio & Other 1		Total
Packaging & Specialty Plastics	50	%	2	%	2	%	54	%	(11)	%	—	%	1	%	—	%	(10)	%
Industrial Intermediates & Infrastructure	40		2		(2)		40		(5)		—		(6)		—		(11)
Performance Materials & Coatings	19		2		1		22		(6)		—		(6)		1		(11)
Total	40	%	2	%	1	%	43	%	(7)	%	—	%	(3)	%	—	%	(10)	%
Total, excluding the Hydrocarbons & Energy business	37	%	2	%	(2)	%	37	%	(5)	%	—	%	(4)	%	—	%	(9)	%
U.S. & Canada	42	%	—	%	2	%	44	%	(5)	%	—	%	(8)	%	—	%	(13)	%
EMEAI	45		4		3		52		(12)		—		1		—		(11)
Asia Pacific	25		2		(4)		23		(6)		—		—		—		(6)
Latin America	48		—		(3)		45		(7)		—		—		—		(7)
Total	40	%	2	%	1	%	43	%	(7)	%	—	%	(3)	%	—	%	(10)	%

1.Portfolio & Other includes the sales impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation, which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont.


Sales Variances by Operating Segment and Geographic Region - As Reported Percentage change from prior year	2019
	Local Price & Product Mix		Currency		Volume		Portfolio & Other 1		Total
Packaging & Specialty Plastics	(12)	%	(1)	%	(3)	%	—	%	(16)	%
Industrial Intermediates & Infrastructure	(12)		(1)		—		—		(13)
Performance Materials & Coatings	(6)		(2)		(3)		3		(8)
Total	(11)	%	(1)	%	(2)	%	1	%	(13)	%
Total, excluding the Hydrocarbons & Energy business	(11)	%	(2)	%	1	%	1	%	(11)	%
U.S. & Canada	(11)	%	—	%	(3)	%	1	%	(13)	%
EMEAI	(9)		(3)		(4)		—		(16)
Asia Pacific	(12)		(1)		5		—		(8)
Latin America	(14)		—		(3)		—		(17)
Total	(11)	%	(1)	%	(2)	%	1	%	(13)	%

2021 Versus 2020

The Company reported net sales of $55 billion in 2021, up 43 percent from $38.5 billion in 2020, with local price up 40 percent, a favorable currency impact of 2 percent and volume up 1 percent. Net sales increased in all operating segments and across all geographic regions. Local price increased in all operating segments and across all geographic regions, primarily reflecting price gains due to tight supply and demand dynamics driven by logistics constraints and weather events. Local price increased in Packaging & Specialty Plastics (up 50 percent), Industrial Intermediates & Infrastructure (up 40 percent) and Performance Materials & Coatings (up 19 percent). Volume increased in Packaging & Specialty Plastics (up 2 percent) and Performance Materials & Coatings (up 1 percent). Volume decreased in Industrial Intermediates & Infrastructure (down 2 percent). Excluding the Hydrocarbons & Energy business, sales increased 37 percent.

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2020 Versus 2019

The Company reported net sales of $38.5 billion in 2020, down 10 percent from $43.0 billion in 2019, with local price down 7 percent and volume down 3 percent. Net sales decreased in all geographic regions and operating segments, reflecting impacts from the global COVID-19 pandemic on economies and supply and demand dynamics, most notably in the first half of the year. Local price decreased in all operating segments and in all geographic regions, primarily in response to lower global energy prices. Local price decreased in Packaging & Specialty Plastics (down 11 percent), Industrial Intermediates & Infrastructure (down 5 percent) and Performance Materials & Coatings (down 6 percent). Volume declined 3 percent, driven by the U.S. & Canada (down 8 percent), which was partially offset by demand growth in EMEAI (up 1 percent). Volume was flat in Asia Pacific and Latin America. Volume increased in Packaging & Specialty Plastics (up 1 percent) and decreased in Industrial Intermediates & Infrastructure and Performance Materials & Coatings (both down 6 percent). Excluding the Hydrocarbons & Energy business, sales declined 9 percent.


Sales Variances by Operating Segment and Geographic Region - Pro Forma Basis
	2020 1								2019
Percentage change from prior year	Local Price & Product Mix		Currency		Volume		Total		Local Price & Product Mix		Currency		Volume		Total
Packaging & Specialty Plastics	(11)	%	—	%	1	%	(10)	%	(12)	%	(1)	%	(3)	%	(16)	%
Industrial Intermediates & Infrastructure	(5)		—		(6)		(11)		(12)		(2)		1		(13)
Performance Materials & Coatings	(6)		—		(5)		(11)		(6)		(2)		(1)		(9)
Total	(7)	%	—	%	(3)	%	(10)	%	(11)	%	(1)	%	(2)	%	(14)	%
Total, excluding the Hydrocarbons & Energy business	(5)	%	—	%	(4)	%	(9)	%	(10)	%	(2)	%	1	%	(11)	%
U.S. & Canada	(5)	%	—	%	(8)	%	(13)	%	(11)	%	—	%	(2)	%	(13)	%
EMEAI	(12)		—		1		(11)		(9)		(3)		(4)		(16)
Asia Pacific	(6)		—		—		(6)		(12)		(1)		5		(8)
Latin America	(7)		—		—		(7)		(15)		—		(3)		(18)
Total	(7)	%	—	%	(3)	%	(10)	%	(11)	%	(1)	%	(2)	%	(14)	%

1.As reported net sales for the year ended December 31, 2020 compared with pro forma net sales for the year ended December 31, 2019.

2020 Versus 2019 - Pro Forma

The Company reported net sales of $38.5 billion for 2020, down 10 percent from pro forma net sales of $43.0 billion in 2019, with local price down 7 percent and volume down 3 percent. Net sales decreased in all geographic regions and operating segments, reflecting impacts from the global COVID-19 pandemic on economies and supply and demand dynamics, most notably in the first half of the year. Local price decreased in all operating segments and in all geographic regions, primarily in response to lower global energy prices. Local price decreased in Packaging & Specialty Plastics (down 11 percent), Industrial Intermediates & Infrastructure (down 5 percent) and Performance Materials & Coatings (down 6 percent). Volume declined 3 percent, driven by the U.S. & Canada (down 8 percent), which was partially offset by an increase in EMEAI (up 1 percent). Volume was flat in Asia Pacific and Latin America. Volume increased in Packaging & Specialty Plastics (up 1 percent) and decreased in Industrial Intermediates & Infrastructure (down 6 percent) and Performance Materials & Coatings (down 5 percent). Excluding the Hydrocarbons & Energy business, sales declined 9 percent.

Cost of Sales

Cost of sales ("COS") was $44.2 billion in 2021, compared with $33.3 billion in 2020. COS increased in 2021 primarily due to higher feedstock and energy costs and impacts from Winter Storm Uri, which included higher raw material costs and repair costs. In 2021, COS included $146 million of costs associated with implementing the Company's digital acceleration program (related to Corporate). COS as a percentage of sales was 80.4 percent in 2021 compared with 86.5 percent in 2020.

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COS was $33.3 billion in 2020, compared with $36.7 billion in 2019. COS decreased in 2020 primarily due to lower feedstock and other raw material costs, decreased sales volume and lower planned maintenance turnaround costs, which were partially offset by higher performance-based compensation costs. Operating rates declined significantly in the second quarter of 2020, as the Company temporarily idled certain manufacturing facilities and selectively adjusted operating rates at other facilities to balance production to demand in response to the COVID-19 pandemic. These facilities returned to more normalized operating rates in the third quarter of 2020. Overall, operating rates increased in the third and fourth quarters of 2020. In 2019, COS also included $75 million of transaction-related costs resulting from the separation from DowDuPont (related to Corporate) and $399 million of environmental charges related to Packaging & Specialty Plastics ($5 million), Industrial Intermediates & Infrastructure ($8 million), Performance Materials & Coatings ($50 million) and Corporate ($336 million). COS as a percentage of sales was 86.5 percent in 2020 compared with 85.3 percent in 2019.

Research and Development Expenses

Research and development ("R&D") expenses were $857 million in 2021, compared with $768 million in 2020 and $765 million in 2019. R&D expenses in 2021 increased compared with 2020 primarily due to increased performance-based compensation costs and fringe benefit expenses driven by stock market increases compared with the same period last year. R&D expenses in 2020 increased compared with 2019 primarily due to increased performance-based compensation costs which were partially offset by cost reductions.

Selling, General and Administrative Expenses

Selling, general and administrative ("SG&A") expenses were $1,645 million in 2021, compared with $1,471 million in 2020 and $1,590 million and $1,585 million for Dow Inc. and TDCC, respectively, in 2019. SG&A expenses in 2021 increased primarily due to increased performance-based compensation costs and fringe benefit expenses driven by stock market increases compared with the same period last year. SG&A expenses in 2020 decreased compared to 2019 primarily due to cost reductions which were partially offset by increased performance-based compensation costs. In 2020, SG&A was also favorably impacted by the recovery of legal costs related to the Nova Chemicals Corporation ("Nova") ethylene asset matter and the reversal of a bad debt reserve related to an arbitration judgment. See Note 16 to the Consolidated Financial Statements for additional information on the Nova litigation matters.

Amortization of Intangibles

Amortization of intangibles was $388 million in 2021, compared with $401 million in 2020 and $419 million in 2019. Amortization of intangibles decreased primarily due to certain intangible assets becoming fully amortized. See Note 13 to the Consolidated Financial Statements for additional information on intangible assets.

Restructuring, Goodwill Impairment and Asset Related Charges - Net

Restructuring, goodwill impairment and asset related charges - net were $6 million in 2021, $708 million in 2020 and $3,219 million in 2019.

2020 Restructuring Program

On September 29, 2020, Dow Inc.'s Board approved restructuring actions to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the COVID-19 pandemic. The restructuring program was designed to reduce structural costs and enable the Company to further enhance competitiveness while the COVID-19 economic recovery gained traction. These actions were substantially complete by the end of 2021, except for certain cash payments expected to be made in 2022.

In 2020, the Company recorded pretax restructuring charges of $573 million, consisting of severance and related benefit costs of $297 million, asset write-downs and write-offs of $196 million and costs associated with exit and disposal activities of $80 million. Restructuring charges by segment were as follows: $11 million in Packaging & Specialty Plastics, $22 million in Industrial Intermediates & Infrastructure, $177 million in Performance Materials & Coatings and $363 million in Corporate.

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

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DowDuPont Cost Synergy Program

In 2019, the Company recorded pretax restructuring charges of $292 million, consisting of severance and related benefit costs of $123 million, asset write-downs and write-offs of $143 million and costs associated with exit and disposal activities of $26 million. Restructuring charges by segment were as follows: $1 million in Packaging & Specialty Plastics, $7 million in Industrial Intermediates & Infrastructure, $28 million in Performance Materials & Coatings and $256 million in Corporate.

In 2020, the Company recorded pretax restructuring charges of $86 million and reduced pretax restructuring charges by $6 million in 2021, both for severance and related benefit costs (related to Corporate). Cash expenditures related to the Synergy Program were substantially complete at December 31, 2020.

2019 Goodwill Impairment

Upon completion of the goodwill impairment testing in the fourth quarter of 2019, the Company determined the fair value of the Coatings & Performance Monomers reporting unit was lower than its carrying amount. As a result, the Company recorded an impairment charge of $1,039 million in the fourth quarter of 2019 related to Performance Materials & Coatings.

2020 Asset Related Charges

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. Impairment charges by segment were as follows: Packaging & Specialty Plastics ($19 million), Performance Materials & Coatings ($15 million) and Corporate ($15 million). See Note 23 for additional information.

2019 Asset Related Charges

On August 13, 2019, the Company entered into a definitive agreement to sell its acetone derivatives business to ALTIVIA Ketones & Additives, LLC. The transaction closed on November 1, 2019 and included the Company's acetone derivatives related inventory and production assets, located in Institute, West Virginia, in addition to the site infrastructure, land, utilities and certain railcars. The Company remains at the Institute site as a tenant. As a result of the divestiture, the Company recognized a pretax impairment charge of $75 million in the third quarter of 2019. The impairment charge by segment was as follows: $24 million in Packaging & Specialty Plastics and $51 million in Corporate.

In the fourth quarter of 2019, the Company concluded that its equity method investment in Sadara was other-than-temporarily impaired. The Company also reserved certain accounts and notes receivable and accrued interest balances due to uncertainty on the timing of collection. As a result, the Company recorded a $1,755 million pretax charge related to Sadara. The charge by segment was as follows: $370 million in Packaging & Specialty Plastics, $1,168 million in Industrial Intermediates & Infrastructure and $217 million in Corporate.

In 2019, the Company recognized additional pretax impairment charges of $58 million related primarily to capital additions at its Santa Vitoria manufacturing facility, which was impaired in 2017. Impairment charges by segment were as follows: $44 million in Packaging & Specialty Plastics, $9 million in Performance Materials & Coatings and $5 million in Corporate.

See Note 6 to the Consolidated Financial Statements for additional information on restructuring, goodwill impairment and asset related charges.

Integration and Separation Costs

Integration and separation costs, which reflect costs related to post-Merger integration and business separation activities, were $239 million in 2020 and $1,063 million and $1,039 million for Dow Inc. and TDCC, respectively, in 2019. Integration and business separation activities were completed as of December 31, 2020. Integration and separation costs are related to Corporate.

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Equity in Earnings (Losses) of Nonconsolidated Affiliates

The Company’s share of equity in earnings of nonconsolidated affiliates was $975 million in 2021, compared with equity losses of $18 million in 2020 and $94 million in 2019. The equity earnings improvement in 2021 compared with 2020 was primarily due to margin expansion at Sadara driven by broad-based price increases, strong MEG prices at the Kuwait joint ventures and improved elastomer and polyethylene margins at the Thai joint ventures. In 2020, equity losses decreased compared with 2019 primarily due to lower equity losses from Sadara, driven by improved industry supply and demand dynamics in the third and fourth quarters of 2020, which were partially offset by lower equity earnings from the Kuwait joint ventures due to lower monoethylene glycol prices. See Note 12 to the Consolidated Financial Statements for additional information on the Company’s evaluation of its equity method investment in Sadara for other-than-temporary impairment in 2019.

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.

TDCC

Sundry income (expense) - net for 2021 was expense of $79 million, compared with income of $1,274 million in 2020 and $573 million in 2019.

In 2021, sundry income (expense) - net included a $574 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows), and foreign currency exchange losses. These were partially offset by non-operating pension and postretirement benefit plan credits, gains on the sale of assets and investments, a $54 million gain related to an arbitration award (related to Industrial Intermediates & Infrastructure), and a $16 million gain related to post-closing adjustments on the previous divestiture of a bio-ethanol manufacturing facility in Brazil (related to Packaging & Specialty Plastics). See Notes 7, 15, 16, 20 and 26 to the Consolidated Financial Statements for additional information.

In 2020, sundry income (expense) - net included a $544 million gain related to the Nova ethylene asset matter (related to Packaging & Specialty Plastics), a $499 million gain related to the sale of certain U.S. Gulf Coast marine and terminal operations and assets ($17 million related to Packaging & Specialty Plastics, $61 million related to Industrial Intermediates & Infrastructure and $421 million related to Corporate), a $233 million gain related to the sale of rail infrastructure operations and assets in the U.S. & Canada ($48 million related to Packaging & Specialty Plastics and $185 million related to Corporate), and non-operating pension and postretirement benefit plan credits. These were partially offset by a $149 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows), foreign currency exchange losses, $11 million in charges associated with agreements entered into with DuPont and Corteva as part of the separation and distribution, which provides for cross-indemnities and allocations of obligations and liabilities for periods prior to, at and after completion of the separation (related to Corporate), a $13 million loss related to the divestiture of a bio-ethanol manufacturing facility in Brazil (related to Packaging & Specialty Plastics) and a $2 million loss on an asset sale (related to Corporate). See Notes 5, 7, 15, 16, 20 and 26 to the Consolidated Financial Statements for additional information.

In 2019, sundry income (expense) - net included foreign currency exchange gains, non-operating pension and postretirement benefit plan credits and gains on sales of assets and investments, as well as a net gain of $205 million related to litigation matters, which included a $170 million gain related to a legal matter with Nova (related to Packaging & Specialty Plastics), and an $85 million gain related to an adjustment of the Dow Silicones breast implant liability (related to Corporate), which were partially offset by a $50 million charge (net of indemnifications of $37 million), related to the settlement of the Dow Silicones commercial creditor matters (related to Corporate). In 2019, sundry income (expense) - net also included a $102 million loss on the early extinguishment of debt (related to Corporate and included in "Other net loss" in the consolidated statements of cash flows) and a gain of $2 million on post-closing adjustments related to previous divestitures (related to Corporate). See Notes 7, 15, 16, 20 and 26 to the Consolidated Financial Statements for additional information.

Dow Inc.

Sundry income (expense) - net for 2021 was expense of $35 million, compared with income of $1,269 million in 2020 and $461 million in 2019.

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In 2021, in addition to the amounts previously discussed above for TDCC, sundry income (expense) - net included $30 million in gains associated with the agreements entered into with DuPont and Corteva as part of the separation and distribution (related to Corporate).

In 2020, in addition to the amounts previously discussed above for TDCC, sundry income (expense) - net included $10 million in charges associated with the agreements entered into with DuPont and Corteva as part of the separation and distribution (related to Corporate).

In 2019, in addition to the amounts previously discussed above for TDCC, sundry income (expense) - net included a $51 million loss on post-closing adjustments related to a previous divestiture and $69 million in charges associated with the agreements entered into with DuPont and Corteva as part of the separation and distribution (both related to Corporate). See Notes 3, 7, 15, 16, 20 and 26 to the Consolidated Financial Statements for additional information.

Interest Expense and Amortization of Debt Discount

Interest expense and amortization of debt discount was $731 million in 2021, compared with $827 million in 2020 and $933 million and $952 million for Dow Inc. and TDCC, respectively, in 2019. Interest expense and amortization of debt discount decreased in 2021 primarily due to lower coupon rates and the redemption of debt. The decrease in 2020 is primarily due to TDCC's redemption of long-term debt in 2019 and debt issuances at lower coupon rates in 2020. See Liquidity and Capital Resources in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 15 to the Consolidated Financial Statements for additional information related to debt financing activity. In addition, TDCC had interest expense related to an intercompany loan with Dow Inc. in 2019.

Provision for Income Taxes on Continuing Operations

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 underlying factors affecting the Company's overall tax rate are summarized in Note 8 to the Consolidated Financial Statements.

The CARES Act was enacted on March 27, 2020 in the United States. There were no significant impacts to the Company's provision for income taxes on continuing operations in 2021 or 2020 as a result of the CARES Act legislation.

The provision for income taxes on continuing operations was $1,740 million in 2021, compared with $777 million in 2020 and $470 million in 2019. The provision for income taxes in 2021 increased primarily due to an increase in pretax income and the recognition of uncertain tax positions in multiple jurisdictions. These factors resulted in an effective tax rate of 21.4 percent for Dow Inc. in 2021.

The tax rate for 2020 was unfavorably impacted by valuation allowances of $260 million related to foreign tax credits and other attributes that are more likely than not to remain unutilized prior to their expiration. The tax rate for 2020 was favorably impacted by a capital loss resulting from the divestiture of the Santa Vitoria manufacturing facility. This resulted in an effective tax rate of 37.5 percent for Dow Inc. in 2020.

The tax rate for 2019 was unfavorably impacted by non-deductible goodwill and investment impairments, geographic mix of earnings and reduced equity earnings. These factors resulted in a negative effective tax rate of 37.7 percent for Dow Inc. in 2019.

In the fourth quarter of 2019, the Company recorded the impacts of tax law changes enacted in Switzerland. As a result, deferred tax assets increased by $92 million.

Income from Discontinued Operations, Net of Tax

Income from discontinued operations, net of tax was $445 million in 2019, related to the distribution of AgCo and SpecCo to DowDuPont as a result of the separation. See Note 3 to the Consolidated Financial Statements for additional information.

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Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests was $94 million in 2021, $69 million in 2020 and $87 million in 2019. Net income attributable to noncontrolling interests from discontinued operations of $13 million in 2019 related to the distribution of AgCo and SpecCo to DowDuPont as a result of the separation are included in the amounts above. See Notes 19 and 24 to the Consolidated Financial Statements for additional information.

Net Income (Loss) Available for the Common Stockholder(s)

Dow Inc.

Net income available for Dow Inc. common stockholders was $6,311 million in 2021, compared with $1,225 million in 2020 and a net loss of $1,359 million in 2019. Earnings per share of Dow Inc. was $8.38 per share in 2021, compared with $1.64 per share in 2020 and a loss of $1.84 per share in 2019. See Note 9 to the Consolidated Financial Statements for details on Dow Inc.'s earnings per share calculations.

TDCC

Net income available for TDCC common stockholder was $6,274 million in 2021, compared with $1,235 million in 2020 and a net loss of $1,237 million in 2019. Following the separation from DowDuPont, TDCC's common shares are owned solely by Dow Inc.

SEGMENT RESULTS

The Company conducts its worldwide operations through six global businesses which are organized into the following operating segments: Packaging & Specialty Plastics, Industrial Intermediates & Infrastructure and Performance Materials & Coatings. Corporate contains the reconciliation between the totals for the operating segments and the Company's totals. The Company did not aggregate any operating segments when determining its reportable segments. The Company reports geographic information for the following regions: U.S. & Canada, Asia Pacific, Latin America and EMEAI. The Company transfers ethylene to its downstream derivative businesses at market prices. The Company also allocated costs previously assigned to AgCo and SpecCo ("stranded costs") to the operating segments.

The Company’s measure of profit/loss for segment reporting purposes is Operating EBIT (for the years ended December 31, 2021 and 2020) and pro forma Operating EBIT (for the year ended December 31, 2019) as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income (loss) from continuing operations before income taxes") before interest, excluding the impact of significant items. The Company defines pro forma Operating EBIT as earnings (i.e., "Income (loss) from continuing operations before income taxes") before interest, plus pro forma adjustments, excluding the impact of significant items. Operating EBIT by segment and pro forma Operating EBIT by segment include all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate. The Company also presents pro forma net sales for the year ended December 31, 2019, as it is included in management’s measure of segment performance and is regularly reviewed by the CODM. Pro forma net sales includes the impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont. See Note 26 to the Consolidated Financial Statements for reconciliations of these measures and a summary of the pro forma adjustments impacting segment measures, which are consistent with the pro forma adjustments included in the Current Report on Form 8-K filed on June 3, 2019, with the SEC.

PACKAGING & SPECIALTY PLASTICS

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("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 March 2021, Dow and the Saudi Arabian Oil Company agreed to transition the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 and is being implemented over the next five years.


Packaging & Specialty Plastics
In millions	2021		2020		2019
Net sales	$	28,128	$	18,301	$	20,245
Pro forma net sales					$	20,245
Operating EBIT	$	6,638	$	2,325
Pro forma Operating EBIT					$	2,904
Equity earnings	$	490	$	173	$	162


Packaging & Specialty Plastics
Percentage change from prior year	2021		2020		2019
Change in Net Sales from Prior Period due to:
Local price & product mix	50	%	(11)	%	(12)	%
Currency	2		—		(1)
Volume	2		1		(3)

Total	54	%	(10)	%	(16)	%
Change in Pro Forma Net Sales from Prior Period due to:
Local price & product mix					(12)	%
Currency					(1)
Volume					(3)

Total					(16)	%

2021 Versus 2020

Packaging & Specialty Plastics net sales were $28,128 million in 2021, up 54 percent from net sales of $18,301 million in 2020, with local price up 50 percent, volume up 2 percent and a favorable currency impact of 2 percent, primarily in EMEAI. Local price increased in both businesses and across all geographic regions, driven by tight supply and demand dynamics. Local price increased in Hydrocarbons & Energy as prices for co-products are generally correlated to Brent crude oil prices, which, on average, increased 64 percent compared with 2020. Local price increased in Packaging and Specialty Plastics driven by favorable supply and demand dynamics in polyethylene, notably in industrial and consumer packaging and flexible food and beverage packaging applications. Volume increased in Hydrocarbons & Energy, primarily in the U.S. & Canada and EMEAI, more than offsetting decreased volume in Asia Pacific. Volume decreased in Packaging and Specialty Plastics, primarily in Asia Pacific and Latin America as supply constraints continue to lower exports, more than offsetting an increase in the U.S. & Canada.

Operating EBIT was $6,638 million in 2021, up $4,313 million from Operating EBIT of $2,325 million in 2020. Operating EBIT increased primarily due to integrated margin expansion and increased equity earnings at Sadara and the Thai and Kuwait joint ventures.

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2020 Versus 2019

Packaging & Specialty Plastics net sales were $18,301 million in 2020, down 10 percent from net sales and pro forma net sales of $20,245 million in 2019, with local price down 11 percent and volume up 1 percent. Net sales declined in the first half of the year, reflecting the impact of the COVID-19 pandemic, while strong supply and demand dynamics took hold in the second half of the year. Local price decreased in both businesses and across all geographic regions, driven by reduced polyethylene prices and lower global energy prices. Local price declined in Hydrocarbons & Energy as prices for co-products are generally correlated to Brent crude oil prices, which declined 33 percent compared with 2019. Volume increased in Hydrocarbons & Energy as increases in EMEAI were partially offset by declines in the U.S. & Canada, Asia Pacific and Latin America. Packaging and Specialty Plastics volume was flat as increases in flexible food and specialty packaging, industrial and consumer packaging and health and hygiene applications in Asia Pacific, Latin America and EMEAI were offset by reduced demand for functional polymers, primarily due to the COVID-19 pandemic, and lower catalyst licensing activity in the U.S. & Canada.

Operating EBIT was $2,325 million in 2020, down 20 percent from pro forma Operating EBIT of $2,904 million in 2019. Operating EBIT decreased primarily due to integrated margin compression in both businesses. These declines more than offset cost reductions, decreased planned maintenance turnaround costs and increased equity earnings.

INDUSTRIAL INTERMEDIATES & INFRASTRUCTURE

The Industrial Intermediates & Infrastructure operating segment consists of two customer-centric global businesses - Industrial Solutions and Polyurethanes & Construction Chemicals - that develop important intermediate chemicals that are essential to manufacturing processes, as well as downstream, customized materials and formulations that use advanced development technologies. These businesses primarily produce and market ethylene oxide and propylene oxide derivatives that are aligned to market segments as diverse as appliances, coatings, electronics, surfactants for cleaning and sanitization, infrastructure and oil and gas. The businesses' global scale and reach, 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, 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.


Industrial Intermediates & Infrastructure
In millions	2021		2020		2019
Net sales	$	16,851	$	12,021	$	13,440
Pro forma net sales					$	13,449
Operating EBIT	$	2,282	$	355
Pro forma Operating EBIT					$	845
Equity earnings (losses)	$	471	$	(166)	$	(241)

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Industrial Intermediates & Infrastructure
Percentage change from prior year	2021		2020		2019
Change in Net Sales from Prior Period due to:
Local price & product mix	40	%	(5)	%	(12)	%
Currency	2		—		(1)
Volume	(2)		(6)		—

Total	40	%	(11)	%	(13)	%
Change in Pro Forma Net Sales from Prior Period due to:
Local price & product mix					(12)	%
Currency					(2)
Volume					1

Total					(13)	%

2021 Versus 2020

Industrial Intermediates & Infrastructure net sales were $16,851 million in 2021, up 40 percent from $12,021 million in 2020, with local price up 40 percent, a favorable currency impact of 2 percent and volume down 2 percent. Local price increased in both businesses and across all geographic regions, primarily driven by strong supply and demand dynamics and rising energy prices. Currency favorably impacted sales in both businesses. Volume in Polyurethanes & Construction Chemicals decreased in the U.S. & Canada and Asia Pacific, partially offset by increased volume in EMEAI and Latin America. The volume decrease in Polyurethanes & Construction Chemicals was due to a decrease in vinyl chloride monomers mainly related to a planned transition of a low-margin co-producer contract as well as a decrease in isocyanates, which were partially offset by robust consumer demand in polyurethane systems. Despite strong consumer demand, volume in Industrial Solutions decreased in all geographic regions, except Latin America and was largely driven by weather-related supply constraints.

Operating EBIT was $2,282 million in 2021, up $1,927 million from Operating EBIT of $355 million in 2020. Operating EBIT increased primarily due to margin expansion from strong supply and demand dynamics in Polyurethanes & Construction Chemicals and higher equity earnings at Sadara and the Kuwait joint ventures.

2020 Versus 2019

Industrial Intermediates & Infrastructure net sales were $12,021 million in 2020, down 11 percent from $13,440 million in 2019. Net sales decreased 11 percent from pro forma net sales of $13,449 million in 2019, with volume down 6 percent and local price down 5 percent. Weak demand for products used in consumer durable good end-markets, including construction, furniture and bedding, appliances and automotive, drove volume declines in Polyurethanes & Construction Chemicals in all geographic regions, reflecting the impact of the COVID-19 pandemic on consumer activities and buying patterns, most notably in the first half of the year. Volume in Industrial Solutions was also impacted by the COVID-19 pandemic, with decreases in the U.S. & Canada and Latin America which were partially offset by increases in Asia Pacific and EMEAI. The volume decline in Industrial Solutions was due to weakened demand in industrial, energy and automotive end-markets partially offset by stronger demand for products used in electronics, agriculture and pharma applications. Local price decreased in both businesses and in all geographic regions, primarily due to lower global energy prices and raw material costs.

Operating EBIT was $355 million in 2020, down 58 percent from pro forma Operating EBIT of $845 million in 2019. Operating EBIT decreased due to lower demand and margin compression, which were partially offset by cost reductions, decreased equity losses and lower planned maintenance turnaround costs. The overall decrease in equity losses was driven by lower equity losses from Sadara partially offset by decreased equity earnings from EQUATE.

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PERFORMANCE MATERIALS & COATINGS


Performance Materials & Coatings
In millions	2021		2020		2019
Net sales	$	9,672	$	7,951	$	8,923
Pro forma net sales					$	8,961
Operating EBIT	$	866	$	314
Pro forma Operating EBIT					$	918
Equity earnings	$	7	$	6	$	5


Performance Materials & Coatings
Percentage change from prior year	2021		2020		2019
Change in Net Sales from Prior Period due to:
Local price & product mix	19	%	(6)	%	(6)	%
Currency	2		—		(2)
Volume	1		(6)		(3)
Portfolio & other	—		1		3
Total	22	%	(11)	%	(8)	%
Change in Pro Forma Net Sales from Prior Period due to: 1
Local price & product mix	—	%	(6)	%	(6)	%
Currency	—		—		(2)
Volume	—		(5)		(1)
Portfolio & other	—		—		—
Total	—	%	(11)	%	(9)	%

1.As reported net sales for the year ended December 31, 2020 compared with pro forma net sales for the year ended December 31, 2019.

2021 Versus 2020

Performance Materials & Coatings net sales were $9,672 million in 2021, up 22 percent from net sales of $7,951 million in 2020, with local price up 19 percent, volume up 1 percent, and a favorable currency impact of 2 percent. Local price increased in both businesses and across all geographic regions. Consumer Solutions local price increased in both upstream siloxanes and downstream silicones due to favorable supply and demand dynamics and higher raw material costs. Local price increased in Coatings & Performance Monomers primarily due to improved supply and demand dynamics and higher raw material costs in acrylic monomers and architectural coatings. Volume increased in the U.S. & Canada, Asia Pacific and Latin America, which was partially offset by a decrease in EMEAI. Consumer Solutions volume increased due to higher demand in all geographic regions partially offset by planned maintenance turnaround activity. Volume decreased in Coatings & Performance Monomers in all geographic regions primarily due to supply availability challenges caused by weather-related outages and third-party supply and logistics constraints. The favorable currency impact was driven by Asia Pacific and EMEAI.

Operating EBIT was $866 million in 2021, up $552 million from Operating EBIT of $314 million in 2020. Operating EBIT increased primarily due to margin expansion and higher volume in Consumer Solutions.

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2020 Versus 2019

Performance Materials & Coatings net sales were $7,951 million in 2020, down 11 percent from net sales of $8,923 million in 2019. Net sales decreased 11 percent from pro forma net sales of $8,961 million in 2019, with local price down 6 percent and volume down 5 percent. Local price decreased in both businesses and across all geographic regions. Consumer Solutions local price declined in all regions, primarily in upstream siloxanes due to weak supply and demand dynamics. Local price decreased in Coatings & Performance Monomers in response to lower feedstock and other raw material costs. Volume declined in all geographic regions except Latin America, reflecting the impact from the COVID-19 pandemic. Consumer Solutions volume decreased as growth in home care applications was more than offset by lower demand for products used in automotive, industrial, construction and personal care end-markets as consumer activities and buying patterns were limited by the COVID-19 pandemic. Coatings & Performance Monomers volume increased in all geographic regions, except EMEAI. Volume gains were driven by higher demand for methacrylates used in protective applications, for architectural coatings as consumers continued do-it-yourself projects at home, and higher demand for vinyl acetate monomers.

Operating EBIT was $314 million in 2020, down 66 percent from pro forma Operating EBIT of $918 million in 2019. Operating EBIT decreased primarily due to margin compression, lower demand in siloxanes as a result of the COVID-19 pandemic and higher manufacturing and planned maintenance turnaround costs that more than offset volume gains in Coatings & Performance Monomers and lower SG&A costs.

CORPORATE


Corporate
In millions	2021		2020		2019
Net sales	$	317	$	269	$	343
Pro forma net sales					$	343
Operating EBIT	$	(253)	$	(279)
Pro forma Operating EBIT					$	(315)
Equity earnings (losses)	$	7	$	(31)	$	(20)

2021 Versus 2020

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $317 million in 2021, up from net sales of $269 million in 2020.

Operating EBIT was a loss of $253 million in 2021, compared with Operating EBIT loss of $279 million in 2020. Operating EBIT improved primarily due to improved equity earnings.

2020 Versus 2019

Net sales for Corporate, which primarily relate to the Company's insurance operations, were $269 million in 2020, down from net sales and pro forma net sales of $343 million in 2019.

Operating EBIT was a loss of $279 million in 2020, compared with a pro forma Operating EBIT loss of $315 million in 2019. Compared with 2019, Operating EBIT improved primarily due to cost reductions and stranded cost removal throughout 2019.

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OUTLOOK

Operating Segments & End-Market Expectations

In 2022, economic forecasts are projecting above average global gross domestic product ("GDP") growth rates due to strong industrial and consumer demand trends which have the potential to positively impact sales volume. Inflationary impacts on natural gas and feedstocks, driven by external macroeconomic and geopolitical factors, remain a potential risk in the near-term, but are expected to be moderate as warmer weather lowers demand for heating supply. The Company anticipates constructive global demand for crude oil compared with 2021 due to ongoing recovery in travel and mobility. Crude oil fundamentals suggest global supply will lag the growing demand that provides support to oil prices and oil-to-gas spreads.

In Packaging & Specialty Plastics, supply improvements following significant weather-related disruptions in 2021 are expected to drive sales volume on continued underlying demand strength, notably in flexible food and specialty packaging, industrial and consumer packaging and functional polymers. Integrated margins are expected to stabilize with recent industry supply additions. The Company’s regional feedstock cost advantages will help offset elevated raw material and energy costs. Other important factors that will impact performance are raw material and logistics challenges; industry operating rates; and timing of additional industry capacity startups.

In Industrial Intermediates & Infrastructure, volume growth is expected across the portfolio, driven by continued underlying demand strength for products used in furniture and bedding, appliances, automotive, construction, electronics and pharma applications. The methylene diphenyl diisocyanate value chain is expected to remain tight with industry capacity additions trailing demand growth. Propylene oxide is expected to be impacted by new capacity entering the market, particularly in Asia Pacific. Ethylene oxide supply is expected to remain tight, with limited industry capacity additions in the near-term and continued demand strength. Margins for the segment are expected to benefit from high-value specialties aligned to strategic incremental growth capacity additions.

In Performance Materials & Coatings, sales growth is expected in downstream silicones, particularly for products used in mobility and transportation, high performance building and construction, industrial, consumer, and electronics applications. The Company continues to pursue incremental downstream silicones capacity debottlenecking and growth projects to meet demand growth in consumer-driven end-markets. Within siloxanes, increased supply availability is expected to drive sales volume. Global demand strength in architectural and industrial coatings is expected to drive sales volume. The Company remains well-positioned to benefit from its customers’ shift to sustainable chemistries where Dow has unique technologies and solutions to offer in both business units.

Other factors impacting operating segment profitability include:

•Planned maintenance turnaround spending is expected to increase approximately $100 million compared with 2021 due to inflationary pressures on materials and labor.

•Equity in earnings of nonconsolidated affiliates is expected to decrease compared with 2021 as margins compress on industry supply additions, lower Asian olefins and mono ethylene glycol prices, and increasing raw material costs.

Projected Uses of Cash

Items that may impact the consolidated statements of cash flows in 2022 include:

•Cash contributions to pension plans are expected to be approximately $250 million.

•Capital expenditures are expected to be approximately $2.2 billion.

•Cash expenditures related to the Digital Acceleration program are expected to be $250 million in 2022.

•Cash outflows related to the Company's 2020 Restructuring Program, including restructuring implementation costs, are expected to be approximately $175 million.

•Cash dividends from equity companies are expected to increase following increased equity earnings in 2021.

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LIQUIDITY AND CAPITAL RESOURCES

The Company had cash and cash equivalents of $2,988 million at December 31, 2021 and $5,104 million at December 31, 2020, of which $1,745 million at December 31, 2021 and $862 million at December 31, 2020, was held by subsidiaries in foreign countries, including United States territories. For each of its foreign subsidiaries, the Company makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

The cash 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 December 31, 2021, management believed that sufficient liquidity was available in the United States. The Company has and expects to continue repatriating certain funds from its non-U.S. subsidiaries that are not needed to finance local operations; however, these particular repatriation activities have not and are not expected to result in a significant incremental tax liability to the Company.

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
In millions	2021		2020		2019		2021		2020		2019
Cash provided by (used for):
Operating activities - continuing operations	$	7,069	$	6,252	$	5,713	$	7,200	$	6,263	$	5,706
Operating activities - discontinued operations	(60)		(26)		217		—		—		371
Operating activities	7,009		6,226		5,930		7,200		6,263		6,077
Investing activities - continuing operations	(2,914)		(841)		(2,158)		(2,914)		(841)		(2,158)
Investing activities - discontinued operations	—		—		(34)		—		—		(34)
Investing activities	(2,914)		(841)		(2,192)		(2,914)		(841)		(2,192)
Financing activities - continuing operations	(6,071)		(2,764)		(4,077)		(6,262)		(2,801)		(4,224)
Financing activities - discontinued operations	—		—		(18)		—		—		(18)
Financing activities	(6,071)		(2,764)		(4,095)		(6,262)		(2,801)		(4,242)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(99)		107		(27)		(99)		107		(27)
Summary
Increase (decrease) in cash, cash equivalents and restricted cash	(2,075)		2,728		(384)		(2,075)		2,728		(384)
Cash, cash equivalents and restricted cash at beginning of year	5,108		2,380		2,764		5,108		2,380		2,764
Cash, cash equivalents and restricted cash at end of year	$	3,033	$	5,108	$	2,380	$	3,033	$	5,108	$	2,380
Less: Restricted cash and cash equivalents, included in "Other current assets"	45		4		13		45		4		13
Cash and cash equivalents at end of year	$	2,988	$	5,104	$	2,367	$	2,988	$	5,104	$	2,367

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Cash Flows from Operating Activities

Cash provided by operating activities from continuing operations in 2021 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, pension contributions and performance-based compensation payments. Cash provided by operating activities from continuing operations in 2020 was primarily driven by the Company's cash earnings, cash receipts related to an advance payment from a customer and the Nova ethylene asset matter, dividends from equity method investments and working capital improvements, which were partially offset by pension contributions. Cash provided by operating activities from continuing operations in 2019 was primarily driven by the Company's cash earnings, dividends from equity method investments, working capital improvements, cash receipts related to an advance payment from a customer and the Nova ethylene asset matter, which were partially offset by performance-based compensation payments and pension contributions.


Net Working Capital and Current Ratio at Dec 31	Dow Inc.				TDCC
In millions	2021		2020		2021		2020
Current assets	$	20,848	$	19,084	$	20,837	$	18,998
Current liabilities	13,226		11,108		13,046		10,574
Net working capital	$	7,622	$	7,976	$	7,791	$	8,424
Current ratio	1.58:1		1.72:1		1.60:1		1.80:1


Working Capital Metrics	Twelve Months Ended
		Dec 31, 2021	Dec 31, 2020
Days sales outstanding in trade receivables		40	48
Days sales in inventory		54	65
Days payables outstanding		57	66

Cash provided by (used for) operating activities from discontinued operations primarily related to cash payments and receipts the Company had with DuPont and Corteva that related to certain agreements and matters related to the separation from DowDuPont. See Note 3 to the Consolidated Financial Statements for additional information.

Cash Flows from Investing Activities

Cash used for investing activities from continuing operations in 2021 was primarily for capital expenditures and purchases of investments and previously leased assets, which were partially offset by proceeds from sales and maturities of investments. Cash used for investing activities from continuing operations in 2020 was primarily for capital expenditures, purchases of investments, investments in and loans to nonconsolidated affiliates (related to Sadara) and acquisitions of property and businesses, which were partially offset by proceeds from sales and maturities of investments and proceeds from sales of property and businesses. Cash used for investing activities from continuing operations in 2019 was primarily for capital expenditures, purchases of investments and investments in and loans to nonconsolidated affiliates, which were partially offset by proceeds from sales and maturities of investments.

The Company loaned Sadara $333 million in 2020 and $473 million in 2019. As a result of Sadara's debt re-profiling completed in the first quarter of 2021, the Company did not provide any shareholder loans or equity contributions to Sadara in 2021. See Notes 12 and 16 to the Consolidated Financial Statements for additional information.

The Company's capital expenditures related to continuing operations were $1,501 million in 2021, $1,252 million in 2020 and $1,961 million in 2019. Capital spending was higher in 2021 as the Company ramped up its growth projects and investments to keep pace with demand recovery. The Company expects capital spending in 2022 to be approximately $2.2 billion.

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Capital spending in recent years has included an expansion of the Company's new ethylene production facility in Freeport, Texas, which commenced operations in 2020, bringing the facility's total ethylene capacity to 2,000 kilotonnes per annum and making it the largest ethylene cracker in the world; the addition of a furnace to the Company's ethylene production facility in Alberta, Canada, which commenced operations in 2021; the retrofit of one of the Company's Louisiana steam crackers with Dow's proprietary fluidized catalytic dehydrogenation ("FCDh") technology to produce on-purpose propylene and the addition of a new specialty alkoxylation reactor in Plaquemine, Louisiana, which are both expected to be completed in the second half of 2022; and the addition of an integrated MDI distillation and prepolymers facility at its site in Freeport, Texas, which is expected to be completed in 2023.

Cash used for investing activities from discontinued operations in 2019 was primarily for capital expenditures, partially offset by proceeds from the sales of property, businesses and ownership interests in nonconsolidated affiliates.

Cash Flows from Financing Activities

Cash used for financing activities from continuing operations in 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. In addition, Dow Inc. included cash outflows for dividends paid to stockholders and purchases of treasury stock and TDCC included cash outflows for dividends paid to Dow Inc. Cash used for financing activities from continuing operations in 2020 included payments on long-term debt, changes in short-term notes payable and transaction financing, debt issuance and other costs, which were partially offset by proceeds from issuance of long-term debt. In addition, Dow Inc. included cash outflows for dividends paid to stockholders and purchases of treasury stock and TDCC included cash outflows for dividends paid to Dow Inc. Cash used for financing activities from continuing operations in 2019 included payments on long-term debt and dividends paid to DowDuPont, which were partially offset by proceeds from issuance of long-term debt. In addition, Dow Inc. received cash as part of the separation from DowDuPont, which was more than offset by dividends paid to stockholders and purchases of treasury stock. See Notes 15 and 18 to the Consolidated Financial Statements for additional information related to the issuance and retirement of debt and the Company's share repurchases and dividends.

Cash used for financing activities from discontinued operations in 2019 primarily related to distributions to noncontrolling interests and employee taxes paid for share-based payment arrangements.

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 and Pro Forma Operating EBITDA

Dow defines Operating EBITDA (for the years ended December 31, 2021 and 2020) as earnings (i.e., "Income from continuing operations before income taxes") before interest, depreciation and amortization, excluding the impact of significant items. Pro forma Operating EBITDA (for the year ended December 31, 2019) is defined as earnings (i.e. "Income (loss) from continuing operations before income taxes") before interest, depreciation and amortization, plus pro forma adjustments, excluding the impact of significant items.

Cash Flow Conversion (Operating EBITDA or Pro Forma Operating EBITDA to Cash Flow From Operations)

Dow defines cash flow conversion (Operating EBITDA or pro forma Operating EBITDA to cash flow from operations) as "Cash provided by operating activities - continuing operations," divided by Operating EBITDA or pro forma 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.

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.

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Reconciliation of Non-GAAP Cash Flow Measures	Dow Inc.
In millions	2021		2020		2019
Cash provided by operating activities - continuing operations (GAAP)	$	7,069	$	6,252	$	5,713
Capital expenditures	(1,501)		(1,252)		(1,961)
Free cash flow (non-GAAP) 1	$	5,568	$	5,000	$	3,752

1.Free cash flow for the year ended December 31, 2021 reflects a $1 billion elective pension contribution.


Reconciliation of Cash Flow Conversion (Operating EBITDA or Pro Forma Operating EBITDA to Cash Flow From Operations)	Dow Inc.
In millions	2021			2020			2019 1
Income (loss) from continuing operations, net of tax (GAAP)	$	6,405		$	1,294		$	(1,717)
+ Provision for income taxes on continuing operations	1,740			777			470
Income (loss) from continuing operations before income taxes	$	8,145		$	2,071		$	(1,247)
- Interest income	55			38			81
+ Interest expense and amortization of debt discount	731			827			933
+ Pro forma adjustments ²	—			—			65
- Significant items ³	(712)			145			(4,682)
Operating EBIT (non-GAAP)	$	9,533		$	2,715		$	4,352
+ Depreciation and amortization	2,842			2,874			2,938
Operating EBITDA (non-GAAP)	$	12,375		$	5,589		$	7,290
Cash provided by operating activities - continuing operations (GAAP)	$	7,069		$	6,252		$	5,713
Cash flow conversion (Operating EBITDA or pro forma Operating EBITDA to cash flow from operations) (non-GAAP) 4	57.1		%	111.9		%	78.4		%

1.Operating EBIT, depreciation and amortization and Operating EBITDA for the year ended December 31, 2019 is presented on a pro forma basis.

2.Pro forma adjustments for the year ended December 31, 2019 include: (1) the margin impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont and (2) the elimination of the impact of events directly attributable to the Merger, internal reorganization and business realignment, separation, distribution and other related transactions (e.g., one-time transaction costs).

3.The year ended December 31, 2021 includes costs associated with the Company's digital acceleration program; restructuring, implementation costs and asset related charges - net; a loss on early extinguishment of debt; a gain on a previous divestiture, litigation related charges, awards and adjustments; and indemnification and other transaction related costs. The year ended December 31, 2020 includes integration and separation costs, restructuring, implementation costs and asset related charges - net, a gain on a warranty accrual adjustment of an exited business, a net gain on divestitures and asset sale, a gain related to a legal matter with Nova, a loss on early extinguishment of debt and a loss associated with agreements entered into with DuPont and Corteva as part of the separation and distribution. The year ended December 31, 2019 includes integration and separation costs, restructuring, goodwill impairment and asset related charges - net, a gain on a warranty accrual adjustment of an exited business, environmental charges, a loss related to previous divestitures, a loss on early extinguishment of debt, a net gain related to litigation matters and a loss associated with agreements entered into with DuPont and Corteva as part of the separation and distribution. See Note 26 to the Consolidated Financial Statements for additional information.

4.Cash flow conversion for the year ended December 31, 2021 reflects a $1 billion elective pension contribution.

Liquidity & Financial Flexibility

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

The Company continues to maintain a strong financial position with all of its committed credit facilities undrawn and fully available at December 31, 2021. Cash and committed and available forms of liquidity were $12.6 billion at December 31, 2021. The Company also has no substantive long-term debt maturities due until 2026. Additional details on sources of liquidity are as follows:

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Commercial Paper

TDCC issues promissory notes under its U.S. and Euromarket commercial paper programs. TDCC had no commercial paper outstanding at December 31, 2021 and 2020. 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 December 31, 2021, TDCC issued approximately $1.3 billion of commercial paper.

Committed Credit Facilities

The Company also has the ability to access liquidity through TDCC's committed and available credit facilities. At December 31, 2021, TDCC had total committed and available credit facilities of $8.1 billion. See Note 15 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. At December 31, 2021, there were no receivables sold under the U.S. and Europe committed accounts receivable facilities. See Note 14 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. In the first quarter of 2021, the Company monetized $200 million of its existing COLI policies' surrender value. In the second quarter of 2021, the Company repaid the drawdown against the cash surrender value. The Company had no outstanding monetization of its existing COLI policies' surrender value at December 31, 2021. See Note 7 to the Consolidated Financial Statements for additional information.

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 December 31, 2021.

Letters of Credit

TDCC utilizes letters of credit to support commitments made in the ordinary course of business. While the terms and amounts of letters of credit change, TDCC generally has approximately $400 million of outstanding letters of credit at any given time.

Early Settlement of Letters of Credit

The Company utilizes, from time-to-time, letters of credit discounting programs to manage and expedite the settlement of letters of credit in certain regions. These letters of credit are associated with accounts receivable and the Company retains no interest in the transferred letters of credit or receivables once sold.

Shelf Registration - U.S.

On July 26, 2019, Dow Inc. and TDCC filed a shelf registration statement with the SEC. 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. Also on July 26, 2019, TDCC filed a new prospectus supplement under this shelf registration to register an unlimited amount of securities for issuance under InterNotes®. The shelf registration expires on July 26, 2022. The Company expects to renew the shelf registration.

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Debt

As the Company continues to maintain its strong balance sheet and financial flexibility, management is focused on net debt (a non-GAAP financial measure), as the Company believes this is the best representation of its financial leverage at this point in time. As shown in the following table, net debt is equal to total gross debt minus "Cash and cash equivalents" and "Marketable securities." At December 31, 2021, net debt as a percentage of total capitalization for Dow Inc. and TDCC decreased to 37.9 percent and 37.5 percent, respectively, compared with 47.9 percent and 46.8 percent, respectively, at December 31, 2020.


Total Debt at Dec 31	Dow Inc.						TDCC
In millions	2021			2020			2021			2020
Notes payable	$	161		$	156		$	161		$	156
Long-term debt due within one year	231			460			231			460
Long-term debt	14,280			16,491			14,280			16,491
Gross debt	$	14,672		$	17,107		$	14,672		$	17,107
- Cash and cash equivalents	2,988			5,104			2,988			5,104
- Marketable securities 1	245			45			245			45
Net debt	$	11,439		$	11,958		$	11,439		$	11,958
Total equity	$	18,739		$	13,005		$	19,029		$	13,569
Gross debt as a percentage of total capitalization	43.9		%	56.8		%	43.5		%	55.8		%
Net debt as a percentage of total capitalization	37.9		%	47.9		%	37.5		%	46.8		%

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

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 as defined in the Revolving Credit Agreement was .40 to 1.00 at December 31, 2021. Management believes TDCC was in compliance with all of its covenants and default provisions at December 31, 2021. The Revolving Credit Agreement was extended in November 2021 to include favorable updates to the terms and conditions and matures in November 2026.

On April 1, 2019, DowDuPont completed the separation of its materials science business and Dow Inc. became the direct parent company of TDCC. In conjunction with the separation, Dow Inc. is obligated, substantially concurrently with the issuance of any guarantee in respect of outstanding or committed indebtedness under the Revolving Credit Agreement, to enter into a supplemental indenture with TDCC and the trustee under TDCC’s existing 2008 base indenture governing certain notes issued by TDCC. Under such supplemental indenture, Dow Inc. will guarantee all outstanding debt securities and all amounts due under such existing base indenture and will become subject to certain covenants and events of default under the existing base indenture.

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In addition, the Revolving Credit Agreement includes an event of default which would be triggered in the event Dow Inc. incurs or guarantees third party indebtedness for borrowed money in excess of $250 million or engages in any material activity or directly owns any material assets, in each case, subject to certain conditions and exceptions. Dow Inc. may, at its option, cure the event of default by delivering an unconditional and irrevocable guarantee to the administrative agent within thirty days of the event or events giving rise to such event of default.

No such events have occurred or have been triggered at the time of the filing of this Annual Report on Form 10-K. See Note 15 to the Consolidated Financial Statements for information related to TDCC’s notes payable and long-term debt activity and information on TDCC’s debt covenants and default provisions.

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

TDCC's credit ratings at January 31, 2022 were as follows:


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

On April 13, 2021, Fitch reaffirmed TDCC’s BBB+ and F2 rating, and revised its outlook to stable from negative. The decision was made as part of Fitch’s annual review process.

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

Dividends

Dow Inc.

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


Dividends Paid for the Years Ended Dec 31	2021		2020		2019 1
In millions, except per share amounts	2021		2020		2019 1
Dividends paid, per common share	$	2.80	$	2.80	$	2.10
Dividends paid to common stockholders	$	2,073	$	2,071	$	1,550

1.Reflects Dow Inc. activity subsequent to the separation from DowDuPont.


Dow Inc. Cash Dividends Declared and Paid
Declaration Date	Record Date	Payment Date	Amount (per share)
February 11, 2021	February 26, 2021	March 12, 2021	$	0.70
April 15, 2021	May 28, 2021	June 11, 2021	$	0.70
August 12, 2021	August 31, 2021	September 10, 2021	$	0.70
October 14, 2021	November 30, 2021	December 10, 2021	$	0.70

1.Operating net income is a non-GAAP measure that Dow defines as "Net income (loss) available for Dow Inc. common stockholders," excluding the impact of significant items.

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TDCC

Effective with the Merger, TDCC no longer has publicly traded common stock. From the Merger Date through March 31, 2019, TDCC's common shares were owned solely by DowDuPont. Pursuant to the Merger Agreement, TDCC committed to fund a portion of DowDuPont's dividends paid to common stockholders and certain governance expenses. Funding was accomplished through intercompany loans. On a quarterly basis, TDCC's Board reviewed and determined a dividend distribution to DowDuPont to settle the intercompany loans. The dividend distribution considered the level of TDCC’s earnings and cash flows and the outstanding intercompany loan balances. TDCC declared and paid dividends to DowDuPont of $535 million for the year ended December 31, 2019. See Note 25 to the Consolidated Financial Statements for additional information.

Effective with the separation from DowDuPont on April 1, 2019, TDCC became a wholly owned subsidiary of Dow Inc. TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders, share repurchases and 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 year ended December 31, 2021, TDCC declared and paid dividends to Dow Inc. of $3,264 million ($2,233 million for the year ended December 31, 2020 and $201 million for the year ended December 31, 2019). At December 31, 2021, TDCC's intercompany loan balance with Dow Inc. was insignificant. See Note 25 to the Consolidated Financial Statements for additional information.

Share Repurchase Program

Dow Inc.

On April 1, 2019, Dow Inc.'s Board ratified the share repurchase program originally approved on March 15, 2019, authorizing up to $3.0 billion to be spent on the repurchase of the Company's common stock, with no expiration date. In 2021, Dow Inc. repurchased $1.0 billion of the Company's common stock. At December 31, 2021, approximately $1.4 billion of the share repurchase program authorization remained available for repurchases. As previously announced, the Company intends to, at a minimum, repurchase shares to cover dilution. The Company may expand share repurchases beyond dilution as favorable economic conditions develop. Any share repurchases, when coupled with the Company's dividends, is 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. In 2021, 2020 and 2019, the Company contributed $1,219 million, $299 million and $261 million to its continuing operations pension plans respectively, including contributions to fund benefit payments for its non-qualified pension plans ($1,219 million, $299 million and $266 million, including contributions to plans of discontinued operations). In the first quarter of 2021, the Company elected to contribute $1 billion to its U.S. tax-qualified pension plans, which is included in the 2021 contribution amount above. This contribution was based on the Company's funding policy, which is to contribute to defined benefit pension plans when pension laws and/or economics either require or encourage funding. The Company expects to contribute approximately $180 million to its pension plans in 2022.

On March 4, 2021, the Company announced changes to the design of its U.S. tax-qualified and non-qualified pension plans (collectively, the "U.S. Plans") and, effective December 31, 2023, the Company will freeze the pensionable compensation and credited service amounts used to calculate pension benefits for employees who participate in the U.S. Plans. See Note 20 to the Consolidated Financial Statements for additional information concerning the Company’s pension plans.

Restructuring

The actions related to the 2020 Restructuring Program are expected to result in additional cash expenditures of $168 million, primarily through the third quarter of 2022, 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 $50 million, primarily through the third quarter of 2022. Restructuring implementation costs totaled $63 million in 2021.

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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 6 to the Consolidated Financial Statements for additional information on the Company's restructuring activities.

Digital Acceleration

In the first quarter of 2021, Dow announced plans to further advance and expand its digitalization efforts to deliver long-term value creation, by accelerating investment in three key areas: expanding digital tools to accelerate materials science innovation; further enhancing the e-commerce buying and fulfillment experience for Dow's customers; and adopting real-time digital manufacturing insights, operational data intelligence and demand sensing to enhance the productivity and reliability of Dow’s operations. The Company expects more than $300 million in incremental annual run rate Operating EBITDA generation by the end of 2025 related to digital acceleration, with an additional one-time $100 million in structural working capital efficiency gains, driven in part by enhanced planning from digital tools. The activities related to digital acceleration are expected to result in additional cash expenditures of approximately $250 million, primarily through the end of 2022. Digital acceleration expenses totaled $169 million in 2021.

Contractual Obligations

The following table summarizes the Company’s contractual obligations, commercial commitments and expected cash requirements for interest at December 31, 2021. Additional information related to these obligations can be found in Notes 15, 16, 17 and 20 to the Consolidated Financial Statements.


Contractual Obligations at Dec 31, 2021	Payments Due In
In millions	2022		2023-2024		2025-2026		2027 and beyond		Total
Dow Inc.
Long-term debt obligations 1	$	231	$	464	$	1,213	$	12,900	$	14,808
Expected cash requirements for interest 2	631		1,207		1,149		7,409		10,396
Pension and other postretirement benefits	280		587		594		6,089		7,550
Operating leases 3	346		499		326		570		1,741
Purchase obligations 4	2,953		4,337		2,579		3,428		13,297
Other noncurrent obligations 5	—		910		677		1,391		2,978
Total	$	4,441	$	8,004	$	6,538	$	31,787	$	50,770
TDCC
Long-term debt obligations 1	$	231	$	464	$	1,213	$	12,900	$	14,808
Expected cash requirements for interest 2	631		1,207		1,149		7,409		10,396
Pension and other postretirement benefits	280		587		594		6,089		7,550
Operating leases 3	346		499		326		570		1,741
Purchase obligations 4	2,953		4,337		2,579		3,428		13,297
Other noncurrent obligations 5	—		884		578		1,368		2,830
Total	$	4,441	$	7,978	$	6,439	$	31,764	$	50,622

1.Excludes unamortized debt discount and issuance costs of $297 million. Includes finance lease obligations of $869 million.

2.Cash requirements for interest on long-term debt was calculated using current interest rates at December 31, 2021, and includes $53 million of various floating rate notes.

3.Includes imputed interest of $278 million.

4.Includes outstanding purchase orders and other commitments greater than $1 million obtained through a survey conducted within the Company.

5.Includes liabilities related to asbestos litigation, environmental remediation, legal matters and other noncurrent liabilities. In addition to these items, Dow Inc. includes liabilities related to noncurrent obligations with DuPont and Corteva. The table excludes uncertain tax positions due to uncertainties in the timing of the effective settlement of tax positions with the respective taxing authorities and deferred tax liabilities as it is impractical to determine whether there will be a cash impact related to these liabilities. The table also excludes deferred revenue as it does not represent future cash requirements arising from contractual payment obligations.

The Company expects to meet its contractual obligations through its normal sources of liquidity and believes it has the financial resources to satisfy these contractual obligations.

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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 24 to the Consolidated Financial Statements). In addition, see Note 14 to the Consolidated Financial Statements for information regarding the transfer of financial assets.

Fair Value Measurements

See Note 20 to the Consolidated Financial Statements for information related to fair value measurements of pension and other postretirement benefit plan assets; see Note 22 for information related to other-than-temporary impairments; and, see Note 23 for additional information concerning fair value measurements.

OTHER MATTERS

Recent Accounting Guidance

See Note 2 to the Consolidated Financial Statements for a summary of recent accounting guidance.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in accordance with U.S. GAAP 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 describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. Following are the Company’s accounting policies impacted by judgments, assumptions and estimates:

Litigation

The Company is subject to legal proceedings and claims arising out of the normal course of business including product liability, patent infringement, employment matters, governmental tax and regulation disputes, contract and commercial litigation and other actions. The Company routinely assesses the legal and factual circumstances of each matter, the likelihood of any adverse outcomes to these matters, as well as ranges of probable losses. A determination of the amount of the reserves required, if any, for these contingencies is made after thoughtful analysis of each known claim. The Company has an active risk management program consisting of numerous insurance policies secured from many carriers covering various timeframes. These policies may provide coverage that could be utilized to minimize the financial impact, if any, of certain contingencies. The required reserves may change in the future due to new developments in each matter. For further discussion, see Note 16 to the Consolidated Financial Statements.

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem Products, Inc. ("Amchem"). Each year, Ankura Consulting Group, LLC ("Ankura") performs a review for Union Carbide based upon historical asbestos claims, resolution and asbestos-related defense and processing costs, through the terminal year of 2049. Union Carbide compares current asbestos claim and resolution activity, including asbestos-related defense and processing costs, to the results of the most recent Ankura study at each balance sheet date to determine whether the asbestos-related liability continues to be appropriate.

For additional information, see Part I, Item 3. Legal Proceedings; Asbestos-Related Matters of Union Carbide Corporation in Management’s Discussion and Analysis of Financial Condition and Results of Operations; and Notes 1 and 16 to the Consolidated Financial Statements.

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Environmental Matters

The Company determines the costs of environmental remediation of its facilities and formerly owned facilities based on evaluations of current law and existing technologies. Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies. The recorded liabilities are adjusted periodically as remediation efforts progress, or as additional technical or legal information becomes available. At December 31, 2021, the Company had accrued obligations of $1,220 million for probable environmental remediation and restoration costs, including $237 million for the remediation of Superfund sites. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. For further discussion, see Environmental Matters in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Notes 1 and 16 to the Consolidated Financial Statements.

Goodwill

The Company performs goodwill impairment testing at the reporting unit level. Reporting units are the level at which discrete financial information is available and reviewed by business management on a regular basis. The Company tests goodwill for impairment annually (in the fourth quarter), or more frequently when events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit has declined below its carrying value. Goodwill is evaluated for impairment using qualitative and/or quantitative testing procedures. The separation from DowDuPont on April 1, 2019, did not impact the composition of the Company's six reporting units: Coatings & Performance Monomers, Consumer Solutions, Hydrocarbons & Energy, Industrial Solutions, Packaging and Specialty Plastics and Polyurethanes & Construction Chemicals. The ECP businesses received as part of the separation from DowDuPont are included in the Hydrocarbons & Energy and Packaging and Specialty Plastics reporting units. At December 31, 2021, goodwill was carried by five out of six of the Company's reporting units.

The Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. Qualitative factors assessed at the Company level include, but are not limited to, GDP growth rates, long-term hydrocarbon and energy prices, equity and credit market activity, discount rates, foreign exchange rates and overall financial performance. Qualitative factors assessed at the reporting unit level include, but are not limited to, changes in industry and market structure, competitive environments, planned capacity and new product launches, cost factors such as raw material prices, and financial performance of the reporting unit. If the Company chooses not to complete qualitative testing for a given reporting unit or if the initial assessment indicates that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying value, additional quantitative testing is required.

Quantitative testing requires the fair value of the reporting unit to be compared with its carrying value. If the reporting unit's carrying value exceeds its fair value, an impairment charge is recognized for the difference. The Company utilizes a discounted cash flow methodology to calculate the fair value of its reporting units. This valuation technique has been selected by management as the most meaningful valuation method due to the limited number of market comparables for the Company's reporting units. However, where market comparables are available, the Company includes EBIT/EBITDA multiples as part of the reporting unit valuation analysis. The discounted cash flow valuations are completed using the following key assumptions: projected revenue growth rates or compounded annual growth rates, discount rates, tax rates, terminal values, currency exchange rates, and forecasted long-term hydrocarbon and energy prices, by geographic region and by year, which include the Company's key feedstocks as well as natural gas and crude oil (due to its correlation to naphtha). Currency exchange rates and long-term hydrocarbon and energy prices are established for the Company as a whole and applied consistently to all reporting units, while revenue growth rates, discount rates and tax rates are established by reporting unit to account for differences in business fundamentals and industry risk. These key assumptions drive projected EBIT/EBITDA and EBIT/EBITDA margins, which are key elements of management’s internal control over the reporting unit valuation analysis.

2021 Goodwill Impairment Testing

In 2021, there were no events or changes in circumstances that warranted interim goodwill impairment testing. In the fourth quarter of 2021, qualitative testing was performed for all reporting units carrying goodwill. Based on the results of the qualitative testing, the Company did not perform quantitative testing on any reporting units. For the qualitative testing, management considered factors at both the Company level and the reporting unit level. Based on the qualitative testing for the reporting units, management concluded it is not more likely than not that the fair value of the reporting unit is less than the carrying value of the reporting unit.

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Pension and Other Postretirement Benefits

The amounts recognized in the consolidated financial statements related to pension and other postretirement benefits are determined from actuarial valuations. Inherent in these valuations are assumptions including expected return on plan assets, discount rates at which the liabilities could have been settled at December 31, 2021, rate of increase in future compensation levels, mortality rates and health care cost trend rates. These assumptions are updated annually and are disclosed in Note 20 to the Consolidated Financial Statements. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and amortized over future periods and, therefore, affect expense recognized and obligations recorded in future periods. The U.S. pension plans represent 71 percent of the Company’s pension plan assets and 70 percent of the pension obligations.

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; service cost and interest cost for all other plans (including all plans prior to adoption) are determined on the basis of the single equivalent discount rates derived in determining those plan obligations.

The following information relates to the U.S. plans only; a similar approach is used for the Company’s non-U.S. plans.

The Company determines the expected long-term rate of return on assets by performing a detailed analysis of historical and expected returns based on the strategic asset allocation approved by the Company's Investment Committee and the underlying return fundamentals of each asset class. The Company’s historical experience with the pension fund asset performance is also considered. The expected return of each asset class is derived from a forecasted future return confirmed by historical experience. The expected long-term rate of return is an assumption and not what is expected to be earned in any one particular year. The weighted-average long-term rate of return assumption used for determining net periodic pension expense for 2021 was 7.96 percent. The weighted-average assumption to be used for determining 2022 net periodic pension expense is 7.95 percent. Future actual pension expense will depend on future investment performance, changes in future discount rates and various other factors related to the population of participants in the Company’s pension plans.

The discount rates utilized to measure the pension and other postretirement obligations of the U.S. plans are based on the yield on high-quality corporate fixed income investments at the measurement date. Future expected actuarially determined cash flows for the Company’s U.S. plans are individually discounted at the spot rates under the Willis Towers Watson U.S. 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 weighted average discount rate utilized to measure pension obligations increased to 3.04 percent at December 31, 2021, from 2.71 percent at December 31, 2020.

At December 31, 2021, the U.S. tax-qualified plans were underfunded on a projected benefit obligation basis by $2,585 million. The underfunded amount decreased $3,288 million compared with December 31, 2020. The decrease in the underfunded amount in 2021 was primarily due to the impact of higher discount rates, overall favorable asset returns, a $1 billion contribution to the U.S. tax-qualified pension plans, and plan design changes.

The assumption for the long-term rate for compensation levels for the U.S. tax-qualified plans was unchanged. The Company uses a generational mortality table to determine the duration of its pension and other postretirement obligations.

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The following discussion relates to the Company’s significant pension plans.

The Company bases the determination of pension expense on a market-related valuation of plan assets that reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-year period from the year in which they occur. Investment gains or losses for this purpose represent the difference between the expected return calculated using the market-related value of plan assets and the actual return based on the market value of plan assets. Since the market-related value of plan assets recognizes gains or losses over a five-year period, the future value will be impacted when previously deferred gains or losses are recorded. Over the life of the plans, both gains and losses have been recognized and amortized. At December 31, 2021, net gains of $1,628 million remain to be recognized in the calculation of the market-related value of plan assets. These net gains will result in decreases in future pension expense as they are recognized in the market-related value of assets.

The net increase in the market-related value of assets due to the recognition of prior gains is presented in the following table:


Net Increase in Market-Related Asset Value Due to Recognition of Prior Gains
In millions
2022	$	329
2023	770
2024	377
2025	152
Total	$	1,628

Exclusive of one-time curtailment gains recognized in 2021, the Company expects pension expense to decrease in 2022 by approximately $25 million. The decrease is driven by a reduction in the amortization of actuarial losses.

A 25 basis point increase or decrease in the long-term return on assets assumption would change the Company’s total pension expense for 2022 by $62 million. A 25 basis point increase in the discount rate assumption would decrease the Company's total pension expense for 2022 by $53 million. A 25 basis point decrease in the discount rate assumption would increase the Company's total pension expense for 2022 by $55 million. A 25 basis point change in the long-term return and discount rate assumptions would have an immaterial impact on the other postretirement benefit expense for 2022.

Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities, applying enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Based on the evaluation of available evidence, both positive and negative, the Company recognizes future tax benefits, such as net operating loss carryforwards and tax credit carryforwards, to the extent that realizing these benefits is considered to be more likely than not.

At December 31, 2021, the Company had a net deferred tax asset balance of $852 million, after valuation allowances of $1,391 million.

In evaluating the ability to realize the deferred tax assets, the Company relies on, in order of increasing subjectivity, taxable income in prior carryback years, the future reversals of existing taxable temporary differences, tax planning strategies and forecasted taxable income using historical and projected future operating results.

At December 31, 2021, the Company had deferred tax assets for tax loss and tax credit carryforwards of $1,784 million, $864 million of which is subject to expiration in the years 2022 through 2026. In order to realize the deferred tax assets for operating tax loss and tax credit carryforwards, the Company needs taxable income of approximately $25,034 million across multiple jurisdictions. The taxable income needed to realize the deferred tax assets for operating tax loss and tax credit carryforwards that are subject to expiration from 2022 through 2026 is approximately $14,748 million.

The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world. Tax authorities have the ability to review and challenge matters that could be subject to differing interpretation of applicable tax laws and regulations as they relate to the amount, character, timing or inclusion of revenue and expenses or the sustainability of tax attributes. The ultimate resolution of such uncertainties could last

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several years. When an uncertain tax position is identified, the Company considers and interprets complex tax laws and regulations in order to determine the need for recognizing a provision in its financial statements. Significant judgment is required in determining the timing and measurement of uncertain tax positions. The Company utilizes internal and external expertise in interpreting tax laws to support the Company's tax positions. The Company recognizes the financial statement effects of an uncertain income tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination. At December 31, 2021, the Company had uncertain tax positions for both domestic and foreign issues of $580 million and $502 million for interest and penalties.

Environmental Matters

Environmental Policies

Dow is committed to world-class environmental, health and safety (“EH&S”) performance, as demonstrated by industry-leading performance, a long-standing commitment to Responsible Care®, and a strong commitment to achieve the Company's 2025 Sustainability Goals – goals that set the standard for sustainability in the chemical industry by focusing on improvements in the Company’s local corporate citizenship and product stewardship, and by actively pursuing methods to reduce its environmental impact.

To meet the Company’s public commitments, as well as the stringent laws and government regulations related to environmental protection and remediation to which its global operations are subject, the Company has well-defined policies, requirements and management systems. The Company's EH&S Management System (“EMS”) defines the “who, what, when and how” needed for the businesses to achieve the Company’s policies, requirements, performance objectives, leadership expectations and public commitments. To ensure effective utilization, the EMS is integrated into a company-wide management system for EH&S, Operations, Quality and Human Resources.

The Company believes third-party verification and transparent public reporting are cornerstones of world-class EH&S performance and building public trust. Numerous Dow sites in Europe, Latin America, Asia Pacific and the U.S. & Canada have received third-party verification of the Company’s compliance with Responsible Care® and with outside specifications such as ISO-14001. The Company continues to be a global champion of Responsible Care® and has worked to broaden the application and impact of Responsible Care® around the world through engagement with suppliers, customers and joint venture partners.

Dow's EH&S policies help to ensure the Company achieves its annual health and safety performance targets and the Company seeks to continuously improve on these targets through process and personal safety project implementations. Improvement in these areas, as well as environmental compliance, remains a top management priority, as the Company continues to implement its 2025 Sustainability Goals and progressive, multi-decade sustainability targets announced in 2020 that include advancing a circular economy and climate protection. Progress is reviewed regularly by management and with the Environment, Health, Safety & Technology Committee of the Board.

Detailed information on Dow’s performance regarding environmental matters and goals is accessible through the Company's Science & Sustainability webpage at www.dow.com/sustainability. Dow's website and its content are not deemed incorporated by reference into this report.

Chemical Security

Public and political attention continues to be placed on the protection of critical infrastructure, including the chemical industry, from security threats. Terrorist attacks, natural disasters and cyber incidents have increased global concerns about the security and safety of chemical production and distribution. Many, including the Company and the American Chemistry Council, have called for uniform risk-based and performance-based national standards for securing the U.S. chemical industry. U.S. regulations set forth risk-based and performance-based standards that must be met at U.S. Coast Guard-regulated facilities. The Company is subject to U.S. Chemical Plant Security regulations and Chemical Facility Anti-Terrorism Standards which were implemented by the U.S. Department of Homeland Security. The Company is also subject to the requirements of the Rail Transportation Security Rule issued by the U.S. Transportation Security Administration. The Company continues to support uniform risk-based national standards for securing the chemical industry.

Since 1988, the Company has maintained a comprehensive, multi-level security plan that focuses on security, emergency planning, preparedness and response. This plan, which has been activated in response to significant world and national events, is reviewed on an annual basis. The Company continues to improve its security plans, placing emphasis on the safety of Dow communities and people by being prepared to meet risks at any level and to

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address both internal and external identifiable risks. The security plan includes regular vulnerability assessments, security audits, mitigation efforts and physical security upgrades designed to reduce vulnerability. The Company’s security plans are also designed to avert interruptions of normal business operations that could materially and adversely affect the Company’s results of operations, financial condition and cash flows.

The Company played a key role in the development and implementation of the American Chemistry Council’s Responsible Care® Security Code ("Security Code"), which requires that all aspects of security – including facility, transportation and cyberspace – be assessed and gaps addressed. Through the global implementation of the Security Code, the Company has permanently heightened the level of security – not just in the United States, but worldwide. The Company employs several hundred employees and contractors in its Emergency Services and Security department worldwide. In 2019, the Company established its Global Security Operations Center ("GSOC") to provide 24-hour/day, 365-day/year real-time monitoring of global risks to Dow assets and people. The GSOC employs state-of-the-art social media monitoring, threat reporting and geo-fencing capabilities to analyze global risks and report those risks, facilitating decision-making and actions to prevent Dow crises.

Through the implementation of the Security Code, including voluntary security enhancements and upgrades, the Company is well-positioned to comply with U.S. chemical facility regulations and other regulatory security frameworks. The Company participates with the American Chemistry Council to periodically review and update the Security Code.

The Company continues to work collaboratively across the supply chain on Responsible Care®, supply chain design, emergency preparedness, shipment visibility and transportation of hazardous materials. The Company cooperated with public and private entities to lead the implementation of advanced tank car design, and track and trace technologies. Further, the Company’s Distribution Risk Review process addresses potential threats in all modes of transportation across the Company’s supply chain. To reduce vulnerabilities, the Company maintains security measures that meet or exceed regulatory and industry security standards in all areas in which they operate.

The Company's initiatives relative to chemical security, emergency preparedness and response, Community Awareness and Emergency Response and crisis management are implemented consistently at all Dow sites on a global basis. Each Dow site has established outreach programs designed to engage community stakeholders with objectives centered around awareness of Dow operations, products, and efforts to protect worker and community health and the environment. These programs also educate community members on emergency planning and response, emissions and waste, future site plans to reduce waste and emissions, and process safety systems. Finally, these outreach efforts establish an opportunity for Dow site leaders to hear about community stakeholder expectations and address questions and concerns about safety, health, environmental or other issues. The Company participates with chemical associations globally and participates as an active member of the U.S. delegation to the G7 Global Partnership Sub-Working Group on Chemical Security and in positions of leadership in the U.S. Chemical Sector Coordinating Council.

Climate Change

Climate change matters for the Company are likely to be driven by several categories of risks related to the transition to a lower-carbon economy (“Transition Risks”) and risks related to the physical impacts of climate change (“Physical Risks”).

Transition Risks

Transition Risks include carbon pricing mechanisms, transition to lower greenhouse gas emissions technology, increased cost of raw materials, and mandates on and regulation of existing products and services. Carbon pricing is a market-based strategy to address climate change by putting a monetary value on greenhouse gas emissions, allowing for the costs of climate impacts and opportunities for low-carbon energy options to be reflected in production and consumption choices. Approximately 35 percent of Dow’s Scope 1 and 2 greenhouse gas emissions are generated from operations in Canada and the European Union (“EU”) where carbon pricing is already in place. As part of the European Green Deal, the European Commission proposed a 2030 greenhouse gas emissions reduction target of at least 55 percent below 1990 levels, with a goal for the EU to be carbon neutral by 2050. In China, an emissions trading system, initially proposed to cover the power sector only, is expected to gradually expand to cover a total of eight sectors, including the petrochemical and chemical industries, though no specific timeline for implementation and expansion has been outlined.

These carbon pricing mechanisms will not only increase Dow’s direct costs to operate but will also result in increased energy costs. Dow mitigates the direct cost impact of existing regulation through research and

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development projects designed to increase energy efficiency, and capital investment projects that will reduce the Company’s energy usage and carbon footprint. The Company is also exploring options for carbon capture, utilization and storage (“CCUS”) and electrification of Dow’s processes. Dow sees CCUS as a mechanism to help bridge the time period between the onset of increased carbon regulation and the technology available to economically reduce Dow’s greenhouse gas emissions. Dow also incorporates a theoretical internal carbon price into its business planning and risk management strategies. This theoretical price of carbon is also included in internal calculations used for prioritizing capital projects. Ultimately the goal of utilizing an internal carbon price is to mitigate the risk of Dow’s carbon exposure to help ensure future resiliency.

Physical Risks

Operationally, climate change may result in more frequent severe weather events, potential changes in precipitation patterns and extreme variability in weather patterns, which can disrupt operations. Several of Dow’s production facilities are located in water-scarce areas and water shortages could impact normal production. Changes in average precipitation could have an impact on the availability and price of water. The Company has engineered susceptible facilities, particularly on the U.S. Gulf Coast, to better withstand severe weather and rising sea levels, and continues to study the long-term implications of changing climate parameters on water availability, plant siting issues and other impacts. Preparedness plans are developed that detail actions needed in the event of severe weather. These measures have historically been in place and these activities and associated costs are driven by normal operational preparedness.

Climate Action

The transition to a low-carbon economy remains one of society's fundamental challenges. The Company continues to progress toward its defined 2025 Sustainability Goals, which are the foundation of Dow's efforts to help lead the transition to a sustainable planet and society, and is taking further action to lessen its carbon impact moving forward. In 2020, the Company announced a new, multi-decade target to reduce its net annual greenhouse gas emissions by 5 million metric tons by 2030, compared with its 2020 baseline, a reduction of approximately 15 percent, and announced its intention to be carbon neutral by 2050 (Scopes 1+2+3, as defined by the Greenhouse Gas Protocol, plus product benefits).

To achieve the 2030 carbon reduction target, Dow developed a climate protection action plan which includes the following elements:

•Optimizing energy efficiency of facilities and processes

•Increasing renewables in purchased power mix

•Investments in CCUS

•Developing low-carbon technologies for emission reductions

•Deploying materials to enable greenhouse gas emissions reductions for customers and industries

The action plan has resulted in new and expanded renewable power purchase agreements. In 2020, Dow increased its existing access to renewable power by more than 50 percent, to over 800 megawatts of renewable power, exceeding its 2025 Sustainability Goal target of 750 megawatts. The Company also initiated a joint development agreement with Shell to develop electrified cracking technology, powered by clean energy.

In 2021, Dow announced additional renewable and cleaner power agreements that increase Dow's access to over 850 megawatts of renewable power and are expected to reduce Scope 2 emissions by more than 600,000 metric tons of carbon dioxide equivalent per year. Dow also announced a plan to build the world’s first net-zero carbon emissions (with respect to Scope 1 and 2 carbon dioxide emissions, including technology advancements) site in Alberta, Canada, which will decarbonize 20 percent of Dow’s global ethylene capacity while growing polyethylene supply, with expected completion by 2030. At Dow's largest European manufacturing site in Terneuzen, The Netherlands, the Company has outlined a multi-generational plan to reduce current carbon emissions at the site by more than 40 percent by 2030, as part of the Company's goal to reduce Company-wide carbon emissions an additional 15 percent by 2030, and to be carbon neutral by 2050. Other steps the Company will take to achieve its 2030 greenhouse gas emissions reduction target include: procuring more renewable energy at multiple sites, modernizing Louisiana Operations energy assets, completing U.S. Gulf Coast flare recovery projects and advancing silicones feedstock capabilities in Brazil. The Company expects to allocate approximately $1 billion of capital expenditures annually to decarbonize its global asset base in a phased, site-by-site approach while driving growth.

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The Task Force on Climate-related Financial Disclosures (“TCFD”) has developed a framework to help organizations more effectively disclose climate-related risks and opportunities through existing reporting processes. Dow’s 2020 ESG Report includes disclosures aligned to the TCFD framework, which includes four core pillars: governance, strategy, risk management, and metrics and targets. The Company intends to meet its commitment to fully implement the recommendations of the TCFD as part of the Company’s 2021 ESG Report, to be published in 2022.

Advancing a Circular Economy

Transitioning to a circular economy is vital to both preserving and protecting Earth’s natural resources and to the success of Dow's businesses. To help advance a circular economy, Dow invests in new product technology, value chain partnerships, business models and waste management infrastructure to discover and scale sustainable solutions that extend the useful life of materials and the resources that are used to make them. In 2020, Dow announced "stop the waste" and "close the loop" goals to address plastic waste.

Dow's “stop the waste” goal is the Company's commitment to invest and/or collaborate in key technologies and infrastructure to significantly increase global recycling. As part of this goal, Dow intends to enable 1 million metric tons of plastic to be collected, reused or recycled through direct actions and partnerships by 2030. Dow will further "stop the waste" through application development, where more recycled plastics can be incorporated into key applications; through critical partnerships such as Circulate Capital and the Alliance to End Plastic Waste; and through incorporating waste into advanced recycling technologies.

Dow continues to look for market applications for recycled plastics to keep plastic out of landfills. One way to help stop the flow of this waste is to use recycled polymer modified asphalt for roads, parking lots, and other pavement. Polymer modified asphalt ("PMA") is a proven solution for making better pavement. Dow's ELVALOY™ Reactive Elastomeric Terpolymer products have been enhancing PMAs for more than 30 years, resulting in excellent performance, long service life, and lower life cycle costs compared to conventional, neat asphalt.

Dow's “close the loop” goal is the Company's commitment to work directly with its customers, brand owners and the value chain to help customers redesign and promote reusable or recyclable packaging applications where there is a clear environmental benefit and enable 100 percent of Dow products sold into packaging applications to be reusable or recyclable by 2035. Today, Dow enables approximately 80 percent of its products sold into packaging applications to be reusable or recyclable and continues to pursue application development, packaging redesign and infrastructure improvements to deliver on the Company's 100 percent commitment.

As one of the world’s largest producers of plastic, Dow wants to put an end to plastic waste. Eliminating plastic waste is about more than just recycling and reusing. It is about creating innovative solutions that are sustainable and investing in the circular economy through recyclability and efficiency for plastic packaging. Dow aims to keep plastic waste out of the environment and retain its value as a resource by increasing impact through partnerships and delivering circular economy solutions.

Environmental Remediation

The Company accrues the costs of remediation of its facilities and formerly owned facilities based on current law and regulatory requirements. The nature of such remediation can include management of soil and groundwater contamination. The accounting policies adopted to properly reflect the monetary impacts of environmental matters are discussed in Note 1 to the Consolidated Financial Statements. To assess the impact on the financial statements, environmental experts review currently available facts to evaluate the probability and scope of potential liabilities. Inherent uncertainties exist in such evaluations primarily due to unknown environmental conditions, changing governmental regulations and legal standards regarding liability, and the ability to apply remediation technologies. These liabilities are adjusted periodically as remediation efforts progress or as additional technical or legal information becomes available. The Company had an accrued liability of $983 million at December 31, 2021, related to the remediation of current or former Dow-owned sites. At December 31, 2020, the liability related to remediation was $996 million.

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In addition to current and former Dow-owned sites, under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and equivalent state laws (hereafter referred to collectively as "Superfund Law"), the Company is liable for remediation of other hazardous waste sites where the Company allegedly disposed of, or arranged for the treatment or disposal of, hazardous substances. Because Superfund Law imposes joint and several liability upon each party at a site, the Company has evaluated its potential liability in light of the number of other companies that have also been named potentially responsible parties (“PRPs”) at each site, the estimated apportionment of costs among all PRPs, and the financial ability and commitment of each to pay its expected share. The Company’s remaining liability for the remediation of Superfund sites was $237 million at December 31, 2021 ($248 million at December 31, 2020). The Company has not recorded any third-party recovery related to these sites as a receivable.

Information regarding environmental sites is provided below:


Environmental Sites	Dow-owned Sites 1		Superfund Sites 2
	2021	2020	2021	2020
Number of sites at Jan 1	185	178	132	133
Sites added during year	2	7	5	—
Sites closed during year	(16)	—	(3)	(1)
Number of sites at Dec 31	171	185	134	132

1.Dow-owned sites are sites currently or formerly owned by the Company. In the United States, remediation obligations are imposed by the Resource Conservation and Recovery Act or analogous state law. At December 31, 2021, 24 of these sites (24 sites at December 31, 2020) were formerly owned by Dowell Schlumberger, Inc., a group of companies in which the Company previously owned a 50 percent interest. The Company sold its interest in Dowell Schlumberger in 1992.

2.Superfund sites are sites, including sites not owned by the Company, where remediation obligations are imposed by Superfund Law.

Additional information is provided below for the Company’s Midland, Michigan, manufacturing site and Midland off-site locations (collectively, the "Midland sites"), as well as a Superfund site in Wood-Ridge, New Jersey, the locations for which the Company has the largest potential environmental liabilities.

In the early days of operations at the Midland manufacturing site, wastes were usually disposed of on-site, resulting in soil and groundwater contamination, which has been contained and managed on-site under a series of Resource Conservation and Recovery Act permits and regulatory agreements. The Hazardous Waste Operating License for the Midland manufacturing site, issued in 2003, and renewed and replaced in September 2015, also included provisions for the Company to conduct an investigation to determine the nature and extent of off-site contamination from historic Midland manufacturing site operations. In January 2010, the Company, the U.S. Environmental Protection Agency ("EPA") and the State of Michigan ("State") entered into an Administrative Order on Consent that requires the Company to conduct a remedial investigation, a feasibility study and a remedial design for the Tittabawassee River, the Saginaw River and the Saginaw Bay, and pay the oversight costs of the EPA and the State under the authority of CERCLA. See Note 16 to the Consolidated Financial Statements for further information relating to Midland off-site environmental matters.

Rohm and Haas, a wholly owned subsidiary of the Company, is a PRP at the Wood-Ridge, New Jersey Ventron/Velsicol Superfund Site, and the adjacent Berry’s Creek Study Area ("BCSA") (collectively, the "Wood-Ridge sites"). Rohm and Haas is a successor in interest to a company that owned and operated a mercury processing facility, where wastewater and waste handling resulted in contamination of soils and adjacent creek sediments. In 2018, the Berry’s Creek Study Area Potentially Responsible Party Group (“PRP Group”), consisting of over 100 PRPs, completed a Remedial Investigation/Feasibility Study for the BCSA. During that time, the EPA concluded that an “iterative or adaptive approach” was appropriate for cleaning up the BCSA. Thus, each phase of remediation will be followed by a period of monitoring to assess its effectiveness and determine if there is a need for more work. In September 2018, the EPA signed a Record of Decision ("ROD 1") which describes the initial phase of the EPA’s plan to clean-up the BCSA. ROD 1 will remediate waterways and major tributaries in the most contaminated part of the BCSA. The PRP Group has signed agreements with the EPA to design the selected remedy. Although there is currently much uncertainty as to what will ultimately be required to remediate the BCSA and Rohm and Haas's share of these costs has yet to be determined, the range of activities that are required in the interim Record of Decision is known in general terms.

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At December 31, 2021, the Company had accrued liabilities totaling $358 million ($370 million at December 31, 2020) for environmental remediation at the Midland and Wood-Ridge sites. In 2021, the Company spent $38 million ($53 million in 2020) for environmental remediation at the Midland and Wood-Ridge sites.

During the third quarter of 2020, the Company accrued additional liabilities totaling $106 million related to environmental remediation matters resulting 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. Net of indemnifications, the Company recognized a pretax charge of $56 million related to these environmental matters, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income.

During the third quarter of 2019, the Company accrued additional liabilities totaling $447 million related to environmental remediation matters at a number of current and historical locations. The additional accrual primarily resulted from: the culmination of long-standing negotiations and discussions with regulators and agencies, including technical studies supporting higher cost estimates for final or staged remediation plans; the Company’s evaluation of the cost required to manage remediation activities at sites affected by Dow’s separation from DowDuPont and related agreements with Corteva and DuPont; and, the Company’s review of its closure strategies and obligations to monitor ongoing operations and maintenance activities. In addition, the Company recorded indemnification assets of $48 million related to Dow Silicones’ environmental matters. Net of indemnifications, the Company recognized a pretax charge of $399 million related to these environmental matters, included in “Cost of sales” in the consolidated statements of income.

In total, the Company’s accrued liability for probable environmental remediation and restoration costs was $1,220 million at December 31, 2021, compared with $1,244 million at December 31, 2020. This is management’s best estimate of the costs for remediation and restoration with respect to environmental matters for which the Company has accrued liabilities, although it is reasonably possible that the ultimate cost with respect to these particular matters could range up to approximately two times that amount. Consequently, it is reasonably possible that environmental remediation and restoration costs in excess of amounts accrued could have a material impact on the Company’s results of operations, financial condition and cash flows. It is the opinion of the Company’s management, however, that the possibility is remote that costs in excess of the range disclosed will have a material impact on the Company’s results of operations, financial condition and cash flows.

The amounts charged to income on a pretax basis related to environmental remediation totaled $158 million in 2021, $234 million in 2020 and $588 million in 2019. The amounts charged to income on a pretax basis related to operating the Company's current pollution abatement facilities, excluding internal recharges, totaled $761 million in 2021, $616 million in 2020 and $677 million in 2019. Capital expenditures for environmental protection were $65 million in 2021, $80 million in 2020 and $83 million in 2019.

Asbestos-Related Matters of Union Carbide Corporation

Union Carbide is and has been involved in a large number of asbestos-related suits filed primarily in state courts during the past four decades. These suits principally allege personal injury resulting from exposure to asbestos-containing products and frequently seek both actual and punitive damages. The alleged claims primarily relate to products that Union Carbide sold in the past, alleged exposure to asbestos-containing products located on Union Carbide’s premises, and Union Carbide’s responsibility for asbestos suits filed against a former Union Carbide subsidiary, Amchem. 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.

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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	2021	2020	2019
Claims unresolved at Jan 1	9,126	11,117	12,780
Claims filed	4,233	4,857	5,743
Claims settled, dismissed or otherwise resolved	(4,612)	(6,848)	(7,406)
Claims unresolved at Dec 31	8,747	9,126	11,117
Claimants with claims against both Union Carbide and Amchem	(2,139)	(2,904)	(3,837)
Individual claimants at Dec 31	6,608	6,222	7,280

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 asbestos 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 Part I, Item 3. Legal Proceedings and Asbestos-Related Matters of Union Carbide Corporation in Note 16 to the Consolidated Financial Statements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s business operations give rise to market risk exposure due to changes in foreign exchange rates, interest rates, commodity prices and other market factors such as equity prices. To manage such risks effectively, the Company enters into hedging transactions, pursuant to established guidelines and policies that enable it to mitigate the adverse effects of financial market risk. Derivatives used for this purpose are designated as hedges per the accounting guidance related to derivatives and hedging activities, where appropriate. A secondary objective is to add value by creating additional non-specific exposure within established limits and policies; derivatives used for this purpose are not designated as hedges. The potential impact of creating such additional exposures is not material to the Company’s results.

The global nature of the Company’s business requires active participation in the foreign exchange markets. The Company has assets, liabilities and cash flows in currencies other than the U.S. dollar. The primary objective of the Company’s foreign currency risk management is to optimize the U.S. dollar value of net assets and cash flows. To achieve this objective, the Company hedges on a net exposure basis using foreign currency forward contracts, over-the-counter option contracts, cross-currency swaps and nonderivative instruments in foreign currencies. Exposures primarily relate to assets, liabilities and bonds denominated in foreign currencies, as well as economic exposure, which is derived from the risk that currency fluctuations could affect the dollar value of future cash flows related to operating activities. The largest exposures are denominated in European currencies, the Chinese yuan, the Japanese yen and the Thai baht, although exposures also exist in other currencies in Asia Pacific, Canada, Latin America, the Middle East, Africa and India.

The main objective of interest rate risk management is to reduce the total funding cost to the Company and to alter the interest rate exposure to the desired risk profile. To achieve this objective, the Company hedges using interest rate swaps, “swaptions,” and exchange-traded instruments. The Company’s primary exposure is to the U.S. dollar yield curve.

The Company has a portfolio of equity securities derived primarily from the investment activities of its insurance subsidiaries. This exposure is managed in a manner consistent with the Company’s market risk policies and procedures.

Inherent in the Company’s business is exposure to price changes for several commodities. Some exposures can be hedged effectively through liquid tradable financial instruments. Natural gas and crude oil, along with feedstocks for ethylene and propylene production, constitute the main commodity exposures. Over-the-counter and exchange traded instruments are used to hedge these risks, when feasible.

The Company uses value-at-risk (“VAR”), stress testing and scenario analysis for risk measurement and control purposes. VAR estimates the maximum potential loss in fair market values, given a certain move in prices over a certain period of time, using specified confidence levels. The VAR methodology used by the Company is a variance/covariance model. This model uses a 97.5 percent confidence level and includes at least one year of historical data. The 2021 and 2020 year-end and average daily VAR for the aggregate of all positions are shown below. These amounts are immaterial relative to the total equity of the Company.


Total Daily VAR by Exposure Type at Dec 31	2021				2020
In millions	Year-end		Average		Year-end		Average
Commodities	$	26	$	17	$	23	$	19
Equity securities	7		11		18		17
Foreign exchange	24		15		11		15
Interest rate	143		112		142		153
Composite	$	200	$	155	$	194	$	204

The Company’s daily VAR for the aggregate of all positions increased from a composite VAR of $194 million at December 31, 2020 to a composite VAR of $200 million at December 31, 2021. The interest rate VAR increased due to an increase in interest rate exposure. The equity securities VAR decreased due to a decrease in equity volatility and a decrease in equity exposure. The foreign exchange VAR increased due to an increase in managed exposures. The commodities VAR increased due to an increase in managed exposures. See Note 22 to the Consolidated Financial Statements for further disclosure regarding market risk.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Dow Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Dow Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, 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, 2021, 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 4, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Uncertain Tax Positions — Refer to Notes 1 and 8 to the financial statements

Critical Audit Matter Description

The Company has a complex legal structure involving numerous domestic and foreign locations with constantly changing tax laws, regulations, and legal interpretations. The Company’s management is required to interpret and apply these tax laws and regulations in determining the amount of its income tax liability and provision. 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 establishes a liability for unrecognized tax benefits that do not meet this threshold. The

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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, 2021 was $580 million and $502 million, respectively.

Because of the complexity of tax laws, regulations and legal interpretations relevant to numerous taxing jurisdictions in which the Company operates, auditing uncertain tax positions and the determination of whether the more likely than not threshold was met requires a high degree of auditor judgment and increased extent of effort, including the involvement of our income tax specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to uncertain tax positions included the following, among others:

•We tested the effectiveness of internal controls over income taxes, including those over identifying uncertain tax positions and measuring liabilities.

•We evaluated, with the assistance of our income tax specialists, the Company’s uncertain tax positions by performing the following:

–Obtaining Company and third-party opinions or memoranda regarding the uncertain tax positions.

–Identifying key judgements underlying the Company’s position and evaluating whether the conclusions are consistent with our interpretation of the relevant laws and regulations.

–Evaluating the Company’s method of measuring its liability for unrecognized tax benefits, including underlying data and assumptions.

–Evaluating the basis for certain intercompany transactions, such as transfer pricing, by comparison to economic studies performed by management and third-party data.

–Evaluating matters raised by taxing authorities in former and ongoing tax audits.

–Assessing changes and interpretation of applicable tax law.


/s/ DELOITTE & TOUCHE LLP
Midland, Michigan
February 4, 2022

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder and the Board of Directors of The Dow Chemical Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of The Dow Chemical Company and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15(a)(2) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Uncertain Tax Positions — Refer to Notes 1 and 8 to the financial statements

Critical Audit Matter Description

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judgment related to the identified position. The Company’s liability for unrecognized tax benefits and related accrued interest and penalties as of December 31, 2021 was $580 million and $502 million, respectively.