DOW INC

NOTE 19 –FINANCIAL INSTRUMENTS

A summary of the Company's financial instruments, risk management policies, derivative instruments and hedging activities can be found in Note 20 to the Consolidated Financial Statements included in the 2023 10-K.

Refer to Note 20 for a summary of the fair value of financial instruments at September 30, 2024 and December 31, 2023.

Debt Securities

The Company's investments in debt securities are primarily classified as available-for-sale. The following table provides investing results from available-for-sale securities for the nine months ended September 30, 2024 and 2023:

The following table summarizes contractual maturities of the Company's investments in debt securities:

Equity Securities

There were no material adjustments to the carrying value of the not readily determinable investments for impairment or observable price changes for the three and nine months ended September 30, 2024. There was $1 million of net unrealized losses recognized in earnings on equity securities for the three and nine months ended September 30, 2024 ($4 million of net unrealized losses for the three months ended September 30, 2023 and $6 million of net unrealized gains for the nine months ended September 30, 2023).

Derivative Instruments

The notional amounts of the Company's derivative instruments at September 30, 2024 and December 31, 2023 were as follows:

1. Notional amounts represent the absolute value of open derivative positions at the end of the period. Multi-leg option positions are reflected at the maximum notional position at expiration.

The notional amounts of the Company's commodity derivatives at September 30, 2024 and December 31, 2023 were as follows:

1. Notional amounts represent the net volume of open derivative positions outstanding at the end of the period.

The following table provides the fair value and balance sheet classification of derivative instruments at September 30, 2024 and December 31, 2023:

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

2. Represents the net amounts included in the consolidated balance sheets.

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

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

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

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

Assets and liabilities related to forward contracts, interest rate swaps, currency swaps, options and other conditional or exchange contracts executed with the same counterparty under a master netting arrangement are netted. Collateral accounts are netted with corresponding assets or liabilities, when applicable. The Company posted cash collateral of $15 million at September 30, 2024 ($22 million at December 31, 2023). There waszero cash collateral posted by counterparties with the Company at September 30, 2024 and December 31, 2023.

The following table summarizes the gain (loss) of derivative instruments in the consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2024 and 2023:

1. OCI is defined as other comprehensive income (loss).

2. Pretax amounts.

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

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

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

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

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