DOW INC

NOTE 5 –RESTRUCTURING AND ASSET RELATED CHARGES - NET

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

Restructuring Programs

2023 Restructuring Program

On January 25, 2023, the Board approved restructuring actions to achieve the Company's structural cost improvement initiatives in response to the continued economic impact from the global recessionary environment and to enhance its agility and long-term competitiveness across the economic cycle. These actions are expected to be substantially complete by the end of the first quarter of 2025. As a result of these actions the Company recorded pretax restructuring charges of $541 million in the first quarter of 2023, additional pretax restructuring charges of $8 million in the second quarter of 2023, and a $14 million net credit adjustment in the fourth quarter of 2023.

In the first quarter of 2024, the Company recorded additional pretax restructuring charges of $8 million for asset write-downs and write-offs related to the shutdown of certain polyurethanes assets within the Industrial Intermediates & Infrastructure segment. In the third quarter of 2024, the Company recorded additional pretax restructuring charges of $7 million for asset write-downs and write-offs related to the shutdown of certain silicones assets within the Performance Materials & Coatings segment. The impacted facilities are expected to be shutdown by the end of 2025. Additionally, the Company recorded a pretax restructuring charge of $16 million for severance and related benefit costs and a pretax restructuring charge of $1 million for additional asset write-downs and write-offs, related to Corporate. In the fourth quarter of 2024, the Company recorded a pretax restructuring charge of $25 million for severance and related benefit costs and a pretax restructuring charge of $9 million for costs associated with exit and disposal activities, related to Corporate.

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

At December 31, 2024, $60 million of the reserve balance was included in "Accrued and other current liabilities" ($101 million at December 31, 2023) andzero was included in "Other noncurrent obligations" ($21 million at December 31, 2023) in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $601 million inception-to-date under the 2023 Restructuring Program, consisting of severance and related benefit costs of $385 million, asset write-downs and write-offs of $207 million, and costs associated with exit and disposal activities of $9 million.

Severance and Related Benefit Costs

Severance benefits are provided to employees primarily under Dow's ongoing benefit arrangements and are accrued against the Corporate segment once management commits to a plan of termination. The 2023 Restructuring Program included a charge for severance and related benefit costs of $385 million for a global workforce reduction of approximately 2,000 employees. The majority of separations occurred by the end of the second quarter of 2023 with the remaining occurring primarily through the first quarter of 2025.

Asset Write-downs and Write-offs

The 2023 Restructuring Program included charges related to the write-down and write-off of assets totaling $207 million. Details regarding the asset write-downs and write-offs are as follows:

•Industrial Intermediates & Infrastructure charges relate to the shutdown of certain polyurethanes assets and the write-off of other assets. The majority of the impacted facilities are expected to be shutdown by the end of 2025.

•Performance Materials & Coatings recorded charges to rationalize its asset footprint by shutting down certain coatings assets. These facilities are expected to be shutdown by the end of 2025.

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

Costs Associated with Exit and Disposal Activities

The 2023 Restructuring program included a net pretax charge of $9 million for the net cost of benefit settlement, curtailment and special termination benefits related to participants of a pension plan in Europe that were impacted by the restructuring program, related to Corporate.

Restructuring implementation costs, primarily decommissioning and demolition activities related to asset actions and costs associated with the Company's productivity and efficiency actions, are expected to result in additional cash expenditures of approximately $40 million, primarily through the first quarter of 2025. Restructuring implementation and efficiency costs totaled $230 million in 2024 ($243 million in 2023).

Asset Related Charges

In 2024, the Company recognized pretax impairment charges of $37 million primarily related to write-downs of certain manufacturing assets in the United States and Italy included in the Company's planned divestiture of its flexible packaging laminating adhesives business. The impairment charges were included in "Restructuring and asset related charges - net" in the consolidated statements of income and related to Packaging & Specialty Plastics. See Notes 4 and 22 for additional information.

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

In 2022, the Company recorded pretax asset related charges of $118 million due to the Russia and Ukraine conflict and the expectation that certain assets would not be recoverable. These charges included the write-down of inventory, the recording of bad debt reserves and the impairment of other assets. Asset related charges by segment in 2022 were as follows: $8 million in Packaging & Specialty Plastics, $73 million in Industrial Intermediates & Infrastructure, $6 million in Performance Materials & Coatings and $31 million in Corporate.

Subsequent Event

On January 27, 2025, the Board approved targeted actions to further achieve the Company's cost reduction initiatives in response to ongoing macroeconomic uncertainty, while reinforcing its long-term competitiveness across the economic cycle. This program includes a workforce reduction of approximately 1,500 roles.

The Company will record a charge in the first quarter of 2025 for costs associated severance and related benefit costs. In total, these costs are expected to be in the range of $250 million to $325 million and have future cash payments to be paid out primarily over the next two years. In addition, the Company will incur costs to implement these actions, which will be expensed as incurred and range from $20 million to $30 million over the life of the program.