DOW CHEMICAL CO /DE/

NOTE 5 –RESTRUCTURING, GOODWILL IMPAIRMENT AND ASSET RELATED CHARGES - NET

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

Restructuring Programs

2025 Restructuring Program

On January 27, 2025, the Dow Inc. Board of Directors ("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. The actions include a workforce reduction of approximately 1,500 roles. As a result of these actions, in the first quarter of 2025, the Company recorded pretax charges of $207 million for severance and related benefits costs. In the fourth quarter of 2025, the Company recorded additional pretax charges of $28 million for severance and related benefits costs. The impact of these charges is included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income, related to Corporate. These actions are expected to be substantially complete by the end of 2026.

On June 30, 2025, the Board approved restructuring actions to rationalize the Company's global asset footprint, including certain actions identified as part of the Company's previously announced strategic review of its European assets and certain corporate and other assets, and to enhance the Company's competitiveness over the economic cycle. The program includes asset write-down and write-off charges, severance and related benefit costs and other exit and disposal costs. As a result of these actions, in the second quarter of 2025, the Company recorded pretax restructuring charges of $591 million, consisting of severance and related benefit costs of $154 million, asset write-downs and write-offs of $334 million and costs associated with exit and disposal activities of $103 million. In the third quarter of 2025, the Company recorded additional pretax restructuring charges of $23 million, consisting of asset write-downs and write-offs of $8 million and costs associated with exit and disposal activities of $15 million. In the fourth quarter of 2025, the Company recorded additional pretax restructuring charges of $13 million, consisting of asset write-down and write-offs of $7 million and costs associated with exit and disposal activities of $6 million. The impact of these charges is included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income. See Note 22 for additional information on nonrecurring fair value measurements. The following table summarizes the activities related to the 2025 Restructuring Program, including segment information:

1. Costs associated with exit and disposal activities relate to asset retirement obligations and pension benefit settlement costs.

At December 31, 2025, $123 million of the restructuring reserve balance was included in "Accrued and other current liabilities" and $140 million was included in "Other noncurrent obligations" in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $862 million inception-to-date under the 2025 Restructuring Program, consisting of severance and related benefit costs of $389 million, asset write-downs and write-offs of $349 million, and costs associated with exit and disposal activities of $124 million.

Restructuring implementation costs, primarily decommissioning and demolition activities related to asset actions and costs associated with the Company's restructuring actions, are expected to result in additional cash expenditures of approximately $200 million. Restructuring implementation costs totaled $53 million in 2025.

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 2025 Restructuring Program included charges for severance and related benefit costs of $389 million. At December 31, 2025, $126 million in severance payments had been made.

Asset Write-downs and Write-offs

The 2025 Restructuring Program included charges related to the write-down and write-off of assets totaling $349 million. Details regarding the asset write-downs and write-offs are as follows:

•Packaging & Specialty Plastics recorded a charge to rationalize its global asset footprint by shutting down an ethylene facility in Böhlen, Germany, by the end of 2027.

•Industrial Intermediates & Infrastructure recorded a charge to primarily rationalize its global asset footprint by shutting down certain chlor-alkali and vinyl assets in Schkopau, Germany, by the end of 2027.

•Performance Materials & Coatings recorded a charge to primarily rationalize its global asset footprint by shutting down a basics siloxanes plant in Barry, United Kingdom, by mid-year 2026.

•Corporate recorded charges related to the write-down of certain Company owned and leased non-manufacturing facilities and other assets.

Costs Associated with Exit and Disposal Activities

In 2025, the Company accrued additional asset retirement obligations of $105 million and wrote off related deferred asset charges associated with the asset shutdowns noted above, resulting in total restructuring charges of $108 million. See Note 15 for additional information related to the Company’s asset retirement obligations.

The 2025 Restructuring Program also included pretax charges of $16 million for net pension benefit settlement costs related to participants of a pension plan in Europe that were impacted by the restructuring program.

It is reasonably possible the Company will incur approximately $60 million of future charges related to costs associated with exit and disposal activities.

In addition, the Company is assessing potential environmental remediation activities associated with the asset actions noted above, which could result in additional charges and cash payments in the future. The Company intends to continue operating other assets at the sites impacted by these actions.

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. 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 facilities impacted by both of these charges were 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.

In the first quarter of 2025, the Company recorded an additional pretax restructuring charge of $5 million for asset write-downs and write-offs and an asset related credit adjustment of $4 million, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income, related to Industrial Intermediates & Infrastructure. See Note 22 for additional information on nonrecurring fair value measurements.

Restructuring implementation and efficiency costs totaled $50 million in 2025 ($230 million in 2024). Actions related to the 2023 Restructuring Program were complete at the end of the second quarter of 2025.

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

1. Costs associated with exit and disposal activities relate to pension benefit settlement costs.

2. The reserve balance at December 31, 2024 was included in "Accrued and other current liabilities" in the consolidated balance sheets.

The Company recorded pretax restructuring charges of $602 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 $208 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 charges 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, the remaining occurred 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 $208 million. Details regarding the asset write-downs and write-offs are as follows:

•Industrial Intermediates & Infrastructure recorded charges related to the shutdown of certain polyurethanes assets and the write-off of other assets. These facilities were shut down by the end of 2025.

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

2025 Goodwill Impairment

Upon completion of the annual goodwill impairment testing in the fourth quarter of 2025, the Company determined the fair value of the Polyurethanes & Construction Chemicals reporting unit was lower than its carrying amount. As a result, the Company recorded an impairment charge of $690 million, included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income, related to Industrial Intermediates & Infrastructure. See Notes 12 and 22 for additional information.

Asset Related Charges

In 2025, the Company recognized a $303 million pretax impairment charge related to assets used for chlor-alkali, propylene oxide and brine production in Latin America. Due to challenging economic conditions in the region, the Company performed a held-and-used impairment analysis and the assets were written down to their fair value. The impairment charge is included in "Restructuring, goodwill impairment and asset related charges - net" in the consolidated statements of income, related to Industrial Intermediates & Infrastructure ($232 million) and Packaging & Specialty Plastics ($71 million). See Note 22 for additional information.

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 divestiture of its flexible packaging laminating adhesives business. The impairment charges were included in "Restructuring, goodwill impairment 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.

Subsequent Event

On January 26, 2026, the Board approved Transform to Outperform, a comprehensive set of actions designed to improve near-term Operating EBITDA by simplifying the Company’s operating model, reducing its cost structure and delivering faster growth. The Company will record charges in 2026 and 2027 for costs associated with Transform to Outperform, including a workforce reduction of 4,500 roles. In total, severance and related benefit costs are expected to be in the range of $600 million to $800 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 the workforce reduction, which will be expensed as incurred and range from $70 million to $90 million.