DOW CHEMICAL CO /DE/

NOTE 11 –COMMITMENTS AND CONTINGENCIES

A summary of the Company's commitments and contingencies can be found in Note 15 to the Consolidated Financial Statements included in the 2025 10-K, which is incorporated by reference herein.

Environmental Matters

Accruals for environmental matters are recorded when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, based on current law and existing technologies. At March 31, 2026, the Company had accrued obligations of $1,025 million for probable environmental remediation and restoration costs ($1,011 million at December 31, 2025), including $234 million for the remediation of Superfund sites ($221 million at December 31, 2025). 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. Inherent uncertainties exist in these estimates primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, and emerging remediation technologies for handling site remediation and restoration. As new or additional information becomes available and/or certain spending trends become known, management will evaluate such information in determination of the current estimate of environmental liability.

Litigation

Each quarter, Union Carbide reviews asbestos-related claims filed, settled and dismissed, as well as average settlement and resolution costs by disease category. Union Carbide also considers additional quantitative and qualitative factors such as the nature of pending claims, trial experience of Union Carbide and other asbestos defendants, current spending for defense and processing costs, significant appellate rulings and legislative developments, trends in the tort system, and their respective effects on expected future resolution costs. Union Carbide's management considers these factors in conjunction with the most recent actuarial study and determines whether a change in the estimate is warranted. Based on Union Carbide's review of 2026 activity, it was determined that no adjustment to the accrual was required at March 31, 2026.

Union Carbide’s total asbestos-related liability for pending and future claims and defense and processing costs was $684 million at March 31, 2026 ($708 million at December 31, 2025). At March 31, 2026, approximately 32 percent of the recorded claim liability related to pending claims and approximately 68 percent related to future claims.

Gain Contingency - Dow v. Nova Chemicals Corporation Ethylene Asset Matter

In 2019, the Court of King's Bench of Alberta, Canada ("Court") found Nova Chemicals Corporation ("Nova") liable for engaging in a deliberate and continuing course of conduct of conversion, breach of contract, gross negligence and willful misconduct in the operation of the companies’ jointly-owned ethylene asset in Joffre, Alberta, Canada ("Ethylene Asset"). As a result of the liability finding, which is now final and non-appealable, the Court signed a judgment ordering Nova to pay $1.43 billion Canadian dollars (equivalent to approximately $1.08 billion U.S. dollars) for damages incurred through 2012. Nova made payment in October 2019. At March 31, 2026, $201 million ($201 million at December 31, 2025) was included in "Other noncurrent obligations" in the Company's consolidated balance sheets related to the disputed portion of the 2019 damages judgment.

On June 10, 2025, the Court signed a separate judgment ordering Nova to pay an additional amount of $1.62 billion Canadian dollars (equivalent to approximately $1.2 billion U.S. dollars) for damages incurred through June 2018, which had not been previously quantified. The Court again found that Nova failed to operate the Ethylene Asset at full capacity during this time, depriving the Company’s subsidiaries of millions of pounds of ethylene. On August 11, 2025, the Court also awarded fees of approximately $100 million U.S. dollars, bringing Nova’s payment obligation to approximately $1.3 billion U.S. dollars. In March 2026, after Nova’s procedural attempt to avoid payment and enforcement measures during its pending appeal on damages was denied, Nova paid $1.4 billion Canadian dollars (equivalent to approximately $1.0 billion U.S. dollars) directly to the Company and remitted withholding tax of $452 million Canadian dollars (equivalent to $331 million U.S. dollars) to the Canada Revenue Agency ("CRA") for the tax account of one of the Company's subsidiaries. The Company has sought a refund of the entire amount remitted to the CRA, which is expected to be received in 2026.

Certain portions of the fees awarded are not appealable and are not in dispute and, in accordance with ASC 450-30 "Gain Contingencies," the Company recorded a $40 million pretax gain in the first quarter of 2026, of which $14 million was included in "Selling, general and administrative expenses" in the consolidated statements of income and $26 million was included in "Sundry income (expense) - net" in the consolidated statements of income and related to Packaging & Specialty Plastics. At March 31, 2026, the Company's consolidated balance sheets included $331 million in "Accounts and notes receivable - Other" related to the withholding tax and $119 million and $1,175 million in "Accrued and other liabilities" and "Other noncurrent obligations," respectively, related to the disputed 2025 damages judgment and related fees.

Dow has filed a similar lawsuit against Nova in the Court to recover damages due to lost ethylene volumes from the operation of the Ethylene Asset after June 2018.

Guarantees

The following table provides a summary of the final expiration, maximum future payments and recorded liability included in the consolidated balance sheets for guarantees:

Guarantees arise during the ordinary course of business from relationships with customers, accounts receivable facilities and nonconsolidated affiliates when the Company undertakes an obligation to guarantee the performance of others (via delivery of cash or other assets) if specified triggering events occur. With guarantees, such as commercial or financial contracts, non-performance by the guaranteed party triggers the obligation of the Company to make payments to the beneficiary of the guarantee. The majority of the Company’s guarantees relate to debt of nonconsolidated affiliates, which have expiration dates ranging from less than one year to 12 years.

The Company maintains accounts receivable facilities with various financial institutions, with committed and uncommitted facilities in the United States and in Europe. Under the terms of the Programs, the Company continues to service the receivables from the customers, but retains no interest in the receivables, and remits payment to the financial institutions. The Company also has access to accounts receivable discounting facilities, under which receivables are transferred with limited recourse. The Company’s maximum guaranteed liability for the accounts receivable facilities waszero at March 31, 2026 and December 31, 2025.

TDCC has entered into guarantee agreements related to Sadara, a nonconsolidated affiliate. Sadara reached an agreement with its lenders to re-profile its outstanding project financing debt in the first quarter of 2021. In conjunction with the debt re-profiling, TDCC currently guarantees approximately $1.2 billion of principal, and the respective interest, of Sadara’s project financing debt. Based on current market conditions and continued evaluation, the Company believes there is a more than remote probability that some future performance under the project financing guarantee may be required due to uncertainty in Sadara's cash flows. As part of the debt re-profiling, Sadara established a $500 million revolving credit facility guaranteed by Dow, which would be used to fund Dow’s pro-rata share of any potential shortfall. In 2025, Sadara drew $80 million under the revolving credit facility. The term of the revolving credit facility expires in the second quarter of 2026 and the Company believes it is probable that it will be required to perform on the existing obligation upon expiration of the revolving credit facility. See Note 9 for additional information on Dow's investment in Sadara and Note 18 for additional information on the fair value determination of the obligation.