DOW CHEMICAL CO /DE/

The Company had cash and cash equivalents of $4,142 million at September 30, 2026 and $3,816 million at December 31, 2025, of which $2,742 million at September 30, 2026 and $2,636 million at December 31, 2025 was held by subsidiaries in foreign countries, including U.S. territories. For each of its foreign subsidiaries, Dow makes an assertion regarding the amount of earnings intended for permanent reinvestment, with the balance available to be repatriated to the United States.

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 United States, 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 September 30, 2026, 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 Flows from Operating Activities

Cash provided by operating activities from continuing operations in the first nine months of 2026 was primarily driven by the Company's cash earnings, cash received related to a judgment on the ethylene asset matter with Nova, dividends from equity method investments and advance payments received from customers related to long-term supply contracts, partially offset by cash used for working capital, cash paid for severance and related benefit costs, income tax payments and performance-based compensation. Cash provided by operating activities from continuing operations in the first nine months of 2025 was primarily driven by the Company's cash earnings, advance payments received from customers related to long-term supply contracts and dividends from equity method investments, partially offset by cash used for working capital and performance-based compensation.

Cash provided by (used for) operating activities from discontinued operations in the first nine months of 2026 and 2025 reflected cash payments and receipts for certain agreements and matters related to the separation from DowDuPont Inc. ("DowDuPont").

Cash Flows from Investing Activities

Cash used for investing activities in the first nine months of 2026 and 2025 was primarily for capital expenditures and purchases of investments, which were partially offset by proceeds from sales and maturities of investments. The first nine months of 2026 also included cash outflows to nonconsolidated affiliates, primarily related to Sadara (see Note 12 for additional information). The first nine months of 2025 also included a cash inflow related to the sale of the Company's soil fumigation product line and certain related assets, proceeds from incentives related to capital expenditures and the divestiture of the Company's ownership interest in a nonconsolidated affiliate.

The Company's capital expenditures were $1,841 million in the first nine months of 2026, compared with $1,911 million in the first nine months of 2025. The Company expects full year capital spending to be approximately $2.5 billion, including capital spending related to the construction of the Alberta project. As evidenced across this and prior economic cycles, the Company will proactively adjust its spending as economic conditions evolve.

Cash Flows from Financing Activities

Cash used for financing activities in the first nine months of 2026 for Dow Inc. was primarily related to dividends paid to stockholders, payments on long-term debt and distributions to noncontrolling interests. TDCC included cash outflows for dividends paid to Dow Inc. Cash provided by financing activities in the first nine months of 2025 was primarily related to proceeds from the sale of a minority stake in Diamond Infrastructure Solutions and proceeds from the issuance of long-term debt, which were partially offset by dividends paid to stockholders and payments on long-term debt. TDCC included cash outflows for dividends paid to Dow Inc.

Dow Inc. 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

Dow defines Operating EBITDA as earnings (i.e., "Income (loss) before income taxes") before interest, depreciation and amortization, excluding the impact of significant items.

Cash Flow Conversion (Cash Flow from Operations to Operating EBITDA)

Dow defines Cash Flow Conversion (Cash Flow from Operations to Operating EBITDA) as "Cash provided by (used for) operating activities - continuing operations," divided by 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 (“GAAP”) and should not be viewed as alternatives to 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.

1. The nine months ended September 30, 2026 includes severance and related benefit costs and costs to achieve associated with Transform to Outperform; a loss due to change in fair value of the estimated liability associated with the Company's guarantee of Sadara's project financing debt; asset charges; implementation costs, costs associated with exit and disposal activities and impairment charges related to the Company's 2025 Restructuring Program and a loss on early extinguishment of debt; partially offset by gains associated with a legal matter with Nova and amounts associated with agreements entered into with DuPont de Nemours, Inc. ("DuPont") and Corteva, Inc. ("Corteva") as part of the separation and distribution. The nine months ended September 30, 2025 includes severance and related benefit costs, costs associated with exit and disposal activities and impairment charges related to the 2025 Restructuring Program; implementation costs associated with the Company's 2025 Restructuring Program and the sale of membership interests of Diamond Infrastructure Solutions; gains on the sale of the Company's soil fumigation product line and divestiture of the Company's ownership interest in a nonconsolidated affiliate; a gain associated with the reassessment of liabilities for certain accrued legacy agricultural products groundwater contamination matters, partially offset by the settlement of a separate claim related to water storage district legacy groundwater contamination matters; charges associated with agreements entered into with DuPont and Corteva as part of the separation and distribution; charges related to an arbitration agreement for historical product claims from a divested business; a loss on early extinguishment of debt; and restructuring charges and implementation and efficiency costs associated with the Company's 2023 Restructuring Program. See Note 21 to the Consolidated Financial Statements for additional information.

2. Cash flow from operations to net income is not applicable for the nine months ended September 30, 2025 due to a net loss for the period.

Liquidity & Financial Flexibility

The Company’s primary source of incremental liquidity is cash flows from operating activities. The generation of cash from operations over the economic cycle 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, payments associated with Transform to Outperform, 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 medium-term notes program, 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 September 30, 2026. Cash and committed and available forms of liquidity were $13.7 billion at September 30, 2026. The Company also has no substantive long-term debt maturities due until 2029. As a well-known seasoned issuer, the Company has ready access to debt capital markets, subject to market conditions, as an additional source of liquidity. Additional details on sources of liquidity are as follows:

Commercial Paper

TDCC issues promissory notes under its U.S. and Euromarket commercial paper programs. TDCC had no commercial paper outstanding at September 30, 2026. 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. TDCC did not issue commercial paper subsequent to September 30, 2026.

Committed Credit Facilities

The Company also has the ability to access liquidity through TDCC's committed and available credit facilities. At September 30, 2026, TDCC had total committed and available credit facilities of $8.2 billion.

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. The Company had no drawdowns outstanding at September 30, 2026.

Accounts Receivable Securitization Facilities

In addition to the above credit facilities, the Company maintains a committed accounts receivable facility in the United States where eligible trade accounts receivable, up to $900 million, may be sold at any point in time and is set to expire in November 2028. The Company also maintains a committed accounts receivable facility in Europe where eligible trade accounts receivable, up to €400 million, may be sold at any point in time and is set to expire in March 2029. In the first nine months of 2026, there were no sales of receivables under the committed accounts receivable facilities ($106 million in sales of receivables in the first nine months of 2025). No sold receivables were outstanding with the facilities at September 30, 2026.

In addition, the Company has an uncommitted accounts receivable facility in the United States providing additional liquidity, set to expire in November 2028. The Company also maintains an uncommitted accounts receivable facility in Europe providing additional liquidity, set to expire in March 2029. Sales of receivables under the facility in Europe were $6 million in the first nine months of 2026 ($147 million in sales of receivables in the first nine months of 2025). No sold receivables were outstanding with the facilities at September 30, 2026. See Note 10 to the Consolidated Financial Statements for additional information.

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.

Accounts Receivable Discounting Facilities

The Company has access to accounts receivable discounting facilities, under which receivables are transferred with limited recourse. The Company retains no interest in the transferred receivables once sold. There were no sales of receivables under the discounting facilities in the first nine months of 2026 ($285 million sales of receivables in the first nine months of 2025). No sold receivables were outstanding with the facilities at September 30, 2026. See Note 10 to the Consolidated Financial Statements for additional information.

The Company maintains these facilities and also participates in certain customers’ supply chain financing and other early pay programs as a routine source of working capital.

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. At December 31, 2025, the Company had monetized $197 million of its existing COLI policies' cash surrender value. The Company repaid the drawdown against the cash surrender value in 2026 and there was no outstanding monetization of the Company's existing COLI policies' cash surrender value at September 30, 2026. See Note 5 to the Consolidated Financial Statements for additional information.

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."

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 to consolidated capitalization as defined in the Revolving Credit Agreement was 0.47 to 1.00 at September 30, 2026. Management believes TDCC was in compliance with all of its covenants and default provisions at September 30, 2026. For information on TDCC's debt covenants and default provisions, see Note 14 to the Consolidated Financial Statements included in the 2025 10-K. There were no material changes to the debt covenants and default provisions related to TDCC’s outstanding long-term debt and primary, private credit agreements in the first nine months of 2026.

In the second quarter of 2026, the Company redeemed $12 million aggregate principal amount of 6.30 percent notes due March 2033, $10 million aggregate principal amount of 5.65 percent notes due March 2036, $20 million aggregate principal amount of 5.25 percent notes due November 2041, $12 million aggregate principal amount of 5.55 percent notes due November 2048, $10 million aggregate principal amount of 6.90 percent notes due May 2053, and $13 million aggregate principal amount of 5.95 percent notes due March 2055. As a result of the redemption, the Company recognized a pretax gain on the early extinguishment of debt of $3 million, included in "Sundry income (expense) - net" in the consolidated statements of income.

In the third quarter of 2026, the Company redeemed $63 million aggregate principal amount of 7.38 percent notes due November 2029, $13 million aggregate principal amount of 7.85 percent notes due July 2029, $125 million aggregate principal amount of 9.40 percent notes due May 2039, and $99 million aggregate principal amount of 6.90 percent notes due May 2053. As a result of the redemption, the Company recognized a pretax loss on the early extinguishment of debt of $53 million, included in "Sundry income (expense) - net" in the consolidated statements of income, related to Corporate.

In the first nine months of 2026, the Company issued an aggregate principal amount of $100 million of InterNotes®. Additionally, the Company repaid $83 million of long-term debt at maturity.

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

At September 30, 2026, TDCC's credit ratings were as follows:

On February 18, 2026, Standard & Poor's announced a long-term credit rating change for TDCC from BBB to BBB- and a short-term credit rating change from A-2 to A-3, with its outlook remaining negative. On February 27, 2026, Moody's Ratings announced a long-term credit rating change for TDCC from Baa2 to Baa3 and a short-term credit rating change from P-2 to P-3, with its outlook remaining negative. The credit rating agencies' decisions reflect the impact of market conditions on the Company's operating results and cash flow, while recognizing the Company's liquidity, strong asset base and strategic cost actions. On March 16, 2026, Fitch Ratings affirmed TDCC's BBB and F2 rating, with its outlook remaining stable.

On July 30, 2026, Standard & Poor's affirmed TDCC's BBB- and A-3 rating, and revised its outlook to stable from negative. Standard & Poor's decision reflects expectations for improved earnings, credit metrics, and continued progress in the Company's strategic cost actions.

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 following table summarizes dividends declared and paid to common stockholders of record in 2026:

TDCC

TDCC has committed to fund Dow Inc.'s dividends paid to common stockholders and share repurchases, as approved by the Board, as well as 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 three months ended September 30, 2026, TDCC declared and paid a dividend to Dow Inc. of $257 million ($771 million dividend declared and paid to Dow Inc. for the nine months ended September 30, 2026). At September 30, 2026, TDCC's intercompany loan balance with Dow Inc. was insignificant.

Share Repurchase Program

On April 13, 2022, the Board approved a share repurchase program authorizing up to $3 billion for the repurchase of the Company's common stock, with no expiration date. The Company did not repurchase any of its common stock in the first nine months of 2026 or 2025. At September 30, 2026, approximately $931 million of the share repurchase program authorization remained available for repurchases. As previously announced, the Company intends to repurchase shares at a minimum to cover dilution over the economic cycle. The Company may from time to time expand its share repurchases beyond dilution, based on a number of factors including macroeconomic conditions, free cash flow generation, and the Dow share price. Any share repurchases, when coupled with the Company's dividends, are intended to implement the long-term strategy of targeting shareholder remuneration of approximately 65 percent of Operating Net Income over the economic cycle.

Pension Plans

The Company has both funded and unfunded defined benefit pension plans in the United States and a number of other countries. The Company's funding policy is to contribute to plans when pension laws and/or economics either require or encourage funding. The Company expects to contribute approximately $220 million to its pension plans in 2026, of which $138 million has been contributed through September 30, 2026. See Note 16 to the Consolidated Financial Statements and Note 19 to the Consolidated Financial Statements included in the 2025 10-K for additional information related to the Company's pension plans.

Transform to Outperform and Restructuring

Transform to Outperform is expected to result in additional cash expenditures of approximately $800 million over the next two years and consists of severance and related benefit costs, implementation costs, and other costs incurred to achieve the intended uplift in Operating EBITDA. Costs to achieve totaled $60 million and $194 million for the three and nine months ended September 30, 2026, respectively.

The 2025 Restructuring Program is expected to result in additional cash expenditures of approximately $370 million primarily over the next three years and consists of severance and related benefit costs, implementation costs related to decommissioning and demolition and additional costs associated with exit and disposal activities. Restructuring implementation costs totaled $31 million and $80 million for the three and nine months ended September 30, 2026, respectively ($5 million and $10 million for the three and nine months ended September 30, 2025, respectively).

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, including Transform to Outperform. These costs cannot be reasonably estimated at this time. See Note 4 to the Consolidated Financial Statements for additional information on the Company's restructuring activities.

Contractual Obligations

Information related to the Company’s contractual obligations, commercial commitments and expected cash requirements for interest can be found in Notes 14, 15, 16 and 19 to the Consolidated Financial Statements included in the 2025 10-K. With the exception of the items noted below, there have been no material changes in the Company’s contractual obligations since December 31, 2025.

1. Cash requirements for interest on long-term debt was calculated using current interest rates at September 30, 2026, and includes $76 million of various floating rate notes.

2. Includes imputed interest of $290 million.

3. Includes liabilities related to asbestos litigation, environmental remediation, legal matters and other noncurrent liabilities. Also includes the updated fair value of the project financing debt guarantee liability with Sadara, which increased $298 million in the first quarter of 2026. 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. The table also excludes deferred revenue as it does not represent future cash requirements arising from contractual payment obligations.

Fair Value Measurements

See Note 19 to the Consolidated Financial Statements for information concerning fair value measurements.