Commission
File Number
|
Exact Name of Registrant as Specified in its Charter,
Principal Office Address and Telephone Number
|
State of Incorporation or
Organization
|
I.R.S. Employer
Identification No.
|
001-38646
|
Dow Inc.
|
Delaware
|
30-1128146
|
|
2211 H.H. Dow Way, Midland, MI 48674
|
|
|
|
(989) 636-1000
|
|
|
001-03433
|
The Dow Chemical Company
|
Delaware
|
38-1285128
|
|
2211 H.H. Dow Way, Midland, MI 48674
|
|
|
|
(989) 636-1000
|
|
|
Dow Inc.
|
Large accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated filer
þ
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
The Dow Chemical Company
|
Large accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated filer
þ
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
Registrant
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Dow Inc.
|
Common Stock, par value $0.01 per share
|
DOW
|
New York Stock Exchange
|
|
|
PAGE
|
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
|
The Dow Chemical Company and Subsidiaries:
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
Dow Inc. and The Dow Chemical Company and Subsidiaries:
|
|
|
|
|
|
||
|
|
|
Item 2.
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
Exhibits
.
|
|
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
PART I – FINANCIAL INFORMATION
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Net sales
|
$
|
13,582
|
|
$
|
14,899
|
|
Cost of sales
|
10,707
|
|
11,552
|
|
||
Research and development expenses
|
361
|
|
386
|
|
||
Selling, general and administrative expenses
|
701
|
|
751
|
|
||
Amortization of intangibles
|
154
|
|
159
|
|
||
Restructuring and asset related charges - net
|
232
|
|
165
|
|
||
Integration and separation costs
|
408
|
|
202
|
|
||
Equity in earnings of nonconsolidated affiliates
|
13
|
|
243
|
|
||
Sundry income (expense) - net
|
73
|
|
83
|
|
||
Interest expense and amortization of debt discount
|
247
|
|
270
|
|
||
Income before income taxes
|
858
|
|
1,740
|
|
||
Provision for income taxes
|
272
|
|
363
|
|
||
Net income
|
586
|
|
1,377
|
|
||
Net income attributable to noncontrolling interests
|
45
|
|
35
|
|
||
Net income available for The Dow Chemical Company common stockholder
|
$
|
541
|
|
$
|
1,342
|
|
|
|
|
||||
Depreciation
|
$
|
598
|
|
$
|
621
|
|
Capital expenditures
|
$
|
514
|
|
$
|
423
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Net income
|
$
|
586
|
|
$
|
1,377
|
|
Other comprehensive income (loss), net of tax
|
|
|
||||
Unrealized gains (losses) on investments
|
67
|
|
(25
|
)
|
||
Cumulative translation adjustments
|
(31
|
)
|
376
|
|
||
Pension and other postretirement benefit plans
|
141
|
|
126
|
|
||
Derivative instruments
|
(75
|
)
|
6
|
|
||
Total other comprehensive income
|
102
|
|
483
|
|
||
Comprehensive income
|
688
|
|
1,860
|
|
||
Comprehensive income attributable to noncontrolling interests, net of tax
|
51
|
|
28
|
|
||
Comprehensive income attributable to The Dow Chemical Company
|
$
|
637
|
|
$
|
1,832
|
|
In millions, except share amounts (Unaudited)
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
Assets
|
|
|
||||
Current Assets
|
|
|
||||
Cash and cash equivalents (variable interest entities restricted - 2019: $109; 2018: $82)
|
$
|
2,969
|
|
$
|
2,669
|
|
Marketable securities
|
101
|
|
100
|
|
||
Accounts and notes receivable:
|
|
|
||||
Trade (net of allowance for doubtful receivables - 2019: $109; 2018: $106)
|
8,428
|
|
8,246
|
|
||
Other
|
3,947
|
|
4,136
|
|
||
Inventories
|
9,508
|
|
9,260
|
|
||
Other current assets
|
708
|
|
852
|
|
||
Total current assets
|
25,661
|
|
25,263
|
|
||
Investments
|
|
|
||||
Investment in nonconsolidated affiliates
|
3,321
|
|
3,823
|
|
||
Other investments (investments carried at fair value - 2019: $1,796; 2018: $1,699)
|
2,737
|
|
2,648
|
|
||
Noncurrent receivables
|
345
|
|
394
|
|
||
Total investments
|
6,403
|
|
6,865
|
|
||
Property
|
|
|
||||
Property
|
61,764
|
|
61,437
|
|
||
Less accumulated depreciation
|
38,272
|
|
37,775
|
|
||
Net property (variable interest entities restricted - 2019: $718; 2018: $734)
|
23,492
|
|
23,662
|
|
||
Other Assets
|
|
|
||||
Goodwill
|
13,812
|
|
13,848
|
|
||
Other intangible assets (net of accumulated amortization - 2019: $5,912; 2018: $5,762)
|
4,743
|
|
4,913
|
|
||
Operating lease right-of-use assets
|
2,584
|
|
—
|
|
||
Deferred income tax assets
|
2,183
|
|
2,031
|
|
||
Deferred charges and other assets
|
859
|
|
796
|
|
||
Total other assets
|
24,181
|
|
21,588
|
|
||
Total Assets
|
$
|
79,737
|
|
$
|
77,378
|
|
Liabilities and Equity
|
|
|
||||
Current Liabilities
|
|
|
||||
Notes payable
|
$
|
317
|
|
$
|
305
|
|
Long-term debt due within one year
|
2,369
|
|
340
|
|
||
Accounts payable:
|
|
|
||||
Trade
|
5,103
|
|
5,378
|
|
||
Other
|
3,176
|
|
3,330
|
|
||
Operating lease liabilities - current
|
477
|
|
—
|
|
||
Income taxes payable
|
699
|
|
791
|
|
||
Accrued and other current liabilities
|
3,232
|
|
3,611
|
|
||
Total current liabilities
|
15,373
|
|
13,755
|
|
||
Long-Term Debt (variable interest entities nonrecourse - 2019: $43; 2018: $75)
|
17,160
|
|
19,254
|
|
||
Other Noncurrent Liabilities
|
|
|
||||
Deferred income tax liabilities
|
721
|
|
664
|
|
||
Pension and other postretirement benefits - noncurrent
|
9,103
|
|
9,226
|
|
||
Asbestos-related liabilities - noncurrent
|
1,133
|
|
1,142
|
|
||
Operating lease liabilities - noncurrent
|
2,126
|
|
—
|
|
||
Other noncurrent obligations
|
5,975
|
|
5,368
|
|
||
Total other noncurrent liabilities
|
19,058
|
|
16,400
|
|
||
Stockholders’ Equity
|
|
|
||||
Common stock (authorized and issued 100 shares of $0.01 par value each)
|
—
|
|
—
|
|
||
Additional paid-in capital
|
7,153
|
|
7,042
|
|
||
Retained earnings
|
29,701
|
|
29,808
|
|
||
Accumulated other comprehensive loss
|
(9,783
|
)
|
(9,885
|
)
|
||
Unearned ESOP shares
|
(105
|
)
|
(134
|
)
|
||
The Dow Chemical Company’s stockholders’ equity
|
26,966
|
|
26,831
|
|
||
Noncontrolling interests
|
1,180
|
|
1,138
|
|
||
Total equity
|
28,146
|
|
27,969
|
|
||
Total Liabilities and Equity
|
$
|
79,737
|
|
$
|
77,378
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Operating Activities
|
|
|
||||
Net income
|
$
|
586
|
|
$
|
1,377
|
|
Adjustments to reconcile net income to net cash provided by (used for) operating activities:
|
|
|
||||
Depreciation and amortization
|
840
|
|
837
|
|
||
Credit for deferred income tax
|
(89
|
)
|
(67
|
)
|
||
Earnings of nonconsolidated affiliates less than dividends received
|
750
|
|
287
|
|
||
Net periodic pension benefit cost
|
62
|
|
110
|
|
||
Pension contributions
|
(103
|
)
|
(308
|
)
|
||
Net (gain) loss on sales of assets, businesses and investments
|
12
|
|
(33
|
)
|
||
Restructuring and asset related charges - net
|
232
|
|
165
|
|
||
Other net loss
|
39
|
|
98
|
|
||
Changes in assets and liabilities, net of effects of acquired and divested companies:
|
|
|
||||
Accounts and notes receivable
|
(58
|
)
|
(1,524
|
)
|
||
Inventories
|
(266
|
)
|
(1,239
|
)
|
||
Accounts payable
|
(468
|
)
|
823
|
|
||
Other assets and liabilities, net
|
(111
|
)
|
(684
|
)
|
||
Cash provided by (used for) operating activities
|
1,426
|
|
(158
|
)
|
||
Investing Activities
|
|
|
||||
Capital expenditures
|
(514
|
)
|
(423
|
)
|
||
Investment in gas field developments
|
(25
|
)
|
(28
|
)
|
||
Proceeds from sales of property and businesses, net of cash divested
|
25
|
|
17
|
|
||
Proceeds from sale of ownership interests in nonconsolidated affiliates
|
21
|
|
—
|
|
||
Purchases of investments
|
(173
|
)
|
(557
|
)
|
||
Proceeds from sales and maturities of investments
|
180
|
|
454
|
|
||
Proceeds from interests in trade accounts receivable conduits
|
—
|
|
445
|
|
||
Cash used for investing activities
|
(486
|
)
|
(92
|
)
|
||
Financing Activities
|
|
|
||||
Changes in short-term notes payable
|
(17
|
)
|
293
|
|
||
Payments on long-term debt
|
(80
|
)
|
(54
|
)
|
||
Proceeds from issuance of parent company stock
|
28
|
|
63
|
|
||
Employee taxes paid for share-based payment arrangements
|
(54
|
)
|
(77
|
)
|
||
Distributions to noncontrolling interests
|
(9
|
)
|
(24
|
)
|
||
Dividends paid to parent
|
(535
|
)
|
(1,057
|
)
|
||
Other financing activities, net
|
—
|
|
3
|
|
||
Cash used for financing activities
|
(667
|
)
|
(853
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
30
|
|
100
|
|
||
Summary
|
|
|
||||
Increase (Decrease) in cash, cash equivalents and restricted cash
|
303
|
|
(1,003
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
2,709
|
|
6,207
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
3,012
|
|
$
|
5,204
|
|
Less: Restricted cash and cash equivalents, included in "Other current assets"
|
43
|
|
18
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,969
|
|
$
|
5,186
|
|
|
Three Months Ended
|
|||||
In millions (Unaudited)
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Common Stock
|
|
|
||||
Balance at beginning and end of period
|
$
|
—
|
|
$
|
—
|
|
Additional Paid-in Capital
|
|
|
||||
Balance at beginning of period
|
7,042
|
|
6,553
|
|
||
Issuance of parent company stock
|
28
|
|
63
|
|
||
Stock-based compensation and allocation of ESOP shares
|
83
|
|
142
|
|
||
Balance at end of period
|
7,153
|
|
6,758
|
|
||
Retained Earnings
|
|
|
||||
Balance at beginning of period
|
29,808
|
|
28,050
|
|
||
Net income available for The Dow Chemical Company common stockholder
|
541
|
|
1,342
|
|
||
Dividends to parent
|
(535
|
)
|
(1,057
|
)
|
||
Adoption of accounting standards (Notes 1, 2 and 6)
|
(111
|
)
|
(68
|
)
|
||
Other
|
(2
|
)
|
(6
|
)
|
||
Balance at end of period
|
29,701
|
|
28,261
|
|
||
Accumulated Other Comprehensive Loss
|
|
|
||||
Balance at beginning of period
|
(9,885
|
)
|
(8,591
|
)
|
||
Other comprehensive income
|
102
|
|
483
|
|
||
Adoption of accounting standards (Note 1)
|
—
|
|
20
|
|
||
Balance at end of period
|
(9,783
|
)
|
(8,088
|
)
|
||
Unearned ESOP Shares
|
|
|
||||
Balance at beginning of period
|
(134
|
)
|
(189
|
)
|
||
Allocation of ESOP shares
|
29
|
|
39
|
|
||
Balance at end of period
|
(105
|
)
|
(150
|
)
|
||
The Dow Chemical Company's stockholders' equity
|
26,966
|
|
26,781
|
|
||
Noncontrolling Interests
|
1,180
|
|
1,190
|
|
||
Total Equity
|
$
|
28,146
|
|
$
|
27,971
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
Note
|
|
Page
|
1
|
||
2
|
||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
9
|
||
10
|
||
11
|
||
12
|
||
13
|
||
14
|
||
15
|
||
16
|
||
17
|
||
18
|
||
19
|
Net Trade Sales by Principal Product Group
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Coatings & Performance Monomers
|
$
|
904
|
|
$
|
954
|
|
Consumer Solutions
|
1,365
|
|
1,363
|
|
||
Crop Protection
|
1,124
|
|
1,122
|
|
||
Electronics & Imaging
|
625
|
|
627
|
|
||
Hydrocarbons & Energy
|
1,380
|
|
1,779
|
|
||
Industrial Biosciences
|
119
|
|
135
|
|
||
Industrial Solutions
1
|
1,104
|
|
1,156
|
|
||
Nutrition & Health
|
152
|
|
156
|
|
||
Packaging and Specialty Plastics
|
3,410
|
|
3,854
|
|
||
Polyurethanes & CAV
1
|
2,297
|
|
2,557
|
|
||
Safety & Construction
|
424
|
|
444
|
|
||
Seed
|
323
|
|
371
|
|
||
Transportation & Advanced Polymers
|
284
|
|
304
|
|
||
Corporate
|
69
|
|
73
|
|
||
Other
|
2
|
|
4
|
|
||
Total
|
$
|
13,582
|
|
$
|
14,899
|
|
Net Trade Sales by Geographic Region
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
U.S. & Canada
|
$
|
4,884
|
|
$
|
5,468
|
|
EMEA
1
|
4,211
|
|
4,765
|
|
||
Asia Pacific
|
3,202
|
|
3,256
|
|
||
Latin America
|
1,285
|
|
1,410
|
|
||
Total
|
$
|
13,582
|
|
$
|
14,899
|
|
Contract Balances
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Accounts and notes receivable - Trade
|
$
|
8,428
|
|
$
|
8,246
|
|
Contract assets - current
1
|
$
|
26
|
|
$
|
37
|
|
Contract assets - noncurrent
2
|
$
|
47
|
|
$
|
47
|
|
Contract liabilities - current
3
|
$
|
233
|
|
$
|
165
|
|
Contract liabilities - noncurrent
4
|
$
|
1,739
|
|
$
|
1,390
|
|
1.
|
Included in "Other current assets" in the consolidated balance sheets.
|
2.
|
Included in "Deferred charges and other assets" in the consolidated balance sheets.
|
3.
|
Included in "Accrued and other current liabilities" in the consolidated balance sheets.
|
4.
|
Included in "Other noncurrent obligations" in the consolidated balance sheets.
|
DowDuPont Agriculture Division Program
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Total
|
||||||
In millions
|
|||||||||
2018 restructuring charges
|
$
|
24
|
|
$
|
1
|
|
$
|
25
|
|
Charges against the reserve
|
—
|
|
(1
|
)
|
(1
|
)
|
|||
Cash payments
|
(1
|
)
|
—
|
|
(1
|
)
|
|||
Reserve balance at Dec 31, 2018
|
$
|
23
|
|
$
|
—
|
|
$
|
23
|
|
Adjustments to the reserve
|
(4
|
)
|
—
|
|
(4
|
)
|
|||
Cash payments
|
(8
|
)
|
—
|
|
(8
|
)
|
|||
Reserve balance at Mar 31, 2019
|
$
|
11
|
|
$
|
—
|
|
$
|
11
|
|
DowDuPont Synergy Program
|
Severance and Related Benefit Costs
|
Asset Write-downs and Write-offs
|
Costs Associated with Exit and Disposal Activities
|
Total
|
||||||||
In millions
|
||||||||||||
Reserve balance at Dec 31, 2018
|
$
|
262
|
|
$
|
—
|
|
$
|
65
|
|
$
|
327
|
|
2019 restructuring charges
|
72
|
|
100
|
|
52
|
|
224
|
|
||||
Charges against the reserve
|
—
|
|
(100
|
)
|
—
|
|
(100
|
)
|
||||
Cash payments
|
(97
|
)
|
—
|
|
(29
|
)
|
(126
|
)
|
||||
Reserve balance at Mar 31, 2019
|
$
|
237
|
|
$
|
—
|
|
$
|
88
|
|
$
|
325
|
|
Inventories
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Finished goods
|
$
|
5,703
|
|
$
|
5,640
|
|
Work in process
|
2,239
|
|
2,214
|
|
||
Raw materials
|
940
|
|
941
|
|
||
Supplies
|
891
|
|
880
|
|
||
Total
|
$
|
9,773
|
|
$
|
9,675
|
|
Adjustment of inventories to a LIFO basis
|
(265
|
)
|
(415
|
)
|
||
Total inventories
|
$
|
9,508
|
|
$
|
9,260
|
|
Investments in Nonconsolidated Affiliates
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Investment in nonconsolidated affiliates
|
$
|
3,321
|
|
$
|
3,823
|
|
Other noncurrent obligations
|
(870
|
)
|
(495
|
)
|
||
Net investment in nonconsolidated affiliates
|
$
|
2,451
|
|
$
|
3,328
|
|
Investment in the HSC Group
|
|
Investment
|
|||||
In millions
|
Balance Sheet Classification
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
Hemlock Semiconductor L.L.C.
|
Other noncurrent obligations
|
$
|
(658
|
)
|
$
|
(495
|
)
|
DC HSC Holdings LLC
|
Investment in nonconsolidated affiliates
|
$
|
485
|
|
$
|
535
|
|
Goodwill
|
|
||
In millions
|
|||
Net goodwill at Dec 31, 2018
|
$
|
13,848
|
|
Foreign currency impact
|
(36
|
)
|
|
Net goodwill at Mar 31, 2019
|
$
|
13,812
|
|
Other Intangible Assets
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
In millions
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
Gross
Carrying
Amount
|
Accum
Amort
|
Net
|
||||||||||||
Intangible assets with finite lives:
|
|
|
|
|
|
|
||||||||||||
Developed technology
|
$
|
3,253
|
|
$
|
(1,996
|
)
|
$
|
1,257
|
|
$
|
3,255
|
|
$
|
(1,934
|
)
|
$
|
1,321
|
|
Software
|
1,539
|
|
(900
|
)
|
639
|
|
1,529
|
|
(876
|
)
|
653
|
|
||||||
Trademarks/tradenames
|
680
|
|
(638
|
)
|
42
|
|
688
|
|
(631
|
)
|
57
|
|
||||||
Customer-related
|
4,898
|
|
(2,211
|
)
|
2,687
|
|
4,911
|
|
(2,151
|
)
|
2,760
|
|
||||||
Other
|
236
|
|
(167
|
)
|
69
|
|
243
|
|
(170
|
)
|
73
|
|
||||||
Total other intangible assets, finite lives
|
$
|
10,606
|
|
$
|
(5,912
|
)
|
$
|
4,694
|
|
$
|
10,626
|
|
$
|
(5,762
|
)
|
$
|
4,864
|
|
In-process research and development
|
49
|
|
—
|
|
49
|
|
49
|
|
—
|
|
49
|
|
||||||
Total other intangible assets
|
$
|
10,655
|
|
$
|
(5,912
|
)
|
$
|
4,743
|
|
$
|
10,675
|
|
$
|
(5,762
|
)
|
$
|
4,913
|
|
Amortization Expense
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Other intangible assets, excluding software
|
$
|
154
|
|
$
|
159
|
|
Software, included in “Cost of sales”
|
$
|
25
|
|
$
|
23
|
|
Cash Proceeds
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Interests in conduits
1
|
$
|
—
|
|
$
|
445
|
|
1.
|
Presented in "Investing Activities" in the consolidated statements of cash flows.
|
Notes Payable
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
In millions
|
||||||
Commercial paper
|
$
|
—
|
|
$
|
10
|
|
Notes payable to banks and other lenders
|
317
|
|
295
|
|
||
Total notes payable
|
$
|
317
|
|
$
|
305
|
|
Period-end average interest rates
|
12.09
|
%
|
8.61
|
%
|
Long-Term Debt
|
2019 Average Rate
|
Mar 31,
2019 |
2018
Average
Rate
|
Dec 31,
2018 |
||||||
In millions
|
||||||||||
Promissory notes and debentures:
|
|
|
|
|
||||||
Final maturity 2019
|
9.80
|
%
|
$
|
7
|
|
9.80
|
%
|
$
|
7
|
|
Final maturity 2020
|
4.46
|
%
|
1,547
|
|
4.46
|
%
|
1,547
|
|
||
Final maturity 2021
|
4.71
|
%
|
1,424
|
|
4.71
|
%
|
1,424
|
|
||
Final maturity 2022
|
3.50
|
%
|
1,372
|
|
3.50
|
%
|
1,373
|
|
||
Final maturity 2023
|
7.64
|
%
|
325
|
|
7.64
|
%
|
325
|
|
||
Final maturity 2024
|
3.50
|
%
|
896
|
|
3.50
|
%
|
896
|
|
||
Final maturity 2025 and thereafter
|
5.98
|
%
|
7,963
|
|
5.98
|
%
|
7,963
|
|
||
Other facilities:
|
|
|
|
|
||||||
U.S. dollar loans, various rates and maturities
|
3.52
|
%
|
4,533
|
|
3.59
|
%
|
4,533
|
|
||
Foreign currency loans, various rates and maturities
|
3.19
|
%
|
714
|
|
3.21
|
%
|
713
|
|
||
Medium-term notes, varying maturities through 2025
|
3.33
|
%
|
703
|
|
3.26
|
%
|
778
|
|
||
Finance lease obligations
|
|
369
|
|
|
369
|
|
||||
Unamortized debt discount and issuance costs
|
|
(324
|
)
|
|
(334
|
)
|
||||
Long-term debt due within one year
1
|
|
(2,369
|
)
|
|
(340
|
)
|
||||
Long-term debt
|
|
$
|
17,160
|
|
|
$
|
19,254
|
|
1.
|
Presented net of current portion of unamortized debt issuance costs.
|
1.
|
Includes
$2.0 billion
of current maturities related to the Dow Silicones term loan facility, repaid on April 5, 2019.
|
2.
|
Assumes the option to extend will be exercised for
$2.5 billion
of the Dow Silicones term loan facility.
|
Committed and Available Credit Facilities at Mar 31, 2019
|
||||||||
In millions
|
Committed Credit
|
Credit Available
|
Maturity Date
|
Interest
|
||||
Five Year Competitive Advance and Revolving Credit Facility
|
$
|
5,000
|
|
$
|
5,000
|
|
October 2023
|
Floating rate
|
Term Loan Facility
1
|
2,000
|
|
—
|
|
April 2019
|
Floating rate
|
||
Term Loan Facility
2
|
2,500
|
|
—
|
|
December 2021
|
Floating rate
|
||
North American Securitization Facility
|
800
|
|
800
|
|
September 2019
|
Floating rate
|
||
European Securitization Facility
3
|
450
|
|
450
|
|
October 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
October 2019
|
Floating rate
|
||
Bilateral Revolving Credit Facility
4
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
280
|
|
280
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
March 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
May 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
200
|
|
200
|
|
July 2020
|
Floating rate
|
||
Bilateral Revolving Credit Facility
|
100
|
|
100
|
|
August 2020
|
Floating rate
|
||
Total committed and available credit facilities
|
$
|
12,130
|
|
$
|
7,630
|
|
|
|
1.
|
Dow Silicones voluntarily repaid
$2.0 billion
of principal on April 5, 2019.
|
2.
|
Assumes the option to extend the Dow Silicones term loan facility will be exercised.
|
3.
|
Equivalent to
Euro 400 million
.
|
4.
|
On March 9, 2019, TDCC renewed a
$100 million
Bilateral Revolving Credit Facility agreement, which has a maturity date in March 2020 and provides for interest at floating rates, as defined in the agreement.
|
Guarantees
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||
In millions
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
Final
Expiration
|
Maximum
Future Payments
|
Recorded
Liability
|
||||||||
Guarantees
|
2023
|
$
|
4,514
|
|
$
|
15
|
|
2023
|
$
|
4,523
|
|
$
|
25
|
|
Lease Cost
|
Three Months Ended
Mar 31, 2019 |
||
In millions
|
|||
Operating lease cost
|
$
|
147
|
|
Finance lease cost
|
|
||
Amortization of right-of-use assets - finance
|
6
|
|
|
Interest on lease liabilities - finance
|
6
|
|
|
Total finance lease cost
|
$
|
12
|
|
Short-term lease cost
|
55
|
|
|
Variable lease cost
|
85
|
|
|
Sublease income
|
(1
|
)
|
|
Total lease cost
|
$
|
298
|
|
Other Lease Information
|
Three Months Ended
Mar 31, 2019 |
||
In millions
|
|||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
154
|
|
Operating cash flows from finance leases
|
$
|
6
|
|
Financing cash flows from finance leases
|
$
|
3
|
|
Lease Position
|
Balance Sheet Classification
|
Mar 31, 2019
|
||
In millions
|
||||
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
||
Operating leases
1
|
|
$
|
2,714
|
|
Assets
|
|
|
||
Operating lease assets
|
Operating lease right-of-use assets
|
$
|
2,584
|
|
Finance lease assets
|
Property
|
437
|
|
|
Finance lease amortization
|
Accumulated depreciation
|
(143
|
)
|
|
Total lease assets
|
|
$
|
2,878
|
|
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Operating lease liabilities - current
|
$
|
477
|
|
Finance
|
Long-term debt due within one year
|
20
|
|
|
Noncurrent
|
|
|
||
Operating
|
Operating lease liabilities - noncurrent
|
2,126
|
|
|
Finance
|
Long-Term Debt
|
349
|
|
|
Total lease liabilities
|
|
$
|
2,972
|
|
1.
|
Includes
$2.7 billion
related to the adoption of Topic 842. See Note
2
for additional information.
|
Lease Term and Discount Rate
|
Mar 31, 2019
|
|
Weighted-average remaining lease term
|
|
|
Operating leases
|
8.7 years
|
|
Finance leases
|
18.7 years
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
4.12
|
%
|
Finance leases
|
6.98
|
%
|
Lease Guarantees
|
March 31, 2019
|
December 31, 2018
|
||||||||||||
In millions
|
Final Expiration
|
Maximum Future Payments
|
Recorded Liability
|
Final Expiration
|
Maximum Future Payments
|
Recorded Liability
|
||||||||
Residual value guarantees
|
2028
|
$
|
885
|
|
$
|
—
|
|
2028
|
$
|
885
|
|
$
|
130
|
|
Accumulated Other Comprehensive Loss
|
Unrealized Gains (Losses) on Investments
|
Cumulative Translation Adj
|
Pension and Other Postretire Benefits
|
Derivative Instruments
|
Total Accum Other Comp Loss
|
||||||||||
In millions
|
|||||||||||||||
Balance at Jan 1, 2018
|
$
|
17
|
|
$
|
(1,481
|
)
|
$
|
(6,998
|
)
|
$
|
(109
|
)
|
$
|
(8,571
|
)
|
Other comprehensive income (loss) before reclassifications
|
(26
|
)
|
376
|
|
—
|
|
(16
|
)
|
334
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
1
|
|
—
|
|
126
|
|
22
|
|
149
|
|
|||||
Net other comprehensive income (loss)
|
$
|
(25
|
)
|
$
|
376
|
|
$
|
126
|
|
$
|
6
|
|
$
|
483
|
|
Balance at Mar 31, 2018
|
$
|
(8
|
)
|
$
|
(1,105
|
)
|
$
|
(6,872
|
)
|
$
|
(103
|
)
|
$
|
(8,088
|
)
|
|
|
|
|
|
|
||||||||||
Balance at Jan 1, 2019
|
$
|
(51
|
)
|
$
|
(1,813
|
)
|
$
|
(7,965
|
)
|
$
|
(56
|
)
|
$
|
(9,885
|
)
|
Other comprehensive income (loss) before reclassifications
|
68
|
|
(13
|
)
|
—
|
|
(68
|
)
|
(13
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
(1
|
)
|
(18
|
)
|
141
|
|
(7
|
)
|
115
|
|
|||||
Net other comprehensive income (loss)
|
$
|
67
|
|
$
|
(31
|
)
|
$
|
141
|
|
$
|
(75
|
)
|
$
|
102
|
|
Balance at Mar 31, 2019
|
$
|
16
|
|
$
|
(1,844
|
)
|
$
|
(7,824
|
)
|
$
|
(131
|
)
|
$
|
(9,783
|
)
|
Tax Benefit (Expense)
1
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Unrealized gains (losses) on investments
|
$
|
(18
|
)
|
$
|
6
|
|
Cumulative translation adjustments
|
(1
|
)
|
5
|
|
||
Pension and other postretirement benefit plans
|
(25
|
)
|
(28
|
)
|
||
Derivative instruments
|
27
|
|
3
|
|
||
Tax expense from income taxes related to other comprehensive income (loss) items
|
$
|
(17
|
)
|
$
|
(14
|
)
|
1.
|
Prior period amounts were updated to conform with the current year presentation.
|
Reclassifications Out of Accumulated Other Comprehensive Loss
|
Three Months Ended
|
Consolidated Statements of Income Classification
|
|||||
Mar 31, 2019
|
Mar 31, 2018
|
||||||
In millions
|
|||||||
Unrealized (gains) losses on investments
|
$
|
(1
|
)
|
$
|
2
|
|
See (1) below
|
Tax benefit
|
—
|
|
(1
|
)
|
See (2) below
|
||
After tax
|
$
|
(1
|
)
|
$
|
1
|
|
|
Cumulative translation adjustments
|
$
|
(18
|
)
|
$
|
—
|
|
See (3) below
|
Pension and other postretirement benefit plans
|
$
|
166
|
|
$
|
154
|
|
See (4) below
|
Tax benefit
|
(25
|
)
|
(28
|
)
|
See (2) below
|
||
After tax
|
$
|
141
|
|
$
|
126
|
|
|
Derivative instruments
|
$
|
(7
|
)
|
$
|
27
|
|
See (5) below
|
Tax benefit
|
—
|
|
(5
|
)
|
See (2) below
|
||
After tax
|
$
|
(7
|
)
|
$
|
22
|
|
|
Total reclassifications for the period, after tax
|
$
|
115
|
|
$
|
149
|
|
|
1.
|
"Net sales" and "Sundry income (expense) - net."
|
2.
|
"Provision for income taxes."
|
3.
|
"Sundry income (expense) - net."
|
4.
|
These AOCL components are included in the computation of net periodic benefit cost of TDCC's defined benefit pension and other postretirement benefit plans. See Note
14
for additional information.
|
5.
|
"Cost of sales," "Sundry income (expense) - net" and "Interest expense and amortization of debt discount."
|
Noncontrolling Interests
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Balance at beginning of period
|
$
|
1,138
|
|
$
|
1,186
|
|
Net income attributable to noncontrolling interests
|
45
|
|
35
|
|
||
Distributions to noncontrolling interests
|
(9
|
)
|
(24
|
)
|
||
Cumulative translation adjustments
|
7
|
|
(6
|
)
|
||
Other
|
(1
|
)
|
(1
|
)
|
||
Balance at end of period
|
$
|
1,180
|
|
$
|
1,190
|
|
Net Periodic Benefit Cost for All Significant Plans
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Defined Benefit Pension Plans:
|
|
|
||||
Service cost
|
$
|
112
|
|
$
|
133
|
|
Interest cost
|
241
|
|
218
|
|
||
Expected return on plan assets
|
(417
|
)
|
(406
|
)
|
||
Amortization of prior service credit
|
(6
|
)
|
(6
|
)
|
||
Amortization of net loss
|
132
|
|
171
|
|
||
Net periodic benefit cost
|
$
|
62
|
|
$
|
110
|
|
|
|
|
||||
Other Postretirement Benefits:
|
|
|
||||
Service cost
|
$
|
2
|
|
$
|
3
|
|
Interest cost
|
14
|
|
11
|
|
||
Amortization of net gain
|
(6
|
)
|
(6
|
)
|
||
Net periodic benefit cost
|
$
|
10
|
|
$
|
8
|
|
Fair Value of Financial Instruments
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||||||||||||
In millions
|
Cost
|
Gain
|
Loss
|
Fair Value
|
Cost
|
Gain
|
Loss
|
Fair Value
|
||||||||||||||||
Cash equivalents
|
$
|
345
|
|
$
|
—
|
|
$
|
—
|
|
$
|
345
|
|
$
|
566
|
|
$
|
—
|
|
$
|
—
|
|
$
|
566
|
|
Marketable securities
|
$
|
101
|
|
$
|
—
|
|
$
|
—
|
|
$
|
101
|
|
$
|
100
|
|
$
|
—
|
|
$
|
—
|
|
$
|
100
|
|
Other investments:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Debt securities:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Government debt
1
|
$
|
694
|
|
$
|
17
|
|
$
|
(9
|
)
|
$
|
702
|
|
$
|
714
|
|
$
|
9
|
|
$
|
(23
|
)
|
$
|
700
|
|
Corporate bonds
|
1,051
|
|
43
|
|
(21
|
)
|
1,073
|
|
1,026
|
|
20
|
|
(63
|
)
|
983
|
|
||||||||
Total debt securities
|
$
|
1,745
|
|
$
|
60
|
|
$
|
(30
|
)
|
$
|
1,775
|
|
$
|
1,740
|
|
$
|
29
|
|
$
|
(86
|
)
|
$
|
1,683
|
|
Equity securities
2
|
16
|
|
5
|
|
—
|
|
21
|
|
16
|
|
1
|
|
(1
|
)
|
16
|
|
||||||||
Total other investments
|
$
|
1,761
|
|
$
|
65
|
|
$
|
(30
|
)
|
$
|
1,796
|
|
$
|
1,756
|
|
$
|
30
|
|
$
|
(87
|
)
|
$
|
1,699
|
|
Total cash equivalents, marketable securities and other investments
|
$
|
2,207
|
|
$
|
65
|
|
$
|
(30
|
)
|
$
|
2,242
|
|
$
|
2,422
|
|
$
|
30
|
|
$
|
(87
|
)
|
$
|
2,365
|
|
Long-term debt including debt due within one year
3
|
$
|
(19,529
|
)
|
$
|
84
|
|
$
|
(1,405
|
)
|
$
|
(20,850
|
)
|
$
|
(19,594
|
)
|
$
|
351
|
|
$
|
(971
|
)
|
$
|
(20,214
|
)
|
Derivatives relating to:
|
|
|
|
|
|
|
|
|
||||||||||||||||
Interest rates
|
$
|
—
|
|
$
|
—
|
|
$
|
(181
|
)
|
$
|
(181
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
(64
|
)
|
$
|
(64
|
)
|
Foreign currency
|
—
|
|
86
|
|
(14
|
)
|
72
|
|
—
|
|
120
|
|
(43
|
)
|
77
|
|
||||||||
Commodities
4
|
—
|
|
88
|
|
(147
|
)
|
(59
|
)
|
—
|
|
91
|
|
(178
|
)
|
(87
|
)
|
||||||||
Total derivatives
|
$
|
—
|
|
$
|
174
|
|
$
|
(342
|
)
|
$
|
(168
|
)
|
$
|
—
|
|
$
|
211
|
|
$
|
(285
|
)
|
$
|
(74
|
)
|
2.
|
Equity securities with a readily determinable fair value.
|
3.
|
Cost includes fair value hedge adjustments of
$17 million
at
March 31, 2019
and
$18 million
at
December 31, 2018
on
$2,290 million
of debt at
March 31, 2019
and
December 31, 2018
.
|
4.
|
Presented net of cash collateral where master netting arrangements allow.
|
Investing Results
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Proceeds from sales of available-for-sale securities
|
$
|
159
|
|
$
|
348
|
|
Gross realized gains
|
$
|
6
|
|
$
|
7
|
|
Gross realized losses
|
$
|
(5
|
)
|
$
|
(9
|
)
|
Fair Value of Derivative Instruments
|
Mar 31, 2019
|
|||||||||
In millions
|
Balance Sheet Classification
|
Gross
|
Counterparty and Cash Collateral Netting
1
|
Net Amounts Included in the Consolidated Balance Sheet
|
||||||
Asset derivatives:
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Other current assets
|
$
|
161
|
|
$
|
(89
|
)
|
$
|
72
|
|
Commodity contracts
|
Other current assets
|
31
|
|
(5
|
)
|
26
|
|
|||
Commodity contracts
|
Deferred charges and other assets
|
57
|
|
(4
|
)
|
53
|
|
|||
Total
|
|
$
|
249
|
|
$
|
(98
|
)
|
$
|
151
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Other current assets
|
$
|
29
|
|
$
|
(15
|
)
|
$
|
14
|
|
Commodity contracts
|
Other current assets
|
8
|
|
(1
|
)
|
7
|
|
|||
Commodity contracts
|
Deferred charges and other assets
|
4
|
|
(2
|
)
|
2
|
|
|||
Total
|
|
$
|
41
|
|
$
|
(18
|
)
|
$
|
23
|
|
Total asset derivatives
|
|
$
|
290
|
|
$
|
(116
|
)
|
$
|
174
|
|
|
|
|
|
|
||||||
Liability derivatives:
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||||
Interest rate swaps
|
Other noncurrent obligations
|
$
|
181
|
|
$
|
—
|
|
$
|
181
|
|
Foreign currency contracts
|
Accrued and other current liabilities
|
98
|
|
(89
|
)
|
9
|
|
|||
Commodity contracts
|
Accrued and other current liabilities
|
93
|
|
(6
|
)
|
87
|
|
|||
Commodity contracts
|
Other noncurrent obligations
|
60
|
|
(8
|
)
|
52
|
|
|||
Total
|
|
$
|
432
|
|
$
|
(103
|
)
|
$
|
329
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Accrued and other current liabilities
|
$
|
20
|
|
$
|
(15
|
)
|
$
|
5
|
|
Commodity contracts
|
Accrued and other current liabilities
|
8
|
|
(4
|
)
|
4
|
|
|||
Commodity contracts
|
Other noncurrent obligations
|
7
|
|
(3
|
)
|
4
|
|
|||
Total
|
|
$
|
35
|
|
$
|
(22
|
)
|
$
|
13
|
|
Total liability derivatives
|
|
$
|
467
|
|
$
|
(125
|
)
|
$
|
342
|
|
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 TDCC and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
|
Fair Value of Derivative Instruments
|
Dec 31, 2018
|
|||||||||
In millions
|
Balance Sheet Classification
|
Gross
|
Counterparty and Cash Collateral Netting
1
|
Net Amounts Included in the Consolidated Balance Sheet
|
||||||
Asset derivatives:
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Other current assets
|
$
|
98
|
|
$
|
(42
|
)
|
$
|
56
|
|
Commodity contracts
|
Other current assets
|
47
|
|
(13
|
)
|
34
|
|
|||
Commodity contracts
|
Deferred charges and other assets
|
18
|
|
(3
|
)
|
15
|
|
|||
Total
|
|
$
|
163
|
|
$
|
(58
|
)
|
$
|
105
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Other current assets
|
$
|
128
|
|
$
|
(64
|
)
|
$
|
64
|
|
Commodity contracts
|
Other current assets
|
41
|
|
(1
|
)
|
40
|
|
|||
Commodity contracts
|
Deferred charges and other assets
|
4
|
|
(2
|
)
|
2
|
|
|||
Total
|
|
$
|
173
|
|
$
|
(67
|
)
|
$
|
106
|
|
Total asset derivatives
|
|
$
|
336
|
|
$
|
(125
|
)
|
$
|
211
|
|
|
|
|
|
|
||||||
Liability derivatives:
|
|
|
|
|
||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
||||||
Interest rate swaps
|
Other noncurrent obligations
|
$
|
64
|
|
$
|
—
|
|
$
|
64
|
|
Foreign currency contracts
|
Accrued and other current liabilities
|
46
|
|
(42
|
)
|
4
|
|
|||
Commodity contracts
|
Accrued and other current liabilities
|
111
|
|
(18
|
)
|
93
|
|
|||
Commodity contracts
|
Other noncurrent obligations
|
86
|
|
(9
|
)
|
77
|
|
|||
Total
|
|
$
|
307
|
|
$
|
(69
|
)
|
$
|
238
|
|
Derivatives not designated as hedging instruments:
|
|
|
|
|
||||||
Foreign currency contracts
|
Accrued and other current liabilities
|
$
|
103
|
|
$
|
(64
|
)
|
$
|
39
|
|
Commodity contracts
|
Accrued and other current liabilities
|
7
|
|
(4
|
)
|
3
|
|
|||
Commodity contracts
|
Other noncurrent obligations
|
8
|
|
(3
|
)
|
5
|
|
|||
Total
|
|
$
|
118
|
|
$
|
(71
|
)
|
$
|
47
|
|
Total liability derivatives
|
|
$
|
425
|
|
$
|
(140
|
)
|
$
|
285
|
|
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 TDCC and its counterparties and the payable or receivable for cash collateral held or placed with the same counterparty.
|
Basis of Fair Value Measurements on a Recurring Basis
|
Mar 31, 2019
|
Dec 31, 2018
|
||||||||||||||||
Quoted Prices in Active Markets for Identical Items
(Level 1) |
Significant Other Observable Inputs
(Level 2) |
Total
|
Quoted Prices in Active Markets for Identical Items
(Level 1) |
Significant Other Observable Inputs
(Level 2) |
Total
|
|||||||||||||
In millions
|
||||||||||||||||||
Assets at fair value:
|
|
|
|
|
|
|
||||||||||||
Cash equivalents
1
|
$
|
—
|
|
$
|
345
|
|
$
|
345
|
|
$
|
—
|
|
$
|
566
|
|
$
|
566
|
|
Marketable securities
|
—
|
|
101
|
|
101
|
|
—
|
|
100
|
|
100
|
|
||||||
Equity securities
2
|
21
|
|
—
|
|
21
|
|
16
|
|
—
|
|
16
|
|
||||||
Debt securities:
2
|
|
|
|
|
|
|
||||||||||||
Government debt
3
|
—
|
|
702
|
|
702
|
|
—
|
|
700
|
|
700
|
|
||||||
Corporate bonds
|
19
|
|
1,054
|
|
1,073
|
|
—
|
|
983
|
|
983
|
|
||||||
Derivatives relating to:
4
|
|
|
|
|
|
|
||||||||||||
Foreign currency
|
—
|
|
189
|
|
189
|
|
—
|
|
226
|
|
226
|
|
||||||
Commodities
|
10
|
|
90
|
|
100
|
|
17
|
|
93
|
|
110
|
|
||||||
Total assets at fair value
|
$
|
50
|
|
$
|
2,481
|
|
$
|
2,531
|
|
$
|
33
|
|
$
|
2,668
|
|
$
|
2,701
|
|
Liabilities at fair value:
|
|
|
|
|
|
|
||||||||||||
Long-term debt including debt due within one year
5
|
$
|
—
|
|
$
|
20,850
|
|
$
|
20,850
|
|
$
|
—
|
|
$
|
20,214
|
|
$
|
20,214
|
|
Derivatives relating to:
4
|
|
|
|
|
|
|
||||||||||||
Interest rates
|
—
|
|
181
|
|
181
|
|
—
|
|
64
|
|
64
|
|
||||||
Foreign currency
|
—
|
|
117
|
|
117
|
|
—
|
|
149
|
|
149
|
|
||||||
Commodities
|
13
|
|
155
|
|
168
|
|
23
|
|
189
|
|
212
|
|
||||||
Total liabilities at fair value
|
$
|
13
|
|
$
|
21,303
|
|
$
|
21,316
|
|
$
|
23
|
|
$
|
20,616
|
|
$
|
20,639
|
|
1.
|
Treasury bills, time deposits, and money market funds included in "Cash and cash equivalents" in the consolidated balance sheets and held at amortized cost, which approximates fair value.
|
2.
|
TDCC’s investments in debt securities, which are primarily available-for-sale, and equity securities are included in “Other investments” in the consolidated balance sheets.
|
3.
|
U.S. Treasury obligations, U.S. agency obligations, agency mortgage-backed securities and other municipalities’ obligations.
|
4.
|
See Note
15
for the classification of derivatives in the consolidated balance sheets.
|
5.
|
See Note
15
for information on fair value measurements of long-term debt.
|
Assets and Liabilities of Consolidated VIEs
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
In millions
|
||||||
Cash and cash equivalents
|
$
|
109
|
|
$
|
82
|
|
Other current assets
|
116
|
|
114
|
|
||
Net property
|
718
|
|
734
|
|
||
Other noncurrent assets
|
60
|
|
45
|
|
||
Total assets
1
|
$
|
1,003
|
|
$
|
975
|
|
Current liabilities
|
$
|
318
|
|
$
|
334
|
|
Long-term debt
|
43
|
|
75
|
|
||
Other noncurrent obligations
|
46
|
|
31
|
|
||
Total liabilities
2
|
$
|
407
|
|
$
|
440
|
|
1.
|
All assets were restricted at
March 31, 2019
and
December 31, 2018
.
|
2.
|
All liabilities were nonrecourse at
March 31, 2019
and
December 31, 2018
.
|
Carrying Amounts of Assets and Liabilities Related to Nonconsolidated VIEs
|
|
Mar 31,
2019 |
Dec 31,
2018 |
||||
In millions
|
Description of asset or liability
|
||||||
Hemlock Semiconductor L.L.C.
|
Equity method investment
1
|
$
|
(658
|
)
|
$
|
(495
|
)
|
Silicon joint ventures
|
Equity method investments
2
|
$
|
96
|
|
$
|
100
|
|
AgroFresh Solutions, Inc.
|
Equity method investment
2
|
$
|
45
|
|
$
|
48
|
|
Other receivable
3
|
$
|
8
|
|
$
|
8
|
|
1.
|
Classified as "Other noncurrent obligations" in the consolidated balance sheets. TDCC's maximum exposure to loss was
zero
at
March 31, 2019
(
zero
at
December 31, 2018
).
|
2.
|
Classified as "Investment in nonconsolidated affiliates" in the consolidated balance sheets.
|
3.
|
Classified as "Accounts and notes receivable - Other" in the consolidated balance sheets.
|
Balances Due To or Due From DuPont and its Affiliates
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Accounts and notes receivable - Other
|
$
|
201
|
|
$
|
288
|
|
Accounts payable - Other
|
$
|
112
|
|
$
|
201
|
|
Sales to DuPont and its Affiliates
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Net sales
|
$
|
106
|
|
$
|
43
|
|
Cost of sales
|
$
|
65
|
|
$
|
26
|
|
•
|
1.6 million
stock options with a weighted-average exercise price of
$54.89
and a weighted-average fair value of
$7.99
per share;
|
•
|
1.7 million
restricted stock units with a weighted-average fair value of
$54.89
per share; and
|
•
|
1.2 million
performance stock units with a weighted-average fair value of
$57.58
per share.
|
Selected Financial Data
|
Three Months Ended
|
|||||
In millions
|
Mar 31,
2019 |
Mar 31,
2018 |
||||
Net sales
|
$
|
13,582
|
|
$
|
14,899
|
|
|
|
|
||||
Cost of sales ("COS")
|
$
|
10,707
|
|
$
|
11,552
|
|
Percent of net sales
|
78.8
|
%
|
77.5
|
%
|
||
|
|
|
||||
Research and development expenses ("R&D")
|
$
|
361
|
|
$
|
386
|
|
Percent of net sales
|
2.7
|
%
|
2.6
|
%
|
||
|
|
|
||||
Selling, general and administrative expenses ("SG&A")
|
$
|
701
|
|
$
|
751
|
|
Percent of net sales
|
5.2
|
%
|
5.0
|
%
|
||
|
|
|
||||
Effective tax rate
|
31.7
|
%
|
20.9
|
%
|
||
|
|
|
||||
Net income available for common stockholder
|
$
|
541
|
|
$
|
1,342
|
|
Sales Variances by Geographic Region
|
Three Months Ended Mar 31, 2019
|
|||||||||
Local Price & Product Mix
|
Currency
|
Volume
|
Portfolio & Other
|
Total
|
||||||
Percentage change from prior year
|
||||||||||
U.S. & Canada
|
(7
|
)%
|
—
|
%
|
(4
|
)%
|
—
|
%
|
(11
|
)%
|
EMEA
1
|
(7
|
)
|
(5
|
)
|
1
|
|
(1
|
)
|
(12
|
)
|
Asia Pacific
|
(9
|
)
|
(2
|
)
|
9
|
|
—
|
|
(2
|
)
|
Latin America
|
(10
|
)
|
(1
|
)
|
2
|
|
—
|
|
(9
|
)
|
Total
|
(8
|
)%
|
(2
|
)%
|
1
|
%
|
—
|
%
|
(9
|
)%
|
1.
|
Europe, Middle East and Africa.
|
Cash Flow Summary
|
Three Months Ended
|
|||||
In millions
|
Mar 31, 2019
|
Mar 31, 2018
|
||||
Cash provided by (used for):
|
|
|
||||
Operating activities
|
$
|
1,426
|
|
$
|
(158
|
)
|
Investing activities
|
(486
|
)
|
(92
|
)
|
||
Financing activities
|
(667
|
)
|
(853
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
30
|
|
100
|
|
||
Summary
|
|
|
||||
Increase (Decrease) in cash, cash equivalents and restricted cash
|
$
|
303
|
|
$
|
(1,003
|
)
|
Cash, cash equivalents and restricted cash at beginning of period
|
2,709
|
|
6,207
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
3,012
|
|
$
|
5,204
|
|
Less: Restricted cash and cash equivalents, included in "Other current assets"
|
43
|
|
18
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,969
|
|
$
|
5,186
|
|
Cash Flows from Operating Activities Excluding Impact of ASU 2016-15 and Additional Interpretive Guidance (non-GAAP)
|
Three Months Ended
|
||
In millions
|
Mar 31, 2018
|
||
Cash flows from operating activities - Updated for impact of ASU 2016-15 and additional interpretive guidance (GAAP)
|
$
|
(158
|
)
|
Less: Impact of ASU 2016-15 and additional interpretive guidance
|
445
|
|
|
Cash flows from operating activities - Excluding impact of ASU 2016-15 and additional interpretive guidance (non-GAAP)
|
$
|
287
|
|
Total Debt
|
Mar 31, 2019
|
Dec 31, 2018
|
||||
In millions
|
||||||
Notes payable
|
$
|
317
|
|
$
|
305
|
|
Long-term debt due within one year
|
2,369
|
|
340
|
|
||
Long-term debt
|
17,160
|
|
19,254
|
|
||
Gross debt
|
$
|
19,846
|
|
$
|
19,899
|
|
- Cash and cash equivalents
|
2,969
|
|
2,669
|
|
||
- Marketable securities
|
101
|
|
100
|
|
||
Net debt
|
$
|
16,776
|
|
$
|
17,130
|
|
Gross debt as a percent of total capitalization
|
41.4
|
%
|
41.6
|
%
|
||
Net debt as a percent of total capitalization
|
37.3
|
%
|
38.0
|
%
|
Credit Ratings
|
Long-Term Rating
|
Short-Term Rating
|
Outlook
|
Standard & Poor’s
|
BBB
|
A-2
|
Stable
|
Moody’s Investors Service
|
Baa2
|
P-2
|
Stable
|
Fitch Ratings
|
BBB+
|
F2
|
Stable
|
Contractual Obligations at Mar 31, 2019
|
Payments Due In
|
|
|||||||||||||
In millions
|
2019
|
2020-2021
|
2022-2023
|
2024 and beyond
|
Total
|
||||||||||
Long-term debt obligations
1
|
$
|
2,307
|
|
$
|
6,088
|
|
$
|
2,007
|
|
$
|
9,451
|
|
$
|
19,853
|
|
Expected cash requirements for interest
2
|
$
|
673
|
|
$
|
1,629
|
|
$
|
1,168
|
|
$
|
6,907
|
|
$
|
10,377
|
|
Operating leases
|
$
|
437
|
|
$
|
936
|
|
$
|
634
|
|
$
|
1,157
|
|
$
|
3,164
|
|
1.
|
Excludes unamortized debt discount and issuance costs of $324 million. Includes finance lease obligations of $369 million. Assumes the option to extend will be exercised for
$2.5 billion
of the Dow Silicones Term Loan Facility.
|
2.
|
Cash requirements for interest on long-term debt was calculated using current interest rates at March 31, 2019, and includes $4,919 million of various floating rate notes.
|
|
EXHIBIT NO.
|
|
DESCRIPTION
|
|
|
Separation and Distribution Agreement, dated as of April 1, 2019, by and among Corteva, Inc., Dow Inc. and DowDuPont Inc. (incorporated by reference to Exhibit 2.1 to Dow Inc.'s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
|
Amended and Restated Certificate of Incorporation of Dow Inc. (incorporated by reference to Exhibit 3.1 to Dow Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
|
Amended and Restated Bylaws of Dow Inc. (incorporated by reference to Exhibit 3.2 to Dow Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
4.3
|
|
Dow Inc. agrees to provide the SEC, on request, copies of all other such indentures and instruments that define the rights of holders of long-term debt of Dow Inc. and its consolidated subsidiaries, including The Dow Chemical Company, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K.
|
|
|
Tax Matters Agreement, dated as of April 1, 2019, by and among DowDuPont Inc., Dow Inc., and Corteva, Inc. (incorporated by reference to Exhibit 10.1 to Dow Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
|
Employee Matters Agreement, dated as of April 1, 2019, by and among DowDuPont Inc., Dow Inc., and Corteva, Inc. (incorporated by reference to Exhibit 10.2 to Dow Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
|
MatCo/SpecCo Intellectual Property Cross License Agreement, dated as of April 1, 2019, by and between Dow Inc. et al and DowDuPont Inc. et al (incorporated by reference to Exhibit 10.3 to Dow Inc.’s Current Report on Form 8‑K filed with the SEC on April 2, 2019).
|
|
|
|
MatCo/AgCo Intellectual Property Cross License Agreement, dated as of April 1, 2019, by and between Dow Inc. et al and Corteva, Inc. et al (incorporated by reference to Exhibit 10.4 to Dow Inc.’s Current Report on Form 8-K filed with the SEC on April 2, 2019).
|
|
|
|
Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Performance Stock Unit Award Agreement under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.1 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Restricted Stock Award Agreement under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.2 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Restricted Stock Unit Award Agreement under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.3 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Stock Appreciation Right Award Agreement under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.4 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Stock Option Award Agreement under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.5 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
|
Form of Restricted Stock Unit Award Agreement (Director) under the Dow Inc. 2019 Stock Incentive Plan effective as of April 1, 2019 (incorporated by reference to Exhibit 4.4.6 to Dow Inc.’s Registration Statement on Form S-3, filed with the SEC on April 1, 2019).
|
|
|
10.8
*
|
|
The Dow Chemical Company Elective Deferral Plan (Pre-2005), restated and effective as of April 1, 2019.
|
|
|
The Dow Chemical Company Elective Deferral Plan (Post 2004), restated and effective as of April 1, 2019 (incorporated by reference to Exhibit 4.1 to The Dow Chemical Company’s Registration Statement on Form S-8 POS, filed with the SEC on April 1, 2019).
|
|
|
10.10
*
|
|
Dow Inc. Voluntary Deferred Compensation Plan for Non-Employee Directors, restated and effective as of April 1, 2019.
|
|
23
*
|
|
Ankura Consulting Group, LLC's Consent.
|
|
31.1
*
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2
*
|
|
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
*
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
*
|
|
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
101.INS
|
|
XBRL Instance Document.
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
/s/ RONALD C. EDMONDS
|
Ronald C. Edmonds
|
Controller and Vice President
|
of Controllers and Tax
|
|
|
|
|
Page
|
|
|
ARTICLE I PURPOSE AND EFFECTIVE DATE
|
1
|
|
||||
ARTICLE II DEFINITIONS
|
2
|
|
||||
|
2.01
|
|
|
Administrator
|
2
|
|
|
2.02
|
|
|
Appeals Administrator
|
2
|
|
|
2.03
|
|
|
Base Salary
|
2
|
|
|
2.04
|
|
|
Base Salary Deferral
|
2
|
|
|
2.05
|
|
|
Beneficiary
|
2
|
|
|
2.06
|
|
|
Board
|
2
|
|
|
2.07
|
|
|
Change of Control
|
3
|
|
|
2.08
|
|
|
Common Stock
|
3
|
|
|
2.09
|
|
|
Company
|
3
|
|
|
2.10
|
|
|
Deferral Account
|
3
|
|
|
2.11
|
|
|
Deferral Period
|
3
|
|
|
2.12
|
|
|
Deferral Amount
|
3
|
|
|
2.13
|
|
|
Disabled
|
3
|
|
|
2.14
|
|
|
Eligible Compensation
|
4
|
|
|
2.15
|
|
|
Eligible Employee
|
4
|
|
|
2.16
|
|
|
ERISA
|
4
|
|
|
2.17
|
|
|
Fair Market Value
|
4
|
|
|
2.18
|
|
|
Form of Payment
|
4
|
|
|
2.19
|
|
|
Hardship Withdrawal
|
4
|
|
|
2.20
|
|
|
Hypothetical Investment Benchmark
|
4
|
|
|
2.21
|
|
|
Initial Claims Reviewer
|
5
|
|
|
2.22
|
|
|
Matching Contribution
|
5
|
|
|
2.23
|
|
|
Other Bonus
|
5
|
|
|
2.24
|
|
|
Other Deferral
|
5
|
|
|
2.25
|
|
|
Participant
|
5
|
|
|
2.26
|
|
|
Participant Agreement
|
5
|
|
|
2.27
|
|
|
Performance Awards
|
5
|
|
|
2.28
|
|
|
Performance Deferral
|
5
|
|
|
2.29
|
|
|
Phantom Share Units
|
5
|
|
|
2.30
|
|
|
Plan
|
6
|
|
|
2.31
|
|
|
Plan Year
|
6
|
|
|
2.32
|
|
|
Retirement
|
6
|
|
|
2.33
|
|
|
Savings Plan
|
6
|
|
|
2.34
|
|
|
Section 16 Participant
|
6
|
|
|
2.35
|
|
|
Termination of Employment
|
6
|
|
|
2.36
|
|
|
Unforeseeable Emergency
|
6
|
|
|
2.37
|
|
|
Valuation Date
|
6
|
|
|
2.38
|
|
|
VPHR
|
7
|
|
ARTICLE III ADMINISTRATION
|
8
|
|
||||
|
3.01
|
|
|
Duties and Powers of the Administrator
|
8
|
|
|
3.02
|
|
|
Designation of Additional Administrators and Delegation of Administrative Responsibilities
|
8
|
|
|
3.03
|
|
|
Decisions of Administrators
|
9
|
|
|
3.04
|
|
|
Indemnification of Administrators
|
9
|
|
|
3.05
|
|
|
Claim Procedure
|
9
|
|
|
3.06
|
|
|
Commencement of Legal Action
|
10
|
|
|
3.07
|
|
|
Forum Selection
|
11
|
|
ARTICLE IV PARTICIPATION
|
12
|
|
||||
|
4.01
|
|
|
Participation
|
12
|
|
|
4.02
|
|
|
Contents of Participation Agreement
|
12
|
|
|
4.03
|
|
|
Modification or Revocation of Election by Participant
|
12
|
|
ARTICLE V DEFERRED COMPENSATION
|
13
|
|
||||
|
5.01
|
|
|
Elective Deferred Compensation
|
13
|
|
|
5.02
|
|
|
Vesting of Deferral Account
|
13
|
|
ARTICLE VI MAINTENANCE AND INVESTMENT OF ACCOUNTS
|
14
|
|
||||
|
6.01
|
|
|
Maintenance of Accounts
|
14
|
|
|
6.02
|
|
|
Hypothetical Investment Benchmarks
|
14
|
|
|
6.03
|
|
|
Statement of Accounts
|
16
|
|
ARTICLE VII BENEFITS
|
17
|
|
||||
|
7.01
|
|
|
Time and Form of Payment
|
17
|
|
|
7.02
|
|
|
Changing Form of Benefit
|
17
|
|
|
7.03
|
|
|
Matching Contribution
|
18
|
|
|
7.04
|
|
|
Retirement
|
18
|
|
|
7.05
|
|
|
Distributions after Specific Future Year
|
18
|
|
|
7.06
|
|
|
Pre-Retirement Survivor Benefit
|
19
|
|
|
7.07
|
|
|
Post-Retirement Survivor Benefit
|
19
|
|
|
7.08
|
|
|
Disability
|
19
|
|
|
7.09
|
|
|
Termination of Employment
|
20
|
|
|
7.10
|
|
|
Merger, Joint Venture or Sale of Business Exception
|
20
|
|
|
7.11
|
|
|
Hardship Withdrawal
|
21
|
|
|
7.12
|
|
|
Voluntary Early Withdrawal
|
21
|
|
|
7.13
|
|
|
Change of Control
|
22
|
|
|
7.14
|
|
|
Discretionary Company Contributions
|
22
|
|
|
7.15
|
|
|
Withholding of Taxes
|
23
|
|
ARTICLE VIII BENEFICIARY DESIGNATION
|
24
|
|
||||
|
8.01
|
|
|
Beneficiary Designation
|
24
|
|
|
8.02
|
|
|
No Beneficiary Designation
|
24
|
|
ARTICLE IX AMENDMENT AND TERMINATION OF PLAN
|
25
|
|
||||
|
9.01
|
|
|
Amendment
|
25
|
|
|
9.02
|
|
|
Company's Right to Terminate
|
25
|
|
ARTICLE X MISCELLANEOUS
|
26
|
|
||||
|
10.01
|
|
|
Unfunded Plan
|
26
|
|
|
10.02
|
|
|
Nonassignability
|
26
|
|
|
10.03
|
|
|
Validity and Severability
|
26
|
|
|
10.04
|
|
|
Governing Law
|
27
|
|
|
10.05
|
|
|
Employment Status
|
27
|
|
|
10.06
|
|
|
Underlying Incentive Plans and Programs
|
27
|
|
|
10.07
|
|
|
Severance
|
27
|
|
|
10.08
|
|
|
Successors of Dow Inc. and the Company
|
27
|
|
|
10.09
|
|
|
Waiver of Breach
|
27
|
|
|
10.10
|
|
|
Notice
|
27
|
|
|
10.11
|
|
|
Successor Titles of Positions
|
28
|
|
APPENDIX A: Hypothetical Investment Benchmarks
|
29
|
|
a.
|
is a United States employee or an expatriate who is paid from one of The Dow Chemical Company's U.S. entities,
|
b.
|
is a member of the functional specialist/functional leader or global leadership job families,
|
c.
|
has a job level of 1.2 or higher,
|
d.
|
is eligible for participation in the Savings Plan,
|
e.
|
is designated by the Administrator as eligible to participate in the Plan as of September 30 for deferral of Base Salary and Performance Awards, and
|
f.
|
qualifies as a member of a "select group of management or highly compensated employees" under ERISA.
|
a.
|
To promulgate and enforce such rules and regulations and prescribe the use of such forms as he shall deem necessary or appropriate for the proper and efficient administration of the Plan;
|
b.
|
To interpret the Plan and to resolve any possible ambiguities, inconsistencies and omissions therein or therefrom;
|
c.
|
To decide all questions concerning the Plan;
|
d.
|
To prepare and disseminate communications to Participants and Beneficiaries as are necessary or appropriate to properly administer the Plan; and
|
e.
|
To retain third party administrators, consultants, accountants and other individuals or entities as he deems necessary or advisable to assist him in fulfilling his responsibilities under the Plan, consistent with The Dow Chemical Company's guidelines on hiring and retention of outside service providers; and monitor the performance of such individuals and entities, decide whether to discontinue the services of such individuals and entities, and make payment to such individuals and entities in accordance with the terms of the plan document.
|
a.
|
Each Administrator shall have the sole and absolute discretion to interpret the plan document, make findings of fact, operate, administer and decide any matters arising with respect to the Plan, and may adopt such rules and procedures as it deems necessary, desirable or appropriate in the administration of the Plan. All rules and decisions of such Administrators shall be conclusive and binding on all persons having an interest in the Plan.
|
b.
|
Any determination by an Administrator shall be binding on all parties. If challenged in court, such determination shall not be subject to de novo review and shall not be overturned unless proven to be arbitrary and capricious based upon the evidence presented to the Administrator at the time of its determination.
|
a.
|
All initial claims for benefits under this Plan shall be sent to the Initial Claims Reviewer. If the Initial Claims Reviewer determines that any individual who has claimed a right to receive benefits, or different benefits, under this Plan is not entitled to receive all or any part of the benefits claimed, the Initial Claims Reviewer shall inform the claimant in writing of such determination and the reasons therefore in terms calculated to be understood by the claimant. The notice shall be sent within 90 days of receipt of the claim unless the Initial Claims Reviewer determines that additional time, not exceeding 90 additional days, is needed and so notifies the claimant in writing before the expiration of the initial 90 day period. Any written notice of extension for review shall include the circumstances requiring extension and date by which a decision is expected to be rendered. A written notice of denial of benefits shall (i) state specific reasons for the denial, (ii) make specific reference to the pertinent Plan provisions on which the denial is based, (iii) describe any additional material or information that is necessary to support the claimant's claim and an explanation of why such material or information is necessary, and (iv) include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records
|
b.
|
The claimant may within 60 days after notice of the denial submit, in writing, to the Appeals Administrator a notice that the claimant contests the denial of his or her claim and desires a further review by the Appeals Administrator. During the review process, the claimant has the right to submit written comments, documents, records and other information relating to the claim for benefits, which the Appeals Administrator shall consider without regard to whether the items were considered upon the initial review. The Appeals Administrator shall within 60 days thereafter review the claim and authorize the claimant to, upon request and free of charge, have reasonable access to, and copies of all documents, records or other information relevant (as defined by Department of Labor Regulation section 2560.503-1(m)) to the claim. The Appeals Administrator will render a final decision with specific reasons therefor in writing and will transmit it to the claimant within 60 days of the written request for review, unless the Appeals Administrator determines that additional time, not exceeding 60 days, is needed, and so notifies the claimant in writing before the expiration of the initial 60 day period. In no event shall the Appeals Administrator render a final decision later than the initial 60 days plus the possible additional 60 days following receipt of the claimant's appeal. Any written notice of extension for review shall include the circumstances requiring extension and date by which a decision is expected to be rendered. A written notice of denial of benefits upon review shall (i) state specific reasons for the denial, (ii) make specific reference to the pertinent Plan provisions on which the denial is based, and (iii) include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records or other information relevant (as defined by Department of Labor Regulation section 2560.503-1(m)) to the claim. Such notice shall, in addition, inform the claimant of the right to bring a civil action under section 502(a) of ERISA. If such determination is adverse to the claimant, it shall be binding and conclusive unless the claimant notifies the Appeals Administrator within 90 days after the mailing or delivery to him or her by the Appeals Administrator of its determination that he or she intends to institute legal proceedings challenging the determination of the Appeals Administrator, and actually institutes such legal proceeding within the applicable limitations period described in Section 3.06 below.
|
a.
|
until the claimant has exhausted the claims review procedures described in Section 3.05 above, including complying with the 90-day notice requirement in Section 3.05(b), and
|
b.
|
unless such claim is filed in a court with jurisdiction over such claim the earlier of:
|
1.
|
180 days after the mailing or delivery of the adverse determination by the Appeals Administrator, or
|
2.
|
two (2) years after (i) the date the first benefit payment was allegedly due, or (ii) the date the Plan first repudiated its alleged obligation to provide such benefits or coverage (regardless of whether such repudiation occurred before or during the administrative review process), whichever is earlier.
|
a.
|
Direction of Hypothetical Investments
. Each Participant shall be entitled to direct the manner in which his or her Deferral Accounts will be deemed to be invested, selecting among the Hypothetical Investment Benchmarks specified in Appendix A hereto, as amended by the VPHR, Global Benefits Director, Chief Financial Officer, or Global Director of Portfolio Investments, each acting individually, or their respective delegates, from time to time, and in accordance with such rules, regulations and procedures as the Administrator may establish from time to time. Notwithstanding anything to the contrary herein, earnings and losses based on a Participant's investment elections shall begin to accrue as of the date such Participant's Deferred Amounts are credited to his or her Deferral Accounts. Participants, except for Section 16 Participants, can reallocate among the Hypothetical Investment Benchmarks on a daily basis. Section 16 Participants can reallocate among the Hypothetical Investment Benchmarks in accordance with such rules, regulations and procedures as the Administrator may establish from time to time.
|
b.
|
Dow Inc. Stock Index Fund and DowDuPont Inc. Stock Index Fund
.
|
i.
|
The Hypothetical Investment Benchmarks available for Deferral Accounts will include the "Dow Inc. Stock Index Fund." The Dow Inc. Stock Index Fund will consist of deemed investments in shares of Dow Inc. Common Stock, including reinvestment of dividends and stock splits, without brokerage fees. Deferred Amounts that are deemed to be invested in the Dow Inc. Stock Index Fund shall be converted into Phantom Share Units based upon the Fair Market Value of the Common Stock as of the date(s) the Deferred Amounts are to be credited to a Deferral Account. The portion of any Deferral Account that is invested in the Dow Inc. Stock Index Fund shall be credited, as of each dividend payment date, with additional Phantom Share Units of Common Stock with respect to cash dividends paid on the Common Stock with record
|
ii.
|
When a reallocation or a distribution of all or a portion of a Deferral Account that is invested in the Dow Inc. Stock Index Fund is to be made, the balance in such a Deferral Account shall be determined by multiplying the Fair Market Value of one share of Common Stock on the most recent Valuation Date preceding the date of such reallocation or distribution by the number of Phantom Share Units to be reallocated or distributed. Upon a distribution, the amounts in the Dow Inc. Stock Index Fund shall be distributed in the form of cash having a value equal to the Fair Market Value of a comparable number of actual shares of Common Stock.
|
iii.
|
In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, or other change in the corporate structure of Dow Inc. affecting Common Stock, or a sale by Dow Inc. of all or part of its assets, or any distribution to stockholders other than a normal cash dividend, then the Administrator may make appropriate adjustments to the number of deemed shares credited to any Deferral Account. The determination of the Administrator as to such adjustments, if any, to be made shall be conclusive.
|
iv.
|
Notwithstanding any other provision of this Plan, the Administrator shall adopt such procedures as it may determine are necessary to ensure that with respect to any Participant who is actually or potentially subject to section 16(b) of the Securities Exchange Act of 1934, as amended, the crediting of deemed shares to his or her Deferral Account is deemed to be an exempt purchase for purposes of such section 16(b), including without limitation requiring that no shares of Common Stock or cash relating to such deemed shares may be distributed for six months after being credited to such Deferral Account.
|
v.
|
The Hypothetical Investment Benchmarks available for Deferral Accounts shall also include the "DowDuPont Inc. Stock Index Fund," but only to the extent that a Participant's Deferral Account is deemed to be invested in DowDuPont Inc. common stock prior to the Spinoff Date (as defined in Article I). The DowDuPont Inc. Stock Index Fund will consist of deemed investments in the common stock of DowDuPont Inc. or any successor thereto (as determined by the Administrator in its sole discretion), including stock splits but not dividends. Dividends shall be deemed to be invested in the same manner as under the Savings Plan. Similar rules and procedures as described in this Section 6.02(b) with respect to the Dow Inc. Stock Index Fund shall apply with respect to the DowDuPont Inc. Stock Index Fund and its successors, to the extent required by section 16(b) of the Securities Exchange Act of 1934, as amended, or by rules established by the Administrator. For the avoidance of doubt: (A) a Participant may not direct that any amounts allocated to his Deferral Account after the Spinoff Date will be deemed to be invested in the DowDuPont Inc. Stock Index Fund or any successor thereto; and (B) amounts deemed to be invested in the DowDuPont Inc. Stock Index Fund prior to the Spinoff Date may continue to be deemed to be so invested following the Spinoff Date in accordance with rules established by the Administrator.
|
a.
|
elect to waive the lump sum distribution of benefits for an entire class of affected employees transferring to the joint venture. In cases where this election is made by the Administrator, the Participant's Base Salary Deferrals shall cease and the Participant's Deferral Account shall remain deferred, in accordance with the distribution elected in the Participation Agreement, until the Participant's termination of employment from the joint venture, provided however, the Participant is employed by the joint venture until at least age 50; in cases where the Participant is not 50 years old at the time of termination of employment from the entity, The Dow Chemical Company (or, a Company other than The Dow Chemical Company, it the Participant is employed at a Company other than The Dow Chemical Company, subject to reimbursement by The Dow Chemical Company) shall pay to the Participant a lump sum termination benefit equal to the balance of the Deferral Account as of the Valuation Date. If any Company terminates its ownership interest in the joint venture, the Participant's Deferral Account shall remain deferred, in accordance with the distribution elected in the Participation Agreement, until the Participant's termination of employment from the remaining joint venture partners, provided however, the Participant is employed by the remaining joint venture partners until at least age 50; in cases where the Participant is not 50 years old at the time of termination of employment from the remaining joint venture partners, The Dow Chemical Company (or, a Company other than The Dow Chemical Company, if the Participant is employed at a Company other than The Dow Chemical Company, subject to reimbursement by The Dow Chemical Company) shall pay to the Participant a lump sum termination benefit equal to the balance of the Deferral Account as of the Valuation Date.
|
b.
|
elect to waive the lump sum distribution of benefits for an entire class of affected employees of a sale. In cases where this election is made by the Administrator, the Participant's Base Salary Deferrals shall cease and the Participant's Deferral Account shall remain in effect until such time as the benefits are distributed to Participants in accordance with the distribution elected in the Participation Agreement, provided however, the Participant is employed by the
|
c.
|
elect to permit the Performance Deferral for an entire class of affected employees transferring to the joint venture. In cases where this election is made by the Administrator, the award will be credited to the Participant's Deferral Account and the Participant's Deferral Account shall remain in effect until such time as benefits are distributed to Participants as provided under Section 7.10(a).
|
d.
|
elect to permit the Performance Deferral for an entire class of affected employees of a sale. In cases where this election is made by the Administrator, the award will be credited to the Participant's Deferral Account and the Participant's Deferral Account shall remain in effect until such time as the benefits are distributed to Participants as provided under Section 7.10(b).
|
a.
|
the spouse of such person, if any;
|
b.
|
the children of such person, if any;
|
c.
|
the beneficiary of any Company Paid Life Insurance of such person, if any;
|
d.
|
the beneficiary of the Executive Life Insurance of such person, if any;
|
e.
|
the beneficiary of any Company-sponsored life insurance policy for which any Company pays all or part of the premium of such person, if any; or
|
f.
|
the deceased person's estate.
|
|
DOW INC.
|
|
|
|
/s/ KAREN S. CARTER
|
|
By: Karen S. Carter
|
|
|
|
Its: Chief Human Resources Officer
|
|
|
|
|
Page
|
|
ARTICLE I PURPOSE AND EFFECTIVE DATE
|
1
|
|
|||
ARTICLE II DEFINITIONS
|
2
|
|
|||
|
2.01.
|
|
Administrator
|
2
|
|
|
2.02.
|
|
Appeals Administrator
|
2
|
|
|
2.03.
|
|
Beneficiary
|
2
|
|
|
2.04.
|
|
Board
|
2
|
|
|
2.05.
|
|
Change in Control
|
2
|
|
|
2.06.
|
|
Code
|
3
|
|
|
2.07.
|
|
Common Stock
|
3
|
|
|
2.08.
|
|
Company
|
3
|
|
|
2.09.
|
|
Deferral Account
|
3
|
|
|
2.10.
|
|
Deferral Amount
|
3
|
|
|
2.11.
|
|
Deputy Administrator
|
4
|
|
|
2.12.
|
|
Domestic Partner
|
4
|
|
|
2.13.
|
|
Eligible Compensation
|
5
|
|
|
2.14.
|
|
Eligible Director
|
5
|
|
|
2.15.
|
|
Fair Market Value
|
5
|
|
|
2.16.
|
|
Form of Payment
|
5
|
|
|
2.17.
|
|
Hardship Withdrawal
|
5
|
|
|
2.18.
|
|
Hypothetical Investment Benchmark
|
5
|
|
|
2.19.
|
|
Initial Claims Reviewer
|
5
|
|
|
2.20.
|
|
Participant
|
5
|
|
|
2.21.
|
|
Participant Agreement
|
5
|
|
|
2.22.
|
|
Phantom Share Units
|
6
|
|
|
2.23.
|
|
Plan
|
6
|
|
|
2.24.
|
|
Plan Year
|
6
|
|
|
2.25.
|
|
Section 16 Participant
|
6
|
|
|
2.26.
|
|
Separation from Board Service
|
6
|
|
|
2.27.
|
|
Section 409A
|
6
|
|
|
2.28.
|
|
Time of Payment
|
6
|
|
|
2.29.
|
|
Unforeseeable Emergency
|
6
|
|
|
2.30.
|
|
Valuation Date
|
7
|
|
ARTICLE III ADMINISTRATION
|
8
|
|
|||
|
3.01.
|
|
Duties and Powers of the Administrator
|
8
|
|
|
3.02.
|
|
Designation of Additional Administrators and Delegation of Administrative Responsibilities
|
8
|
|
|
3.03.
|
|
Decisions of Administrators
|
9
|
|
|
3.04.
|
|
Indemnification
|
10
|
|
|
3.05.
|
|
Claim and Review Procedure
|
10
|
|
|
3.06.
|
|
Commencement of Legal Action
|
11
|
|
|
3.07.
|
|
Forum Selection
|
13
|
|
|
3.08.
|
|
Expenses
|
13
|
|
ARTICLE IV PARTICIPATION AGREEMENT
|
14
|
|
|||
|
4.01.
|
|
Participation Agreement
|
14
|
|
|
4.02.
|
|
Contents of Participation Agreement
|
14
|
|
|
4.03.
|
|
Modification or Revocation of Election by Participant
|
14
|
|
ARTICLE V DEFERRED COMPENSATION
|
15
|
|
|||
|
5.01.
|
|
Elective Deferred Compensation
|
15
|
|
|
5.02.
|
|
Vesting of Deferral Account
|
15
|
|
ARTICLE VI MAINTENANCE AND INVESTMENT OF ACCOUNTS
|
16
|
|
|||
|
6.01.
|
|
Maintenance of Accounts
|
16
|
|
|
6.02.
|
|
Hypothetical Investment Benchmarks
|
16
|
|
ARTICLE VII BENEFITS
|
19
|
|
|||
|
7.01.
|
|
Time and Form of Payment
|
19
|
|
|
7.02.
|
|
Changing Form of Benefit
|
19
|
|
|
7.03.
|
|
Survivor Benefit
|
19
|
|
|
7.04.
|
|
Hardship Withdrawal
|
20
|
|
|
7.05.
|
|
Change of Control
|
20
|
|
|
7.06.
|
|
Permitted Acceleration of Distributions
|
20
|
|
|
7.07.
|
|
Permitted Delays in Distribution
|
21
|
|
|
7.08.
|
|
Administrative Provisions Regarding Distributions
|
21
|
|
|
7.09.
|
|
Disputed Payments and Refusals to Pay
|
23
|
|
ARTICLE VIII BENEFICIARY DESIGNATION
|
24
|
|
|||
|
8.01.
|
|
Beneficiary Designation
|
24
|
|
|
8.02.
|
|
No Beneficiary Designation
|
24
|
|
ARTICLE IX AMENDMENT AND TERMINATION OF PLAN
|
25
|
|
|||
|
9.01.
|
|
Amendment
|
25
|
|
|
9.02.
|
|
Right to Terminate and Manner of Termination
|
25
|
|
ARTICLE X MISCELLANEOUS
|
26
|
|
|||
|
10.01.
|
|
Plan is Binding
|
26
|
|
|
10.02.
|
|
Effect of Plan on Service Relationship
|
26
|
|
|
10.03.
|
|
Governing Law
|
26
|
|
|
10.04.
|
|
Tax Withholding
|
26
|
|
|
10.05.
|
|
Savings Clause
|
26
|
|
|
10.06.
|
|
Notices
|
26
|
|
|
10.07.
|
|
Waiver
|
27
|
|
|
10.08.
|
|
Reliance on Information Provided
|
27
|
|
|
10.09.
|
|
Plan Interpretation and Section 409A
|
27
|
|
|
10.10.
|
|
Scrivener's Errors
|
28
|
|
|
10.11.
|
|
Privilege
|
28
|
|
|
10.12.
|
|
Rules of Construction
|
28
|
|
|
10.13.
|
|
Unfunded Plan
|
29
|
|
|
10.14.
|
|
Nonassignability
|
29
|
|
|
10.15.
|
|
Underlying Incentive Plans and Programs
|
29
|
|
a.
|
the date that any one person, or more than one person acting as a group, acquires ownership of stock of Dow Inc. that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of Dow Inc.;
|
b.
|
the date that a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the directors before the date of the appointment or election;
|
c.
|
the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of Dow Inc. possessing 30 percent or more of
|
d.
|
the date that any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from Dow Inc. that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of Dow Inc. immediately before such acquisition or acquisitions, provided that the following asset transfers shall not result in a Change of Control: (i) a transfer of assets to a stockholder of Dow Inc. in exchange for or with respect to its stock, (ii) a transfer to a corporation, 50 percent or more of the total value or voting power of which is owned directly or indirectly, by Dow Inc., (iii) a transfer to a person, or more than one person acting as a group, that owns 50 percent or more of the stock of Dow Inc., or (iv) a transfer to an entity, at least 50 percent of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (iii).
|
a.
|
the two people live together on the determination date;
|
b.
|
the two people are not married to other persons;
|
c.
|
the two people are each other’s sole domestic partner in a committed relationship similar to a legal marriage and with the intent to remain in the relationship indefinitely;
|
d.
|
each of the two people is legally competent and able to enter into a contract;
|
e.
|
the two people are not related to each other in a way which would prohibit legal marriage;
|
f.
|
in entering the relationship with each other, neither of the two people is acting fraudulently or under duress;
|
g.
|
the two people are financially interdependent with each other; and
|
h.
|
both people have signed a statement acceptable to the Administrator that has been provided to the Administrator, and there has been no change in circumstances that would render such statement invalid as of the determination date.
|
a.
|
evidence satisfactory to the Administrator is provided that the two people are registered as domestic partners or partners in a civil union in a state or municipality or country that legally recognizes such domestic partnerships or civil unions; and
|
b.
|
each of the two people has signed a statement acceptable to the Administrator and have provided it to the Administrator.
|
a.
|
annual retainers and fees paid by Dow Inc. to Eligible Directors; and
|
b.
|
other compensation related to deemed to be Eligible Compensation by the Administrator.
|
a.
|
To promulgate and enforce such rules and regulations and prescribe the use of such forms as it shall deem necessary or appropriate for the proper and efficient administration of the Plan;
|
b.
|
To interpret the Plan and to resolve any possible ambiguities, inconsistencies and omissions therein or therefrom;
|
c.
|
To decide all questions of fact arising under the Plan;
|
d.
|
To prepare and disseminate communications to Participants and Beneficiaries as are necessary or appropriate to properly administer the Plan;
|
e.
|
To retain third-party administrators, consultants, accountants, actuaries, and other individuals or entities as it deems necessary or advisable to assist it in fulfilling its responsibilities under the Plan, to monitor the performance of such individuals and entities, to decide whether to discontinue the services of such individuals and entities, and to make payment to such individuals and entities in accordance with the terms of the Plan; and
|
f.
|
To settle or compromise any claim or dispute involving the Plan and enforce any release of a claim against the Plan or any covenant not to sue the Plan; and
|
g.
|
To authorize other Companies to participate in the Plan.
|
a.
|
Designation of administrators
. Dow Inc., as the Plan sponsor, may: (i) designate one more persons to serve as the Deputy Administrator or Initial Claims Reviewer, through an action of the Administrator or its designee; and (ii) designate one or more persons, groups of persons, or entities to serve as the Administrator or Appeals Administrator, in addition to or in lieu of the Administrator or Appeals Administrator named in the plan document, through an action of the Board or of such other person as the Board shall designate.
|
b.
|
Deputy Administrator
. The Deputy Administrator shall be responsible for performing certain administrative and ministerial functions under the Plan, subject to oversight by the
|
c.
|
Allocation of administrative responsibilities.
If there is more than one Administrator, or if the Administrator consists of more than one person, group of persons, or entity, such Administrator may allocate its administrative responsibilities among such persons, group of persons, or entities. Similarly, if any of the Deputy Administrator, Initial Claims Reviewer, or Appeals Administrator consists of more than one person, group of persons or entity, such Deputy Administrator, Initial Claims Reviewer, or Appeals Administrator may allocate its administrative responsibilities among such persons, groups of persons or entities.
|
d.
|
Delegation of administrative responsibilities
. The Administrator, Deputy Administrator, Initial Claims Reviewer, and Appeals Administrator may designate other persons, groups of persons or entities to carry out their responsibilities under the Plan, provided that such delegation is consistent with the terms of the Plan and the Administrator’s, Deputy Administrator’s, Initial Claims Reviewer’s, or Appeals Administrator’s duties and responsibilities under the Plan.
|
e.
|
Authority of delegees
. Unless an instrument delegating authority to a delegee specifies otherwise, the delegee shall have the same discretionary powers in carrying out such delegated responsibility as the delegor would have if it had carried out the responsibility itself, and the provisions of Section 3.03 shall apply to such delegee.
|
a.
|
The Administrator, Deputy Administrator, Initial Claims Reviewer, and Appeals Administrator shall have the sole and absolute discretion to interpret the Plan documents, make findings of fact and decide any matters arising with respect to their assigned duties and powers under the Plan, and may adopt such rules and procedures as they deem necessary, desirable, or appropriate to carry out their responsibilities under the Plan. In particular: (i) the Administrator and the Deputy Administrator shall have the sole and absolute discretion to decide administrative issues and to exercise the duties and powers set forth in the Plan and shall
|
b.
|
The determinations and rules of the Administrator, Deputy Administrator, Initial Claims Reviewer, and Appeals Administrator or other administrator upon any question of fact, interpretation, definition or procedure relating to the Plan or any other matter relating to the Plan shall be conclusive and binding on all persons having an interest in the Plan, except that (i) the determinations of the Initial Claims Reviewer are subject to review by the Appeals Administrator; (ii) the determinations of the Initial Claims Reviewer and Appeals Administrator are subject to the interpretations of the Plan document by the Administrator; and (iii) the determinations of the Deputy Administrator are subject to the interpretations of the Plan document by the Administrator. If challenged in court, the determinations of the Administrator, Deputy Administrator, Initial Claims Reviewer, and Appeals Administrator shall not be subject to
de novo
review and shall not be overturned unless proven to be arbitrary and capricious based upon the evidence presented to, or considered by, the Administrator, Deputy Administrator, Initial Claims Reviewer, or Appeals Administrator at the time of its determination.
|
a.
|
Initial Claims
. If the Initial Claims Reviewer receives a written claim for benefits from a Participant or other individual, the Initial Claims Reviewer shall review such claim in accordance with this Section 3.05. If the Initial Claims Reviewer determines that such claim should be denied in whole or in part, the Initial Claims Reviewer shall, in writing, notify such claimant within 90 days of receipt of such claim that his or her claim has been denied, unless the Deputy Administrator determines that additional time, not exceeding 90 additional days, is needed and so notifies the claimant. If the claim is denied, the Initial Claims Reviewer shall set forth in writing the specific reasons for such denial and such notification shall:
|
i.
|
state the reason why the claim is being denied;
|
ii.
|
set forth the pertinent sections of the Plan relied upon;
|
iii.
|
if applicable, set forth an explanation of any additional material or information necessary for the claimant to perfect his or her claim; and
|
iv.
|
set forth an explanation of how the claimant can obtain review of such denial under the procedures set forth below.
|
b.
|
Appeals.
Within 60 days after receipt by the claimant of such notice, such claimant may request, by mailing or delivery of written notice to the Appeals Administrator, a review by the Appeals Administrator of the decision denying the claim. If the claimant fails to request such a review within such 60-day period, it shall be conclusively determined for all purposes of this Plan that the denial of such claim by the Initial Claims Reviewer is correct. The Appeals Administrator shall notify a claimant of its determination on appeal within 90 days after receipt of such notice from the claimant, unless the Appeals Administrator determines that additional time, not exceeding 90 additional days, is needed, and so notifies the claimant. If such determination is favorable to the claimant, it shall be binding and conclusive.
|
i.
|
state the reason for denial of the claim;
|
ii.
|
set forth the pertinent sections of the Plan relied upon; and
|
iii.
|
state that the claimant may bring institute legal proceedings, provided the claimant institutes such legal proceeding within the time periods provided in Section 3.06.
|
a.
|
An Applicable Claim may not be filed in any court until the claimant has exhausted the claims review procedures described in Section 3.05, and unless such claim or action is filed in a
|
i.
|
in the case of a claim or action to recover benefits allegedly due to a claimant under the terms of the Plan or to clarify the claimant’s rights to future benefits under the terms of the Plan, the earliest of (i) the date the first benefit payment was actually made, (ii) the date the first benefit payment was allegedly due, and (iii) the date the Plan first repudiated its alleged obligation to provide such benefits (regardless of whether such repudiation occurred before or during the administrative review process),
|
ii.
|
in the case of a claim or action to enforce an alleged right under the Plan (other than a right to benefits which are subject to Section 3.06(a)(i)), the date the Initial Claims Reviewer or Appeals Administrator first denied the claimant’s request to exercise such right, regardless of whether such denial occurred during the administrative review process,
|
iii.
|
in the case of any other claim or action described in Section 3.06(b)(iv), below, the earliest date on which the claimant knew or should have known of the material facts on which such claim or action is based, regardless of whether the claimant was aware of the legal theory underlying the claim or action,
|
b.
|
For purposes of this Section 3.06, an Applicable Claim is:
|
i.
|
a claim or action to recover benefits allegedly due under the provisions of the Plan or by reason of any law,
|
ii.
|
a claim or action to clarify rights to future benefits under the Plan,
|
iii.
|
a claim or action to enforce rights under the Plan, or
|
iv.
|
any other claim or action that (i) relates to the Plan, and (ii) seeks a remedy, ruling, or judgment of any kind against the Plan, the Company, the Administrator, the Initial Claims Reviewer, the Appeals Administrator or any delegee of the Administrator,
|
c.
|
In the event of any Applicable Claim brought by or on behalf of two or more claimants, this Section 3.06, including the Applicable Limitations Period, shall apply separately with respect to each claimant.
|
a.
|
To the fullest extent permitted by law, any putative class action lawsuit relating to the Plan, the lawfulness of any Plan provision, the administration of the Plan, or the performance or non-performance of an Administrator, Deputy Administrator, Initial Claims Reviewer, Appeals Administrator, their delegees or any officer, employee or former employee of the Company or other persons who act on their behalf with respect to the Plan shall be filed in one of the following jurisdictions: (i) the jurisdiction in which the Plan is principally administered, which is currently within the territorial boundaries of the Northern Division of the United States District Court for the Eastern District of Michigan; or (ii) the jurisdiction in which the largest number of putative class members resides (or if that jurisdiction cannot be determined the jurisdiction in which the largest number of class members is reasonably believed to reside).
|
b.
|
If any putative class action within the scope of paragraph (a) above is filed in a jurisdiction other than one of those described in paragraph (a), or if any non-class action filed in such a jurisdiction is subsequently amended or altered to include class action allegations, then the Plan, all parties to such action that are related to the Plan, including all alleged Participants and Beneficiaries, shall take all necessary steps to have the action removed to, transferred to or re-filed in a jurisdiction described in paragraph (a). Such steps may include, but are not limited to, (i) a joint motion to transfer the action; or (ii) a joint motion to dismiss the action without prejudice to its re-filing in a jurisdiction described in paragraph (a), with any applicable time limits or statutes of limitations applied as if the suit or class action allegation had originally been filed or asserted in a jurisdiction described in paragraph (a) at the same time that it was filed or asserted in a jurisdiction not described therein.
|
c.
|
This provision does not relieve any putative class member from any obligation existing under the Plan or by law to exhaust administrative remedies before initiating litigation.
|
e.
|
Direction of Hypothetical Investments
. Each Participant shall be entitled to direct the manner in which his or her Deferral Accounts will be deemed to be invested, selecting among the Hypothetical Investment Benchmarks designated by the Administrator or the Deputy Administrator acting individually, or their respective delegates, from time to time, and in accordance with any such rules, regulations, and procedures as the Administrator or the Deputy Administrator may establish from time to time. Notwithstanding anything to the contrary herein, earnings and losses based on a Participant’s investment elections shall begin to accrue as of the date such Participant’s Deferred Amounts are credited to his or her Deferral Accounts. Participants, except for Section 16 Participants, can reallocate among the Hypothetical Investment Benchmarks on a daily basis. Section 16 Participants can reallocate among the Hypothetical Investment Benchmarks in accordance with such rules, regulations, and procedures as the Administrator may establish from time to time.
|
f.
|
Dow Inc. Stock Index Fund and DowDuPont Inc. Stock Index Fund
.
|
1.
|
The Hypothetical Investment Benchmarks available for Deferral Accounts shall include the “Dow Inc. Stock Index Fund.” The Dow Inc. Stock Index Fund shall consist of deemed investments in shares of Common Stock, including reinvestment of dividends and stock splits. Deferred Amounts that are deemed to be invested in the Dow Inc. Index Fund shall be converted into Phantom Share Units based upon the Fair Market Value of the Common Stock as of the date(s) the Deferred Amounts are to be credited to a Deferral Account. The portion of any Deferral Account that is invested in the Dow Inc. Index Fund shall be credited, as of each dividend payment date, with additional Phantom Share Units of Common Stock with respect to cash dividends paid on the Common Stock with record dates during the period beginning on the day after the most recent preceding Valuation Date and ending on such Valuation Date.
|
2.
|
When a reallocation or a distribution of all or a portion of a Deferral Account that is invested in the Dow Inc. Stock Index Fund is to be made, the balance in such a Deferral Account shall be determined by multiplying the Fair Market Value of one share of Common Stock on the most recent Valuation Date preceding the date of such reallocation or distribution by the number of Phantom Share Units to be reallocated or distributed. Upon a distribution, the amounts in the Dow Inc. Stock Index Fund shall be distributed in the form of cash having a value equal to the Fair Market Value of a comparable number of actual shares of Common Stock.
|
3.
|
In the event of a reorganization, recapitalization, stock split, stock dividend, combination of shares, merger, consolidation, spinoff or other change in the corporate structure of Dow Inc., The Dow Chemical Company, or another Company affecting Common Stock, or a sale by Dow Inc., The Dow Chemical Company, or another Company of all or part of its assets, or any distribution to stockholders other than a normal cash dividend, then the Administrator may make appropriate adjustments to the number of Phantom Share Units credited to any Deferral Account to the extent that the Administrator deems such adjustments necessary. The determination of the Administrator as to such adjustments, if any, to be made shall be conclusive.
|
4.
|
Notwithstanding any other provision of this Plan, the Administrator shall adopt such procedures as it may determine are necessary to ensure that with respect to any Participant who is actually or potentially subject to section 16(b) of the Securities Exchange Act of 1934, as amended, the crediting of deemed shares to his or her Deferral Account is deemed to be an exempt purchase for purposes of such section 16(b), including, without limitation, requiring that no shares of Common Stock or cash relating to such deemed shares may be distributed for six months after being credited to such Deferral Account.
|
5.
|
The Hypothetical Investment Benchmarks available for Deferral Accounts shall also include the “DowDuPont Inc. Stock Index Fund,” but only to the extent that a Participant’s Deferral Account is deemed to be invested in DowDuPont Inc. common stock prior to the Spinoff. The DowDuPont Inc. Stock Index Fund shall consist of deemed investments in the common stock of DowDuPont Inc. or any successor thereto (as determined by the Administrator in its sole discretion), including stock splits but not dividends. Dividends shall be deemed to be invested in the manner determined the Administrator. Similar rules and procedures as described in this Section 6.02(b) with respect to the Dow Inc. Stock Index Fund shall apply with respect to the DowDuPont Inc. Stock Index Fund and its successors, to the extent required by section 16(b) of the Securities Exchange Act of 1934, as amended, or by rules established by the Administrator. For the avoidance of doubt: (A) a Participant may not direct that any amounts allocated to his or her Deferral Account after the Spinoff will be deemed to be invested in the DowDuPont Inc. Stock Index Fund or any successor thereto; and (B) amounts deemed to be invested in the DowDuPont Inc. Stock Index Fund prior to the Spinoff may continue to be deemed to be so invested
|
a.
|
Time of Payment
. Upon the Time of Payment elected by the Participant in the applicable Participation Agreement for each Deferral Account, Dow Inc. shall pay to the Participant the balance of such Deferral Account or commence installment payments from the Deferral Account, in each case, as determined in the manner set forth in Section 7.01(b) below.
|
b.
|
Form of Payment
: Dow Inc. shall make cash payments from a Participant’s Deferral Accounts in the Form of Payment elected by the Participant in the applicable Participation Agreement for each Deferral Account. Lump sum payments shall consist of an amount equal to the balance of such Deferral Account determined as of the most recent Valuation Date preceding the payment date. Installment payments shall consist of an annual amount equal to (i) the balance of such Deferral Account as of the most recent Valuation Date preceding the applicable annual payment date times (ii) a fraction, the numerator of which is one and the denominator of which is the number of remaining installment years (including the year for the installment being paid). Each such installment shall be deemed to be made on a
pro rata
basis from each of the different deemed investments of the Deferral Account. Notwithstanding any election by a Participant in a Participation Agreement or provisions of the Plan to the contrary, in the event the sum of all benefits payable to the Participant is less than or equal to ten thousand dollars ($10,000), the Administrator shall pay such benefits in a single lump sum.
|
a.
|
the election must be made at least twelve (12) months prior to the date the distribution is scheduled to be made or commence;
|
b.
|
a distribution may not be made earlier than at least five (5) years following the date the distribution would have been made or commenced; and
|
c.
|
the election may not cause the payments to be accelerated.
|
a.
|
Ethics Agreement.
To the extent necessary for the Participant to comply with an ethics agreement with the Federal government, and to the extent reasonably necessary to avoid the violation of applicable Federal, state, or local ethics law or conflicts of interest law, to the extent permitted by Treas. Reg. § 1.409A-3(j)(4)(iii);
|
b.
|
Tax Obligations.
To comply with state, local, or foreign tax obligations that apply to amounts deferred under the Plan before the amounts are paid or made available to the Participant, to the extent permitted by Treas. Reg. § 1.409A-3(j)(4)(xi);
|
c.
|
Section 409A Violations.
To the extent required to be included in income as a result of a violation of Section 409A, to the extent permitted by Treas. Reg. § 1.409A-3(j)(4)(vii);
|
d.
|
Debt Owed to the Company.
To the extent necessary to satisfy a debt of the Participant to the Company and to the extent permitted by Treas. Reg. § 1.409A-3(j)(4)(xiii), where (i) such debt is incurred in the ordinary course of the service relationship, (ii) the entire amount used to satisfy such debt in any fiscal year of the Company does not exceed $5,000, and (iii) the offset against such debt is made at the same time and in the same amount as such debt otherwise would have been due and collected from the Participant;
|
e.
|
Disputed Amounts.
To the extent of any settlement between the Company and the Participant of an arm’s length bona fide dispute as to the Participant’s right to a deferred compensation amount under the Plan, and to the extent permitted by Treas. Reg. § 1.409A-3(j)(4)(xiv), provided that such settlement amount is at least 25 percent less than the present value of the disputed amount and is not made at the same time as or proximate to a downturn in the financial health of Dow Inc.; and
|
f.
|
Other Permissible Circumstances.
In the sole discretion of the Administrator, under any other circumstance permitted under Section 409A.
|
a.
|
Federal Securities Laws.
Payment may be delayed if the Administrator reasonably anticipates that the making of a payment would violate Federal securities laws or other applicable law, provided that the payment is made at the earliest date at which the Administrator reasonably anticipates that the making of the payment will not cause such violation; and
|
b.
|
Other Events as Permitted by § 409A.
Payment may be delayed upon such other events or conditions as may be permitted in regulations or other guidance issued under Section 409A.
|
a.
|
Domestic Relations Orders.
Upon receipt of a valid domestic relations order, as determined by the Administrator pursuant to Treas. Reg. § 1.409A-3(j)(4)(ii) and the domestic relations order procedures applicable to the Plan (the “Procedures”), that require distribution of all or a portion of a Participant’s vested benefit under the Plan to an alternate payee, the required distribution(s) shall be paid to the alternate payee in accordance with such order, to the extent not already paid to a Participant or Beneficiary. Except as otherwise provided in the Procedures, however, a domestic relations order shall be valid with respect to the Plan: (a) only if the Administrator determines that the Plan is or will be able to, with sufficient certainty and without undue administrative burden, ascertain the amount of the benefit assigned to
|
b.
|
Incompetence.
If the Administrator determines that any person entitled to receive benefits hereunder is not physically or mentally capable of electing the time or form, or receiving or acknowledging receipt, of benefits under the Plan, the Administrator may make benefit payments to the court-appointed legal guardian of the such person, to an individual who has become the legal guardian of such person by operation of state law, or to another individual whom the Administrator determines is the appropriate person to receive such benefits on behalf of the person entitled to receive benefits.
|
c.
|
Unclaimed Payments and Lost or Missing Participants.
Benefits that the Plan is unable to pay because a Participant, Beneficiary, spouse, Domestic Partner, or other intended recipient has not been located, and benefit payments made by checks that are not cashed or deposited or by electronic funds transfers or other payment methods that are not completed and any benefits to which such benefit payments relate, shall be forfeited if the Plan is not able to locate the intended recipient, or the payment is not completed, within one year after the Plan first attempts to make the payment. The Deputy Administrator is entitled to rely on the last address provided to the Plan by the intended recipient and has no obligation to search for or ascertain such individual’s whereabouts.
|
d.
|
Incorrect Payment of Benefits.
If the Deputy Administrator determines in its sole discretion that the Plan made an overpayment of the amount of any benefits due any payee under the Plan, and that a correction is necessary or desirable under the law, then to the extent permitted by Section 409A, the Plan may recover the amounts either by requiring the payee to return the excess to the Plan, by reducing any future Plan payments to the payee, or by any other method deemed reasonable by the Deputy Administrator.
|
e.
|
Administrative Delay.
The Deputy Administrator may make payment on any day later than the date specified in the Plan as a result of administrative delay to the extent that such payment is treated as being paid on the date specified in the Plan under Treas. Reg. section 1.409A-3(d), which generally permits payment to be made later within the same calendar year, or, if later, within 2½ months following the date specified in the Plan, provided that the Participant is not permitted to designate the taxable year of payment.
|
a.
|
The Advisor’s client is the Advisee and not any Participant, service provider, Beneficiary, spouse or Domestic Partner, alternate payee, claimant, service provider, or other person;
|
b.
|
The Advisee shall be entitled to preserve the attorney-client privilege and any other privilege accorded to communications with the Advisor, and all other rights to maintain confidentiality, to the full extent permitted by law; and
|
c.
|
No Participant, service provider, Beneficiary, spouse or Domestic Partner, alternate payee, claimant, or other person shall be permitted to review any communication between the Advisee and any of its or his or her Advisors with respect to whom a privilege applies, unless mandated by a court order.
|
a.
|
the use of the masculine gender in this Plan shall also include within its meaning the feminine gender and vice versa;
|
b.
|
the use of the singular shall also include within its meaning the plural and vice versa;
|
c.
|
the word “include” shall mean to include, but not to be limited to;
|
d.
|
any reference to a statute or section of a statute shall further be a reference to any successor or amended statute or section, and any regulations or other guidance of general applicability issued thereunder;
|
e.
|
the title of an officer, employee, or entity used in this Plan (including, but not limited to, the title(s) referred to in the definitions of Administrator, Deputy Administrator, Initial Claims Reviewer, and Appeals Administrator), means the respective officer, employee, or entity of Dow Inc. or The Dow Chemical Company and means any successor title to such position as such title may be changed from time to time;
|
f.
|
references to an Administrator, Deputy Administrator, Appeals Administrator, Initial Claims Reviewer, officer or employee of Dow Inc. or The Dow Chemical Company, or other person or entity with responsibility or authority under the Plan shall include delegees (if any) of such entity or person, with respect to such entity’s or person’s delegated responsibilities; and
|
g.
|
the captions and headings of each article, section, paragraph, and other provision of the Plan are for convenience and reference only and are not to be considered in interpreting the terms and conditions of the Plan.
|
|
DOW INC.
|
|
|
|
/s/ KAREN S. CARTER
|
|
By: Karen S. Carter
|
|
|
|
Its: Chief Human Resources Officer
|
|
Ankura Consulting Group, LLC's Consent
|
EXHIBIT 23
|
Form S-3:
|
|
|
|
No.
|
333-230668
|
|
|
Form S-8:
|
|
|
|
Nos.
|
333-220352-01
|
|
333-230680
|
|
333-230681
|
Form S-4:
|
|
|
|
No.
|
333-88443
|
|
|
Form S-8:
|
|
|
|
Nos.
|
33-61795
|
|
333-40271
|
|
333-91027
|
|
333-103519
|
|
333-220352
|
/s/ B. THOMAS FLORENCE
|
B. Thomas Florence
|
Senior Managing Director
|
Ankura Consulting Group, LLC
|
May 3, 2019
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 31.1
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Dow Inc. and The Dow Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of registrants' board of directors (or persons performing the equivalent function):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/s/ JIM FITTERLING
|
Jim Fitterling
|
Chief Executive Officer
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 31.2
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Dow Inc. and The Dow Chemical Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrants as of, and for, the periods presented in this report;
|
4.
|
The registrants' other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrants and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrants, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrants' disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrants' internal control over financial reporting that occurred during the registrants' most recent fiscal quarter (the registrants' fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and
|
5.
|
The registrants' other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants' auditors and the audit committee of registrants' board of directors (or persons performing the equivalent function):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants' ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants' internal control over financial reporting.
|
/s/ HOWARD I. UNGERLEIDER
|
Howard I. Ungerleider
|
President and Chief Financial Officer
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 32.1
|
1.
|
the Quarterly Report on Form 10-Q of the Companies for the quarter ended
March 31, 2019
as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/s/ JIM FITTERLING
|
Jim Fitterling
|
Chief Executive Officer
|
May 3, 2019
|
|
|
Dow Inc.
The Dow Chemical Company and Subsidiaries
|
|
EXHIBIT 32.2
|
1.
|
the Quarterly Report on Form 10-Q of the Companies for the quarter ended
March 31, 2019
as filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Companies.
|
/s/ HOWARD I. UNGERLEIDER
|
Howard I. Ungerleider
|
President and Chief Financial Officer
|
May 3, 2019
|