SEGMENTS AND GEOGRAPHIC REGIONS (Notes)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segments and Geographic Regions [Text Block]

SEGMENTS AND GEOGRAPHIC REGIONS

Dow combines one of the broadest technology sets in the industry with asset integration, focused innovation and global scale to achieve profitable growth and become the most innovative, customer centric, inclusive and sustainable materials science company. Dow’s portfolio of performance materials, industrial intermediates and plastics businesses delivers a broad range of differentiated science-based products and solutions for our customers in high-growth segments, such as packaging, infrastructure and consumer care.

Effective with the Merger, TDCC's business activities were components of DowDuPont's business operations and were reported as a single operating segment. Following the separation from DowDuPont, the Company changed the manner in which its business activities were managed. The Company's portfolio now includes six global businesses which are organized into the following operating segments: Performance Materials & Coatings, Industrial Intermediates & Infrastructure and Packaging & Specialty Plastics. Corporate contains the reconciliation between the totals for the operating segments and the Company's totals. The Company did not aggregate any operating segments when determining its reportable segments.

Following the separation from DowDuPont, the Company changed its practice of transferring ethylene to its downstream derivative businesses at cost to transferring ethylene at market prices. The Company also changed certain of its Corporate segment allocation practices including costs previously assigned to AgCo and SpecCo, which are now allocated to the operating segments. These changes have been consistently applied to all periods presented.

Dow reported geographic information for the following regions: U.S. & Canada, Asia Pacific, Latin America and EMEAI. As a result of the separation from DowDuPont, the Company changed the geographic alignment for the country of India to be reflected in EMEAI (previously reported in Asia Pacific).

Dow’s measure of profit/loss for segment reporting purposes is pro forma Operating EBIT (for the six months ended June 30, 2019 and the three and six months ended June 30, 2018) and Operating EBIT (for the three months ended June 30, 2019) as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines pro forma Operating EBIT as earnings (i.e., "Income from continuing operations before income taxes") before interest, plus pro forma adjustments, excluding the impact of significant items. The Company defines Operating EBIT as earnings (i.e., "Income from continuing operations before income taxes") before interest, excluding the impact of significant items. Pro forma Operating EBIT and Operating EBIT by segment include all operating items relating to the businesses; items that principally apply to Dow as a whole are assigned to Corporate. These measures have been reflected retrospectively for all periods presented, and reconciliations of these measures are provided at the end of this footnote. The Company also presents pro forma net sales for the six months ended June 30, 2019 and the three and six months ended June 30, 2018 in this footnote as it is included in management's measure of segment performance and is regularly reviewed by the CODM. Pro forma net sales includes the impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont.

Corporate Profile

Dow conducts its worldwide operations through global businesses which are reflected in the following reportable segments:

Performance Materials & Coatings

Performance Materials & Coatings includes industry-leading franchises that deliver a wide array of solutions into consumer and infrastructure end-markets. The segment consists of two global businesses: Coatings & Performance Monomers and Consumer Solutions. These businesses primarily utilize the Company's acrylics-, cellulosics- and silicone-based technology platforms to serve the needs of the architectural and industrial coatings, home care and personal care end-markets. Both businesses employ materials science capabilities, global reach and unique products and technology to combine chemistry platforms to deliver differentiated offerings to customers.

Coatings & Performance Monomers

Coatings & Performance Monomers consists of two businesses: Coating Materials and Performance Monomers. The Coating Materials business makes critical ingredients and additives that help advance the performance of paints and coatings. The business offers innovative and sustainable products to accelerate paint and coatings performance across diverse market segments, including architectural paints and coatings, as well as industrial coatings applications used in maintenance and protective industries, wood, metal packaging, traffic markings, thermal paper and leather. These products enhance coatings by improving hiding and coverage characteristics, enhancing durability against nature and the elements, reducing volatile organic compounds (“VOC”) content, reducing maintenance and improving ease of application. The Performance Monomers business manufactures critical building blocks based on acrylics needed for the production of coatings, textiles, and home and personal care products.

Consumer Solutions

Consumer Solutions consists of three businesses: Performance Silicones; Silicone Feedstocks & Intermediates; and Home & Personal Care. Performance Silicones uses innovative, versatile silicone-based technology to provide ingredients and solutions to customers in high performance building, consumer goods, elastomeric applications and the pressure sensitive adhesives industry that help them meet modern consumer preferences in attributes such as texture, feel, scent, durability and consistency. The Company’s wide array of silicone-based products and solutions enables customers to: increase the appeal of their products; extend shelf life; improve performance of products under a wider range of conditions; and provide a more sustainable offering. Silicone Feedstocks & Intermediates provides standalone silicone materials that are used as intermediates in a wide range of applications including adhesion promoters, coupling agents, crosslinking agents, dispersing agents and surface modifiers. The Home & Personal Care business collaborates closely with global and regional brand owners to deliver innovative solutions for creating new and unrivaled consumer benefits and experiences in cleaning, laundry and skin and hair care applications, among others.

Industrial Intermediates & Infrastructure

Industrial Intermediates & Infrastructure consists of two customer-centric global businesses - Industrial Solutions and Polyurethanes & Construction Chemicals - that develop important intermediate chemicals that are essential to manufacturing processes, as well as downstream, customized materials and formulations that use advanced development technologies. These businesses primarily produce and market ethylene oxide and propylene oxide derivatives that are aligned to market segments as diverse as appliances, coatings, infrastructure and oil and gas. The global scale and reach of these businesses, world-class technology and R&D capabilities and materials science expertise enable the Company to be a premier solutions provider offering customers value-add sustainable solutions to enhance comfort, energy efficiency, product effectiveness and durability across a wide range of home comfort and appliances, building and construction, adhesives and lubricant applications, among others.

Industrial Solutions

Industrial Solutions is the world’s largest producer of purified ethylene oxide. It provides a broad portfolio of solutions that address world needs by enabling and improving the manufacture of consumer and industrial goods and services. The business’ solutions minimize friction and heat in mechanical processes, manage the oil and water interface, deliver ingredients for maximum effectiveness, facilitate dissolvability, enable product identification and provide the foundational building blocks for the development of chemical technologies. The business supports manufacturers associated with a large variety of end-markets, notably better crop protection offerings in agriculture, coatings, detergents and cleaners, solvents for electronics processing, inks and textiles.

Polyurethanes & Construction Chemicals

Polyurethanes & Construction Chemicals consists of three businesses: Polyurethanes, Chlor-Alkali & Vinyl (“CAV”) and Construction Chemicals (“DCC”). The Polyurethanes business is the world’s largest producer of propylene oxide, propylene glycol and polyether polyols, and a leading producer of aromatic isocyanates and fully formulated polyurethane systems for rigid, semi-rigid and flexible foams, and coatings, adhesives, sealants, elastomers and composites that serve energy efficiency, consumer comfort, industrial and enhanced mobility market sectors. The CAV business provides cost-advantaged chlorine and caustic soda supply and markets caustic soda, a valuable co-product of the chlor-alkali manufacturing process, and ethylene dichloride and vinyl chloride monomer. The DCC business provides cellulose ethers, redispersible latex powders, silicones and acrylic emulsions used as key building blocks for differentiated building and construction materials across many market segments and applications ranging from roofing and flooring to gypsum-, cement-, concrete- or dispersion-based building materials.

Joint Ventures

This segment includes a portion of the Company's share of the results of the following joint ventures:

• EQUATE - a Kuwait-based company that manufactures ethylene, polyethylene and ethylene glycol, and manufactures and markets monoethylene glycol, diethylene glycol and polyethylene terephthalate resins; owned 42.5 percent by the Company.

• The Kuwait Olefins Company K.S.C.C. (“TKOC”) - a Kuwait-based company that manufactures ethylene and ethylene glycol; owned 42.5 percent by the Company.

• Map Ta Phut Olefins Company Limited ("Map Ta Phut") - a Thailand-based company that manufactures propylene and ethylene; the Company has an effective ownership of 32.77 percent (of which 20.27 percent is owned directly by the Company and aligned with the Industrial Intermediates & Infrastructure segment and 12.5 percent is owned indirectly through the Company’s equity interest in Siam Polyethylene Company Limited, an entity that is part of The SCG-Dow Group and aligned with the Packaging & Specialty Plastics segment).

• Sadara - a Saudi Arabian company that manufactures chlorine, ethylene, propylene and aromatics for internal consumption and manufactures and sells polyethylene, ethylene oxide and propylene oxide derivative products, and isocyanates; owned 35 percent by the Company.

Packaging & Specialty Plastics

Packaging & Specialty Plastics is a world leader in plastics and consists of two highly integrated global businesses: Hydrocarbons & Energy and Packaging and Specialty Plastics. The segment employs the industry’s broadest polyolefin product portfolio, supported by the Company’s proprietary catalyst and manufacturing process technologies, to work at the customer’s design table throughout the value chain to deliver more reliable and durable, higher performing, and more sustainable plastics to customers in food and specialty packaging; industrial and consumer packaging; health and hygiene; caps, closures and pipe applications; consumer durables; and infrastructure.

The Company’s unique advantages compared with its competitors include: the Company’s extensive low-cost feedstock positions around the world; unparalleled scale, footprint, and market reach, with world-class manufacturing sites in every geography; deep customer and brand owner understanding; and market-driven application development and technical support.

The segment remains agile and adaptive by participating in the entire ethylene-to-polyethylene chain integration, enabling the Company to manage market swings, and therefore optimize returns while reducing long-term earnings volatility. The Company’s unrivaled value chain ownership, combined with its Pack Studio locations in every geography, which help customers and brand owners deliver faster and more efficient packaging product commercialization through a global network of laboratories, technical experts and testing equipment, together differentiate the Company from its competitors.

Hydrocarbons & Energy

Hydrocarbons & Energy is the largest global producer of ethylene, an internal feedstock that is consumed primarily within the Packaging & Specialty Plastics segment. In addition to ethylene, the business is a leading producer of propylene and aromatics products that are used to manufacture materials that consumers use every day. The business also produces and procures the power and feedstocks used by the Company’s manufacturing sites.

Packaging and Specialty Plastics

Packaging and Specialty Plastics serves growing, high-value sectors using world-class technology, broad existing product lines, and a rich product pipeline that creates competitive advantages for the entire packaging value chain. The business is also a leader in polyolefin elastomers and ethylene propylene diene monomer ("EPDM") rubber serving automotive, consumer, wire and cable and construction markets. Market growth is expected to be driven by major shifts in population demographics; improving socioeconomic status in emerging geographies; consumer and brand owner demand for increased functionality; global efforts to reduce food waste; growth in telecommunications networks; global development of electrical transmission and distribution infrastructure; and renewable energy applications.

Joint Ventures

This segment also includes the results of the following joint ventures of the Company, as well as a portion of the results of EQUATE, TKOC, Map Ta Phut and Sadara:

• The Kuwait Styrene Company K.S.C.C. - a Kuwait-based company that manufactures styrene monomer; owned 42.5 percent by the Company.

• The SCG-Dow Group - a group of Thailand-based companies (consisting of Siam Polyethylene Company Limited; Siam Polystyrene Company Limited; Siam Styrene Monomer Co., Ltd.; and Siam Synthetic Latex Company Limited) that manufacture polyethylene, polystyrene, styrene, latex and specialty elastomers; owned 50 percent by the Company.

Corporate

Corporate includes certain enterprise and governance activities (including insurance operations, environmental operations, etc.); non-business aligned joint ventures; gains and losses on sales of financial assets; non-business aligned litigation expenses; and discontinued or non-aligned businesses.

Segment Information	Perf. Materials & Coatings		Ind. Interm. & Infrast.			Pack. & Spec. Plastics		Corp.			Total
In millions
Three months ended Jun 30, 2019
Net sales	$	2,356	$	3,342		$	5,205	$	111		$	11,014
Equity in earnings (losses) of nonconsolidated affiliates	1		(78		)	74		(12		)	(15		)
Dow Inc. Operating EBIT 1	214		154			768		(77		)	1,059
Three months ended Jun 30, 2018
Net sales	$	2,624	$	3,969		$	6,124	$	72		$	12,789
Pro forma net sales	2,673		3,972			6,134		72			12,851
Equity in earnings (losses) of nonconsolidated affiliates	1		96			108		(12		)	193
Pro forma Operating EBIT	292		502			926		(81		)	1,639
Six months ended Jun 30, 2019
Net sales	$	4,638	$	6,822		$	10,343	$	180		$	21,983
Pro forma net sales	4,676		6,831			10,343		180			22,030
Equity in earnings (losses) of nonconsolidated affiliates	1		(126		)	112		(16		)	(29		)
Dow Inc. pro forma Operating EBIT 2	485		431			1,458		(172		)	2,202
Six months ended Jun 30, 2018
Net sales	$	4,951	$	7,767		$	12,162	$	146		$	25,026
Pro forma net sales	5,044		7,775			12,182		146			25,147
Equity in earnings (losses) of nonconsolidated affiliates	1		245			167		(19		)	394
Pro forma Operating EBIT	647		962			1,897		(170		)	3,336

1. Operating EBIT for TDCC for the three months ended June 30, 2019 is substantially the same as that of Dow Inc. and therefore has not been disclosed separately in the table above. A reconciliation of "Income from continuing operations, net of tax" to Operating EBIT is provided below.

2. Pro forma Operating EBIT for TDCC for the six months ended June 30, 2019 is substantially the same as that of Dow Inc. (same for the three and six months ended June 30, 2018) and therefore has not been disclosed separately in the table above. A reconciliation of "Income from continuing operations, net of tax" to pro forma Operating EBIT is provided below.

Reconciliation of "Income from continuing operations, net of tax" to Operating EBIT	Three Months Ended
In millions	Jun 30, 2019
Income from continuing operations, net of tax	$	90
+ Provision for income taxes on continuing operations	125
Income from continuing operations before income taxes	$	215
- Interest income	21
+ Interest expense and amortization of debt discount	237
- Significant items	(628		)
Operating EBIT	$	1,059

Reconciliation of "Income from continuing operations, net of tax" to Pro Forma Operating EBIT	Three Months Ended			Six Months Ended
In millions	Jun 30, 2018			Jun 30, 2019			Jun 30, 2018
Income from continuing operations, net of tax	$	810		$	246		$	1,735
+ Provision for income taxes on continuing operations	249			266			475
Income from continuing operations before income taxes	$	1,059		$	512		$	2,210
- Interest income	18			39			38
+ Interest expense and amortization of debt discount	261			478			523
+ Pro forma adjustments 1	51			65			96
- Significant items	(286		)	(1,186		)	(545		)
Pro forma Operating EBIT	$	1,639		$	2,202		$	3,336

1. Pro forma adjustments include (1) the margin impact of various manufacturing, supply and service related agreements entered into with DuPont and Corteva in connection with the separation which provide for different pricing than the historical intercompany and intracompany pricing practices of TDCC and Historical DuPont, (2) the removal of the amortization of ECP's inventory step-up recognized in connection with the Merger, and (3) the elimination of the impact of events directly attributable to the Merger, internal reorganization and business realignment, separation, distribution and other related transactions (e.g., one-time transaction costs).

The following tables summarize the pretax impact of significant items by segment that are excluded from Operating EBIT and pro forma Operating EBIT:

Significant Items by Segment	Three Months Ended Jun 30, 2019														Six Months Ended Jun 30, 2019
	Perf. Mat. & Coatings			Ind. Interm. & Infrast.		Pack. & Spec. Plastics			Corp.			Total			Perf. Mat. & Coatings			Ind. Interm. & Infrast.		Pack. & Spec. Plastics			Corp.			Total
In millions
Indemnification and other transaction related costs 1	$	—		$	—	$	—		$	(127	)	$	(127	)	$	—		$	—	$	—		$	(127	)	$	(127	)
Integration and separation costs 2	—			—		—			(348		)	(348		)	—			—		—			(750		)	(750		)
Restructuring and asset related charges - net 3	(22		)	—		(6		)	(37		)	(65		)	(22		)	—		(19		)	(180		)	(221		)
Loss on divestiture 4	—			—		—			(44		)	(44		)	—			—		—			(44		)	(44		)
Loss on early extinguishment of debt 5	—			—		—			(44		)	(44		)	—			—		—			(44		)	(44		)
Total	$	(22	)	$	—	$	(6	)	$	(600	)	$	(628	)	$	(22	)	$	—	$	(19	)	$	(1,145	)	$	(1,186	)

1. Includes charges primarily associated with agreements entered into with DuPont and Corteva as part of the separation and distribution which, among other matters, provides for cross-indemnities and allocations of obligations and liabilities for periods prior to, at and after the completion of the separation.

2. Costs related to post-Merger integration and business separation activities. The six months ended June 30, 2019 excludes one-time transaction costs directly attributable to the Merger.

3. Includes Board approved restructuring plans and asset-related charges, which includes other asset impairments. See Note 5 for additional information.

4. Includes post-closing adjustments on a previous divestiture.

5. The Company retired outstanding long-term debt resulting in a loss on early extinguishment. See Note 12 for additional information.

Significant Items by Segment	Three Months Ended Jun 30, 2018														Six Months Ended Jun 30, 2018
	Perf. Mat. & Coatings			Ind. Interm. & Infrast.		Pack. & Spec. Plastics			Corp.			Total			Perf. Mat. & Coatings			Ind. Interm. & Infrast.			Pack. & Spec. Plastics			Corp.			Total
In millions
Impact of Dow Silicones ownership restructure 1	$	(20	)	$	—	$	—		$	—		$	(20	)	$	(20	)	$	—		$	—		$	—		$	(20	)
Integration and separation costs 2	—			—		—			(234		)	(234		)	—			—			—			(441		)	(441		)
Restructuring and asset related charges - net 3	(15		)	—		(3		)	(14		)	(32		)	(14		)	(11		)	(9		)	(70		)	(104		)
Gain on divestiture 4	—			—		—			—			—			—			20			—			—			20
Total	$	(35	)	$	—	$	(3	)	$	(248	)	$	(286	)	$	(34	)	$	9		$	(9	)	$	(511	)	$	(545	)

1. Includes a loss related to a post-closing adjustment related to the Dow Silicones ownership restructure.

2. Costs related to post-Merger integration and business separation activities, and costs related to the ownership restructure of Dow Silicones. Excludes one-time transaction costs directly attributable to the Merger.

3. Includes Board approved restructuring plans and asset related charges, which include other asset impairments. See Note 5 for additional information. Excludes one-time transaction costs directly attributable to the Merger.

4. Includes a gain related to the Company's sale of its equity interest in MEGlobal.