SEGMENTS AND GEOGRAPHIC REGIONS (Notes)

3 Months Ended

Mar. 31, 2020

Segments and Geographic Regions [Text Block]

SEGMENTS AND GEOGRAPHIC REGIONS

Dow’s measure of profit/loss for segment reporting purposes is Operating EBIT (for the three months ended March 31, 2020) and pro forma Operating EBIT (for the three months ended March 31, 2019) as this is the manner in which the Company's chief operating decision maker ("CODM") assesses performance and allocates resources. The Company defines Operating EBIT as earnings (i.e., "Income from continuing operations before income taxes") before interest, excluding the impact of significant items. 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. Operating EBIT and pro forma 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. The Company also presents pro forma net sales for the three months ended March 31, 2019 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.


Segment Information	Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Materials & Coatings		Corp.		Total
In millions
Three months ended Mar 31, 2020
Net sales	$	4,609	$	3,045	$	2,065	$	51	$	9,770
Equity in earnings (losses) of nonconsolidated affiliates	5		(76)		1		(19)		(89)
Dow Inc. Operating EBIT ¹	580		175		162		(74)		843

Three months ended Mar 31, 2019
Net sales	$	5,138	$	3,480	$	2,282	$	69	$	10,969
Pro forma net sales	5,138		3,489		2,320		69		11,016
Equity in earnings (losses) of nonconsolidated affiliates	38		(48)		—		(4)		(14)
Dow Inc. pro forma Operating EBIT ²	690		277		271		(95)		1,143

1. Operating EBIT for TDCC for the three months ended March 31, 2020 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 on the following page.

2. Pro forma Operating EBIT for TDCC for the three months ended March 31, 2019 is 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 pro forma Operating EBIT is provided on the following page.


Reconciliation of "Income from continuing operations, net of tax" to Operating EBIT	Three Months Ended
In millions	Mar 31, 2020
Income from continuing operations, net of tax	$	258
+ Provision for income taxes on continuing operations	138
Income from continuing operations before income taxes	$	396
- Interest income	15
+ Interest expense and amortization of debt discount	215
- Significant items	(247)
Operating EBIT	$	843


Reconciliation of "Income from continuing operations, net of tax" to Pro Forma Operating EBIT	Three Months Ended
In millions	Mar 31, 2019
Income from continuing operations, net of tax	$	156
+ Provision for income taxes on continuing operations	141
Income from continuing operations before income taxes	$	297
- Interest income	18
+ Interest expense and amortization of debt discount	241
+ Pro forma adjustments ¹	65
- Significant items	(558)
Pro forma Operating EBIT	$	1,143

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 and (2) 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 Mar 31, 2020
			Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total
In millions

Integration and separation costs ¹	$	—	$	—	$	—	$	(65)	$	(65)
Restructuring and asset related charges - net ²	(6)		—		—		(90)		(96)

Loss on early extinguishment of debt ³	—		—		—		(86)		(86)
Total	$	(6)	$	—	$	—	$	(241)	$	(247)

1. Costs related to business separation activities.

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

3. The Company retired outstanding long-term debt resulting in a loss on early extinguishment. See Note 11 for additional information.


Significant Items by Segment	Three Months Ended Mar 31, 2019
			Pack. & Spec. Plastics		Ind. Interm. & Infrast.		Perf. Mat. & Coatings		Corp.		Total
In millions
Integration and separation costs ¹	$	—	$	—	$	—	$	(402)	$	(402)
Restructuring and asset related charges - net ²	(13)		—		—		(143)		(156)
Total	$	(13)	$	—	$	—	$	(545)	$	(558)

1. Costs related to business separation activities. Excludes one-time transaction costs directly attributable to the Merger.

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