NONCONSOLIDATED AFFILIATES (Notes)

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

NONCONSOLIDATED AFFILIATES

NONCONSOLIDATED AFFILIATES

The Company’s investments in companies accounted for using the equity method (“nonconsolidated affiliates”), by classification in the consolidated balance sheets, and dividends received from nonconsolidated affiliates are shown in the following tables:

Investments in Nonconsolidated Affiliates at Dec 31	2021 1		2020 1
In millions
Investment in nonconsolidated affiliates	$	2,045	$	1,327
Other noncurrent obligations	—		(169)
Net investment in nonconsolidated affiliates	$	2,045	$	1,158

1.The carrying amount of the Company’s investments in nonconsolidated affiliates at December 31, 2021 and 2020 was $55 million less than its share of the investees’ net assets, exclusive of additional differences relating to Sadara, EQUATE Petrochemical Company K.S.C.C. ("EQUATE") and AgroFresh Solutions Inc. ("AFSI"), which are discussed separately in the disclosures that follow.

Dividends Received from Nonconsolidated Affiliates	2021		2020		2019
In millions
Dividends from nonconsolidated affiliates 1	$	324	$	425	$	1,020

1.Included in "Earnings of nonconsolidated affiliates less than (in excess of) dividends received" in the consolidated statements of cash flows.

Except for AFSI, the nonconsolidated affiliates in which the Company has investments are privately held companies; therefore, quoted market prices are not available.

Sadara

In 2011, the Company and Saudi Arabian Oil Company formed Sadara - a joint venture between the two companies that subsequently constructed and now operates a world-scale, fully integrated chemicals complex in Jubail Industrial City, Kingdom of Saudi Arabia. The Company has a 35 percent equity interest in this joint venture and has been, and continues to be, responsible for marketing the majority of Sadara’s products through the Company’s established sales channels. In 2021, Dow and the Saudi Arabian Oil Company agreed to and began transitioning the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership.

The Company’s investment in Sadara was $1,541 million less than Dow’s proportionate share of the carrying value of the underlying net assets held by Sadara at December 31, 2021 ($1,618 million less at December 31, 2020). This basis difference is primarily attributed to the long-lived assets of Sadara and is being amortized over the remaining useful lives of the assets. At December 31, 2021, the Company had an investment balance in Sadara of $416 million included in “Investment in nonconsolidated affiliates” (negative $22 million at December 31, 2020 included in “Other noncurrent obligations”) in the Company’s consolidated balance sheets. See Note 16 for additional information related to guarantees.

In 2019, the Company recorded impairment charges related to its investment in Sadara. The joint venture achieved full commercial operations of all its facilities in 2017. In December 2018, the joint venture successfully completed its Creditors Reliability Test, an extensive operational testing program designed to demonstrate the reliability of the joint venture’s full chemical complex by operating at high rates for an extended period of time. While Sadara had reached these operational milestones and had been generating positive EBITDA (a non-GAAP measure defined as earnings before interest, taxes, depreciation and amortization), the joint venture had yet to report positive net income. During the fourth quarter of 2019, Sadara tested its long-lived assets for impairment using long-term cash flow projections. Sadara’s U.S. GAAP impairment test utilized an undiscounted cash flow methodology, under which Sadara concluded its long-lived assets were recoverable. Due to Sadara's financial condition and its long-lived asset impairment test, Dow evaluated its equity method investment in Sadara for other-than-temporary impairment. The Company utilized a discounted cash flow methodology to measure the estimated fair value of its investment in Sadara, which was estimated to be zero (see Note 23 for additional information on the fair value measurement). The Company determined the decline in value of its investment in Sadara was other-than-temporary due to Sadara’s financial performance since becoming commercially operational in 2017 and uncertainty around prospects for recovery in Sadara’s financial condition. In addition, the Company reserved certain accounts and notes receivable and accrued interest balances associated with Sadara due to uncertainty around the timing of collection. In total, the Company recorded a $1,755 million pretax charge in the fourth quarter of 2019 related to Sadara, included in “Restructuring, goodwill impairment and asset related charges - net” in the consolidated statements of

income and related to Packaging & Specialty Plastics ($370 million), Industrial Intermediates & Infrastructure ($1,168 million) and Corporate ($217 million).

In 2020, the Company loaned $333 million to Sadara that was accounted for as in substance common stock and classified as "Investment in nonconsolidated affiliates" in the Company's consolidated balance sheets. The Company loaned $473 million to Sadara and converted $380 million of the notes and accounts receivable into equity during 2019. At December 31, 2021 and 2020, the Company's note receivable with Sadara was zero.

EQUATE

At December 31, 2021, the Company had an investment balance in EQUATE of $115 million included in “Investment in nonconsolidated affiliates” (negative $147 million at December 31, 2020 included in "Other noncurrent obligations") in the consolidated balance sheets. The Company's investment in EQUATE was $458 million less than the Company's proportionate share of EQUATE's underlying net assets at December 31, 2021 ($475 million less at December 31, 2020), which represents the difference between the fair values of certain MEGlobal assets acquired by EQUATE and the Company's related valuation on a U.S. GAAP basis. A basis difference of $140 million at December 31, 2021 ($155 million at December 31, 2020) is being amortized over the remaining useful lives of the assets and the remainder is considered a permanent difference.

AFSI

At December 31, 2021 and 2020, the Company had an investment balance in AFSI of zero. At December 31, 2021, the Company's investment in AFSI was $96 million less than the Company's proportionate share of AFSI's underlying net assets ($108 million less at December 31, 2020). This amount primarily relates to an other-than-temporary decline in the Company's investment in AFSI. At December 31, 2021 and 2020, the Company held a 40 percent ownership interest in AFSI.

Transactions with Nonconsolidated Affiliates

The Company has service agreements with certain nonconsolidated affiliates, including contracts to manage the operations of manufacturing sites and the construction of new facilities; licensing and technology agreements; and marketing, sales, purchase, lease and sublease agreements.

The Company sells excess ethylene glycol produced at manufacturing facilities in the United States and Europe to MEGlobal, a subsidiary of EQUATE. The Company also sells ethylene to MEGlobal as a raw material for its ethylene glycol plants in Canada. Sales of these products to MEGlobal represented 1 percent of total net sales in 2021, 2020 and 2019. Sales of ethylene to MEGlobal are reflected in the Packaging & Specialty Plastics segment and represented 2 percent of the segment's sales in 2021 (2 percent in 2020 and 1 percent in 2019). Sales of ethylene glycol to MEGlobal are reflected in the Industrial Intermediates & Infrastructure segment and represented 1 percent of the segment's sales in 2021, 2020 and 2019.

The Company is responsible for marketing the majority of Sadara products outside of the Middle East zone through the Company’s established sales channels. Under this arrangement, the Company purchases and sells Sadara products for a marketing fee. In March 2021, Dow and the Saudi Arabian Oil Company agreed to transition the marketing rights and responsibilities for Sadara’s finished products to levels more consistent with each partner’s equity ownership. This transition began in July 2021 and is being implemented over the next five years. Purchases of Sadara products represented 9 percent of "Cost of sales" in 2021 (8 percent in 2020 and 2019).

The Company purchases products from The SCG-Dow Group, primarily for marketing and distribution in Asia Pacific. Purchases of products from The SCG-Dow Group represented 3 percent of "Cost of sales" in 2021 (3 percent in 2020 and 2 percent in 2019).

Sales to and purchases from other nonconsolidated affiliates were not material to the consolidated financial statements.

Balances due to or due from nonconsolidated affiliates at December 31, 2021 and 2020 were as follows:

Balances Due To or Due From Nonconsolidated Affiliates at Dec 31	2021		2020
In millions
Accounts and notes receivable - Other	$	357	$	229
Accounts payable - Other	$	1,611	$	1,075

Principal Nonconsolidated Affiliates

The Company had an ownership interest in 37 nonconsolidated affiliates at December 31, 2021 (35 at December 31, 2020). The Company's principal nonconsolidated affiliates and its ownership interest (direct and indirect) for each at December 31, 2021, 2020 and 2019 are as follows:

Principal Nonconsolidated Affiliates at Dec 31	Country	Ownership Interest
		2021		2020		2019
EQUATE Petrochemical Company K.S.C.C.	Kuwait	42.5	%	42.5	%	42.5	%
The Kuwait Olefins Company K.S.C.C.	Kuwait	42.5	%	42.5	%	42.5	%
The Kuwait Styrene Company K.S.C.C.	Kuwait	42.5	%	42.5	%	42.5	%
Map Ta Phut Olefins Company Limited 1	Thailand	32.77	%	32.77	%	32.77	%
Sadara Chemical Company	Saudi Arabia	35	%	35	%	35	%
The SCG-Dow Group:
Siam Polyethylene Company Limited	Thailand	50	%	50	%	50	%
Siam Polystyrene Company Limited	Thailand	50	%	50	%	50	%
Siam Styrene Monomer Company Limited	Thailand	50	%	50	%	50	%
Siam Synthetic Latex Company Limited	Thailand	50	%	50	%	50	%

1.The Company's effective ownership of Map Ta Phut Olefins Company Limited ("Map Ta Phut") is 32.77 percent, of which the Company directly owns 20.27 percent and indirectly owns 12.5 percent through its equity interest in Siam Polyethylene Company Limited.

The Company’s investment in and equity earnings from its principal nonconsolidated affiliates are as follows:

Investment in Principal Nonconsolidated Affiliates at Dec 31	2021		2020
In millions
Investment in nonconsolidated affiliates	$	1,621	$	922
Other noncurrent obligations	—		(169)
Net investment in principal nonconsolidated affiliates	$	1,621	$	753

Equity in Earnings (Losses) of Principal Nonconsolidated Affiliates	2021		2020		2019
In millions
Equity in earnings (losses) of principal nonconsolidated affiliates	$	918	$	(16)	$	21

The summarized financial information that follows represents the combined accounts (at 100 percent) of the principal nonconsolidated affiliates.

Summarized Balance Sheet Information at Dec 31	2021		2020
In millions
Current assets	$	8,158	$	5,044
Noncurrent assets	23,681		25,298
Total assets	$	31,839	$	30,342
Current liabilities	$	3,990	$	3,942
Noncurrent liabilities	20,039		20,144
Total liabilities	$	24,029	$	24,086
Noncontrolling interests	$	174	$	132

Summarized Income Statement Information 1	2021		2020		2019
In millions
Sales	$	14,969	$	9,470	$	10,905
Gross profit	$	3,219	$	619	$	644
Income (loss) from continuing operations, net of tax	$	2,013	$	(461)	$	(277)

1.The results in this table include purchase and sale activity between certain principal nonconsolidated affiliates and the Company, as previously discussed in the "Transactions with Nonconsolidated Affiliates" section.