DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements made by or on behalf of The Dow Chemical Company and its subsidiaries ("Dow" or the "Company"). This section covers the current performance and outlook of the Company and each of its operating segments. The forward-looking statements contained in this section and in other parts of this document involve risks and uncertainties that may affect the Company's operations, markets, products, services, prices and other factors as more fully discussed elsewhere and in filings with the U.S. Securities and Exchange Commission ("SEC"). These risks and uncertainties include, but are not limited to, economic, competitive, legal, governmental and technological factors. Accordingly, there is no assurance that the Company's expectations will be realized. The Company assumes no obligation to provide revisions to any forward-looking statements should circumstances change, except as otherwise required by securities and other applicable laws.

OVERVIEW
· The Company reported sales in the third quarter of 2009 of $12.0 billion, down 22 percent from $15.4 billion in the third quarter of 2008. Sales were down 32 percent from pro forma(1) sales of $17.8 billion in the third quarter of 2008, with prices down 23 percent and volume down 9 percent, reflecting falling feedstock and energy costs and continued poor economic conditions.

· Purchased feedstock and energy costs, which account for more than one third of Dow's total costs, decreased 46 percent or $3.5 billion compared with the third quarter of 2008.

· Equity earnings were $224 million in the third quarter of 2009, down from $266 million in the third quarter of 2008.

· Capital spending was $266 million in the third quarter of 2009, on track with the full-year post-acquisition target of $1.4 billion; debt as a percent of total capitalization was 52.7 percent, up 7 percentage points from year-end 2008.

· On September 1, 2009, the Company completed the sale of Total Raffinaderij Nederland N.V. ("TRN"), a nonconsolidated affiliate, and related inventory and recognized a net pretax gain of $457 million. In addition, on September 30, 2009, the Company completed the sale of the OPTIMAL Group of Companies ("OPTIMAL"), nonconsolidated affiliates, and recognized a pretax gain of $328 million. (See Note E to the Consolidated Financial Statements.)

· The Company continued to pay down the Term Loan related to the April 1, 2009 acquisition of Rohm and Haas Company ("Rohm and Haas"), through the issuance of debt securities and the sale of assets. The September 30, 2009 balance on the Term Loan of $1.0 billion was paid on October 1, 2009, bringing the balance to zero.

· The Company has achieved more than 110 percent of the 12-month cost synergy run-rate goal for the integration of Rohm and Haas, which began just six months ago. The Company expects the transaction to create $1.3 billion in estimated pretax annual cost synergies and savings including increased purchasing power for raw materials; manufacturing and supply chain work process improvements; and the elimination of redundant corporate overhead for shared services and governance.

(1) The unaudited pro forma historical segment information is based on the historical consolidated financial statements and accompanying notes of both Dow and Rohm and Haas and has been prepared to illustrate the effects of the Company's acquisition of Rohm and Haas, assuming the acquisition of Rohm and Haas had been consummated on January 1, 2008, and the treatment of Dow's Calcium Chloride business as discontinued operations due to the sale of the business on June 30, 2009.

Selected Financial Data                            Three Months Ended             Nine Months Ended
                                                  Sept. 30,      Sept. 30,      Sept. 30,      Sept. 30,
In millions, except per share amounts                  2009           2008           2009           2008
Net sales                                      $   12,046     $   15,371     $  32,409      $   46,511

Cost of sales                                  $   10,386     $   13,949     $  28,288      $   41,454
Percent of net sales                                 86.2 %         90.7 %        87.3 %          89.1 %

Research and development expenses              $      400     $      334     $   1,073      $    1,000
Percent of net sales                                  3.3 %          2.2 %         3.3 %           2.2 %

Selling, general and administrative expenses   $      683     $      497     $   1,789      $    1,509
Percent of net sales                                  5.7 %          3.2 %         5.5 %           3.2 %

Effective tax rate                                   20.3 %         29.0 %       (21.6 )%         24.8 %

Net income available for common stockholders   $      711     $      428     $     249      $    2,131

Earnings per common share - basic              $     0.64     $     0.46     $    0.24      $     2.29
Earnings per common share - diluted            $     0.63     $     0.46     $    0.24      $     2.26

Operating rate percentage                              78 %           76 %          74 %            82 %

ACQUISITION OF ROHM AND HAAS COMPANY
On April 1, 2009, the Company completed the acquisition of Rohm and Haas. Pursuant to the July 10, 2008 Agreement and Plan of Merger (the "Merger Agreement"), Ramses Acquisition Corp., a direct wholly owned subsidiary of the Company, merged with and into Rohm and Haas (the "Merger"), with Rohm and Haas continuing as the surviving corporation becoming a direct wholly owned subsidiary of the Company.

The Company pursued the acquisition of Rohm and Haas to make the Company a leading specialty chemicals and advanced materials company, combining the two organizations' best-in-class technologies, broad geographic reach and strong industry channels to create a business portfolio with significant growth opportunities.

Pursuant to the terms and conditions of the Merger Agreement, each outstanding share of Rohm and Haas common stock was converted into the right to receive cash of $78 per share, plus additional cash consideration of $0.97 per share. The additional cash consideration represented 8 percent per annum on the $78 per share consideration from January 10, 2009 to the closing of the Merger, less dividends declared by Rohm and Haas with a dividend record date between January 10, 2009 and the closing of the Merger. All options to purchase shares of common stock of Rohm and Haas granted under the Rohm and Haas stock option plans and all other Rohm and Haas equity-based compensation awards, whether vested or unvested as of April 1, 2009, became fully vested and converted into the right to receive cash of $78.97 per share, less any applicable exercise price. Total cash consideration paid to Rohm and Haas shareholders was $15.7 billion.

The Company expects the transaction to create $1.3 billion in estimated pretax annual cost synergies and savings including increased purchasing power for raw materials; manufacturing and supply chain work process improvements; and the elimination of redundant corporate overhead for shared services and governance. The Company also anticipates that the transaction will produce significant growth synergies through the application of each company's innovative technologies and as a result of the combined businesses' broader product portfolio in key industry segments with strong global growth rates.

On July 31, 2009, the Company entered into a definitive agreement for the sale of certain acrylic monomer and specialty latex assets, as required by the United States Federal Trade Commission ("FTC"), for approval of the April 1, 2009 acquisition of Rohm and Haas (see Note D to the Consolidated Financial Statements). The transaction is subject to approval by the FTC and other customary closing conditions, and is expected to close in the fourth quarter of 2009.

RESULTS OF OPERATIONS
Results of Rohm and Haas are included in the Company's consolidated results from the acquisition date forward. In order to provide the most meaningful comparison of results of operations, some of the comparisons presented are to pro forma amounts. The unaudited pro forma historical segment information reflects the combination of Dow and Rohm and Haas and the impact of increased depreciation and amortization expense resulting from the fair valuation of assets acquired from Rohm and Haas in accordance with the accounting guidance related to business combinations (see "Segment Results" for further information).

Net sales for the third quarter of 2009 were $12.0 billion, down 22 percent from $15.4 billion reported in the third quarter of last year and down 32 percent compared with pro forma net sales of $17.8 billion. Compared with the same quarter of 2008 on a pro forma basis, prices fell 23 percent, with double-digit price decreases in all operating segments, with the exception of Electronic and Specialty Materials (down 6 percent), and in all geographic areas. Price declines were most pronounced in the basics segments, with Basic Chemicals down 36 percent, Basic Plastics down 33 percent and Hydrocarbons and Energy down 29 percent, driven by significantly lower feedstock and energy costs compared with the third quarter of last year. From a geographic standpoint, price declines were most pronounced in Latin America, where prices declined 28 percent, Europe, where prices declined 24 percent and North America, where prices declined 22 percent. Compared with the third quarter of last year on a pro forma basis, double-digit volume decreases were reported by Hydrocarbons and Energy, which reported a 25 percent decline, and Basic Chemicals and Performance Systems, which both reported 13 percent declines. Volume decreases were most pronounced in North America and Europe where both reported 13 percent declines. Volume declines were a result of continued weakness in the global economy. Volume in North America in the third quarter of 2008 was negatively impacted by Hurricanes Gustav and Ike which hit the U.S. Gulf Coast, resulting in temporary plant outages.

Reported net sales for the first nine months of 2009 were $32.4 billion, down 30 percent from $46.5 billion in the same period last year. On a pro forma basis, net sales for the first nine months of 2009 were $34.2 billion, down 37 percent from $54.0 billion in the same period last year. Compared with the first nine months of 2008, on a pro forma basis, prices were down 21 percent and volume decreased 16 percent. Price declines were reported in all operating segments, with the most significant declines in Hydrocarbons and Energy (37 percent), Basic Plastics (32 percent) and Basic Chemicals (29 percent). Double-digit volume declines were reported in North America (20 percent), Europe (17 percent) and Asia Pacific (11 percent) and in all operating segments except Health and Agricultural Sciences, which reported a 1 percent decline and Basic Plastics, which reported an 8 percent decline. North America volume in the first nine months of 2008 reflects the impact of Hurricanes Gustav and Ike, as discussed above.

Gross margin was $1,660 million for the third quarter of 2009, up from $1,422 million reported in the third quarter of last year. Despite the significant drop in sales, gross margin increased as a result of the acquisition of Rohm and Haas and lower feedstock and energy costs. In the third quarter of 2009, gross margin was reduced by hedging losses of $56 million related to the September 1, 2009 sale of the Company's 45 percent ownership interest in TRN (see Note E to the Consolidated Financial Statements). Gross margin in 2008 reflects the impact of Hurricanes Gustav and Ike which hit the U.S. Gulf Coast in the third quarter of 2008, resulting in temporary outages for several of the Company's Gulf Coast production facilities and resulting in $127 million in additional manufacturing expenses including the repair of property damage, clean-up costs, unabsorbed fixed costs and inventory write-offs.

Year to date, gross margin was $4,121 million, compared with $5,057 million reported in the first nine months of 2008. Despite a significant decline in feedstock and energy costs, year-to-date gross margin declined due to significantly lower prices and operating rates, reflecting the depressed economic conditions of 2009. In addition, year to date, gross margin was reduced by a one-time increase in cost of sales of $209 million related to the fair value step-up of inventories acquired from Rohm and Haas on April 1, 2009, and sold in the second quarter of 2009. The increase was included in "Cost of sales" in the consolidated statements of income and reflected in the operating segments as follows: $75 million in Electronic and Specialty Materials, $82 million in Coatings and Infrastructure, $30 million in Performance Systems and $22 million in Performance Products. Gross margin for the first nine months of 2008 also reflects the impact of Hurricanes Gustav and Ike, as discussed above.

The Company's global plant operating rate (for its chemicals and plastics businesses) was 78 percent in the third quarter of 2009, up from 76 percent in the third quarter of 2008. For the first nine months of 2009, the Company's global plant operating rate was 74 percent, down from 82 percent in the same period of 2008. The Company's operating rates for the first nine months of 2009 declined across most businesses, impacted by actions taken by management in response to lower demand resulting from the downturn in the global economy.

Personnel count was 56,023 at September 30, 2009 up from 46,102 at December 31, 2008 and 46,051 at September 30, 2008. Headcount increased from year-end 2008 due primarily to the acquisition of Rohm and Haas (an increase of approximately 15,400), offset by declines related to restructuring activities (a decrease of approximately 4,100), asset and business divestitures (a decrease of approximately 800) and approximately 170 employees transferred to a joint venture. On October 1, 2009, the Company completed its divestiture of the Salt business which included a reduction of approximately 3,000 employees (see Note E to the Consolidated Financial Statements).

Research and development ("R&D") expenses totaled $400 million in the third quarter of 2009, up $66 million (20 percent) from $334 million in the third quarter of last year. For the first nine months of 2009, R&D expenses totaled $1,073 million, up $73 million (7 percent) from $1,000 million in the first nine months of 2008, due to the acquisition of Rohm and Haas and strategic growth initiatives at Dow AgroSciences, partially offset by cost saving initiatives.

Selling, general and administrative ("SG&A") expenses totaled $683 million in the third quarter of 2009, up $186 million (37 percent) from $497 million in the third quarter of last year. For the first nine months of 2009, SG&A totaled $1,789 million, up $280 million (19 percent) from $1,509 million in the first nine months of 2008 due to the acquisition of Rohm and Haas, partially offset by cost saving initiatives.

Amortization of intangibles was $108 million in the third quarter of 2009, up from $21 million in the third quarter of last year. For the first nine months of 2009, amortization of intangibles was $242 million, compared with $68 million for the same period last year. The increase in amortization of intangibles reflected the amortization of the fair value of intangible assets acquired from Rohm and Haas. See Notes D and H to the Consolidated Financial Statements for additional information concerning the acquisition of Rohm and Haas and intangible assets.

In the first quarter of 2009, the Company recorded additional severance of $19 million related to 2008 restructuring activities. The charge was shown as "Restructuring charges" in the consolidated statements of income and reflected in Corporate. In June 2009, Dow's Board of Directors approved a restructuring plan that incorporated actions related to the Company's acquisition of Rohm and Haas as well as additional actions to advance the Company's strategy and to respond to continued weakness in the global economy. The restructuring plan included the shutdown of a number of facilities and a global workforce reduction. As a result, the Company recorded restructuring charges totaling $677 million in the second quarter of 2009, which included asset write-downs and write-offs, severance costs and costs associated with exit or disposal activities. The impact of the charges was shown as "Restructuring charges" in the consolidated statements of income and was reflected in the Company's segment results as follows: $68 million in Electronic and Specialty Materials, $171 million in Coatings and Infrastructure, $73 million in Performance Products, $1 million in Basic Plastics, $75 million in Basic Chemicals, $65 million in Hydrocarbons and Energy and $224 million in Corporate. In the second quarter of 2009, the Company also recorded a $15 million reduction in the 2007 restructuring reserve, reflected in the Health and Agricultural Sciences segment. See Note C to the Consolidated Financial Statements for details on the restructuring charges.

For the three and nine months ended September 30, 2008, pretax charges totaling $27 million were recorded for purchased in-process research and development ("IPR&D") associated with acquisitions within the Health and Agricultural Sciences segment. There were no such charges for the three and nine months ended September 30, 2009.

For the three months ended September 30, 2009, pretax charges totaling $21 million ($121 million in the first nine months of 2009) were recorded for integration costs, legal expenses and other transaction costs related to the April 1, 2009 acquisition of Rohm and Haas, and reflected in Corporate. These charges were expensed in accordance with the accounting guidance related to business combinations. The three and nine months ended September 30, 2008 included pretax charges totaling $18 million related to legal expenses and other transaction costs related to the acquisition of Rohm and Haas. These charges were reflected in Corporate. An additional $26 million of acquisition-related retention expenses were incurred during the third quarter of 2009 for a total of $60 million for the first nine months of 2009. These costs were recorded in "Cost of sales," "Research and development expenses," and "Selling, general and administrative expenses" and reflected in Corporate.

Dow's share of the earnings of nonconsolidated affiliates was $224 million in the third quarter of 2009, down from $266 million in the third quarter of last year. Compared with the same quarter of last year, earnings decreased at EQUATE Petrochemical Company K.S.C. ("EQUATE"), Dow Corning Corporation ("Dow Corning") and OPTIMAL, reflecting the overall decrease in global demand and poor economic conditions. Results from The Kuwait Olefins Company K.S.C. increased due to additional production capacity for ethylene oxide/ethylene glycol and polyethylene. For the first nine months of 2009, Dow's share of the earnings of nonconsolidated affiliates was $411 million, down from $791 million for the same period last year, with EQUATE, OPTIMAL and Dow Corning showing the largest declines. Equity earnings in the first nine months of 2009 were negatively impacted by $29 million for the Company's share of a restructuring charge recognized by Dow Corning. In September 2009, the Company completed the sales of its ownership interests in TRN and OPTIMAL (see Note E to the Consolidated Financial Statements).

Sundry income (expense) - net includes a variety of income and expense items such as the gain or loss on foreign currency exchange, dividends from investments, and gains and losses on sales of investments and assets. Sundry income (expense) - net for the third quarter of 2009 was income of $813 million, compared with expense of $34 million in the same quarter of 2008. Year to date, sundry income (expense) - net was income of $833 million, compared with income of $49 million in the first nine months of 2008. The increase in 2009 was due to a pretax gain of $513 million on the sale of the Company's ownership interest in TRN, a nonconsolidated affiliate, and related inventory on September 1, 2009, and a pretax gain of $328 million on the sale of the Company's ownership interest in OPTIMAL, nonconsolidated affiliates, on September 30, 2009. Sundry income (expense) - net for the quarter was reduced by a loss of $56 million related to the Company's early extinguishment of debt in the third quarter of 2009. See "Changes in Financial Condition" for additional information regarding the Company's early extinguishment of debt.

Net interest expense (interest expense less capitalized interest and interest income) was $482 million in the third quarter of 2009, compared with $137 million in the third quarter of last year. Year to date, net interest expense was $1,140 million, compared with $384 million in the first nine months of 2008. The increase in interest expense was due to debt financing for the April 1, 2009 acquisition of Rohm and Haas. See "Changes in Financial Condition" for additional information regarding debt financing activity related to the acquisition of Rohm and Haas. Interest income was down $17 million in the third quarter of 2009 compared with the third quarter of 2008, and down $45 million for the first nine months of 2009 compared with the first nine months of 2008. The decline in interest income was due to lower interest rates.

The effective tax rate for the third quarter of 2009 was 20.3 percent compared with 29.0 percent for the third quarter of 2008. For the first nine months of 2009 the effective tax rate was a negative 21.6 percent compared with 24.8 percent for the first nine months of 2008. The Company's effective tax rate fluctuates based on, among other factors, where income is earned and the level of income relative to available tax credits. The year-to-date tax rate was primarily impacted by higher equity earnings relative to the Company's total income before taxes and accrual-to-return adjustments in the United States and foreign jurisdictions.

On June 30, 2009, the Company sold the Calcium Chloride business and recognized a $162 million pretax gain. The results of operations related to the Calcium Chloride business have been reclassified and reported as discontinued operations for all periods presented. Discontinued operations (net of income tax benefit) for the third quarter of 2009 was a loss of $4 million ($0.01 per share) (for post-closing adjustments), compared with income of $8 million ($0.01 per share) in the third quarter of 2008. Income from discontinued operations (net of income taxes) for the first nine months of 2009 was $110 million ($0.11 per share) compared with $19 million ($0.02 per share) for the same period in 2008.

Preferred stock dividends of $85 million were recognized in the third quarter of 2009 related to Company's Cumulative Convertible Perpetual Preferred Stock, Series A. For the nine months ended September 30, 2009, preferred stock dividends of $227 million were recognized. Dividends on Cumulative Convertible Perpetual Preferred Stock, Series A were $170 million, with the remaining $57 million of dividends relating to Cumulative Perpetual Preferred Stock, Series B and Cumulative Convertible Perpetual Preferred Stock, Series C, both of which were retired in the second quarter of 2009. See Notes P and Q to the Consolidated Financial Statements for additional information.

Net income available for common stockholders was $711 million or $0.63 per share for the third quarter of 2009, compared with $428 million or $0.46 per share for the third quarter of 2008. Net income available for common stockholders for the first nine months of 2009 was $249 million or $0.24 per share, compared with $2,131 million or $2.26 per share for the same period of 2008.

The following tables summarize the impact of certain items recorded in the three- and nine-month periods ended September 30, 2009 and September 30, 2008, and previously described in this section:

Certain Items
Impacting Results                  Pretax                         Impact on                       Impact on
                                 Impact (1)                     Net Income (2)                     EPS (3)
                              Three Months Ended               Three Months Ended              Three Months Ended
In millions, except         Sept. 30,        Sept. 30,         Sept. 30,      Sept. 30,       Sept. 30,      Sept. 30,
per share amounts                2009             2008              2009           2008            2009           2008
Impact of Hurricanes
Gustav and Ike (4)               -       $      (127 )             -       $      (81 )            -      $    (0.09 )
Purchased in-process
research and
development charges              -               (27 )             -              (27 )            -           (0.03 )
Transaction,
integration and other
acquisition costs       $      (47 )             (18 )   $       (34 )            (18 )   $    (0.03 )         (0.02 )
Gain on sale of TRN            457                 -             321                -           0.29               -
Gain on sale of
OPTIMAL                        328                 -             191                -           0.17               -
Loss on early
extinguishment of
debt                           (56 )               -             (36 )              -          (0.03 )             -
Total                   $      682       $      (172 )   $       442       $     (126 )   $     0.40      $    (0.14 )




Certain Items
Impacting Results                       Pretax                                     Impact on                           Impact on
                                      Impact (1)                                Net Income (2)                          EPS (3)
                                   Nine Months Ended                           Nine Months Ended                   Nine Months Ended
In millions, except          Sept. 30,               Sept. 30,             Sept. 30,             Sept. 30,      Sept. 30,       Sept. 30,
per share amounts                 2009                    2008                  2009                  2008           2009            2008
One-time increase in
cost of sales related
to fair valuation of
Rohm and Haas
inventories              $        (209 )                     -       $          (132 )                   -     $    (0.13 )             -
Impact of Hurricanes
Gustav and Ike (4)                   -         $          (127 )                   -       $           (81 )            -     $     (0.09 )
Restructuring charges             (681 )                     -                  (462 )                   -          (0.45 )             -
Purchased in-process
research and
development charges                  -                     (27 )                   -                   (27 )            -           (0.03 )
Transaction,
integration and other
acquisition costs                 (181 )                   (18 )                (136 )                 (18 )        (0.13 )         (0.02 )
. . .