LEASES (Notes)

9 Months Ended

Sep. 30, 2021

LEASES

For additional information on the Company's leases, see Note 17 to the Consolidated Financial Statements included in the 2020 10-K.

The components of lease cost for operating and finance leases for the three and nine months ended September 30, 2021 and 2020 were as follows:


Lease Cost	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2021		Sep 30, 2020		Sep 30, 2021		Sep 30, 2020
Operating lease cost	$	123	$	122	$	362	$	362
Finance lease cost
Amortization of right-of-use assets - finance	$	19	$	16	$	53	$	42
Interest on lease liabilities - finance	6		7		19		19
Total finance lease cost	$	25	$	23	$	72	$	61
Short-term lease cost	57		54		177		161
Variable lease cost	78		45		228		157
Sublease income	(2)		(2)		(5)		(4)
Total lease cost	$	281	$	242	$	834	$	737

The following table provides supplemental cash flow and other information related to leases:


Other Lease Information	Nine Months Ended
In millions	Sep 30, 2021		Sep 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	364	$	357
Operating cash flows for finance leases	$	19	$	19
Financing cash flows for finance leases	$	48	$	34
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	133	$	68
Finance leases	$	73	$	142

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at September 30, 2021 and December 31, 2020:


Lease Position	Balance Sheet Classification	Sep 30, 2021		Dec 31, 2020
In millions
Assets
Operating lease assets	Operating lease right-of-use assets	$	1,727	$	1,856
Finance lease assets	Property	726		665
Finance lease amortization	Accumulated depreciation	(263)		(216)
Total lease assets		$	2,190	$	2,305
Liabilities
Current
Operating	Operating lease liabilities - current	$	413	$	416
Finance	Long-term debt due within one year	68		54
Noncurrent
Operating	Operating lease liabilities - noncurrent	1,428		1,521
Finance	Long-Term Debt	474		464
Total lease liabilities		$	2,383	$	2,455

The weighted-average remaining lease term and discount rate for leases recorded in the consolidated balance sheets at September 30, 2021 and December 31, 2020 are provided below:


Lease Term and Discount Rate	Sep 30, 2021		Dec 31, 2020
Weighted-average remaining lease term
Operating leases	7.2 years		7.6 years
Finance leases	10.3 years		11.6 years
Weighted-average discount rate
Operating leases	3.63	%	3.84	%
Finance leases	5.04	%	5.41	%

The following table provides the maturities of lease liabilities at September 30, 2021:


Maturities of Lease Liabilities	Sep 30, 2021
In millions	Operating Leases		Finance Leases
2021	$	140	$	29
2022	434		89
2023	351		113
2024	273		58
2025	201		47
2026 and thereafter	744		375
Total future undiscounted lease payments	$	2,143	$	711
Less: Imputed interest	302		169
Total present value of lease liabilities	$	1,841	$	542

At September 30, 2021, Dow had additional leases of approximately $152 million, primarily for equipment, which had not yet commenced. These leases are expected to commence in 2021 and 2022, with lease terms of up to 20 years.

Dow provides guarantees related to certain leased assets, specifying the residual value that will be available to the lessor at lease termination through the sale of the assets to the lessee or third parties. The following table provides a summary of the final expiration, maximum future payments and recorded liability included in the consolidated balance sheets for residual value guarantees at September 30, 2021 and December 31, 2020. The Company had a recorded liability of $56 million related to these residual value guarantees at September 30, 2021 ($22 million at December 31, 2020), as payment of such residual value guarantees was determined to be probable. The lease agreements do not contain any material restrictive covenants.


Lease Guarantees	Sep 30, 2021					Dec 31, 2020
In millions	Final Expiration	Maximum Future Payments		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability
Residual value guarantees	2031	$	805	$	56	2030	$	818	$	22