LEASES (Notes)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

LEASES

Operating lease ROU assets are included in "Operating lease right-of-use assets" while finance lease ROU assets are included in "Net property" in the consolidated balance sheets. With respect to lease liabilities, operating lease liabilities are included in "Operating lease liabilities - current" and "Operating lease liabilities - noncurrent," and finance lease liabilities are included in "Long-term debt due within one year" and "Long-Term Debt" in the consolidated balance sheets.

Dow routinely leases sales and administrative offices, power plants, production facilities, warehouses and tanks for product storage, aircraft, motor vehicles, railcars, computers, office machines and equipment. Some leases contain renewal provisions, purchase options and escalation clauses and the terms for these leased assets vary depending on the lease agreement. These leased assets have remaining lease terms that currently range from 1 to 50 years. See Notes 1 and 2 for additional information on leases.

The components of lease cost for operating and finance leases for the three and nine months ended September 30, 2019 were as follows:

Lease Cost	Three Months Ended Sep 30, 2019		Nine Months Ended Sep 30, 2019
In millions
Operating lease cost	$	134	$	398
Finance lease cost
Amortization of right-of-use assets - finance	14		31
Interest on lease liabilities - finance	6		19
Total finance lease cost	$	20	$	50
Short-term lease cost	51		151
Variable lease cost	89		196
Sublease income	—		(2		)
Total lease cost	$	294	$	793

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

Other Lease Information	Nine Months Ended Sep 30, 2019
In millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	398
Operating cash flows for finance leases	$	19
Financing cash flows for finance leases	$	16

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at September 30, 2019:

Lease Position	Balance Sheet Classification	Sep 30, 2019
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases 1		$	2,482
Finance leases		$	99
Assets
Operating lease assets	Operating lease right-of-use assets	$	2,130
Finance lease assets	Property	501
Finance lease amortization	Accumulated depreciation	(158		)
Total lease assets		$	2,473
Liabilities
Current
Operating	Operating lease liabilities - current	$	418
Finance	Long-term debt due within one year	38
Noncurrent
Operating	Operating lease liabilities - noncurrent	1,735
Finance	Long-Term Debt	387
Total lease liabilities		$	2,578

1. Includes $2.3 billion related to the adoption of Topic 842. See Note 2 for additional information.

Lease Term and Discount Rate	Sep 30, 2019
Weighted-average remaining lease term
Operating leases	8.0 years
Finance leases	12.2 years
Weighted-average discount rate
Operating leases	4.17	%
Finance leases	6.16	%

The following table provides the maturities of lease liabilities at September 30, 2019:

Maturities of Lease Liabilities at Sep 30, 2019	Operating Leases		Finance Leases
In millions
2019	$	132	$	22
2020	472		62
2021	391		57
2022	329		51
2023	265		78
2024 and thereafter	990		348
Total future undiscounted lease payments	$	2,579	$	618
Less imputed interest	426		193
Total present value of lease liabilities	$	2,153	$	425

At September 30, 2019, Dow had additional leases of approximately $88 million, primarily for pipelines, buildings and equipment, which had not yet commenced. These leases are expected to commence in the fourth quarter of 2019 or in 2020, with lease terms of up to 20 years.

Future minimum lease payments for operating leases accounted for under ASC 840, "Leases," with remaining non-cancelable terms in excess of one year at December 31, 2018 were as follows:

Minimum Lease Commitments at Dec 31, 2018
In millions
2019	$	366
2020	329
2021	296
2022	269
2023	227
2024 and thereafter	855
Total	$	2,342

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 reflected in the consolidated balance sheets for residual value guarantees at September 30, 2019 and December 31, 2018. There was no recorded liability related to these residual value guarantees at September 30, 2019, as payment of such residual value guarantees was not determined to be probable. The lease agreements do not contain any material restrictive covenants.

Lease Guarantees	Sep 30, 2019					Dec 31, 2018
In millions	Final Expiration	Maximum Future Payments		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability
Residual value guarantees	2028	$	763	$	—	2028	$	885	$	130