LEASES (Notes)

3 Months Ended

Mar. 31, 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 months ended March 31, 2021 and 2020 were as follows:


Lease Cost	Three Months Ended
In millions	Mar 31, 2021		Mar 31, 2020
Operating lease cost	$	121	$	120
Finance lease cost
Amortization of right-of-use assets - finance	$	15	$	13
Interest on lease liabilities - finance	7		6
Total finance lease cost	$	22	$	19
Short-term lease cost	49		54
Variable lease cost	71		64
Sublease income	(2)		(1)
Total lease cost	$	261	$	256

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


Other Lease Information	Three Months Ended
In millions	Mar 31, 2021		Mar 31, 2020

Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	127	$	126
Operating cash flows for finance leases	$	7	$	6
Financing cash flows for finance leases	$	11	$	8

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


Lease Position	Balance Sheet Classification	Mar 31, 2021		Dec 31, 2020
In millions
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		$	35	$	185
Finance leases		$	57	$	178
Assets
Operating lease assets	Operating lease right-of-use assets	$	1,810	$	1,856
Finance lease assets	Property	712		665
Finance lease amortization	Accumulated depreciation	(227)		(216)
Total lease assets		$	2,295	$	2,305
Liabilities
Current
Operating	Operating lease liabilities - current	$	405	$	416
Finance	Long-term debt due within one year	64		54
Noncurrent
Operating	Operating lease liabilities - noncurrent	1,477		1,521
Finance	Long-Term Debt	490		464
Total lease liabilities		$	2,436	$	2,455

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


Lease Term and Discount Rate	Mar 31, 2021		Dec 31, 2020
Weighted-average remaining lease term
Operating leases	7.5 years		7.6 years
Finance leases	11.0 years		11.6 years
Weighted-average discount rate
Operating leases	3.72	%	3.84	%
Finance leases	5.15	%	5.41	%

The following table provides the maturities of lease liabilities at March 31, 2021:


Maturities of Lease Liabilities	Mar 31, 2021
	Operating Leases		Finance Leases
In millions
2021	$	353	$	66
2022	398		84
2023	323		108
2024	253		54
2025	174		44
2026 and thereafter	704		383
Total future undiscounted lease payments	$	2,205	$	739
Less: Imputed interest	323		185
Total present value of lease liabilities	$	1,882	$	554

At March 31, 2021, Dow had additional leases of approximately $9 million, primarily for buildings and equipment, which had not yet commenced. These leases are expected to commence in 2021 and 2022, with lease terms of up to 10 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 reflected in the consolidated balance sheets for residual value guarantees at March 31, 2021 and December 31, 2020. The Company had a recorded liability of $19 million related to these residual value guarantees at March 31, 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	Mar 31, 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	$	19	2030	$	818	$	22