LEASES (Notes)

9 Months Ended

Sep. 30, 2022

LEASES

For additional information on the Company's leases, see Note 17 to the Consolidated Financial Statements included in the 2021 10-K.

The components of lease cost for operating and finance leases for the three and nine months ended September 30, 2022 and 2021 were as follows:


Lease Cost	Three Months Ended				Nine Months Ended
In millions	Sep 30, 2022		Sep 30, 2021		Sep 30, 2022		Sep 30, 2021
Operating lease cost	$	98	$	123	$	294	$	362
Finance lease cost
Amortization of right-of-use assets - finance	$	28	$	19	$	80	$	53
Interest on lease liabilities - finance	8		6		25		19
Total finance lease cost	$	36	$	25	$	105	$	72
Short-term lease cost	69		57		194		177
Variable lease cost	164		78		412		228
Sublease income	(2)		(2)		(8)		(5)
Total lease cost	$	365	$	281	$	997	$	834

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


Other Lease Information	Nine Months Ended
In millions	Sep 30, 2022		Sep 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	289	$	364
Operating cash flows for finance leases	$	25	$	19
Financing cash flows for finance leases	$	79	$	48
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	93	$	133
Finance leases	$	44	$	73

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at September 30, 2022 and December 31, 2021:


Lease Position	Balance Sheet Classification	Sep 30, 2022		Dec 31, 2021
In millions
Assets
Operating lease assets	Operating lease right-of-use assets	$	1,231	$	1,412
Finance lease assets	Property	1,145		1,158
Finance lease amortization	Accumulated depreciation	(418)		(368)
Total lease assets		$	1,958	$	2,202
Liabilities
Current
Operating	Operating lease liabilities - current	$	277	$	314
Finance	Long-term debt due within one year	110		106
Noncurrent
Operating	Operating lease liabilities - noncurrent	1,012		1,149
Finance	Long-Term Debt	694		763
Total lease liabilities		$	2,093	$	2,332

The weighted-average remaining lease term and discount rate for leases recorded in the consolidated balance sheets at September 30, 2022 and December 31, 2021 are provided below:


Lease Term and Discount Rate	Sep 30, 2022		Dec 31, 2021
Weighted-average remaining lease term
Operating leases	7.7 years		7.9 years
Finance leases	11.1 years		11.8 years
Weighted-average discount rate
Operating leases	4.21	%	3.72	%
Finance leases	4.19	%	4.17	%

The following table provides the maturities of lease liabilities at September 30, 2022:


Maturities of Lease Liabilities	Sep 30, 2022
In millions	Operating Leases		Finance Leases
2022	$	93	$	40
2023	298		166
2024	230		109
2025	186		76
2026	151		70
2027 and thereafter	590		545
Total future undiscounted lease payments	$	1,548	$	1,006
Less: Imputed interest	259		202
Total present value of lease liabilities	$	1,289	$	804

At September 30, 2022, Dow had additional leases of approximately $85 million, primarily for equipment, which had not yet commenced. These leases are expected to commence in 2022 and 2025, with lease terms of up to 16 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, 2022 and December 31, 2021. The lease agreements do not contain any material restrictive covenants.


Lease Guarantees	Sep 30, 2022					Dec 31, 2021
In millions	Final Expiration	Maximum Future Payments		Recorded Liability		Final Expiration	Maximum Future Payments		Recorded Liability
Residual value guarantees	2031	$	245	$	—	2031	$	280	$	—