Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Leases

The Company has operating and finance leases for real estate and equipment. Generally, the leases have remaining terms of one month to ten years. Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

In addition, some leases include options to terminate the lease. The Company generally negotiates these termination clauses in anticipation of any changes in market conditions; however, because a termination option requires approval from management, the Company assumes the majority of its termination options will not be exercised when determining the lease term.

The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease cost. Lease expense is recorded in operating expenses in the results of operations.

Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable portion of lease payments is not included in the computation of the right of use assets or lease liabilities. Rather, variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred and are included in "Cost of sales" and "Selling, general, and administrative" within the consolidated statements of income (loss).

The Company does not include significant restrictions or covenants in its lease agreements, and residual value guarantees are generally not included within its operating leases.

The components of lease expense were as follows:

	Year Ended December 31, 2019
Operating lease expense	$	131
Finance lease expense
Amortization of right-of-use assets	1
Short-term lease expense	13
Variable lease expense	26
Sublease income	(1		)
Total lease expense	$	170

Other information related to leases was as follows:

	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	160
Financing cash flows from finance leases	$	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	170

Supplemental balance sheet information related to leases was as follows:

	December 31, 2019
Operating leases
Operating lease right-of-use assets (a)	$	331
Other current liabilities (b)	$	96
Other long-term liabilities (c)	234
Total operating lease liabilities	$	330
Finance leases
Property, plant and equipment, gross	$	2
Accumulated depreciation	(1		)
Total finance lease right-of-use assets	$	1
Other current liabilities (b)	$	1
Other long-term liabilities (c)	1
Total finance lease liabilities	$	2

^(a) Included in "Other assets" in the consolidated balance sheets.

^(b) Included in "Accrued expenses and other current liabilities" in the consolidated balance sheets.

^(c) Included in "Deferred credits and other liabilities" in the consolidated balance sheets.

	December 31, 2019
	Weighted average remaining lease term	Weighted average discount rate
Operating leases	4.82	4.24	%
Finance leases	3.18	4.02	%

Maturities of lease liabilities under non-cancellable leases as of December 31, 2019 were as follows:

Year ending December 31	Operating leases			Finance leases
2020	$	109		$	2
2021	84			—
2022	61			—
2023	44			—
2024	27			—
Thereafter	40			—
Total future undiscounted lease payments	365			2
Less imputed interest	(35		)	—
Total reported lease liability	$	330		$	2

Total rental expense (under ASC 840) for the years ended December 31, 2018 and 2017 was $111 million and $81 million.

At December 31, 2018, future minimum operating lease payments (under ASC 840) for the years ended December 31, 2019, 2020, 2021, 2022, 2023, and beyond were as follows: $120 million, $100 million, $86 million, $68 million, $56 million, and $53 million.

Leases

Leases

The Company has operating and finance leases for real estate and equipment. Generally, the leases have remaining terms of one month to ten years. Leases with an initial term of 12 months or less which do not include an option to purchase the underlying asset that the Company is reasonably certain to exercise are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term.

In addition, some leases include options to terminate the lease. The Company generally negotiates these termination clauses in anticipation of any changes in market conditions; however, because a termination option requires approval from management, the Company assumes the majority of its termination options will not be exercised when determining the lease term.

The Company has elected the practical expedient to not separate non-lease components from the lease components to which they relate, and instead account for each separate lease and non-lease component associated with that lease component as a single lease component for all underlying asset classes. Accordingly, all costs associated with a lease contract are accounted for as lease cost. Lease expense is recorded in operating expenses in the results of operations.

Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable portion of lease payments is not included in the computation of the right of use assets or lease liabilities. Rather, variable payments, other than those dependent upon a market index or rate, are expensed when the obligation for those payments is incurred and are included in "Cost of sales" and "Selling, general, and administrative" within the consolidated statements of income (loss).

The Company does not include significant restrictions or covenants in its lease agreements, and residual value guarantees are generally not included within its operating leases.

The components of lease expense were as follows:

	Year Ended December 31, 2019
Operating lease expense	$	131
Finance lease expense
Amortization of right-of-use assets	1
Short-term lease expense	13
Variable lease expense	26
Sublease income	(1		)
Total lease expense	$	170

Other information related to leases was as follows:

	Year Ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	160
Financing cash flows from finance leases	$	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	170

Supplemental balance sheet information related to leases was as follows:

	December 31, 2019
Operating leases
Operating lease right-of-use assets (a)	$	331
Other current liabilities (b)	$	96
Other long-term liabilities (c)	234
Total operating lease liabilities	$	330
Finance leases
Property, plant and equipment, gross	$	2
Accumulated depreciation	(1		)
Total finance lease right-of-use assets	$	1
Other current liabilities (b)	$	1
Other long-term liabilities (c)	1
Total finance lease liabilities	$	2

^(a) Included in "Other assets" in the consolidated balance sheets.

^(b) Included in "Accrued expenses and other current liabilities" in the consolidated balance sheets.

^(c) Included in "Deferred credits and other liabilities" in the consolidated balance sheets.

	December 31, 2019
	Weighted average remaining lease term	Weighted average discount rate
Operating leases	4.82	4.24	%
Finance leases	3.18	4.02	%

Maturities of lease liabilities under non-cancellable leases as of December 31, 2019 were as follows:

Year ending December 31	Operating leases			Finance leases
2020	$	109		$	2
2021	84			—
2022	61			—
2023	44			—
2024	27			—
Thereafter	40			—
Total future undiscounted lease payments	365			2
Less imputed interest	(35		)	—
Total reported lease liability	$	330		$	2

Total rental expense (under ASC 840) for the years ended December 31, 2018 and 2017 was $111 million and $81 million.

At December 31, 2018, future minimum operating lease payments (under ASC 840) for the years ended December 31, 2019, 2020, 2021, 2022, 2023, and beyond were as follows: $120 million, $100 million, $86 million, $68 million, $56 million, and $53 million.