Leases

The Company leases certain buildings, warehouses, rail cars, land and operating equipment under both operating and finance leases expiring on various dates through 2044. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company combines lease and non-lease components.

The Company determines if a contract is a lease at the inception of the arrangement. The Company reviews all options to extend, terminate, or purchase its right of use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Nearly all of the Company’s lease contracts do not provide a readily determinable implicit rate. For these contracts, the Company estimates the incremental borrowing rate to discount the lease payments based on information available at lease commencement.

Lease Costs

For the three months ended March 31, 2019, the Company recorded $9 of operating lease expense and $3 of short-term lease expense. The Company had less than $1 of amortization expense and less than $1 of interest expense from finance leases for the three months ended March 31, 2019. Variable lease expense was $1 for the three months ended March 31, 2019. These expense items are included as components of “Operating income” and “Interest expense, net” within the Condensed Consolidated Statements of Operations.

Balance Sheet Classification

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet:



	Classification	March 31, 2019⁽¹⁾
Assets:
Operating	Operating lease assets	$	99
Finance⁽¹⁾	Machinery and Equipment	9
Total leased assets		$	108
Liabilities:
Current
Operating	Current portion of operating lease liabilities	$	23
Finance	Debt payable within one year	2
Noncurrent
Operating	Operating lease liabilities	76
Finance	Long-term debt	7
Total leased liabilities		$	108


(1)	Finance lease assets are recorded net of accumulated amortization of $8 as of March 31, 2019.

Other Lease Information

Cash paid for finance leases was $1 and cash paid for operating leases approximated operating lease expense and non-cash right-of-use asset amortization for the three months ended March 31, 2019. Right-of-use assets obtained in exchange for operating lease obligations were less than $1 during the first three months ending March 31, 2019. There were no right-of-use assets obtained in exchange for finance lease obligations during the first three months ending March 31, 2019.

The tables below present supplemental information related to leases for the three months ended March 31, 2019:



	March 31, 2019
Weighted-average remaining lease term (years)
Operating leases	8.8
Finance leases	2.5
Weighted-average discount rate
Operating leases	12.19	%
Finance leases	9.00	%

The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of March 31, 2019:



Year	Minimum Rentals Under Operating Leases		Minimum Payments Under Finance Leases⁽¹⁾
Remaining nine months of 2019	$	25	$	3
2020	24		7
2021	20		—
2022	14		—
2023	11		—
2024 and thereafter	78		1
Total lease payments	$	172	$	11
Less: Amount representing interest	73		2
Present value of lease liabilities	$	99	$	9

(1) Amounts exclude sale leaseback financing arrangements which are not considered leases under Topic 842.

Disclosures related to periods prior to adoption of ASU 2016-02

The Company adopted ASU 2016-02 using a retrospective adoption method at January 1, 2019. See Note 3 for more information. The following is the minimum lease commitments under the previous lease guidance (ASC 840) as of December 31, 2018, as disclosed in the Company’s most recent Annual Report on Form 10-K.



Year	Minimum Rentals Under Operating Leases		Minimum Payments Under Capital Leases
2019	$	33	$	15
2020	24		20
2021	20		13
2022	13		26
2023	10		9
2024 and thereafter	61		1
Total minimum payments	$	161	84
Less: Amount representing interest			(18		)
Present value of minimum payments			$	66