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

The table below summarizes the lease costs for the for the Successor period July 2, 2019 through December 31, 2019 and the Predecessor period January 1, 2019 through July 1, 2019:



	Classification	Successor		Predecessor
		July 2, 2019 through December 31, 2019		January 1, 2019 through July 1, 2019
Operating lease expense	Operating (loss) income	$	19	$	18
Short-term lease expense	Operating (loss) income	2		5
Amortization expense	Operating (loss) income	1		1
Interest expense from financing leases	Interest expense, net	<1		<1
Variable lease expense	Operating (loss) income	3		2

Balance Sheet Classification

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



Successor
	Classification	December 31, 2019⁽¹⁾
Assets:
Operating⁽¹⁾	Operating lease assets	$	122
Finance⁽²⁾	Machinery and Equipment	10
Total leased assets		$	132
Liabilities:
Current
Operating	Current portion of operating lease liabilities	$	22
Finance	Debt payable within one year	4
Noncurrent
Operating	Operating lease liabilities	86
Finance	Long-term debt	3
Total leased liabilities		$	115


(1)	Operating lease assets include $14 of favorable leasehold interests as of December 31, 2019.


(2)	Finance lease assets are recorded net of accumulated amortization for the Successor Period of $1 as of December 31, 2019.

Other Lease Information

Cash paid for operating leases approximated operating lease expense and non-cash right-of-use asset amortization for the Successor period July 2, 2019 through December 31, 2019 and the Predecessor period January 1, 2019 through July 1, 2019. The table below presents other cash consideration detail for the Successor period July 2, 2019 through December 31, 2019 and the Predecessor period January 1, 2019 through July 1, 2019:



	Successor		Predecessor
	July 2, 2019 through December 31, 2019		January 1, 2019 through July 1, 2019
Cash paid for finance leases	$	2	$	2
Right-of-use assets obtained in exchange for operating lease	2		1
Right-of-use assets obtained in exchange for finance lease obligations	—		3

The tables below present supplemental information related to leases as of December 31, 2019:



Successor	December 31, 2019
Weighted-average remaining lease term (years)
Operating leases	10.4
Finance leases	1.7
Weighted-average discount rate
Operating leases	5.75	%
Finance leases	10.00	%

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 Successor Company’s Consolidated Balance Sheet as of December 31, 2019:



Year	Minimum Rentals Under Operating Leases			Minimum Payments Under Finance Leases⁽¹⁾
2020	$	28		$	3
2021	21			3
2022	14			—
2023	11			—
2024	4			—
2025 and thereafter	66			2
Total lease payments	$	144		$	8
Less: Amount representing interest	(36		)	(1		)
Present value of lease liabilities	$	108		$	7


(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 2 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 Predecessor Company’s most recent Annual Report on Form 10-K.



Predecessor
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