Leases (Notes)

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

NOTE 2 - LEASES

On January 1, 2019, we adopted ASU 2016-02, "Leases (Topic 842)" (ASC 842), which supersedes the lease accounting requirements in ASC Topic 840, "Leases". The new standard requires entities to recognize, separately from each other, an asset for its right to use (ROU) the underlying asset equal to the liability for its finance and operating lease obligations. Further, the company is required to present separately the current and non-current portion of the ROU asset and corresponding lease liability.

In July 2018, the FASB issued ASU 2018-11, "Leases (Topic 842) Targeted Improvements", which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard. We have elected to adopt using this optional transition method.

We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

Our lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, railcars to transport our products, and a fleet of vehicles.

As part of our adoption of ASC 842, we have also elected to apply the following practical expedients as permitted under the new standard:

• Package of practical expedients - we will not reassess whether expiring or existing contracts contain a lease, will not reassess the classification of expired or existing leases, and will not reassess whether lease initial direct costs would qualify for capitalization under the new lease accounting standard.

• Lease and non-lease components as lessee - for leases across all asset classes in which we are a lessee, we will not separate non-lease components from lease components and instead will account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

• Short-term leases - we have elected not to recognize ROU assets and lease liabilities for short-term leases across all asset classes that have a lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term.

Key estimates and judgments include how we determined the discount rate used to record the unpaid lease payments at present value and lease term.

• ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

• The lease term for all of our leases includes the non-cancelable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

Supplemental Balance Sheet information Related to Leases:

	Classification	September 30, 2019
Assets:
Operating lease assets	Operating lease assets	$	41
Finance lease assets	Property, plant, and equipment, net	1
Total lease assets		$	42
Liabilities:
Current
Operating	Accounts payable and accrued liabilities	$	9
Finance	Current portion of long-term debt	1
Non-current
Operating	Non-current operating lease liabilities	33
Finance	Long-term debt	1
Total lease liabilities		$	42

Components of Lease Expense:	Quarter Ended September 30, 2019		Nine Months Ended September 30, 2019
Lease Cost:
Operating lease cost	$	3	$	7
Finance lease cost:
Amortization of leased assets	—		—
Interest on lease liabilities	—		—
Total lease cost	$	3	$	8

Lease Term and Discount Rate:	September 30, 2019
Weighted average remaining lease term (years)
Operating leases	12.0
Finance leases	3.0
Weighted average discount rate
Operating leases	4.6	%
Finance leases	4.2	%

Maturity of Lease Liabilities	Operating Leases			Finance Leases		Total
2019	$	3		$	—	$	3
2020	9			1		10
2021	7			—		7
2022	5			—		5
2023	3			—		3
2024 and thereafter	29			—		29
Total lease payments	55			1		56
Less: Interest	(14		)	—		(14		)
Present value of lease liabilities	$	41		$	1	$	42

Other Information	Quarter Ended September 30, 2019		Nine Months Ended September 30, 2019
Short-term lease cost	$	1	$	3
Variable lease cost	7		20
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	—		—
Operating cash flows from operating leases	2		6
Financing cash flows from finance leases	—		—
ROU assets obtained in exchange for new operating lease liabilities	20		25
ROU assets obtained in exchange for new financing lease liabilities	—		1

As of December 31, 2018, total future minimum commitments under non-cancelable operating leases were as follows:

	2019		2020		2021		2022		2023		Thereafter
Lease Obligations	$	8	$	7	$	5	$	2	$	—	$	—