Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

9.  Leases

All Segments and Holding Company

We have operating and finance leases primarily within our Automotive, Energy and Food Packaging segments. Our Automotive segment leases assets, primarily real estate (operating) and vehicles (financing). Our Energy segment leases certain pipelines, storage tanks, railcars, office space, land and equipment (operating and financing). Our Food Packaging segment leases assets, primarily real estate, equipment and vehicles (primarily operating). Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Right-of-use assets and related liabilities are recorded on the balance sheet for leases with an initial lease term in excess of twelve months and therefore, do not include any lease arrangements with initial lease terms of twelve months or less.

Right-of-use assets and lease liabilities are as follows:

	September 30,		December 31,
	2022		2021
	(in millions)
Operating Leases:
Right-of-use assets (other assets)	$	416	$	467
Lease liabilities (accrued expenses and other liabilities)		424		479
Financing Leases:
Right-of-use assets (property, plant and equipment, net)		49		56
Lease liabilities (debt)		66		72

Additional information with respect to our operating leases as of September 30, 2022 and December 31, 2021 is presented below. The lease terms and discount rates for our Energy, Automotive and Food Packaging segments represent weighted averages based on their respective lease liability balances.

	Right-Of-Use		Lease			Discount
Operating Leases as of September 30, 2022	Assets		Liabilities		Lease Term	Rate
	(in millions)
Energy	$	35	$	35	3.9 years	5.1%
Automotive		330		340	4.5 years	5.7%
Food Packaging		24		27	10.3 years	7.4%
Other segments and Holding Company		27		22
	$	416	$	424

	Right-Of-Use		Lease			Discount
Operating Leases as of December 31, 2021	Assets		Liabilities		Lease Term	Rate
	(in millions)
Energy	$	37	$	37	4.1 years	5.4%
Automotive		369		385	4.9 years	5.8%
Food Packaging		28		31	10.5 years	7.4%
Other segments and Holding Company		33		26
	$	467	$	479

For the three months ended September 30, 2022 and 2021, lease cost was comprised of (i) operating lease cost of $47 million and $49 million, respectively, (ii) amortization of financing lease right-of-use assets of $3 million and $3 million, respectively, and (iii) interest expense on financing lease liabilities of $2 million and $2 million, respectively. For the nine months ended September 30, 2022 and 2021, lease cost was comprised of (i) operating lease cost of $145 million and $150 million, respectively, (ii) amortization of financing lease right-of-use assets of $7 million and $8 million, respectively, and (iii) interest expense on financing lease liabilities of $4 million and $5 million, respectively. Our automotive segment accounted for $121 million and $127 million of total lease cost for the nine months ended September 30, 2022 and 2021, respectively.

Automotive

Our Automotive segment leases certain retail locations under long-term operating leases. Our Automotive segment’s revenues from operating leases were $13 million and $3 million for the three months ended September 30, 2022 and 2021, respectively, and $35 million and $5 million for the nine months ended September 30, 2022 and 2021, respectively. Revenues from operating leases are included in other revenue from operations in the condensed consolidated statements of operations.

Real Estate

Our Real Estate segment leases real estate, primarily commercial properties under long-term operating leases. As of September 30, 2022 and December 31, 2021, our Real Estate segment had assets leased to others included in property, plant and equipment of $252 million and $251 million, respectively, net of accumulated depreciation. Our Real Estate segment’s revenue from operating leases were $2 million and $1 million for the three months ended September 30, 2022 and 2021, respectively, and $5 million and $7 million for the nine months ended September 30, 2022 and 2021,

respectively. Revenues from operating leases are included in other revenue from operations in the condensed consolidated statements of operations.