v3.20.1

LEASES | 3 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
LEASES | LEASES The Company routinely leases storage facilities, transportation equipment, land, and office facilities that are typically classified as operating leases. The accounting for some of the Company's leases may require significant judgment when determining whether a contract is or contains a lease, the lease term, and the likelihood of renewal or termination options. Leases with an initial term of more than 12 months are recognized on the balance sheet as right-of-use assets (Operating lease assets) and lease liabilities for the obligation to make payments under such leases (Current operating lease obligations and Non-current operating lease obligations). As of the lease commencement date, the lease liability is initially measured as the present value of lease payments not yet paid. The lease asset is initially measured equal to the lease liability and adjusted for lease payments made at or before lease commencement (e.g., prepaid rent), lease incentives, and any initial direct costs. Over time, the lease liability is reduced for lease payments made and the lease asset is reduced through expense, classified as either Cost of goods sold or Selling, general and administrative expense, depending upon the nature of the lease. Lease assets are subject to review for impairment in a manner consistent with Property, plant and equipment. Leases with an initial term of 12 months or less (“short-term leases”) are not recorded on the balance sheet, and lease expense for these short-term leases is recognized on a straight-line basis over the lease term. The Company’s leases range in length of term, with an average remaining lease term of 5.1 years, but with certain land leases continuing for up to 92 years. Additionally, certain leases contain renewal options that can extend the lease term up to an additional 5 years. Renewal options are generally exercisable solely at the Company’s discretion. When a renewal option is reasonably certain to be exercised, such additional terms are considered when calculating the associated operating lease asset and liability. When determining the lease liability at commencement of the lease, the present value of lease payments is based on the Company’s incremental borrowing rate determined using a portfolio approach and the Company’s incremental cost of debt, adjusted to arrive to the rate in the applicable country and for the applicable term of the lease, as the rate implicit in the lease is generally not readily determinable. As of March 31, 2020, this weighted average discount rate was 4.5%. Certain of the Company’s freight supply agreements for ocean freight vessels and rail cars may include rental payments that are variable in nature. Variable payments on time charter agreements for ocean freight vessels under freight supply agreements are dependent on then-current market daily hire rates. Variable payments for certain rail cars can be based on volumes, and in some cases, benchmark interest rates. All such variable payments are not included in the calculation of the associated operating lease asset or liability subsequent to the inception date of the associated lease and are recorded as expense in the period in which the adjustment to the variable payment obligation is incurred. Certain of the Company’s lease agreements related to railcars and barges contain residual value guarantees (see Note 16 - Commitments And Contingencies). None of the Company’s lease agreements contain material restrictive covenants. The components of lease expense were as follows:
|  | Three Months Ended March 31,
(US$ in millions) |  | 2020 |  | 2019
Operating lease cost |  | $ | 64 |  |  | $ | 80 |
Short-term lease cost |  | 149 |  |  | 152 |
Variable lease cost |  | 4 |  |  | 3 |
Sublease income |  | (14 | ) |  | (30 | )
Total lease cost |  | $ | 203 |  |  | $ | 205 |
Supplemental cash flow information related to leases was as follows:
|  | Three Months Ended March 31,
(US$ in millions) |  | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating lease liability principal payments |  | $ | 65 |  |  | $ | 79 |
Supplemental non-cash information: |  |  |  |
Right-of-use assets obtained in exchange for new lease obligations |  | $ | 29 |  |  | $ | 70 |
Maturities of lease liabilities for operating leases as of March 31, 2020, are as follows:
(US$ in millions) |
Remaining in 2020 |  | $ | 183 |
2021 |  | 203 |
2022 |  | 152 |
2023 |  | 110 |
2024 |  | 55 |
Thereafter |  | 99 |
Total lease payments (1) |  | 802 |
Less imputed interest |  | 91 |
Present value of lease liabilities, as separately presented on the condensed consolidated balance sheet |  | $ | 711 |
(1) | Minimum lease payments have not been reduced by minimum sublease income receipts of $24 million due in future periods under non-cancelable subleases. Non-cancelable subleases primarily relate to agreements with third parties for the use of portions of certain facilities with remaining sublease terms of approximately 5 years, as well as an agreement in which the Company subleases rail cars with remaining sublease terms of approximately three to four
years. Additionally, the Company may enter into re-let agreements to sell the right to use ocean freight vessels under time charter agreements when excess capacity is available. As of March 31, 2020, the Company has additional operating leases for freight supply agreements on ocean freight vessels, that have not yet commenced, of $182 million. These operating leases will commence in 2020 with lease terms of up to eight years.

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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