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Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases, Operating

Note 5. Leases

We have operating and finance leases for manufacturing and distribution facilities, vehicles, equipment and office space. Our leases have remaining lease terms of 1 to 10 years, some of which include options to extend the leases for up to 6 years. We assume the majority of our termination options will not be exercised when determining the lease term of our leases. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases, with the exception of some fleet leases. Some of our leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as product costs, insurance and tax payments. These variable payment leases are not included in our recorded lease assets and liabilities and are expensed as incurred. Certain leases are tied to a variable index or rate and are included in our lease assets and liabilities based on the indices or rates as of lease commencement.

The components of lease costs were as follows:

	For the Three Months Ended September 30, 2019				For the Nine Months Ended September 30, 2019
	(in millions)
Operating lease cost	$	53			$	168
Finance lease cost:
Amortization of right-of-use assets	8				18
Interest on lease liabilities	1				2
Short-term lease cost	8				28
Variable lease cost	114				319
Sublease income	(1		)		(3		)
Total lease cost	$	183			$	532

Supplemental cash flow information related to leases was as follows:

	For the Nine Months Ended September 30, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(187	)
Operating cash flows from finance leases	(2		)
Financing cash flows from finance leases	(15		)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	91
Finance leases	48

Supplemental balance sheet information related to leases was as follows:

	As of September 30, 2019
	(in millions)
Operating Leases:
Operating lease right-of-use assets, net of amortization	$	596
Other current liabilities	$	173
Operating lease liabilities	429
Total operating lease liabilities	$	602
Finance Leases:
Finance leases, net of amortization (within property, plant & equipment)	$	79
Other current liabilities	$	24
Other long-term liabilities	58
Total finance lease liabilities	$	82
Weighted Average Remaining Lease Term
Operating leases	5.4 years
Finance leases	4.6 years
Weighted Average Discount Rate
Operating leases	3.5%
Finance leases	4.2%

Future lease payments under non-cancelable leases under prior lease accounting rules (ASC 840) and under the new lease accounting rules (ASC 842) that went into effect on January 1, 2019 were as follows:

	As of September 30, 2019								As of December 31, 2018
	ASC 842								ASC 840
	Operating Leases				Finance Leases				Operating Leases
	(in millions)
Year Ending December 31:
2019 (excluding the nine months ended September 30, 2019)	$	43			$	7
2019									$	208
2020	191				29				165
2021	139				24				114
2022	99				12				79
2023	69				7				57
Thereafter	150				11				157
Total future undiscounted lease payments	$	691			$	90			$	780
Less imputed interest	(89		)		(8		)
Total reported lease liability	$	602			$	82

In 2020, we expect to record a $44 million operating lease liability for a 15 year lease that has not yet commenced.

Leases, Finance

Note 5. Leases

We have operating and finance leases for manufacturing and distribution facilities, vehicles, equipment and office space. Our leases have remaining lease terms of 1 to 10 years, some of which include options to extend the leases for up to 6 years. We assume the majority of our termination options will not be exercised when determining the lease term of our leases. We do not include significant restrictions or covenants in our lease agreements, and residual value guarantees are generally not included within our operating leases, with the exception of some fleet leases. Some of our leasing arrangements require variable payments that are dependent on usage or output or may vary for other reasons, such as product costs, insurance and tax payments. These variable payment leases are not included in our recorded lease assets and liabilities and are expensed as incurred. Certain leases are tied to a variable index or rate and are included in our lease assets and liabilities based on the indices or rates as of lease commencement.

The components of lease costs were as follows:

	For the Three Months Ended September 30, 2019				For the Nine Months Ended September 30, 2019
	(in millions)
Operating lease cost	$	53			$	168
Finance lease cost:
Amortization of right-of-use assets	8				18
Interest on lease liabilities	1				2
Short-term lease cost	8				28
Variable lease cost	114				319
Sublease income	(1		)		(3		)
Total lease cost	$	183			$	532

Supplemental cash flow information related to leases was as follows:

	For the Nine Months Ended September 30, 2019
	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	(187	)
Operating cash flows from finance leases	(2		)
Financing cash flows from finance leases	(15		)
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	91
Finance leases	48

Supplemental balance sheet information related to leases was as follows:

	As of September 30, 2019
	(in millions)
Operating Leases:
Operating lease right-of-use assets, net of amortization	$	596
Other current liabilities	$	173
Operating lease liabilities	429
Total operating lease liabilities	$	602
Finance Leases:
Finance leases, net of amortization (within property, plant & equipment)	$	79
Other current liabilities	$	24
Other long-term liabilities	58
Total finance lease liabilities	$	82
Weighted Average Remaining Lease Term
Operating leases	5.4 years
Finance leases	4.6 years
Weighted Average Discount Rate
Operating leases	3.5%
Finance leases	4.2%

Future lease payments under non-cancelable leases under prior lease accounting rules (ASC 840) and under the new lease accounting rules (ASC 842) that went into effect on January 1, 2019 were as follows:

	As of September 30, 2019								As of December 31, 2018
	ASC 842								ASC 840
	Operating Leases				Finance Leases				Operating Leases
	(in millions)
Year Ending December 31:
2019 (excluding the nine months ended September 30, 2019)	$	43			$	7
2019									$	208
2020	191				29				165
2021	139				24				114
2022	99				12				79
2023	69				7				57
Thereafter	150				11				157
Total future undiscounted lease payments	$	691			$	90			$	780
Less imputed interest	(89		)		(8		)
Total reported lease liability	$	602			$	82

In 2020, we expect to record a $44 million operating lease liability for a 15 year lease that has not yet commenced.

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- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance 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

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X

- 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

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