Leases (Notes)

9 Months Ended

Sep. 30, 2019

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) and which primarily consist of leases that expire within 14 years. 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, 2019		December 31, 2018
	(in millions)
Operating Leases:
Right-of-use assets (other assets)	$	635	$	—
Lease liabilities (accrued expenses and other liabilities)	664		—

Financing Leases:
Right-of-use assets (property, plant and equipment, net)	80		41
Lease liabilities (debt)	93		52

Additional information with respect to our operating leases as of September 30, 2019 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.



Operating Leases	Right-Of-Use Assets		Lease Liabilities		Lease Term	Discount Rate
	(in millions)
Energy	$	48	$	47	3.9 years	5.7%
Automotive	521		547		5.3 years	5.7%
Food Packaging	34		38		12.7 years	7.5%
Other segments and Holding Company	32		32
	$	635	$	664

Maturities of lease liabilities as of September 30, 2019 are as follows:



Year	Operating Leases			Financing Leases
	(in millions)
Remainder of 2019	$	54		$	6
2020	176			19
2021	152			14
2022	131			14
2023	80			12
Thereafter	206			67
Total lease payments	799			132
Less: imputed interest	(135		)	(39		)
	$	664		$	93

The components of lease expense are presented in the following table. Operating lease expense is net of immaterial amounts for sublease income.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in millions)
Operating lease expense	$	48	$	48	$	145	$	142

Amortization of financing lease right-of-use assets	$	4	$	1	$	10	$	5
Interest expense on financing lease liabilities	2		2		6		4

Real Estate

Our Real Estate segment leases real estate, primarily commercial properties under long-term operating leases. As of September 30, 2019 and December 31, 2018, our Real Estate segment has assets leased to others included in property, plant and equipment of $220 million and $217 million, respectively, net of accumulated depreciation. Our Real Estate segment’s revenue from operating leases were $9 million and $9 million for the three months ended September 30, 2019 and 2018, respectively, and $25 million and $30 million for the nine months ended September 30, 2019 and 2018, respectively, and are included in other revenue from operations in the condensed consolidated statements of operations. Our Real Estate segment’s anticipated future receipts of minimum operating lease payments receivable are $9 million for the remainder of 2019, $33 million in 2020 and $10 million in 2021 and thereafter.