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Recent Accounting Pronouncements | 3 Months Ended
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Mar. 31, 2019
Accounting Policies [Abstract] |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company's significant accounting policies are described in Note 1–Basis of Presentation and Summary of Significant Accounting Policies in the Company’s 2018 Annual Report on Form 10-K. Summarized below are the accounting pronouncements adopted subsequent to December 31, 2018 that were applicable and material to the Company. New Accounting Standards Adopted Leases: The Company adopted the updated lease guidance as of January 1, 2019, using the cumulative-effect adjustment transition method, which applies the provisions of the standard at the effective date without adjusting the comparative periods presented. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are, or contain, leases, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any existing leases as of the adoption date. The Company did not elect to apply the hindsight practical expedient. Additionally, the Company has elected not to include short-term leases, with a term of 12 months or less, on its Condensed Consolidated Balance Sheets. The impact of adopting this new guidance resulted in an increase to Operating lease right-of-use (ROU) assets of $387 million, an increase to Other current liabilities of $103 million, a decrease to Other long-term liabilities of $21 million, an increase to Operating lease liabilities of $316 million and a net decrease to opening retained earnings (deficit) of $8 million as of January 1, 2019. The adoption did not have an impact on the Company’s Condensed Consolidated Statements of Income (Loss) or Condensed Consolidated Statements of Cash Flows. Summary of Accounting Policies Leases The Company determines if an arrangement is a lease at the inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. The Company has operating and finance leases for real estate and equipment. Operating leases are included in Operating lease ROU assets, Other current liabilities, and Operating lease liabilities in our Condensed Consolidated Balance Sheets. Finance leases are included in Land, buildings and equipment, net, Current portion of long-term debt, and Long-term debt in our Condensed Consolidated Balance Sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the net present value of lease payments over the lease term using the Company’s incremental borrowing rates or implicit rates. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option based on economic factors. The Company recognizes operating fixed lease expense and finance lease depreciation on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. The Company accounts for lease and non-lease components separately for its equipment leases, based on the estimated standalone price of each component, and combines lease and non-lease components for its real estate leases. The components of lease costs were as follows:
(in millions) |  | Three Months Ended March 31, 2019
Finance Lease Costs: |  |
Amortization of right of use assets |  | $ | 3 |
Total Finance Lease Costs |  | $ | 3 |
Operating lease costs: |  |
Base rent |  | $ | 31 |
Short-term lease costs |  | 3 |
Variable lease costs(1) |  | 7 |
Sublease income |  | (1 | )
Total Operating Lease Costs |  | $ | 40 |
__________
(1) | Primarily related to taxes, insurance and common area and other maintenance costs for real estate leases.
Interest expense related to the finance leases for the three months ended March 31, 2019 was immaterial. Supplemental cash flow information related to leases was as follows:
(in millions) |  | Three Months Ended March 31, 2019
Cash paid for the amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases |  | $ | (30 | )
Financing cash flow from finance leases |  | $ | (3 | )
Supplemental non-cash information on right of use assets obtained in exchange for new lease obligations: |  |
Operating leases |  | $ | 6 |
Supplemental balance sheet information related to leases was as follows:
(in millions) |  | March 31, 2019
Operating Leases: |  |
Operating lease right of use assets |  | $ | 338 |
Other current liabilities |  | $ | 112 |
Operating lease liabilities |  | 282 |
Total Operating Lease Liabilities |  | $ | 394 |
Finance Leases: |  |
Land, buildings and Equipment, net |  | $ | 21 |
Current portion of long-term debt |  | $ | 9 |
Long-term debt |  | 14 |
Total Finance Lease Liabilities |  | $ | 23 |
The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. The weighted average discount rates for operating and finance leases were 5.2% and 4.8%, respectively. The weighted average remaining lease terms for operating and finance leases at March 31, 2019, were 5 years and 3 years, respectively. The aggregate future lease payments for operating leases were as follows:
|  | March 31, 2019
(in millions) |  | Operating Lease Payments
Maturity Of Lease Liabilities: |  |
2019 (remaining) |  | $ | 100 |
2020 |  | 105 |
2021 |  | 75 |
2022 |  | 52 |
2023 |  | 35 |
Thereafter |  | 84 |
Total undiscounted operating lease payments |  | 451 |
Less imputed interest |  | 57 |
Present value of operating lease liabilities |  | $ | 394 |
Maturities of finance lease liabilities were as follows:
|  | March 31, 2019
(in millions) |  | Finance Lease Payments
2019 (remaining) |  | $ | 8 |
2020 |  | 6 |
2021 |  | 5 |
2022 |  | 4 |
2023 |  | 1 |
Thereafter |  | — |
Total undiscounted finance lease payments |  | 24 |
Less imputed interest |  | 1 |
Present value of finance lease liabilities |  | $ | 23 |
As of March 31, 2019, the Company had an additional operating lease for real estate of $14 million, which has not commenced and has not been recognized on the Company's Consolidated Balance Sheet. This operating lease is expected to commence in 2019 with a lease term of 10 years. As previously disclosed in Note 5 to the Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, under the previous lease accounting, future minimum lease payments for operating leases having initial or remaining non-cancelable lease term in excess of one year were as follows:
|  | December 31, 2018
(in millions) |  | Operating Lease Payments
Maturity Of Lease Liabilities: |  |
2019 |  | $ | 153 |
2020 |  | 113 |
2021 |  | 78 |
2022 |  | 53 |
2023 |  | 33 |
Thereafter |  | 76 |
Total minimum operating lease payments |  | $ | 506 |
New Accounting Standards To Be Adopted Credit Losses: In June 2016, the FASB updated the accounting guidance related to measurement of credit losses on financial instruments, which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected. This updated guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact on the Company's Consolidated Financial Statements.

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- Definition The entire disclosure of changes in accounting principles, including adoption of new accounting pronouncements, that describes the new methods, amount and effects on financial statement line items. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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