Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

Note 11. Leases

The Company is party to operating leases for the majority of its manufacturing sites, offices, engineering and lab sites, stocking locations, warehouses, automobiles, and certain equipment. Certain of the Company’s real estate leases include variable rental payments which adjust periodically based on inflation, and certain automobile

lease agreements include rental payments which fluctuate based on mileage. Generally, the Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company’s operating lease costs for the three and six months ended June 30, 2020 and 2019 consisted of the following:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Cost of goods sold	$	4	$	4	$	8	$	8
Selling, general & administrative		10		9		20		17
Total operating lease costs	$	14	$	13	$	28	$	25

Total operating lease costs include variable lease costs of $4 million and $7 million, respectively, for the three and six months ended June 30, 2020. For the three and six months ended June 30, 2019, total operating lease costs included variable lease costs of $2 million and $5 million, respectively. Total operating lease costs also include offsetting sublease income which is immaterial for the three and six months ended June 30, 2020 and 2019.

The Company recognized the following related to its operating leases:

	Financial Statement Line Item	At June 30, 2020		At December 31, 2019
Operating right-of-use assets	Other assets	$	129	$	137
Operating lease liabilities - current	Accrued liabilities	$	30	$	31
Operating lease liabilities - noncurrent	Other liabilities	$	106	$	111

Maturities of the Company’s operating lease liabilities were as follows:

	At June 30, 2020
2020	$	19
2021		37
2022		32
2023		25
2024		14
Thereafter		35
Total lease payments		162
Less: imputed interest		26
Present value of operating lease liabilities	$	136
Weighted-average remaining lease term (years)		5.58
Weighted-average incremental borrowing rate		6.11	%

Supplemental cash flow information related to the Company’s operating leases was as follows:

	Six Months Ended June 30,
	2020		2019
Operating cash outflows	$	15	$	18
Operating right-of-use assets obtained in exchange for operating lease liabilities	$	10	$	38

As of June 30, 2020, the Company has additional operating leases that have not yet commenced. Obligations under these leases are not material. Additionally, as a lessor, the Company leases all or a portion of certain owned properties. Rental income for the three and six months ended June 30, 2020 and 2019 was not material.