Leases

3 Months Ended

Mar. 31, 2024

Leases

Leases

11.  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). 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:

	March 31,		December 31,
	2024		2023
	(in millions)
Operating Leases:
Right-of-use assets (other assets)	$	513	$	526
Lease liabilities (accrued expenses and other liabilities)		519		531
Financing Leases:
Right-of-use assets (property, plant and equipment, net)		54		55
Lease liabilities (debt)		68		70

Additional information with respect to our operating leases as of March 31, 2024 and December 31, 2023 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.

	Right-Of-Use		Lease			Discount
Operating Leases as of March 31, 2024	Assets		Liabilities		Lease Term	Rate
	(in millions)
Energy	$	53	$	50	5.3 years	6.8%
Automotive		412		424	5.3 years	5.9%
Food Packaging		21		24	9.0 years	7.4%
Other segments and Holding Company		27		21
	$	513	$	519

	Right-Of-Use		Lease			Discount
Operating Leases as of December 31, 2023	Assets		Liabilities		Lease Term	Rate
	(in millions)
Energy	$	53	$	49	5.4 years	6.7%
Automotive		422		434	5.4 years	5.9%
Food Packaging		22		25	9.1 years	7.4%
Other segments and Holding Company		29		23
	$	526	$	531

For the three months ended March 31, 2024 and 2023, lease cost was comprised of (i) operating lease cost of $42 million and $41 million, respectively, (ii) amortization of financing lease right-of-use assets of $2 million and $1 million, respectively, and (iii) interest expense on financing lease liabilities of $2 million and $1 million, respectively.

Our Automotive segment accounted for $33 million of total lease cost for each of the three months ended March 31, 2024 and 2023.

Lessor Arrangements

Automotive

Our Automotive segment leases available and excess real estate in certain locations under long-term operating leases. Our Automotive segment’s revenues from operating leases were $15 million and $16 million for the three months ended March 31, 2024 and 2023, respectively. Revenues from operating leases are included in other revenue from operations in the condensed consolidated statements of operations. Our Automotive segment’s expenses from operating leases including variable lease costs were $24 million and $28 million for the three months ended March 31, 2024 and 2023, respectively. Expenses from operating leases are included in other expenses from operations in the condensed consolidated statements of operations.

Real Estate

Our Real Estate segment leases real estate, primarily commercial properties under long-term operating leases. As of March 31, 2024 and December 31, 2023, our Real Estate segment had assets leased to others included in property, plant and equipment of $255 million and $252 million, respectively, net of accumulated depreciation. Our Real Estate segment’s revenue from operating leases were $3 million and $5 million for the three months ended March 31, 2024 and 2023, respectively. Revenues from operating leases are included in other revenue from operations in the condensed consolidated statements of operations.