Leases

3 Months Ended

Mar. 31, 2020

Supplemental Condensed Consolidated Balance Sheet information related to leases for the period indicated, is as follows (in millions):


	Classification	March 31, 2020		December 31, 2019
Assets
Operating leases	Operating lease assets, net (1)	$	561	$	615
Finance leases	Property, plant and equipment, net (2)	14		15
Total lease assets		$	575	$	630
Liabilities
Current
Operating leases	Other accrued liabilities	$	126	$	132
Finance leases	Short-term debt and current portion of long-term debt	3		3
Noncurrent
Operating leases	Long-term operating lease liabilities	503		541
Finance leases	Long-term debt	9		10
Total lease liabilities		$	641	$	686

(1) During the first quarter of 2020, the Company concluded that a triggering event had occurred for all of its reporting units as a result of overall macroeconomic conditions and developments in the equity and credit markets primarily driven by the COVID-19 pandemic. Pursuant to the authoritative accounting literature, the Company compared the sum of the undiscounted future cash flows attributable to the asset or group of assets at the lowest level for which identifiable cash flows are available to their respective carrying amount. As a result of the impairment testing performed in connection with the triggering event, the Company recorded a non-cash impairment charge of $3 million during the three months ended March 31, 2020 in the Home and Outdoor segment related to the operating leases of its Yankee Candle retail store business. In addition, the Company recorded an impairment charge of $2 million in the Corporate segment to reflect a reduction in the carrying values of certain operating lease assets.

(2) Net of accumulated depreciation of $10 million and $8 million at March 31, 2020 and December 31, 2019.

Components of lease expense as of the date indicated, are as follows (in millions):


	Three Months Ended March 31,
	2020		2019
Operating lease cost:
Operating lease cost (1)	$	48	$	53
Variable lease costs (2)	6		6
Finance lease cost:
Amortization of leased assets	1		1

(1)Includes short-term leases, which are immaterial.

(2)Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales.

Remaining lease term and discount rates as of the date indicated, are as follows:

March 31, 2020

Weighted average remaining lease term (years):

Operating leases

Finance leases

Weighted average discount rate:

Operating leases

4.3%

Finance leases

3.5%

Supplemental cash flow information related to leases for the period indicated is as follows (in millions):


	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47	$	42

Financing cash flows from finance leases	1		1
Right of use assets obtained in exchange for lease liabilities:
Operating leases	7		27
Finance leases	—		7

Maturities of lease liabilities for continuing operations at March 31, 2020, are as follows (in millions):


	Operating Leases		Finance Leases
2020 (Excludes three months ended March 31, 2020)	$	123	$	4
2021	139		4
2022	114		3
2023	86		1
2024	69		—
Thereafter	214		—
Total lease payments	745		12
Less: imputed interest	(116)		—
Present value of lease liabilities	$	629	$	12

Leases

Supplemental Condensed Consolidated Balance Sheet information related to leases for the period indicated, is as follows (in millions):


	Classification	March 31, 2020		December 31, 2019
Assets
Operating leases	Operating lease assets, net (1)	$	561	$	615
Finance leases	Property, plant and equipment, net (2)	14		15
Total lease assets		$	575	$	630
Liabilities
Current
Operating leases	Other accrued liabilities	$	126	$	132
Finance leases	Short-term debt and current portion of long-term debt	3		3
Noncurrent
Operating leases	Long-term operating lease liabilities	503		541
Finance leases	Long-term debt	9		10
Total lease liabilities		$	641	$	686

(2) Net of accumulated depreciation of $10 million and $8 million at March 31, 2020 and December 31, 2019.

Components of lease expense as of the date indicated, are as follows (in millions):


	Three Months Ended March 31,
	2020		2019
Operating lease cost:
Operating lease cost (1)	$	48	$	53
Variable lease costs (2)	6		6
Finance lease cost:
Amortization of leased assets	1		1

(1)Includes short-term leases, which are immaterial.

(2)Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales.

Remaining lease term and discount rates as of the date indicated, are as follows:

March 31, 2020

Weighted average remaining lease term (years):

Operating leases

Finance leases

Weighted average discount rate:

Operating leases

4.3%

Finance leases

3.5%

Supplemental cash flow information related to leases for the period indicated is as follows (in millions):


	Three Months Ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	47	$	42

Financing cash flows from finance leases	1		1
Right of use assets obtained in exchange for lease liabilities:
Operating leases	7		27
Finance leases	—		7

Maturities of lease liabilities for continuing operations at March 31, 2020, are as follows (in millions):


	Operating Leases		Finance Leases
2020 (Excludes three months ended March 31, 2020)	$	123	$	4
2021	139		4
2022	114		3
2023	86		1
2024	69		—
Thereafter	214		—
Total lease payments	745		12
Less: imputed interest	(116)		—
Present value of lease liabilities	$	629	$	12