Leases

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

Leases

The Company has operating and finance leases for corporate and field offices. We determine if an arrangement is a lease at inception or modification. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and corresponding lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Certain lease incentives such as free rent periods are recorded as a reduction of the ROU asset. The Company uses an incremental borrowing rate that is readily available in determining the present value of future lease payments. Lease costs for operating ROU assets is recognized on a straight-line basis over the lease term.

Certain leases include one or more options to renew with terms that can extend the lease from one year to 20 years. The exercise of any lease renewal option is at the sole discretion of the Company. Renewal options are included in the ROU assets and lease liabilities when they either provide an economic incentive to renew or when the costs related to the termination of a lease outweigh the benefits of signing a new lease.

The following table presents the balances for operating and finance ROU assets and lease liabilities:

Leases	Classification	September 30, 2019
		(in millions)
Assets
Operating lease assets	Other assets	$	220
Finance lease assets	Other assets	54
Total lease assets		$	274
Liabilities
Operating lease liabilities	Other liabilities	$	243
Finance lease liabilities	Long-term debt	61
Total lease liabilities		$	304

The components of lease expense include operating and finance lease costs. For the three months and nine months ended September 30, 2019 operating lease costs were $15 million and $44 million, respectively. For the three months and nine months ended September 30, 2019, finance lease costs consisted of $2 million and $6 million, respectively, in amortization and $1 million and $2 million, respectively, of interest expense. Amortization is recorded in general and administrative expenses and interest expense is recorded in interest and debt expense in the Consolidated Statements of Operations.

Maturities of lease liabilities, weighted-average remaining term and weighted-average discount rate are as follows:

Maturity of Lease Liabilities	September 30, 2019
	Finance Leases			Operating Leases
	(in millions)
2019 (1)	$	4		$	10
2020	14			60
2021	10			47
2022	10			39
2023	10			32
Thereafter	19			80
Total lease payments	67			268
Less: Interest	(6		)	(25		)
Present value of lease liabilities	$	61		$	243
Weighted-average remaining lease term (years)	6.1			6.1
Weighted-average discount rate	3.4		%	3.1		%

⁽¹⁾ 2019 amounts represent the amounts payable for the period from October 1, 2019 to December 31, 2019.

Maturities of lease liabilities prior to the adoption of new lease guidance were as follows:

Maturity of Lease Liabilities	December 31, 2018
	Operating Leases
	(in millions)
2019	$	61
2020	53
2021	40
2022	33
2023	26
Thereafter	65
Total lease payments	$	278

For the nine months ended September 30, 2019, operating cash flows included $47 million of cash paid for amounts included in the measurement of operating lease liabilities and $2 million of cash paid for amounts included in the measurement of finance lease liabilities. For the nine months ended September 30, 2019, financing cash flows included $10 million of cash paid for amounts included in the measurement of finance lease liabilities.