Leases

12 Months Ended

Dec. 31, 2019

On January 1, 2019, we adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. Certain required disclosures have been made on a prospective basis in accordance with the standard’s guidance. See Note 1, Summary of significant accounting policies.

We lease certain facilities and equipment related primarily to administrative, R&D and sales and marketing activities. Leases with terms of 12 months or less are expensed on a straight-line basis over the term and are not recorded in the Consolidated Balance Sheets.

Most leases include one or more options to renew, with renewal terms that may extend the lease term up to seven years. The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain residual value guarantees nor impose significant restrictions or covenants. We sublease certain real estate to third parties. Our sublease portfolio consists of operating leases from former R&D and administrative space.

The following table summarizes information related to our leases, all of which are classified as operating, included in our Consolidated Balance Sheets (in millions):



Consolidated Balance Sheets locations	December 31, 2019
Assets:
Other assets	$	469
Liabilities:
Accrued liabilities	$	140
Other noncurrent liabilities	388
Total lease liabilities	$	528

The components of net lease costs were as follows (in millions):



Lease costs	Year ended December 31, 2019
Operating⁽¹⁾	$	204
Sublease income	(33		)
Total net lease costs	$	171

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⁽¹⁾	Includes short-term leases and variable lease costs, which were not material for the year ended December 31, 2019.

Maturities of lease liabilities as of December 31, 2019, were as follows (in millions):



Maturity dates	Amounts
2020	$	157
2021	150
2022	110
2023	88
2024	30
Thereafter	32
Total lease payments⁽¹⁾	567
Less imputed interest	(39		)
Present value of lease liabilities	$	528

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⁽¹⁾	Includes future rental commitments for abandoned leases of $178 million. We expect to receive total future rental income of $141 million related to noncancelable subleases for abandoned facilities.

The weighted-average remaining lease term and weighted-average discount rate of our leases were 4.1 years and 3.3%, respectively, as of December 31, 2019.

Cash and noncash information related to our leases was as follows (in millions):



	Year ended December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	148
ROU assets obtained in exchange for lease obligations:
Operating leases	$	163

As of December 31, 2019, we have entered into leases that have not yet commenced, with total undiscounted future lease payments of $306 million. Theses leases will commence between 2020 and 2021 with lease terms from 5 years to 15 years.

The following table summarizes minimum future rental commitments related to noncancelable operating leases under the prior lease guidance as of December 31, 2018 (in millions):



	Amounts
2019	$	164
2020	126
2021	113
2022	64
2023	56
Thereafter	46
Total minimum operating lease commitments	$	569

Included in the table above are future rental commitments for abandoned leases in the amount of $222 million. As of December 31, 2018, we expect to receive total future rental income of $203 million related to noncancelable subleases for abandoned facilities. Rental expenses on operating leases under the prior lease guidance for the years ended December 31, 2018 and 2017, were $166 million and $159 million, respectively.