We adopted ASU No.

2016-02,

Leases (Topic 842)

, which requires leases with durations greater than 12 months to be recognized on the balance sheet, effective January 1, 2019, using the modified retrospective approach. Prior period financial statement amounts and disclosures have not been adjusted to reflect the provisions of the new standard. We elected the package of transition provisions available which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related

right-of-use

assets and

right-of-use

obligations at the present value of lease payments over the term. Many of our leases include rental escalation clauses and renewal options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts.

Generally, we use our estimated incremental borrowing rate to discount the lease payments based on information available at lease commencement, as most of our leases do not provide a readily determinable implicit interest rate

The following table presents our lease-related assets and liabilities at September 30, 2019 (dollars in millions):


	Balance Sheet Classification		September 30, 2019
Assets:
Operating leases		Right-of-use operating lease assets	$	1,770
Finance leases		Property and equipment		486

Total lease assets			$	2,256

Liabilities:
Current:
Operating leases		Other accrued expenses	$	344
Finance leases		Long-term debt due within one year		89
Noncurrent:
Operating leases		Right-of-use operating lease obligations		1,440
Finance leases		Long-term debt		451

Total lease liabilities			$	2,324

Weighted-average remaining term:
Operating leases				10.8 years
Finance leases				10.6 years
Weighted-average discount rate:
Operating leases(1)				5.4	%
Finance leases				6.1	%

(1)	Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

The following table presents certain information related to lease expense for finance and operating leases for the quarter and nine months ended September 30, 2019 (dollars in millions):


	2019
	Quarter		Nine Months
Finance lease expense:
Amortization of leased assets	$	33	$	70
Interest on lease liabilities		9		24
Operating leases(2)		94		287
Short-term lease expense(2)		82		235
Variable lease expense(2)		40		114

	$	258	$	730

(2)	Expenses are included in “other operating expenses” in our condensed consolidated income statements.

Other Information

The following table presents supplemental cash flow information for the nine months ended September 30, 2019 (dollars in millions):


	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	293
Operating cash flows for finance leases		24
Financing cash flows for finance leases		58

Maturities of Lease Liabilities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at September 30, 2019 (dollars in millions):


	Operating Leases			Finance Leases
Year 1	$	388		$	107
Year 2		339			102
Year 3		279			97
Year 4		221			57
Year 5		175			61
Thereafter		1,038			353

Total minimum lease payments		2,440			777
Less: amount of lease payments representing interest		(656	)		(237	)

Present value of future minimum lease payments		1,784			540
Less: current obligations under leases		(344	)		(89	)

Long-term lease obligations	$	1,440		$	451