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Leases (Notes) | 6 Months Ended
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Jun. 30, 2019
Leases [Abstract] |
Leases | Leases The Company adopted ASU 2016-02 and its related amendments (collectively known as “ASC 842”) effective January 1, 2019 using the optional transition method in ASU 2018-11. Therefore, the reported results for the three and six months ended June 30, 2019 reflect the application of ASC 842 while the reported results for the three and six months ended June 30, 2018 were not adjusted and continue to be reported under the accounting guidance, ASC 840, Leases (“ASC 840”), in effect for the prior periods. The Company determines if an arrangement is a lease at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property, and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The lease term is used to determine lease classification as an operating or finance lease and is used to calculate straight-line lease expense for operating leases. The Company elected the package of practical expedients permitted under the transition guidance within ASU 2016-02 to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As a practical expedient, lease agreements with lease and non-lease components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets also include prepaid lease payments and exclude lease incentives received. The Company estimates contingent lease incentives when it is probable that the Company is entitled to the incentive at lease commencement. As the Company’s leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date for both real estate and equipment leases. The determination of the incremental borrowing rate requires judgment. The Company determines the incremental borrowing rate using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease. The Company elected the short-term lease recognition exemption for all leases that qualify. Therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company leases certain office space, data centers, and equipment. The Company’s leases have remaining lease terms of one to 11 years. Most leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. These variable lease costs are recognized as a variable lease expense when incurred. Certain leases include options to purchase the leased asset at the end of the lease term, which is assessed as a part of the Company’s lease classification determination. The depreciable life of the ROU assets and leasehold improvements are limited by the expected lease term unless the Company is reasonably certain of a transfer of title or purchase option. Lease Balances
(In millions) |  | June 30, 2019
Assets |  |
Operating lease assets(1) |  | $ | 361 |
Finance lease assets(2) |  | 24 |
Total lease assets |  | $ | 385 |
Liabilities |  |
Current |  |
Operating lease liabilities(1) |  | $ | 74 |
Finance lease liabilities(2) |  | 7 |
Noncurrent |  |
Operating lease liabilities(1) |  | 327 |
Finance lease liabilities(2) |  | 11 |
Total lease liabilities |  | $ | 419 |
(1) Operating lease assets are included within other long-term assets, and operating lease liabilities are included within accounts payable and accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s consolidated balance sheet. Operating lease assets are recorded net of accumulated amortization of $39 million as of June 30, 2019. (2) Finance lease assets are included within property and equipment, net and finance lease liabilities are included within current maturities of long-term debt (current portion) and long-term debt (noncurrent portion) in the Company’s consolidated balance sheets. Finance lease assets are recorded net of accumulated amortization of $10 million as of June 30, 2019. Components of Lease Cost
(In millions) |  | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Operating lease cost(1) |  | $ | 38 |  |  | $ | 77 |
Finance lease cost(2) |  |  |  |
Amortization of right-of-use assets |  | 1 |  |  | 2 |
Interest on lease liabilities |  | — |  |  | — |
Total lease cost |  | $ | 39 |  |  | $ | 79 |
(1) Operating lease expense is included within cost of processing and services, cost of product and selling, and general and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s consolidated statements of income. Operating lease cost includes approximately $15 million and $28 million of variable lease costs for the three and six months ended June 30, 2019, respectively. (2) Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, and general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense in the Company’s consolidated statements of income. Supplemental Cash Flow Information
(In millions) |  | Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |
Operating cash flows from operating leases |  | $ | 53 |
Operating cash flows from finance leases |  | — |
Financing cash flows from finance leases |  | 11 |
Right-of-use assets obtained in exchange for lease liabilities |  |
Operating leases |  | $ | 56 |
Finance leases |  | 15 |
Lease Term and Discount Rate
|  | June 30, 2019
Weighted-average remaining lease term |  |
Operating leases |  | 6 years |
Finance leases |  | 3 years |
Weighted-average discount rate |  |
Operating leases |  | 3.5 | %
Finance leases |  | 3.5 | %
Maturity of Lease Liabilities under ASC 842 Future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows at June 30, 2019:
(In millions) |  |  |
Year ending December 31, | Operating Leases (1) |  | Finance Leases
2019 | $ | 45 |  |  | $ | 2 |
2020 | 79 |  |  | 7 |
2021 | 70 |  |  | 7 |
2022 | 58 |  |  | 1 |
2023 | 47 |  |  | 1 |
Thereafter | 140 |  |  | 1 |
Total lease payments | 439 |  |  | 19 |
Less: Interest | (38 | ) |  | (1 | )
Present value of lease liabilities | $ | 401 |  |  | $ | 18 |
(1) Operating lease payments include $61 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $13 million of legally binding minimum lease payments for leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are for real estate and equipment and will commence in 2019 with lease terms of one to seven years. Maturity of Lease Liabilities under ASC 840 Future minimum rental payments on operating leases with initial non-cancellable lease terms in excess of one year were due as follows at December 31, 2018:
(In millions) |
Year ending December 31, |
2019 | $ | 94 |
2020 | 75 |
2021 | 62 |
2022 | 51 |
2023 | 40 |
Thereafter | 108 |
Total | $ | 430 |
Rent expense for all operating leases was $118 million and $126 million during the years ended December 31, 2018 and 2017, respectively.
Leases | Leases The Company adopted ASU 2016-02 and its related amendments (collectively known as “ASC 842”) effective January 1, 2019 using the optional transition method in ASU 2018-11. Therefore, the reported results for the three and six months ended June 30, 2019 reflect the application of ASC 842 while the reported results for the three and six months ended June 30, 2018 were not adjusted and continue to be reported under the accounting guidance, ASC 840, Leases (“ASC 840”), in effect for the prior periods. The Company determines if an arrangement is a lease at inception. The lease term begins on the commencement date, which is the date the Company takes possession of the property, and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. The lease term is used to determine lease classification as an operating or finance lease and is used to calculate straight-line lease expense for operating leases. The Company elected the package of practical expedients permitted under the transition guidance within ASU 2016-02 to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. As a practical expedient, lease agreements with lease and non-lease components are accounted for as a single lease component for all asset classes, which are comprised of real estate leases and equipment leases. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets also include prepaid lease payments and exclude lease incentives received. The Company estimates contingent lease incentives when it is probable that the Company is entitled to the incentive at lease commencement. As the Company’s leases typically do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date for both real estate and equipment leases. The determination of the incremental borrowing rate requires judgment. The Company determines the incremental borrowing rate using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization and term to align with the terms of the lease. The Company elected the short-term lease recognition exemption for all leases that qualify. Therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet; instead, lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company leases certain office space, data centers, and equipment. The Company’s leases have remaining lease terms of one to 11 years. Most leases contain renewal options for varying periods, which are at the Company’s sole discretion. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance, and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the lease liability to the extent they are variable in nature. These variable lease costs are recognized as a variable lease expense when incurred. Certain leases include options to purchase the leased asset at the end of the lease term, which is assessed as a part of the Company’s lease classification determination. The depreciable life of the ROU assets and leasehold improvements are limited by the expected lease term unless the Company is reasonably certain of a transfer of title or purchase option. Lease Balances
(In millions) |  | June 30, 2019
Assets |  |
Operating lease assets(1) |  | $ | 361 |
Finance lease assets(2) |  | 24 |
Total lease assets |  | $ | 385 |
Liabilities |  |
Current |  |
Operating lease liabilities(1) |  | $ | 74 |
Finance lease liabilities(2) |  | 7 |
Noncurrent |  |
Operating lease liabilities(1) |  | 327 |
Finance lease liabilities(2) |  | 11 |
Total lease liabilities |  | $ | 419 |
(1) Operating lease assets are included within other long-term assets, and operating lease liabilities are included within accounts payable and accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the Company’s consolidated balance sheet. Operating lease assets are recorded net of accumulated amortization of $39 million as of June 30, 2019. (2) Finance lease assets are included within property and equipment, net and finance lease liabilities are included within current maturities of long-term debt (current portion) and long-term debt (noncurrent portion) in the Company’s consolidated balance sheets. Finance lease assets are recorded net of accumulated amortization of $10 million as of June 30, 2019. Components of Lease Cost
(In millions) |  | Three Months Ended June 30, 2019 |  | Six Months Ended June 30, 2019
Operating lease cost(1) |  | $ | 38 |  |  | $ | 77 |
Finance lease cost(2) |  |  |  |
Amortization of right-of-use assets |  | 1 |  |  | 2 |
Interest on lease liabilities |  | — |  |  | — |
Total lease cost |  | $ | 39 |  |  | $ | 79 |
(1) Operating lease expense is included within cost of processing and services, cost of product and selling, and general and administrative expense, dependent upon the nature and use of the ROU asset, in the Company’s consolidated statements of income. Operating lease cost includes approximately $15 million and $28 million of variable lease costs for the three and six months ended June 30, 2019, respectively. (2) Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, and general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense in the Company’s consolidated statements of income. Supplemental Cash Flow Information
(In millions) |  | Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities |  |
Operating cash flows from operating leases |  | $ | 53 |
Operating cash flows from finance leases |  | — |
Financing cash flows from finance leases |  | 11 |
Right-of-use assets obtained in exchange for lease liabilities |  |
Operating leases |  | $ | 56 |
Finance leases |  | 15 |
Lease Term and Discount Rate
|  | June 30, 2019
Weighted-average remaining lease term |  |
Operating leases |  | 6 years |
Finance leases |  | 3 years |
Weighted-average discount rate |  |
Operating leases |  | 3.5 | %
Finance leases |  | 3.5 | %
Maturity of Lease Liabilities under ASC 842 Future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows at June 30, 2019:
(In millions) |  |  |
Year ending December 31, | Operating Leases (1) |  | Finance Leases
2019 | $ | 45 |  |  | $ | 2 |
2020 | 79 |  |  | 7 |
2021 | 70 |  |  | 7 |
2022 | 58 |  |  | 1 |
2023 | 47 |  |  | 1 |
Thereafter | 140 |  |  | 1 |
Total lease payments | 439 |  |  | 19 |
Less: Interest | (38 | ) |  | (1 | )
Present value of lease liabilities | $ | 401 |  |  | $ | 18 |
(1) Operating lease payments include $61 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $13 million of legally binding minimum lease payments for leases signed but not yet commenced. Operating leases that have been signed but not yet commenced are for real estate and equipment and will commence in 2019 with lease terms of one to seven years. Maturity of Lease Liabilities under ASC 840 Future minimum rental payments on operating leases with initial non-cancellable lease terms in excess of one year were due as follows at December 31, 2018:
(In millions) |
Year ending December 31, |
2019 | $ | 94 |
2020 | 75 |
2021 | 62 |
2022 | 51 |
2023 | 40 |
Thereafter | 108 |
Total | $ | 430 |
Rent expense for all operating leases was $118 million and $126 million during the years ended December 31, 2018 and 2017, respectively.

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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