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Leases (Tables)

12 Months Ended

Dec. 31, 2019

Balance Sheet Classification of Lease Assets and Liabilities

Lease Balances



(In millions)
December 31,	2019
Assets
Operating lease assets ⁽¹⁾	$	684
Finance lease assets ⁽²⁾	235
Total lease assets	$	919

Liabilities
Current
Operating lease liabilities ⁽¹⁾	$	140
Finance lease liabilities ⁽²⁾	78
Noncurrent
Operating lease liabilities ⁽¹⁾	603
Finance lease liabilities ⁽²⁾	144
Total lease liabilities	$	965


⁽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.

⁽²⁾

Finance lease assets are included within property and equipment, net and finance lease liabilities are included within short-term and current maturities of long-term debt (current portion) and long-term debt (noncurrent portion) in the Company’s consolidated balance sheets.

Schedule of Cost, Supplemental Cash Flow and Other Information Related to Leases

Components of Lease Cost



(In millions)
Year ended December 31,	2019
Operating lease cost ⁽¹⁾	$	207
Finance lease cost ⁽²⁾
Amortization of right-of-use assets	40
Interest on lease liabilities	8
Total lease cost	$	255


⁽¹⁾	Operating lease expense is included within cost of processing and services, cost of product and selling, 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 $56 million of variable lease costs for the year ended December 31, 2019.


⁽²⁾	Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense, net in the Company’s consolidated statements of income.

Supplemental Cash Flow Information



(In millions)
Year ended December 31,	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	139
Operating cash flows from finance leases	8
Financing cash flows from finance leases	37

Right-of-use assets obtained in exchange for lease liabilities: ⁽¹⁾
Operating leases	$	441
Finance leases	288


⁽¹⁾	Includes right-of-use assets and lease liabilities obtained through the acquisition of First Data

Lease Term and Discount Rate



December 31,	2019
Weighted-average remaining lease term:
Operating leases	7 years
Finance leases	3 years
Weighted-average discount rate:
Operating leases	3.0	%
Finance leases	3.5	%

Operating Lease Maturity 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 December 31, 2019:



(In millions)
Year ending December 31,	Operating Leases ⁽¹⁾			Finance Leases ⁽²⁾
2020	$	153		$	83
2021	139			73
2022	123			64
2023	104			10
2024	86			3
Thereafter	212			5
Total lease payments	817			238
Less: Interest	(74		)	(16		)
Present value of lease liabilities	$	743		$	222


⁽¹⁾	Operating lease payments include $47 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $4 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 will commence in 2020 with lease terms of 5 years.

⁽²⁾

Finance lease payments exclude $302 million of legally binding minimum lease payments for leases signed but not yet commenced. Finance leases that have been signed but not yet commenced are for equipment and will commence in 2020 with lease terms of 5 years.

Finance Lease Maturity 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 December 31, 2019:



(In millions)
Year ending December 31,	Operating Leases ⁽¹⁾			Finance Leases ⁽²⁾
2020	$	153		$	83
2021	139			73
2022	123			64
2023	104			10
2024	86			3
Thereafter	212			5
Total lease payments	817			238
Less: Interest	(74		)	(16		)
Present value of lease liabilities	$	743		$	222


⁽¹⁾	Operating lease payments include $47 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $4 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 will commence in 2020 with lease terms of 5 years.

⁽²⁾

Operating Lease Maturity 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

Schedule of Components of Lease Income

Components of Lease Income



(In millions)
Year ended December 31,	2019
Sales-type leases:
Selling profit ⁽¹⁾	$	20
Interest income ⁽¹⁾	33
Operating lease income ⁽²⁾	36


⁽¹⁾	Selling profit includes $48 million recorded within product revenue with a corresponding charge of $28 million recorded in cost of product in the consolidated statement of income for the year ended December 31, 2019. Interest income is included within product revenue in the consolidated statement of income.

⁽²⁾

Operating lease income includes a nominal amount of variable lease income and is included within product revenue in the Company’s consolidated statement of income for the year ended December 31, 2019.

Schedule of Components of Lease Income

Components of Lease Income



(In millions)
Year ended December 31,	2019
Sales-type leases:
Selling profit ⁽¹⁾	$	20
Interest income ⁽¹⁾	33
Operating lease income ⁽²⁾	36


⁽¹⁾	Selling profit includes $48 million recorded within product revenue with a corresponding charge of $28 million recorded in cost of product in the consolidated statement of income for the year ended December 31, 2019. Interest income is included within product revenue in the consolidated statement of income.

⁽²⁾

Schedule of Components of Lease Income

Components of Lease Income



(In millions)
Year ended December 31,	2019
Sales-type leases:
Selling profit ⁽¹⁾	$	20
Interest income ⁽¹⁾	33
Operating lease income ⁽²⁾	36


⁽¹⁾	Selling profit includes $48 million recorded within product revenue with a corresponding charge of $28 million recorded in cost of product in the consolidated statement of income for the year ended December 31, 2019. Interest income is included within product revenue in the consolidated statement of income.

⁽²⁾

Schedule of Components of Net Investment in Sales-Type and Direct Financing Leases

Components of Net Investment in Sales-Type Leases



(In millions)
December 31,	2019
Minimum lease payments	$	376
Residual values	34
Less: Unearned interest income	(160		)
Net investment in leases ⁽¹⁾	$	250

⁽¹⁾

Net investments in leased assets are included within prepaid expenses and other current assets (current portion) and other long-term assets (noncurrent portion) in the consolidated balance sheet.

Schedule of Maturities of Future Minimum Lease Payments

Future minimum lease payments receivable on sales-type leases were as follows at December 31, 2019:



(In millions)
Year ending December 31,	Sales-Type Leases
2020	$	161
2021	120
2022	70
2023	23
2024	2
Thereafter	—
Total minimum lease payments	$	376