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Leases | 12 Months Ended
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Dec. 31, 2019
Leases [Abstract] |
Leases | 8. Leases Effective January 1, 2019 the Company adopted the new US GAAP accounting rules in ASC Topic 842, Leases (ASC 842), using the modified retrospective method. The Company elected to follow the package of practical expedients provided under the transition guidance within ASC 842, the practical expedient to account for lease and non-lease components as a single lease, and to not include leases with an initial term of less than 12 months in lease assets and liabilities. At adoption of ASC 842, the Company had lease right-of-use assets of $786 million ($537 million operating and $249 million financing) and lease liabilities of $839 million ($554 million operating and $285 million financing). The adoption had no material effect on retained earnings. The Company leases certain facilities and equipment to support its operations around the world. These leases generally require the Company to pay maintenance, insurance, taxes and other operating costs in addition to rent. Renewal options are common in longer term leases; however, it is rare that the Company intends to exercise a lease option at inception due to the cyclical nature of the Company’s business. Residual value guarantees are not typically part of the Company’s leases. Occasionally, the Company sub-leases excess facility space, generally at terms similar to the source lease. The Company reviews new agreements to determine if they include a lease and, when they do, uses its incremental borrowing rate to determine the present value of the future lease payments as most do not include implicit interest rates. At adoption of ASC 842, for those existing leases that included a periodic rent adjustment based on an index (or a similar variable rate), the asset and liability balances were updated with the January 1, 2019 index. Going forward, new such leases are initially valued at the index rate in effect on the lease commencement date. For all continuing such leases, subsequent changes in variable rates will be recorded to expense. Components of leases are as follows (in millions):
|  | December 31, |
|  | 2019 |  |  | 2018 |
Current portion of lease liabilities: |  |  |  |  |  |  |  |
Operating |  | $ | 84 |  |  | $ | — |
Financing |  |  | 30 |  |  |  | 7 |
Total |  | $ | 114 |  |  | $ | 7 |
|  | December 31, |
|  | 2019 |  |  | 2018 |
Long-term portion of lease liability: |  |  |  |  |  |  |  |
Operating |  | $ | 424 |  |  | $ | — |
Financing |  |  | 250 |  |  |  | 222 |
Total |  | $ | 674 |  |  | $ | 222 |
Components of lease expense were as follows (in millions):
|  | Years Ended |
|  | December 31, 2019 |
Lease cost |  |  |  |
Finance lease cost |  |  |  |
Amortization of right-of-use assets |  | $ | 32 |
Interest on lease liabilities |  |  | 13 |
Operating lease cost |  |  | 115 |
Short-term lease cost |  |  | 68 |
Sub-lease income |  |  | (11 | )
Total |  | $ | 217 |
Supplemental information related to the Company’s leases is as follows (in millions):
|  | Year Ended |
|  | December 31, 2019 |
Other information: |  |  |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |
Operating cash flows - finance leases |  | $ | 13 |
Operating cash flows - operating leases |  |  | 115 |
Financing cash flows - finance leases |  |  | 32 |
Right-of-use assets obtained in exchange for new: |  |  |  |
Operating lease liabilities |  |  | 53 |
Finance lease liabilities |  | $ | 12 |
Weighted average remaining lease term at December 31, 2019: |  |  |  |
Operating leases |  | 10 years |
Finance leases |  | 16 years |
Weighted average discount rate at December 31, 2019: |  |  |  |
Operating leases |  |  | 4.48 | %
Finance leases |  |  | 4.58 | %
Future minimum lease commitments for leases with initial or remaining terms of one year or more at December 31, 2019, are payable as follows (in millions):
|  | Operating |  |  | Finance |
2020 |  | $ | 98 |  |  | $ | 38 |
2021 |  |  | 81 |  |  |  | 33 |
2022 |  |  | 64 |  |  |  | 25 |
2023 |  |  | 49 |  |  |  | 18 |
2024 |  |  | 40 |  |  |  | 15 |
Thereafter |  |  | 228 |  |  |  | 210 |
Total lease payments |  |  | 560 |  |  |  | 339 |
Less: Interest |  |  | (52 | ) |  |  | (59 | )
Present value of lease liabilities |  | $ | 508 |  |  | $ | 280 |

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