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Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

Lessee

The Company adopted ASU No. 2016-02, "Leases (Topic 842)," on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million, respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows.

The Company leases property and equipment under finance and operating leases. The Company's operating leases primarily consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 5 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs). For automobile leases we account for lease and non-lease components together.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not typically provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property.

The table below presents the lease-related assets and liabilities recorded on the balance sheet at December 31:

In millions, except weighted average calculations			Classification on the Balance Sheet						2021						2020
Assets
Operating lease assets			Right of use assets - operating lease, net						$	26					$	38
Finance lease assets			Property and equipment, net						170						170
Total lease assets									$	196					$	208
Liabilities
Current
Operating			Current portion of operating lease liability						$	12					$	15
Finance			Current portion of finance lease liability						77						75
Non current
Operating			Operating lease liability						18						28
Finance			Finance lease liability						53						70
Total lease liabilities									$	160					$	188
Weighted-average remaining lease term
Operating leases									2.81 years						3.35 years
Finance leases									1.86 years						2.03 years
Weighted-average discount rate
Operating leases(1)									5.00		%				5.00		%
Finance leases									3.98		%				4.33		%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement.

Lessee Costs

The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's consolidated statements of income (loss) for the years ended December 31:

In millions						2021						2020
Finance lease cost
Depreciation of leased assets						$	78					$	55
Interest of lease liabilities						6						6
Operating lease cost						17						24
Sub-lease income from real estate properties owned and leased						(5)						(6)
Total lease cost						$	96					$	79

Other Information

The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities for the year ended December 31:

In millions			2021						2020
Operating cash flows for operating leases			$	19					$	23
Operating cash flows for finance leases			$	6					$	6
Financing cash flows for finance leases			$	92					$	70

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at December 31, 2021:

In millions						Operating Leases						Finance Leases
2022						$	16					$	80
2023						9						44
2024						7						11
2025						2						—
2026						1						—
Thereafter						—						—
Total minimum lease payments						35						135
Less: amount of lease payments representing interest						(5)						(5)
Present value of future minimum lease payments						30						130
Less: current obligations under leases						(12)						(77)
Long-term lease obligations						$	18					$	53

The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2020:

In millions						Operating Leases						Finance Leases
2021						$	19					$	80
2022						14						56
2023						9						17
2024						5						—
2025						3						—
Thereafter						1						—
Total minimum lease payments						51						153
Less: amount of lease payments representing interest						(8)						(8)
Present value of future minimum lease payments						43						145
Less: current obligations under leases						(15)						(75)
Long-term lease obligations						$	28					$	70

Lessor

The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the consolidated balance sheet.

The following table includes rental revenue for the years ended December 31:

In millions						2021						2020						2019
Rental revenue*						$	162					$	100					$	76

*Rental revenue includes hardware maintenance.

The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at December 31, 2021:

In millions			Rental Revenue
2022			$	154
2023			99
2024-25			44
Total			$	297

Leases

Leases

Lessee

The Company adopted ASU No. 2016-02, "Leases (Topic 842)," on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million, respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows.

The Company leases property and equipment under finance and operating leases. The Company's operating leases primarily consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 5 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs). For automobile leases we account for lease and non-lease components together.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not typically provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property.

The table below presents the lease-related assets and liabilities recorded on the balance sheet at December 31:

In millions, except weighted average calculations			Classification on the Balance Sheet						2021						2020
Assets
Operating lease assets			Right of use assets - operating lease, net						$	26					$	38
Finance lease assets			Property and equipment, net						170						170
Total lease assets									$	196					$	208
Liabilities
Current
Operating			Current portion of operating lease liability						$	12					$	15
Finance			Current portion of finance lease liability						77						75
Non current
Operating			Operating lease liability						18						28
Finance			Finance lease liability						53						70
Total lease liabilities									$	160					$	188
Weighted-average remaining lease term
Operating leases									2.81 years						3.35 years
Finance leases									1.86 years						2.03 years
Weighted-average discount rate
Operating leases(1)									5.00		%				5.00		%
Finance leases									3.98		%				4.33		%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement.

Lessee Costs

The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's consolidated statements of income (loss) for the years ended December 31:

In millions						2021						2020
Finance lease cost
Depreciation of leased assets						$	78					$	55
Interest of lease liabilities						6						6
Operating lease cost						17						24
Sub-lease income from real estate properties owned and leased						(5)						(6)
Total lease cost						$	96					$	79

Other Information

The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities for the year ended December 31:

In millions			2021						2020
Operating cash flows for operating leases			$	19					$	23
Operating cash flows for finance leases			$	6					$	6
Financing cash flows for finance leases			$	92					$	70

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at December 31, 2021:

In millions						Operating Leases						Finance Leases
2022						$	16					$	80
2023						9						44
2024						7						11
2025						2						—
2026						1						—
Thereafter						—						—
Total minimum lease payments						35						135
Less: amount of lease payments representing interest						(5)						(5)
Present value of future minimum lease payments						30						130
Less: current obligations under leases						(12)						(77)
Long-term lease obligations						$	18					$	53

The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2020:

In millions						Operating Leases						Finance Leases
2021						$	19					$	80
2022						14						56
2023						9						17
2024						5						—
2025						3						—
Thereafter						1						—
Total minimum lease payments						51						153
Less: amount of lease payments representing interest						(8)						(8)
Present value of future minimum lease payments						43						145
Less: current obligations under leases						(15)						(75)
Long-term lease obligations						$	28					$	70

Lessor

The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the consolidated balance sheet.

The following table includes rental revenue for the years ended December 31:

In millions						2021						2020						2019
Rental revenue*						$	162					$	100					$	76

*Rental revenue includes hardware maintenance.

The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at December 31, 2021:

In millions			Rental Revenue
2022			$	154
2023			99
2024-25			44
Total			$	297

Leases

Leases

Lessee

The Company adopted ASU No. 2016-02, "Leases (Topic 842)," on January 1, 2019, which requires leases with durations greater than twelve months to be recognized on the balance sheet. The Company adopted the standard using the modified retrospective approach utilizing the optional transition method. Prior year financial statements were not recast using this approach. The Company elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $68 million and $66 million, respectively, as of January 1, 2019. The standard did not materially impact our consolidated net earnings or cash flows.

The Company leases property and equipment under finance and operating leases. The Company's operating leases primarily consist of automobiles in certain countries and real estate, including office, storage and parking spaces. The duration of these leases range from 2 to 5 years. The Company's finance leases primarily consist of equipment financed for the purpose of delivering services to our customers. For leases with terms greater than 12 months, the Company recorded the related asset and obligation at the present value of lease payments over the term. Many of our leases include variable rental escalation clauses which are recognized when incurred. Some of our leases also include renewal options and/or termination options that are factored into the determination of lease payments and lease terms when it is reasonably certain that the Company will exercise these options. Lease agreements do not contain any material residual value guarantees or material restrictive covenants. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. For real estate leases beginning in 2019 and later, we account for lease components (e.g., fixed payments including rent, real estate taxes and insurance costs) separately from the non-lease components (e.g., common-area maintenance costs). For automobile leases we account for lease and non-lease components together.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, real estate leases do not typically provide a readily determinable implicit rate. Therefore, the Company must estimate the incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate used in the calculation of the lease liability is based on the secured rate associated with financed lease obligations for each location of leased property.

The table below presents the lease-related assets and liabilities recorded on the balance sheet at December 31:

In millions, except weighted average calculations			Classification on the Balance Sheet						2021						2020
Assets
Operating lease assets			Right of use assets - operating lease, net						$	26					$	38
Finance lease assets			Property and equipment, net						170						170
Total lease assets									$	196					$	208
Liabilities
Current
Operating			Current portion of operating lease liability						$	12					$	15
Finance			Current portion of finance lease liability						77						75
Non current
Operating			Operating lease liability						18						28
Finance			Finance lease liability						53						70
Total lease liabilities									$	160					$	188
Weighted-average remaining lease term
Operating leases									2.81 years						3.35 years
Finance leases									1.86 years						2.03 years
Weighted-average discount rate
Operating leases(1)									5.00		%				5.00		%
Finance leases									3.98		%				4.33		%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established based on the Company's incremental borrowing rate at January 1, 2019. For new leases entered after January 1, 2019, the discount rate was determined based on the Company's incremental borrowing rate at lease commencement.

Lessee Costs

The table below presents certain information related to the lease costs for finance and operating leases recognized in the Company's consolidated statements of income (loss) for the years ended December 31:

In millions						2021						2020
Finance lease cost
Depreciation of leased assets						$	78					$	55
Interest of lease liabilities						6						6
Operating lease cost						17						24
Sub-lease income from real estate properties owned and leased						(5)						(6)
Total lease cost						$	96					$	79

Other Information

The table below presents supplemental cash flow information related to cash paid for amounts included in the measurement of lease liabilities for the year ended December 31:

In millions			2021						2020
Operating cash flows for operating leases			$	19					$	23
Operating cash flows for finance leases			$	6					$	6
Financing cash flows for finance leases			$	92					$	70

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at December 31, 2021:

In millions						Operating Leases						Finance Leases
2022						$	16					$	80
2023						9						44
2024						7						11
2025						2						—
2026						1						—
Thereafter						—						—
Total minimum lease payments						35						135
Less: amount of lease payments representing interest						(5)						(5)
Present value of future minimum lease payments						30						130
Less: current obligations under leases						(12)						(77)
Long-term lease obligations						$	18					$	53

The table below provides the undiscounted cash flows for the Company's finance lease liabilities and operating lease obligations as of December 31, 2020:

In millions						Operating Leases						Finance Leases
2021						$	19					$	80
2022						14						56
2023						9						17
2024						5						—
2025						3						—
Thereafter						1						—
Total minimum lease payments						51						153
Less: amount of lease payments representing interest						(8)						(8)
Present value of future minimum lease payments						43						145
Less: current obligations under leases						(15)						(75)
Long-term lease obligations						$	28					$	70

Lessor

The Company receives rental revenue for leasing hardware offerings to its customers. For our hardware rental offering, the Company owns or leases the hardware and may or may not provide managed services. Leases sometimes include options to renew but typically do not include lessee purchase options. The revenue for these operating leases is generally recognized straight-line over the term of the contract and is included within the recurring revenue caption on the consolidated statements of income (loss). Equipment used for this revenue is reported within Property and equipment, net on the consolidated balance sheet.

The following table includes rental revenue for the years ended December 31:

In millions						2021						2020						2019
Rental revenue*						$	162					$	100					$	76

*Rental revenue includes hardware maintenance.

The following table includes estimated rental revenue expected to be recognized in the future based on executed contracts at December 31, 2021:

In millions			Rental Revenue
2022			$	154
2023			99
2024-25			44
Total			$	297

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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

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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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

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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- Definition

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 30
-URI http://asc.fasb.org/subtopic&trid=77888252

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