Leases Lessee Disclosure (Notes)

12 Months Ended

Dec. 31, 2020

LEASES

The Company's lease portfolio consists primarily of office space and equipment. The Company has approximately 1,200 real estate leases with lease terms ranging from less than 1 year to 17 years and includes the Company's brokerage sales offices, regional and branch offices for our title and relocation operations, corporate headquarters, regional headquarters, and facilities serving as local administration, training and storage. The Company's brokerage sales offices are generally located in shopping centers and small office parks, typically with lease terms of 1 year to 5 years. In addition, the Company has equipment leases which primarily consist of furniture, computers and other office equipment.

Effective January 1, 2019, the Company adopted the new leasing standard using the modified retrospective transition approach with optional transition relief and recognized the cumulative effect of applying the new leasing standard to existing contracts on the balance sheet on January 1, 2019. Therefore, results for reporting periods beginning after January 1, 2019 are presented under the new leasing standard; however, the comparative prior period amounts have not been restated and continue to be reported in accordance with historical accounting under ASC Topic 840.

Right-of-use 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. At lease commencement, the Company records a liability for its lease obligation measured at the present value of future lease payments and a right-of-use asset equal to the lease liability adjusted for prepayments and lease incentives. The Company uses its collateralized incremental borrowing rate to calculate the present value of lease liabilities as most of its leases do not provide an implicit rate that is readily determinable. The Company does not recognize a lease obligation and right-of-use asset on its balance sheet for any leases with an initial term of 12 months or less. Some real estate leases include one or more options to renew or terminate a

lease. The exercise of a lease renewal or termination option is assessed at commencement of the lease and only reflected in the lease term if the Company is reasonably certain to exercise the option. The Company has lease agreements that contain both lease and non-lease components, such as common area maintenance fees, and has made a policy election to combine both fixed lease and non-lease components in total gross rent for all of its leases. Expense for operating leases is recognized on a straight-line basis over the lease term. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful life of the underlying asset or the lease term. The interest component of a finance lease is included in interest expense and recognized using the effective interest method over the lease term.

Supplemental balance sheet information related to the Company's leases was as follows:


Lease Type	Balance Sheet Classification	December 31, 2020			December 31, 2019
Assets:
Operating lease assets	Operating lease assets, net	$	450		$	550
Finance lease assets (a)	Property and equipment, net	40			42
Total lease assets, net		$	490		$	592
Liabilities:
Current:
Operating lease liabilities	Current portion of operating lease liabilities	$	129		$	128
Finance lease liabilities	Accrued expenses and other current liabilities	13			13
Non-current:
Operating lease liabilities	Long-term operating lease liabilities	430			496
Finance lease liabilities	Other non-current liabilities	19			22
Total lease liabilities		$	591		$	659

Weighted Average Lease Term and Discount Rate
Weighted average remaining lease term (years):
Operating leases		5.9			6.2
Finance leases		2.8			3.1

Weighted average discount rate:
Operating leases		4.6		%	5.1		%
Finance leases		3.7		%	4.1		%

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(a)Finance lease assets are recorded net of accumulated amortization of $40 million and $39 million at December 31, 2020 and 2019, respectively.

As of December 31, 2020, maturities of lease liabilities by fiscal year were as follows:


Maturity of Lease Liabilities	Operating Leases		Finance Leases		Total
2021	$	149	$	13	$	162
2022	132		10		142
2023	102		7		109
2024	81		3		84
2025	56		1		57
Thereafter	122		—		122
Total lease payments	642		34		676
Less: Interest	83		2		85
Present value of lease liabilities	$	559	$	32	$	591

Supplemental income statement information related to the Company's leases is as follows:


	Year Ended		Year Ended
Lease Costs	December 31, 2020		December 31, 2019
Operating lease costs	$	150	$	165
Finance lease costs:
Amortization of leased assets	12		13
Interest on lease liabilities	2		2
Other lease costs (a)	24		28
Impairment (b)	46		12
Less: Sublease income, gross	2		3
Net lease cost	$	232	$	217

_______________

(a)Primarily consists of variable lease costs.

(b)Impairment charges relate to the exit and sublease of certain real estate operating leases. As of December 31, 2020, the Company impaired or restructured approximately 1 million square feet which included its corporate headquarters in Madison, New Jersey and the relocation operations' main corporate location in Danbury, Connecticut resulting in additional impairment charges and restructuring charges. See Note 12, "Restructuring Costs", for further discussion.

Supplemental cash flow information related to leases was as follows:


	Year Ended		Year Ended
	December 31, 2020		December 31, 2019
Supplemental cash flow information:
Operating cash flows from operating leases	$	165	$	162
Operating cash flows from finance leases	2		2
Financing cash flows from finance leases	14		15

Supplemental non-cash information:
Lease assets obtained in exchange for lease obligations:
Operating leases	$	103	$	153
Finance leases	11		18

Significant non-cash transactions included finance lease additions of $20 million for the year ended December 31, 2018, which resulted in non-cash additions to property and equipment, net and other non-current liabilities.