Leases

3 Months Ended

Mar. 31, 2019

4. LEASES

The Company has operating leases for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment. The Company’s leases have remaining lease terms of 1-47 years, some of which include options to extend the leases for up to 25 years, and some of which include options to terminate the leases within 1 year(s).

The Company has not identified any material finance leases as of March 31, 2019.

As of March 31, 2019, the Company has additional operating leases, primarily for Warehousing, Cars and Other equipment that have not yet commenced of $5 million. These operating leases will commence during 2019 with lease terms of 1-8 years.

The Company has elected the practical expedient of not separating lease components from non-lease components for all its classes of underlying assets. The Company has also elected to recognize the lease payments for short-term leases in its consolidated statement of income on a straight-line basis over the lease term and recognize the variable lease payments in the period in which the obligation for those payments is incurred.

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgement when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

The following tables provide information about the Company’s leases:

Lease cost
(in millions)	Three months ended
	March 31, 2019
Operating lease cost	$	12
Short-term lease cost		2
Variable lease cost		1
Sublease income		(1	)
Total lease cost	$	14

Other information
(in millions)	Three months ended or as of
	March 31, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	11
Right-of-use assets obtained in exchange for new operating lease liabilities	3
Weighted-average remaining lease term: - operating leases	7 years
Weighted-average discount rate: - operating leases		2.7	%

Maturities of operating lease liabilities (undiscounted cash flows) are as follows:
(in millions)
	As of March 31, 2019
2019 (excluding the three months ended March 31, 2019)	$	32
2020		33
2021		22
2022		17
2023		15
Thereafter		45
Total operating lease payments		164
Less imputed interest		(16	)
Total operating lease liabilities	$	148