Leases

12 Months Ended

Dec. 31, 2019

Leases:

PMI’s operating leases are principally for real estate (office space, warehouses and retail store space) and vehicles. Lease terms range from 1 year to 74 years, some of which include options to renew, which are reasonably certain to be renewed. Lease terms may also include options to terminate the lease. The exercise of a lease renewal or termination option is at PMI’s discretion.

PMI’s operating leases at December 31, 2019, were as follows:



(in millions)	December 31, 2019
Assets:
Other assets	$	766

Liabilities:
Current
Accrued liabilities - Other	$	194
Noncurrent
Income taxes and other liabilities	569
Total lease liabilities	$	763

For information regarding PMI’s immaterial finance leases, see Note 16. Fair Value Measurements.

The components of PMI’s lease cost were as follows for the year ended December 31, 2019:



(in millions)	December 31, 2019
Operating lease cost	$	242
Short-term lease cost	61
Variable lease cost	29
Total lease cost	$	332

For the year ended December 31, 2019, lease cost of $79 million was recorded in cost of sales and $253 million was recorded in marketing, administration and research cost.

Maturity of PMI’s operating lease liabilities, on an undiscounted basis, as of December 31, 2019, was as follows (as calculated under the new guidance ASC 842 (Leases)):



(in millions)	Total
2020	$	222
2021	162
2022	124
2023	92
2024	66
Thereafter	283
Total lease payments	949
Less: Interest	186
Present value of lease liabilities	$	763

Minimum rental commitments under non-cancelable operating leases in effect at December 31, 2018, were as follows (as calculated under legacy guidance ASC 840 (Leases)):



(in millions)	Total
2019	$	147
2020	103
2021	73
2022	52
2023	43
Thereafter	354
	$	772

Other information related to PMI’s operating leases was as follows for the year ended December 31, 2019:



(in millions)	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities in Operating cash flows	$	240
Leased assets obtained in exchange for new operating lease liabilities	$	221
Weighted-average remaining lease term (years)	9.6
Weighted-average discount rate⁽¹⁾	4.4		%

⁽¹⁾ PMI’s weighted-average discount rate is based on its estimated pre-tax cost of debt adjusted for country-specific risk.

For further details, see Note 24. New Accounting Standards.