Leases

12 Months Ended

Dec. 31, 2021

LEASES

Lease Portfolio

The Company has operating and finance leases for real estate, office equipment, automobiles, forklifts and certain other equipment. The Company's leases have remaining lease terms of one year to 30 years, some of which include options to extend the leases for up to eight years, and some of which include options to terminate the leases within one year. Certain of our lease agreements include rental payments which are adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. The incremental borrowing rate is not a quoted rate and is primarily derived by applying a spread over U.S. Treasury rates with a similar duration to the Company’s lease payments. The spread utilized is based on the Company’s credit rating and the impact of full collateralization.

Related Party Lease Agreement

Aptiv subleases certain office space to Motional, our autonomous driving joint venture, which has a remaining lease term of approximately seven years as of December 31, 2021. Total income under the agreement was $3 million and $3 million during the years ended December 31, 2021 and 2020, respectively. The sublease income and Aptiv’s associated operating lease cost are recorded to cost of sales in the consolidated statement of operations. The Company believes the terms of the lease agreement have not significantly been affected by the fact the Company and the lessee are related parties.

The components of lease expense were as follows:


	Year Ended December 31,
	2021		2020		2019

	(in millions)
Lease cost:
Finance lease cost:
Amortization of right-of-use assets	$	4	$	5	$	4
Interest on lease liabilities	1		1		1
Total finance lease cost	5		6		5
Operating lease cost	119		111		114
Short-term lease cost	13		13		13
Variable lease cost	—		—		1
Sublease income (1)	(4)		(4)		—
Total lease cost	$	133	$	126	$	133

(1)Sublease income excludes rental income from owned properties of $10 million, $10 million and $11 million for the years ended December 31, 2021, 2020 and 2019, respectively, which is included in other income, net.

Supplemental cash flow and other information related to leases was as follows:


	Year Ended December 31,
	2021		2020		2019

	(in millions)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for finance leases	$	1	$	1	$	1
Operating cash flows for operating leases	122		107		112
Financing cash flows for finance leases	4		4		3
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	74	$	35	$	86
Finance leases	1		1		5

Supplemental balance sheet information related to leases was as follows:


	December 31,
	2021			2020

	(dollars in millions)
Operating leases:
Operating lease right-of-use assets	$	383		$	380
Accrued liabilities (Note 8)	$	92		$	100
Long-term operating lease liabilities	304			300
Total operating lease liabilities	$	396		$	400

Finance leases:
Property and equipment	$	26		$	31
Less: accumulated depreciation	(15)			(13)
Total property, net	$	11		$	18
Short-term debt (Note 11)	$	3		$	4
Long-term debt (Note 11)	10			14
Total finance lease liabilities	$	13		$	18

Weighted average remaining lease term:
Operating leases	6 years			6 years
Finance leases	5 years			6 years

Weighted average discount rate:
Operating leases	3.00		%	3.25		%
Finance leases	3.50		%	3.50		%

Maturities of lease liabilities were as follows:


	Operating Leases		Finance Leases

	(in millions)
As of December 31, 2021
2022	$	103	$	3
2023	86		3
2024	62		3
2025	50		2
2026	38		2
Thereafter	92		2
Total lease payments	431		15
Less: imputed interest	(35)		(2)
Total	$	396	$	13

As of December 31, 2021, the Company has entered into additional operating leases, primarily for real estate, that have not yet commenced of approximately $15 million. These operating leases are anticipated to commence primarily in 2022 with lease terms of approximately 10 years.