Leases

6 Months Ended

Jun. 30, 2019

Leases [Abstract]

Leases

Note 14 – Leases

As discussed in Note 2, the Company adopted ASU 2016-02, Leases, as of January 1, 2019. As permitted by the standard, the Company did not restate its Consolidated Financial Statements for periods prior to the adoption date and the required disclosures presented below are prospective only. The Company’s operating leases are primarily for office space and certain computer and other equipment, and have terms ranging from one month to 18 years.

Accounting policy. The Company determines if an arrangement is a lease and its lease classification (operating or finance) at inception. Beginning in the first quarter of 2019, both operating and finance leases result in (1) a right-of-use (“ROU”) asset that represents our right to use the underlying asset for the lease term, and (2) a lease liability that represents our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are reflected in the following lines in the Company’s Consolidated Balance Sheet:

	ROU Asset	Current Lease Liability	Non-Current Lease Liability
Operating lease	Other assets	Accrued expenses and other liabilities (current)	Other liabilities (non-current)
Finance lease	Property and equipment	Short-term debt	Long-term debt

These lease assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. Most of the Company’s leases do not provide an implicit rate, so the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease pre-payments made and excludes lease incentives for operating leases. The Company’s lease terms may include options to extend or terminate a lease when it is reasonably certain that the Company will exercise that option.

The Company has lease agreements with lease and non-lease components that are accounted for as a single lease component. Variable lease payments are expensed as incurred and represent amounts that are not fixed in nature, such as maintenance and other services provided by the lessor, and are not tied to an index or rate.

The components of lease expense were as follows:

		Three Months Ended		Six Months Ended
(In millions)		June 30, 2019		June 30, 2019
Operating lease costs	$	47	$	94
Finance lease costs:
Amortization of ROU assets		6		14
Interest on lease liabilities		1		2
Total finance lease costs		7		16
Variable lease costs		11		23
Total lease costs	$	65	$	133

Supplemental cash flow information related to leases was as follows:

		Six Months Ended
(In millions)		June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	84
Operating cash outflows from finance leases	$	2
Financing cash outflows from finance leases	$	12
ROU assets obtained in exchange for lease obligations:
Operating leases	$	49
Finance leases	$	53

Operating and finance lease ROU assets and lease liabilities were as follows at the balance sheet date:

(In millions)		June 30, 2019
Operating leases:
Operating lease ROU assets	$	587
Accrued expenses and other current liabilities		163
Other non-current liabilities		512
Total operating lease liabilities	$	675
Finance leases:
Property and equipment, gross	$	105
Accumulated depreciation		(12)
Property and equipment, net	$	93
Short-term debt	$	22
Long-term debt		70
Total finance lease liabilities	$	92

As of June 30, 2019, the weighted average remaining lease term was 5 years for operating leases and 6 years for finance leases, and the weighted average discount rate for operating leases was 3.89% and 3.87% for finance leases.

Maturities of lease liabilities as of June 30, 2019 were as follows:

(In millions)	Operating Leases		Finance Leases
2019	$	90	$	14
2020		174		24
2021		144		16
2022		125		15
2023		84		10
Thereafter		133		24
Total lease payments		750		103
Less: imputed interest		75		11
Total	$	675	$	92

Disclosures regarding minimum lease payments under previous lease accounting guidance can be found in the Company’s 2018 Form 10-K.