Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

Note 19 – 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 from the date of adoption. The Company’s leases are primarily for office space and certain computer and other equipment, and have terms of up to 23 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 expected life of a lease may consider 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 neither fixed in nature, such as maintenance and other services provided by the lessor, nor tied to an index or rate.

The components of lease expense were as follows:

(In millions)		Year Ended December 31, 2019
Operating lease cost	$	188
Finance lease cost:
Amortization of ROU assets		28
Interest on lease liabilities		3
Total finance lease cost		31
Variable lease cost		50
Total lease cost	$	269

Rental expense under operating lease agreements was $162 million for the years ended December 31, 2018 and 2017.

Supplemental cash flow information related to leases was as follows:

		Year ended
(In millions)		December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	173
Operating cash outflows from finance leases	$	3
Financing cash outflows from finance leases	$	25
ROU assets obtained in exchange for lease obligations:
Operating leases	$	89
Finance leases	$	68

The non-cash impact of adopting the new lease guidance was an increase of Other assets of $615 million and an increase to Accrued expenses and other liabilities of $630 million.Operating and finance lease ROU assets and lease liabilities were as follows at the balance sheet date:

(In millions)		December 31, 2019
Operating leases:
Operating lease ROU assets	$	536
Accrued expenses and other current liabilities	$	166
Other non-current liabilities		465
Total operating lease liabilities	$	631
Finance leases:
Property and equipment, gross	$	110
Accumulated depreciation		(23)
Property and equipment, net	$	87
Short-term debt	$	27
Long-term debt		61
Total finance lease liabilities	$	88

As of December 31, 2019, the weighted average remaining lease term was five years for operating leases and five years for finance leases, and the weighted average discount rate was 3.89% for operating leases and 3.77% for finance leases.

Maturities of lease liabilities as of December 31, 2019 were as follows:

(In millions)	Operating Leases		Finance Leases
2020	$	177	$	28
2021		159		21
2022		133		18
2023		89		8
2024		63		6
Thereafter		74		16
Total lease payments		695		97
Less: imputed interest		64		9
Total	$	631	$	88