Leases

12 Months Ended

Dec. 31, 2020

Note 9. Leases

Lease agreements primarily cover office facilities and machinery and equipment and expire at various dates. The Company’s leases are predominantly operating leases, which are included in Other assets and Other liabilities on the Consolidated Balance Sheet. The Company’s lease agreements do not contain significant residual value guarantees, restrictions or covenants.

Operating lease right of use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The discount rate used to determine the commencement date present value of lease payments is typically the Company’s secured borrowing rate, as most of the Company’s leases do not provide an implicit rate. The Company’s operating lease right of use asset was $370 million and $573 million and the Company’s operating lease liability was $501 million and $694 million at December 31, 2020 and 2019.

Total lease expense was $110 million and $146 million for the years ended December 31, 2020 and 2019, which includes operating lease expense of $84 million and $121 million, variable lease expense of $22 million and $19 million and short term lease expense of $4 million and $6 million. Prior to the adoption of the new lease standard, lease expense for the year ended December 31, 2018 was $120 million. Cash paid for amounts included in operating lease liabilities was $86 million and $117 million for year ended December 31, 2020 and 2019. Operating lease right of use assets obtained in exchange for lease obligations was $40 million and $54 million for the years ended December 31, 2020 and 2019.

The table below presents the maturities of lease liabilities:

	Operating
As of December 31, 2020	Leases
(In millions)

2021	$	89
2022		80
2023		72
2024		59
2025		49
Thereafter		317
Total		666
Less: discount		165
Total lease liabilities	$	501

The table below presents the weighted average remaining lease term for operating leases and weighted average discount rate used in calculating the operating lease asset and liability.

As of December 31, 2020

Weighted average remaining lease term	9.7 Years
Weighted average discount rate	3.5%