Leases

12 Months Ended

Dec. 31, 2020

Leases

Leases

NOTE 17. Leases

The components of lease expense are as follows:

	Year ended December 31,
(Millions)	2020		2019
Operating lease cost	$	348	$	308
Finance lease cost:
Amortization of assets		21		20
Interest on lease liabilities		1		2
Variable lease cost		101		93
Total net lease cost	$	471	$	423

Short-term lease cost and income related to sub-lease activity is immaterial for the Company.

Supplemental balance sheet information related to leases is as follows:

	Location on Face of	As of December 31,
(Millions unless noted)	Balance Sheet	2020			2019
Operating leases:
Operating lease right of use assets	Operating lease right of use assets	$	864		$	858
Current operating lease liabilities	Operating lease liabilities - current	$	256		$	247
Noncurrent operating lease liabilities	Operating lease liabilities		609			607
Total operating lease liabilities		$	865		$	854
Finance leases:
Property and equipment, at cost	Property, plant and equipment	$	225		$	239
Accumulated amortization	Property, plant and equipment (accumulated depreciation)		(106)			(102)
Property and equipment, net		$	119		$	137
Current obligations of finance leases	Other current liabilities	$	22		$	21
Finance leases, net of current obligations	Other liabilities		93			111
Total finance lease liabilities		$	115		$	132
Weighted average remaining lease term (in years):
Operating leases			5.6			5.7
Finance leases			7.6			9.0
Weighted average discount rate:
Operating leases			2.4	%		3.2	%
Finance leases			3.5	%		3.8	%

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

	Year Ended December 31,
(Millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	326	$	309
Operating cash flows from finance leases		1		2
Financing cash flows from finance leases		58		18
Right of use assets obtained in exchange for lease liabilities:
Operating leases		250		326
Finance leases		18		61

In the first quarter of 2020, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $10 million. In the first quarter of 2019, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $9 million. During 2019, the Company sold and leased-back an office location and a manufacturing site resulting in a combined gain of $82 million.

Maturities of lease liabilities were as follows:

	December 31, 2020
(Millions)	Finance Leases		Operating Leases
2021	$	20	$	273
2022		18		201
2023		18		141
2024		16		93
2025		10		60
After 2025		41		162
Total	$	123	$	930
Less: Amounts representing interest		8		65
Present value of future minimum lease payments		115		865
Less: Current obligations		22		256
Long-term obligations	$	93	$	609

As of December 31, 2020, the Company has additional operating lease commitments that have not yet commenced of approximately $18 million. These commitments pertain to 3M’s right of use of certain buildings.

Disclosures related to periods prior to 2019 adoption of new lease standard:

Capital and Operating Leases:

Rental expense under operating leases was $393 million in 2018.