Leases

12 Months Ended

Dec. 31, 2019

Leases [Abstract]

Leases

NOTE 10 — LEASES

We adopted ASU No. 2016-02, Leases (Topic 842), which requires leases with durations greater than 12 months to be recognized on the balance sheet, effective January 1, 2019, using the modified retrospective approach. Prior period financial statement amounts and disclosures have not been adjusted to reflect the

provisions of the new standard. We elected the package of transition provisions available which allowed us to carry forward our historical assessments of whether contracts are or contain leases, the lease classification and the treatment of initial direct costs.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related assets and obligations at the present value of lease payments over the term. Many of our leases include rental escalation clauses and renewal options that are factored into our determination of lease payments, when appropriate. We do not separate lease and nonlease components of contracts. Generally, we use our estimated incremental borrowing rate to discount the lease payments, as most of our leases do not provide a readily determinable implicit interest rate.

The following table presents our lease-related assets and liabilities at December 31, 2019 (dollars in millions):

	Balance Sheet Classification	December 31, 2019
Assets:
Operating leases	Right-of-use operating lease assets	$	1,834
Finance leases	Property and equipment		520
Total lease assets		$	2,354
Liabilities:
Current:
Operating leases	Other accrued expenses	$	350
Finance leases	Long-term debt due within one year		87
Noncurrent:
Operating leases	Right-of-use operating lease obligations		1,499
Finance leases	Long-term debt		470
Total lease liabilities		$	2,406
Weighted-average remaining term:
Operating leases			10.8 years
Finance leases			12.0 years
Weighted-average discount rate:
Operating leases(1)			5.3	%
Finance leases			6.0	%

(1) Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

The following table presents certain information related to lease expense for finance and operating leases for the year ended December 31, 2019 (dollars in millions):

	Year Ended December 31, 2019
Finance lease expense:
Amortization of leased assets	$	93
Interest on lease liabilities		32
Operating leases(2)		389
Short-term lease expense(2)		316
Variable lease expense(2)		150
	$	980

(2) Expenses are included in “other operating expenses” in our consolidated income statements.

The following table presents supplemental cash flow information for the year ended December 31, 2019 (dollars in millions):

	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	404
Operating cash flows for finance leases		32
Financing cash flows for finance leases		79

Maturities of Lease Liabilities

The following table reconciles the undiscounted minimum lease payment amounts to the operating and finance lease liabilities recorded on the balance sheet at December 31, 2019 (dollars in millions):

	Operating Leases			Finance Leases
Year 1	$	411		$	110
Year 2		350			105
Year 3		285			99
Year 4		228			58
Year 5		182			60
Thereafter		1,074			368
Total minimum lease payments		2,530			800
Less: amount of lease payments representing interest		(681	)		(243	)
Present value of future minimum lease payments		1,849			557
Less: current lease obligations		(350	)		(87	)
Long-term lease obligations	$	1,499		$	470