Leases

12 Months Ended

Dec. 31, 2019

LEASES

Our operating leases consist primarily of properties and equipment for our administrative, manufacturing and R&D activities. We determine if an arrangement contains a lease at inception. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of the lease payments over the lease term, which is the non-cancelable period stated in the contract adjusted for any options to extend or terminate when it is reasonably certain that we will exercise that option. Some of our leases include options to extend the terms for up to 15 years and some include options to terminate the lease within one year after the lease commencement date. Right-of-use assets are adjusted for prepaid lease payments, lease incentives and initial direct costs incurred.

As of December 31, 2019, we do not have material finance leases. As most of our operating leases do not provide an implicit interest rate, we generally utilize a collateralized incremental borrowing rate, applied in a portfolio approach when relevant, based on the information available at the commencement date to determine the lease liability. Operating lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term. Operating lease expenses, including variable costs and short-term leases, were $162 million for the year ended December 31, 2019. Operating lease expense under the prior lease standard was $109 million and $84 million for the years ended December 31, 2018 and 2017, respectively.

The following table summarizes balance sheet and other information related to our operating leases as of December 31, 2019 (in millions, except weighted average amounts):



	Classification	Amount
Right-of-use assets, net	Other long-term assets	$	668
Lease liabilities - current	Other accrued liabilities	$	99
Lease liabilities - noncurrent	Other long-term obligations	$	626
Weighted average remaining lease term		8.7 years
Weighted average discount rate		3.47		%

The following table summarizes other supplemental information related to our operating leases (in millions):



	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	66
Right-of-use assets obtained in exchange for lease liabilities	$	313

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of December 31, 2019 (in millions):



Fiscal Year	Amount
2020	$	125
2021	117
2022	109
2023	100
2024	87
Thereafter	312
Total undiscounted lease payments	850
Less: imputed interest	(125		)
Total discounted lease payments	$	725

The following table summarizes the aggregate undiscounted non-cancelable future minimum lease payments for operating leases under the prior lease standard as of December 31, 2018 (in millions):



Fiscal Year	Amount
2019	$	89
2020	78
2021	66
2022	60
2023	52
Thereafter	229
Total minimum lease payments	$	574