Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

The Company has operating and finance leases for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment. The leases have remaining lease terms of 1 month to 14.6 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 month to 1 year. As of December 31, 2020 and 2019, assets recorded under finance leases included in Property, plant and equipment, net were $52 million and $35 million, respectively, and accumulated depreciation associated with finance leases was $6 million and $2 million as of December 31, 2020 and 2019, respectively.

The Company has elected the practical expedient not to separate lease components from non-lease components for all its underlying assets.

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

The components of lease expense for the year ended December 31, 2020 were as follows:

	Year Ended December 31
(Dollars in millions)	2020		2019
Operating lease cost	$	24	$	24
Finance lease cost
Amortization of right-of-use assets	4		3
Interest on lease liabilities	2		2
Total finance lease cost	6		5
Short-term lease cost	1		—
Total lease cost	$	31	$	29

Other information related to leases for the year ended December 31, 2020 was as follows:

Supplemental Cash Flows Information	Year Ended December 31
(Dollars in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	23	$	22
Operating cash flows used for finance leases	2		2
Financing cash flows used for finance leases	2		2
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	17		52
Finance leases	17		33

	As of December 31
(Lease term in years and discount rate)	2020		2019
Weighted-average remaining lease term
Operating Leases	7		8
Finance Leases	10		11
Weighted-average discount rate
Operating leases	3.4	%	3.6	%
Finance leases	4.95	%	4.9	%

Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
2021	$	21	$	6
2022	18		8
2023	16		8
2024	10		8
2025	8		4
Thereafter	27		32
Total lease payments	100		66
Less imputed interest	11		16
Total lease liabilities	$	89	$	50

Lease obligations reported as of December 31, 2020 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
Other current liabilities	$	18	$	4
Lease liabilities - non current	71		46
Total lease liabilities	$	89	$	50

As of December 31, 2020 and 2019, the Company has additional obligations of $12 million and $1 million, respectively, relating to leases, primarily for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment, that have not yet commenced. These leases will commence in 2021 with lease terms of 3 years to 5 years.

Leases

Leases

The Company has operating and finance leases for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment. The leases have remaining lease terms of 1 month to 14.6 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 month to 1 year. As of December 31, 2020 and 2019, assets recorded under finance leases included in Property, plant and equipment, net were $52 million and $35 million, respectively, and accumulated depreciation associated with finance leases was $6 million and $2 million as of December 31, 2020 and 2019, respectively.

The Company has elected the practical expedient not to separate lease components from non-lease components for all its underlying assets.

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

The components of lease expense for the year ended December 31, 2020 were as follows:

	Year Ended December 31
(Dollars in millions)	2020		2019
Operating lease cost	$	24	$	24
Finance lease cost
Amortization of right-of-use assets	4		3
Interest on lease liabilities	2		2
Total finance lease cost	6		5
Short-term lease cost	1		—
Total lease cost	$	31	$	29

Other information related to leases for the year ended December 31, 2020 was as follows:

Supplemental Cash Flows Information	Year Ended December 31
(Dollars in millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	23	$	22
Operating cash flows used for finance leases	2		2
Financing cash flows used for finance leases	2		2
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	17		52
Finance leases	17		33

	As of December 31
(Lease term in years and discount rate)	2020		2019
Weighted-average remaining lease term
Operating Leases	7		8
Finance Leases	10		11
Weighted-average discount rate
Operating leases	3.4	%	3.6	%
Finance leases	4.95	%	4.9	%

Future minimum lease payments under non-cancellable leases as of December 31, 2020 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
2021	$	21	$	6
2022	18		8
2023	16		8
2024	10		8
2025	8		4
Thereafter	27		32
Total lease payments	100		66
Less imputed interest	11		16
Total lease liabilities	$	89	$	50

Lease obligations reported as of December 31, 2020 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
Other current liabilities	$	18	$	4
Lease liabilities - non current	71		46
Total lease liabilities	$	89	$	50

As of December 31, 2020 and 2019, the Company has additional obligations of $12 million and $1 million, respectively, relating to leases, primarily for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment, that have not yet commenced. These leases will commence in 2021 with lease terms of 3 years to 5 years.