Leases

9 Months Ended

Sep. 30, 2019

On January 1, 2019, we adopted a new accounting standard that amends the guidance for the accounting and reporting of leases. Certain required disclosures have been made on a prospective basis in accordance with the guidance of the standard. See Note 1, Summary of significant accounting policies.

We lease certain facilities and equipment related primarily to administrative, R&D and sales and marketing activities. Leases with terms of 12 months or less are expensed on a straight-line basis over the term and are not recorded in the Condensed Consolidated Balance Sheets.

Most leases include one or more options to renew, with renewal terms that may extend the lease term up to seven years. The exercise of lease renewal options is at our sole discretion. In addition, some of our lease agreements include rental payments adjusted periodically for inflation. Our lease agreements neither contain residual value guarantees nor impose significant restrictions or covenants. We sublease certain real estate to third parties. Our sublease portfolio consists of operating leases from former R&D and administrative space.

The following table summarizes information related to our leases, all of which are classified as operating, included in our Condensed Consolidated Balance Sheets (in millions):



Condensed Consolidated Balance Sheets locations	September 30, 2019
Assets:
Other assets	$	422
Liabilities:
Accrued liabilities	$	135
Other noncurrent liabilities	351
Total lease liabilities	$	486

The components of net lease costs were as follows (in millions):



Lease costs	Three months ended September 30, 2019			Nine months ended September 30, 2019
Operating⁽¹⁾	$	50		$	149
Sublease income	(8		)	(25		)
Total net lease costs	$	42		$	124

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⁽¹⁾	Includes short-term leases and variable lease costs, which were not material for the three and nine months ended September 30, 2019.

Maturities of lease liabilities as of September 30, 2019, were as follows (in millions):



Maturity dates	Operating leases
Remaining three months ending December 31, 2019	$	31
2020	157
2021	137
2022	77
2023	65
Thereafter	55
Total lease payments⁽¹⁾	522
Less imputed interest	(36		)
Present value of lease liabilities	$	486

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⁽¹⁾	Includes future rental commitments for abandoned leases of $189 million. We expect to receive total future rental income of $149 million related to noncancelable subleases for abandoned facilities.

The weighted-average remaining lease term and weighted-average discount rate of our leases were four years and 3.31%, respectively, as of September 30, 2019.

Cash and noncash information related to our leases was as follows (in millions):



	Three months ended September 30, 2019		Nine months ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	42	$	115
ROU assets obtained in exchange for lease obligations:
Operating leases	$	29	$	83