Leases

12 Months Ended

Dec. 31, 2020

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 standard’s guidance. 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 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 Consolidated Balance Sheets (in millions):


	December 31,
Consolidated Balance Sheets locations	2020		2019
Assets:
Other assets	$	408	$	469
Liabilities:
Accrued liabilities	$	153	$	140
Other noncurrent liabilities	306		388
Total lease liabilities	$	459	$	528

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


	Years ended December 31,
Lease costs	2020		2019
Operating(1)	$	223	$	204






Sublease income	(34)		(33)
Total net lease costs	$	189	$	171

____________

(1) Includes short-term leases and variable lease costs, which were not material for the years ended December 31, 2020 and 2019.

Maturities of lease liabilities as of December 31, 2020, were as follows (in millions):


Maturity dates	Amounts
2021	$	164
2022	132
2023	105
2024	36
2025	15
Thereafter	36
Total lease payments(1)	488
Less imputed interest	(29)
Present value of lease liabilities	$	459

____________

(1) Includes future rental commitments for abandoned leases of $133 million. We expect to receive total future rental income of $107 million related to noncancelable subleases for abandoned facilities.

The weighted-average remaining lease terms and weighted-average discount rates were as follows:


	December 31,
	2020		2019
Weighted-average remaining lease term (in years)	3.7		4.1
Weighted-average discount rate	3.1	%	3.3	%

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


	Years ended December 31,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	177	$	148


ROU assets obtained in exchange for lease obligations:
Operating leases	$	101	$	163

As of December 31, 2020, we have entered into leases that have not yet commenced, with total undiscounted future lease payments of $339 million. These leases will commence in 2021 with lease terms from 30 months to 15 years.

Rental expense on operating leases under the prior lease guidance for the year ended December 31, 2018, was $166 million.