LEASE COMMITMENTS

We lease land, dealership facilities, offices, distribution centers, warehouses, and equipment under agreements with contractual periods ranging from less than one year to 40 years. Many of our leases contain one or more options to extend. In certain dealership lease agreements, we are the tenant and we sublease the site to a dealer. In the event the sublease is terminated, we have the option to terminate the head lease. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors.

Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased (“right-of-use”) assets in finance lease arrangements are reported in Net property on our consolidated balance sheet. Otherwise, the leases are classified as operating leases and reported in Other assets in the non-current assets section of our consolidated balance sheet.

For the majority of our leases commencing after January 1, 2019, we do not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease liabilities. However, we do separate lease and non-lease components for contracts containing a significant service component (e.g., energy performance contracts). We calculate the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market rate or an index (e.g., CPI), measured at commencement. The majority of our leases are discounted using our incremental borrowing rate because the rate implicit in the lease is not readily determinable. All other variable payments are expensed as incurred.

NOTE 15. LEASE COMMITMENTS (Continued)

Lease right-of-use assets and liabilities at March 31 were as follows (in millions):



	March 31, 2019
Operating leases
Other assets, non-current	$	1,321

Other liabilities and deferred revenue, current	$	335
Other liabilities and deferred revenue, non-current	1,025
Total operating lease liabilities	$	1,360

Finance leases
Property and equipment, gross	$	230
Accumulated depreciation	(35		)
Property and equipment, net	$	195

Automotive debt payable within one year	$	90
Automotive long-term debt	75
Total finance lease liabilities	$	165

Minimum non-cancellable operating lease commitments at December 31, 2018 were as follows (in millions):



	Operating Leases
2019	$	363
2020	271
2021	193
2022	141
2023	106
Thereafter	437
Total	$	1,511

The amounts contractually due on our lease liabilities as of March 31, 2019 were as follows (in millions):



	Operating Leases		Finance Leases (a)
Within one year	$	376	$	95
After one year and within two years	282		29
After two years and within three years	199		20
After three years and within four years	146		15
After four years and within five years	113		10
After five years	428		7
Total	1,544		176
Less: Present value discount	184		11
Total lease liabilities	$	1,360	$	165

__________

(a) Excludes approximately $400 million in future lease payments for a 20-year finance lease commencing in a future period.

NOTE 15. LEASE COMMITMENTS (Continued)

Supplemental cash flow information related to leases for the period ended March 31 was as follows (in millions):



	First Quarter 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	106
Operating cash flows from finance leases	1
Financing cash flows from finance leases	8
Right-of-use assets obtained in exchange for lease liabilities
Operating leases	$	80
Finance leases	16

The components of lease expense for the period ended March 31 were as follows (in millions):



	First Quarter 2019
Operating lease expense	$	110
Variable lease expense	19
Sublease income	(4		)
Finance lease expense
Amortization of right-of-use assets	3
Interest on lease liabilities	1
Total lease expense	$	129

The weighted average remaining lease term and weighted average discount rate at March 31 were as follows:



	March 31, 2019
Weighted average remaining lease term (years)
Operating leases	6.8
Finance leases	12.7
Weighted average discount rate
Operating leases	3.5	%
Finance leases	3.5	%