XML 38 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases
Leases
A lease is defined as a party obtaining the right to use an asset legally owned by another party. The Company determines if an arrangement is a lease at lease inception. For operating leases entered into prior to January 1, 2019, the ROU assets and operating lease liabilities are recognized in the balance sheet based on the present value of the remaining future minimum payments over the lease term from the implementation date of the standard, January 1, 2019. The ROU asset was adjusted for unamortized lease incentives and restructuring liabilities that were reported, prior to adoption, as other liabilities in the consolidated balance sheet. For leases entered into subsequent to January 1, 2019, the operating lease ROU asset and operating lease liabilities are based on the present value of minimum payments over the lease term at commencement date of the lease.
The Company uses discount rates to determine the present value of future lease payments. The Company primarily uses its incremental borrowing rate adjusted to reflect a secured rate, based on the information available for leases, including the lease term and interest rate environment in the country in which the lease exists. The lease terms used to calculate the ROU asset and lease liability may include options to extend or terminate when it is reasonably certain that the Company will exercise that option.
The Company leases office facilities under non-cancelable operating leases with terms generally ranging between 10 and 25 years. The Company utilizes these leased office facilities for use by its employees in countries in which the Company conducts its business. Leases are negotiated with third-parties and, in some instances contain renewal, expansion and termination options. The Company also subleases certain office facilities to third-parties when the Company no longer intends to utilize the space. None of the Company’s leases restrict the payment of dividends or the incurrence of debt or additional lease obligations, or contain significant purchase options. In addition to the base rental costs, our lease agreements generally provide for rent escalations resulting from increased assessments for real estate taxes and other charges. A portion of our real estate lease portfolio contains base rents subject to annual changes in the Consumer Price Index ("CPI") as well as charges for operating expenses which are reimbursable to the landlord based on actual usage. Changes to the CPI and payments for such reimbursable operating expenses are considered variable and are recognized as variable lease costs in the period in which the obligation for those payments was incurred.
As a practical expedient, the Company has elected an accounting policy not to separate non-lease components from lease components and instead, account for these components as a single lease component. The Company has made an accounting policy election not to recognize ROU assets and lease liabilities for leases that, at the commencement date, are for 12 months or less. Approximately 98% of the Company’s lease obligations are for the use of office space. All of the Company’s material leases are operating leases.
The following chart provides additional information about the Company’s property leases:
For the Three Months Ended March 31,
 
(In millions)
2019

Lease Cost:
 
Operating lease cost
$
82

Short-term lease cost
1

Variable lease cost
37

Sublease income
(4
)
Net lease cost
$
116

Other information:
 
Operating cash outflows from operating leases
$
87

Right of use assets obtained in exchange for new operating lease liabilities

Weighted-average remaining lease term – real estate
7.7 years

Weighted-average discount rate – real estate leases
3.12
%

Future minimum lease payments for the Company’s operating leases as of March 31, 2019 are as follows:
Payment Dates
Real Estate Leases
Remainder of 2019
$
262

2020
328

2021
276

2022
257

2023
220

2024
183

Subsequent years
610

Total future lease payments
2,136

Less: Imputed interest
(255
)
Total
$
1,881

Current lease liabilities
$
291

Long-term lease liabilities
1,590

Total lease liabilities
$
1,881

Note: Table excludes obligations for leases with original terms of 12 months or less which have not been recognized as a right to use asset or liability in the consolidated balance sheets.
As of March 31, 2019, the Company had additional operating real estate leases that had not yet commenced of $46 million. These operating leases will commence over the next 15 months.
At December 31, 2018, the aggregate future minimum rental commitments under all non-cancelable operating lease agreements are as follows:
For the Year Ended December 31,
Gross
Rental
Commitments
 
Rentals
from
Subleases
 
Net
Rental
Commitments
(In millions of dollars)
 
 
2019
$
361

 
$
32

 
$
329

2020
$
340

 
$
31

 
$
309

2021
$
277

 
$
12

 
$
265

2022
$
252

 
$
10

 
$
242

2023
$
214

 
$
9

 
$
205

Subsequent years
$
753

 
$
32

 
$
721