LEASES

12 Months Ended

Dec. 31, 2020

LEASES

The Company leases real estate, automobiles and equipment under various operating and finance leases. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the implicit rate is not readily determinable in most of the Company’s lease agreements, the Company uses its estimated secured incremental borrowing rate, based on the information available, at commencement of the lease to determine the present value of lease payments. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Beginning January 1, 2019, any new real estate and equipment operating lease agreements with lease and non-lease components, were accounted for as a single lease component; auto leases were accounted for as separate lease components.

The Company determines if an arrangement is a lease or contains a lease at inception. The Company’s leases have remaining lease terms of approximately 1 year to 10 years. Many of the Company's real estate and equipment leases have one or more options to renew, with terms that can extend primarily from 1 year to 3 years, which are not included in the initial lease term. The Company does not have lease agreements with residual value guarantees, sale-and-leaseback terms, or material restrictive covenants. The Company does not have any material sublease arrangements.

The net present value of finance and operating lease right-of-use assets and liabilities were as follows:


		Year Ended December 31,
(in millions, except percentages)	Location in the Consolidated Balance Sheets	2020			2019

Assets
Finance leases	Property, plant, and equipment, net	$	1		$	1
Operating leases	Operating lease right-of-use assets, net	176			159
Total right-of-use assets		$	177		$	160

Liabilities
Current liabilities

Operating leases	Accrued liabilities	$	48		$	44
Noncurrent liabilities
Finance leases	Long-term debt	1			1
Operating leases	Operating lease liabilities	130			120
Total lease liabilities		$	179		$	165

Supplemental information:
Weighted-average discount rate
Finance leases		3.7		%	3.6		%
Operating leases		3.0		%	2.9		%

Weighted-average remaining lease term in years
Finance leases		6.5			7.0
Operating leases		5.2			5.3

The lease cost recognized in the Consolidated Statements of Operations for the year ended December 31, 2020 and 2019 were as follows:


(in millions)	2020		2019




Operating lease cost	$	57	$	55
Short-term lease cost	1		1
Variable lease cost	9		10
Total lease cost	$	67	$	66

The contractual maturity dates of the remaining lease liabilities for the year ended December 31, 2020 were as follows:


(in millions)	Finance Leases		Operating Leases		Total

2021	$	—	$	52	$	52
2022	—		41		41
2023	—		31		31
2024	—		22		22
2025	—		14		14
2026 and beyond	1		34		35
Total lease payments	$	1	$	194	$	195
Less imputed interest	—		16		16
Present value of lease liabilities	$	1	$	178	$	179

The supplemental cash flow information for the year ended December 31, 2020 and 2019 were as follows:


(in millions)	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows paid for operating leases	$	56	$	53


Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases	$	43	$	35

Leases

LEASES

The net present value of finance and operating lease right-of-use assets and liabilities were as follows:


		Year Ended December 31,
(in millions, except percentages)	Location in the Consolidated Balance Sheets	2020			2019

Assets
Finance leases	Property, plant, and equipment, net	$	1		$	1
Operating leases	Operating lease right-of-use assets, net	176			159
Total right-of-use assets		$	177		$	160

Liabilities
Current liabilities

Operating leases	Accrued liabilities	$	48		$	44
Noncurrent liabilities
Finance leases	Long-term debt	1			1
Operating leases	Operating lease liabilities	130			120
Total lease liabilities		$	179		$	165

Supplemental information:
Weighted-average discount rate
Finance leases		3.7		%	3.6		%
Operating leases		3.0		%	2.9		%

Weighted-average remaining lease term in years
Finance leases		6.5			7.0
Operating leases		5.2			5.3

The lease cost recognized in the Consolidated Statements of Operations for the year ended December 31, 2020 and 2019 were as follows:


(in millions)	2020		2019




Operating lease cost	$	57	$	55
Short-term lease cost	1		1
Variable lease cost	9		10
Total lease cost	$	67	$	66

The contractual maturity dates of the remaining lease liabilities for the year ended December 31, 2020 were as follows:


(in millions)	Finance Leases		Operating Leases		Total

2021	$	—	$	52	$	52
2022	—		41		41
2023	—		31		31
2024	—		22		22
2025	—		14		14
2026 and beyond	1		34		35
Total lease payments	$	1	$	194	$	195
Less imputed interest	—		16		16
Present value of lease liabilities	$	1	$	178	$	179

The supplemental cash flow information for the year ended December 31, 2020 and 2019 were as follows:


(in millions)	2020		2019

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows paid for operating leases	$	56	$	53


Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases	$	43	$	35