LEASES

9 Months Ended

Sep. 30, 2019

Leases [Abstract]

LEASES

LEASES:

As described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, we adopted new lease accounting guidance effective January 1, 2019.

We determine if a contractual arrangement is a lease at inception. Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration. Our leases primarily relate to building space, tower space, and equipment. We do not separate non-lease components from our building and tower leases for the purposes of measuring our lease liabilities and assets. Our leases consist of operating leases and finance leases which are presented separately on our consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of the future lease payments over the lease term discounted using our incremental borrowing rate. Implicit interest rates within our lease arrangements are rarely determinable. Right of use assets also include, if applicable, prepaid lease payments and initial direct costs, less incentives received.

We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses. Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right of use assets. The interest component is recorded in interest expense and amortization of the finance lease asset is recognized on a straight-line basis over the term of the lease in depreciation of property and equipment.

Our leases do not contain any material residual value guarantees or material restrictive covenants. Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.

The following table presents lease expense we have recorded on our consolidated statements of operations for the three and nine months ended September 30, 2019 (in millions):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease expense:
Amortization of finance lease asset	$	1	$	2
Interest on lease liabilities	1		3
Total finance lease expense	2		5
Operating lease expense (a)	12		32
Total lease expense	$	14	$	37

(a) Includes variable and short-term lease expense of $1 million and $0.4 million, respectively, for the three months ended September 30, 2019 and $4 million and $1 million, respectively, for the nine months ended September 30, 2019.

The following table summarizes our outstanding operating and finance lease obligations as of September 30, 2019 (in millions):

	Operating Leases			Finance Leases			Total
2019 (remainder)	$	13		$	2		$	15
2020	49			8			57
2021	41			8			49
2022	31			7			38
2023	28			7			35
2024 and thereafter	173			21			194
Total undiscounted obligations	335			53			388
Less imputed interest	(84		)	(14		)	(98		)
Present value of lease obligations	$	251		$	39		$	290

Future minimum payments under operating leases as of December 31, 2018 were as follows (in millions):

2019	$	32
2020	31
2021	30
2022	27
2023	24
2024 and thereafter	158
Total	$	302

The following table summarizes supplemental balance sheet information related to leases as of September 30, 2019 (in millions, except lease term and discount rate):

	Operating Leases			Finance Leases
Lease assets, non-current	$	222		$	16		(a)
Lease liabilities, current	$	38		$	5
Lease liabilities, non-current	213			34
Total lease liabilities	$	251		$	39
Weighted average remaining lease term (in years)	9.63			7.37
Weighted average discount rate	5.6		%	9.0		%

(a) Finance lease assets are reflected in property and equipment, net on our consolidated balance sheets.

The following table presents other information related to leases for the nine months ended September 30, 2019 (in millions):

	Nine Months Ended   September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25
Operating cash flows from finance leases	3
Financing cash flows from finance leases	3
Leased assets obtained in exchange for new lease liabilities	10

LEASES

LEASES:

As described in Note 1. Nature of Operations and Summary of Significant Accounting Policies, we adopted new lease accounting guidance effective January 1, 2019.

We determine if a contractual arrangement is a lease at inception. Our lease arrangements provide the Company the right to utilize certain specified tangible assets for a period of time in exchange for consideration. Our leases primarily relate to building space, tower space, and equipment. We do not separate non-lease components from our building and tower leases for the purposes of measuring our lease liabilities and assets. Our leases consist of operating leases and finance leases which are presented separately on our consolidated balance sheets. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

We recognize a lease liability and a right of use asset at the lease commencement date based on the present value of the future lease payments over the lease term discounted using our incremental borrowing rate. Implicit interest rates within our lease arrangements are rarely determinable. Right of use assets also include, if applicable, prepaid lease payments and initial direct costs, less incentives received.

We recognize operating lease expense on a straight-line basis over the term of the lease within operating expenses. Expense associated with our finance leases consists of two components, including interest on our outstanding finance lease obligations and amortization of the related right of use assets. The interest component is recorded in interest expense and amortization of the finance lease asset is recognized on a straight-line basis over the term of the lease in depreciation of property and equipment.

Our leases do not contain any material residual value guarantees or material restrictive covenants. Some of our leases include optional renewal periods or termination provisions which we assess at inception to determine the term of the lease, subject to reassessment in certain circumstances.

The following table presents lease expense we have recorded on our consolidated statements of operations for the three and nine months ended September 30, 2019 (in millions):

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
Finance lease expense:
Amortization of finance lease asset	$	1	$	2
Interest on lease liabilities	1		3
Total finance lease expense	2		5
Operating lease expense (a)	12		32
Total lease expense	$	14	$	37

(a) Includes variable and short-term lease expense of $1 million and $0.4 million, respectively, for the three months ended September 30, 2019 and $4 million and $1 million, respectively, for the nine months ended September 30, 2019.

The following table summarizes our outstanding operating and finance lease obligations as of September 30, 2019 (in millions):

	Operating Leases			Finance Leases			Total
2019 (remainder)	$	13		$	2		$	15
2020	49			8			57
2021	41			8			49
2022	31			7			38
2023	28			7			35
2024 and thereafter	173			21			194
Total undiscounted obligations	335			53			388
Less imputed interest	(84		)	(14		)	(98		)
Present value of lease obligations	$	251		$	39		$	290

Future minimum payments under operating leases as of December 31, 2018 were as follows (in millions):

2019	$	32
2020	31
2021	30
2022	27
2023	24
2024 and thereafter	158
Total	$	302

The following table summarizes supplemental balance sheet information related to leases as of September 30, 2019 (in millions, except lease term and discount rate):

	Operating Leases			Finance Leases
Lease assets, non-current	$	222		$	16		(a)
Lease liabilities, current	$	38		$	5
Lease liabilities, non-current	213			34
Total lease liabilities	$	251		$	39
Weighted average remaining lease term (in years)	9.63			7.37
Weighted average discount rate	5.6		%	9.0		%

(a) Finance lease assets are reflected in property and equipment, net on our consolidated balance sheets.

The following table presents other information related to leases for the nine months ended September 30, 2019 (in millions):

	Nine Months Ended   September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	25
Operating cash flows from finance leases	3
Financing cash flows from finance leases	3
Leased assets obtained in exchange for new lease liabilities	10