Quarterly report pursuant to Section 13 or 15(d)

Leases

v3.19.1
Leases
3 Months Ended
Mar. 31, 2019
Leases [Abstract]  
Leases
Leases

In February 2016, the FASB issued ASU No. 2016-02, Leases, which introduced a lessee model that requires the majority of leases to be recognized on the balance sheet. On January 1, 2019, the Company adopted the ASU using the modified retrospective transition approach and elected the transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. Adoption of the new guidance resulted in the initial recognition of right-of-use (ROU) assets of $661 million, ROU lease liabilities of $774 million and the elimination of $113 million of straight-line lease liabilities.

The Company records ROU assets and liabilities for non-cancelable operating leases primarily for real estate and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three months ended March 31, 2019, the Company recognized operating lease expense of $50 million.

The following table sets forth the ROU assets and liabilities as of March 31, 2019 ($ in millions):
 
March 31, 2019
Assets
 
ROU assets (recorded within other long-term assets)
$
624

 
 
Liabilities
 
Short-term (recorded within accounts payable and accrued expenses)
$
156

Long-term (recorded within other long-term liabilities)
583

Total ROU liabilities
$
739



During the three months ended March 31, 2019, the Company reduced its ROU liabilities by $64 million for cash paid. In addition, new operating leases commenced resulting in the recognition of ROU assets and liabilities of $32 million, respectively. As of March 31, 2019, the Company had additional operating leases that have not yet commenced of $13 million. These operating leases will commence in 2019 with lease terms of 1 year to 5 years.

As of March 31, 2019, the weighted average remaining lease term of the Company's operating leases was 6.1 years. The ROU liabilities as of March 31, 2019 reflect a weighted average discount rate of 4.6%. Lease payments over the next five years and thereafter are as follows ($ in millions):
 
March 31, 2019
2019
$
133

2020
181

2021
144

2022
102

2023
76

2024
57

Thereafter
148

Total lease payments
841

Less: imputed interest
(102
)
Total ROU liabilities
$
739