NOTE 17. Leases The components of lease expense are as follows: | | | | | | | | | Year ended December 31, | (Millions) | | 2020 | | 2019 | Operating lease cost | | $ | 348 | | $ | 308 | Finance lease cost: | | | | | | | Amortization of assets | | | 21 | | | 20 | Interest on lease liabilities | | | 1 | | | 2 | Variable lease cost | | | 101 | | | 93 | Total net lease cost | | $ | 471 | | $ | 423 |
Short-term lease cost and income related to sub-lease activity is immaterial for the Company. Supplemental balance sheet information related to leases is as follows: | | | | | | | | | | | | Location on Face of | | As of December 31, | (Millions unless noted) | | Balance Sheet | | 2020 | | 2019 | Operating leases: | | | | | | | | | | Operating lease right of use assets | | Operating lease right of use assets | | $ | 864 | | $ | 858 | | | | | | | | | | | | Current operating lease liabilities | | Operating lease liabilities - current | | $ | 256 | | $ | 247 | | Noncurrent operating lease liabilities | | Operating lease liabilities | | | 609 | | | 607 | | Total operating lease liabilities | | | | $ | 865 | | $ | 854 | | | | | | | | | | | | Finance leases: | | | | | | | | | | Property and equipment, at cost | | Property, plant and equipment | | $ | 225 | | $ | 239 | | Accumulated amortization | | Property, plant and equipment (accumulated depreciation) | | | (106) | | | (102) | | Property and equipment, net | | | | $ | 119 | | $ | 137 | | | | | | | | | | | | Current obligations of finance leases | | Other current liabilities | | $ | 22 | | $ | 21 | | Finance leases, net of current obligations | | Other liabilities | | | 93 | | | 111 | | Total finance lease liabilities | | | | $ | 115 | | $ | 132 | | | | | | | | | | | | Weighted average remaining lease term (in years): | | | | | | | | | | Operating leases | | | | | 5.6 | | | 5.7 | | Finance leases | | | | | 7.6 | | | 9.0 | | Weighted average discount rate: | | | | | | | | | | Operating leases | | | | | 2.4 | % | | 3.2 | % | Finance leases | | | | | 3.5 | % | | 3.8 | % |
Supplemental cash flow and other information related to leases is as follows: | | | | | | | | | Year Ended December 31, | (Millions) | | 2020 | | 2019 | Cash paid for amounts included in the measurement of lease liabilities: | | | | | | | Operating cash flows from operating leases | | $ | 326 | | $ | 309 | Operating cash flows from finance leases | | | 1 | | | 2 | Financing cash flows from finance leases | | | 58 | | | 18 | | | | | | | | Right of use assets obtained in exchange for lease liabilities: | | | | | | | Operating leases | | | 250 | | | 326 | Finance leases | | | 18 | | | 61 |
In the first quarter of 2020, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $10 million. In the first quarter of 2019, 3M sold and leased-back certain recently constructed machinery and equipment in return for municipal securities, which in aggregate, were recorded as a finance lease asset and obligation of approximately $9 million. During 2019, the Company sold and leased-back an office location and a manufacturing site resulting in a combined gain of $82 million. Maturities of lease liabilities were as follows: | | | | | | | | | | December 31, 2020 | | (Millions) | | Finance Leases | | Operating Leases | | 2021 | | $ | 20 | | $ | 273 | | 2022 | | | 18 | | | 201 | | 2023 | | | 18 | | | 141 | | 2024 | | | 16 | | | 93 | | 2025 | | | 10 | | | 60 | | After 2025 | | | 41 | | | 162 | | Total | | $ | 123 | | $ | 930 | | Less: Amounts representing interest | | | 8 | | | 65 | | Present value of future minimum lease payments | | | 115 | | | 865 | | Less: Current obligations | | | 22 | | | 256 | | Long-term obligations | | $ | 93 | | $ | 609 | |
As of December 31, 2020, the Company has additional operating lease commitments that have not yet commenced of approximately $18 million. These commitments pertain to 3M’s right of use of certain buildings. Disclosures related to periods prior to 2019 adoption of new lease standard: Capital and Operating Leases: Rental expense under operating leases was $393 million in 2018.
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