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Note 16 - Leases

12 Months Ended

Dec. 31, 2022

Lessee, Operating and Finance Leases [Text Block]

16. Leases

We lease certain locomotives, freight cars, and other property for use in our rail operations.

The following are additional details related to our lease portfolio:

		*Dec. 31,*			Dec. 31,
Millions	Classification		*2022*			2021
Assets
Operating leases	Operating lease assets		$	1,672		$	1,787
Finance leases	Properties, net [a]			310			366
Total leased assets			$	1,982		$	2,153
Liabilities
Current
Operating	Accounts payable and other current liabilities		$	331		$	330
Finance	Debt due within one year			67			92
Noncurrent
Operating	Operating lease liabilities			1,300			1,429
Finance	Debt due after one year			167			244
Total lease liabilities			$	1,865		$	2,095

[a]

Finance lease assets are recorded net of accumulated amortization of $658 million and $687 million as of December 31, 2022 and 2021, respectively.

The lease cost components are classified as follows:

Millions	*Dec 31, 2022*			Dec 31, 2021
Operating lease cost [a]		$	338		$	303
Short-term lease cost			18			25
Variable lease cost			13			11
Finance lease cost
Amortization of leased assets [b]			52			69
Interest on lease liabilities [c]			12			20
Net lease cost		$	433		$	428

[a]	Operating lease cost is primarily reported in equipment and other rents in our Consolidated Statements of Income.
[b]	Amortization of leased assets is reported in depreciation in our Consolidated Statements of Income.
[c]	Interest on lease liabilities is reported in interest expense in our Consolidated Statements of Income.

The following table presents aggregate lease maturities as of December 31, 2022:

Millions	Operating Leases			Finance Leases			Total
2023		$	335		$	76		$	411
2024			318			63			381
2025			321			44			365
2026			248			35			283
2027			188			30			218
After 2027			393			11			404
Total lease payments		$	1,803		$	259		$	2,062
Less: Interest			172			25			197
Present value of lease liabilities		$	1,631		$	234		$	1,865

The following table presents the weighted average remaining lease term and discount rate:

	Dec. 31,
		2022
Weighted-average remaining lease term (years)
Operating leases			6.4
Finance leases			4.2
Weighted-average discount rate (%)
Operating leases			3.3
Finance leases			4.7

The following table presents other information related to our operating and finance leases for the years ended December 31:

Millions	*2022*		2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	319	$	292
Investing cash flows from operating leases		31		27
Operating cash flows from finance leases		15		26
Financing cash flows from finance leases		91		106
Leased assets obtained in exchange for finance lease liabilities		-		-
Leased assets obtained in exchange for operating lease liabilities		173		442