Leases (Notes)

12 Months Ended

Dec. 31, 2022

LEASESThe Company has leases for corporate offices, manufacturing facilities, research and development facilities, and certain transportation and office equipment, the majority of which are operating leases. The Company's leases have remaining lease terms of up to 50 years, some of which include options to extend the leases for up to 7 years.

The components of lease expense were as follows:


	December 31,
(DOLLARS IN MILLIONS)	2022		2021		2020
Operating lease cost	$	187	$	168	$	62
Finance lease cost	8		7		4

Supplemental cash flow information related to leases was as follows:


	December 31,
(DOLLARS IN MILLIONS)	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flow for operating leases	$	135	$	129	$	52

Financing cash flow for finance leases	7		6		4
Right-of-use assets obtained in exchange for lease obligations
Operating leases	60		88		63
Finance leases	7		15		6

Supplemental balance sheet information related to leases was as follows:


	December 31,
(DOLLARS IN MILLIONS)	2022		2021
Operating Leases
Operating lease right-of-use assets	$	636	$	767

Current operating lease obligations(2)	86		109
Operating lease liabilities	565		670
Total operating lease liabilities	$	651	$	779
Finance Leases
Finance lease right-of-use assets(1)	$	22	$	21

Current finance lease obligations(2)	5		5
Finance lease liabilities(3)	12		15
Total finance lease liabilities	$	17	$	20

_______________________

(1)Presented in Other assets in the Consolidated Balance Sheets.

(2)Presented in Other current liabilities in the Consolidated Balance Sheets.

(3)Presented in Other liabilities in the Consolidated Balance Sheets.

Weighted average remaining lease term and discount rate were as follows:


	December 31,
	2022		2021
Weighted average remaining lease term in years
Operating leases	10.1		11.1
Finance leases	4.0		4.3
Weighted average discount rate
Operating leases	4.03	%	2.73	%
Finance leases	2.59	%	1.85	%

Maturities of lease liabilities as of December 31, 2022 were as follows:


(DOLLARS IN MILLIONS)	Operating Leases		Finance Leases		Total
2023	$	111	$	6	$	117
2024	103		3		106
2025	89		4		93
2026	78		3		81
2027	66		2		68
Thereafter	363		—		363
Total undiscounted liabilities	810		18		828
Less: Imputed interest	(159)		(1)		(160)
Total lease liabilities	$	651	$	17	$	668

Right-of-use assets and lease liabilities acquired from N&B were remeasured at the present value of the future minimum lease payments over the remaining lease term utilizing an updated incremental borrowing rate of the Company as if the acquired leases were new leases as of the Closing Date. Right-of-use assets were further adjusted for any off-market terms of the lease. The remaining lease term is based on the remaining term at the Closing Date plus any renewal or extension options that the Company is reasonably certain will be exercised. Additionally, the Company has elected short-term lease treatment for those acquired lease contracts which, at the Closing Date, have a remaining lease term of 12 months or less. For the leases acquired through the Transactions, the Company will retain the previous lease classification. This resulted in an increase in both right-of-use assets and operating lease liabilities of approximately $525 million and $523 million, respectively, as of the Closing Date.

As a result of the Company’s acquisition of Health Wright, there was an increase of approximately $22 million in finance lease right-of-use assets and $21 million in finance lease liabilities as of the Acquisition Date. In the fourth quarter of 2022, the Company exercised its option to purchase the asset and, as such, de-recognized the finance lease right-of-use assets and finance lease liabilities.