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LEASES | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
LEASES | LEASES The Company leases certain equipment and facilities under both operating and finance leases expiring on various dates through 2050. The nature of these leases generally fall into the following five categories: real estate, material handling equipment, fleet vehicles, office equipment and energy equipment. For leases with initial terms greater than 12 months, we consider these our right-of-use assets and record the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, we do not consider them as right-of-use assets and instead consider them short-term lease costs that are recognized on a straight-line basis over the lease term. Many of our leases include escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when reasonably certain. These options to extend or terminate a lease are at our discretion. We have elected to take the practical expedient and not separate lease and non-lease components of contracts. We estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our lease agreements do not contain any material residual value guarantees. Balance Sheet Classification The table below presents the lease-related assets and liabilities recorded on the balance sheet (in millions):
|  | December 31,
Leases | Classification on Balance Sheet | 2022 |  | 2021
Assets |  |  |  |
Operating lease assets | Operating lease right-of-use assets | $ | 204 |  |  | $ | 158 |
Finance lease assets | Other non-current assets | 127 |  |  | 95 |
Total lease assets |  | $ | 331 |  |  | $ | 253 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Current operating lease liabilities | $ | 52 |  |  | $ | 49 |
Finance | Other current liabilities | 28 |  |  | 25 |
Non-Current |  |  |  |
Operating | Non-current operating lease liabilities | 152 |  |  | 109 |
Finance | Long-term debt, net of current portion | 103 |  |  | 74 |
Total lease liabilities |  | $ | 335 |  |  | $ | 257 |
Lease Costs The table below presents lease-related costs (in millions):
| Twelve Months Ended December 31,
| 2022 |  | 2021 |  | 2020
Operating lease cost | $ | 67 |  |  | $ | 69 |  |  | $ | 71 |
Finance lease cost |  |  |  |  |
Amortization | $ | 30 |  |  | $ | 23 |  |  | $ | 16 |
Interest | $ | 4 |  |  | $ | 4 |  |  | $ | 3 |
Short-term lease cost | $ | 12 |  |  | $ | 7 |  |  | $ | 11 |
Variable lease cost | $ | 6 |  |  | $ | 5 |  |  | $ | 5 |
Cash paid for operating leases approximated operating lease expense for the years ended December 31, 2022, 2021 and 2020. Cash paid for finance leases included $30 million for financing activities and $4 million for operating activities for the year ended December 31, 2022. Cash paid for finance leases included $23 million for financing activities and $4 million for operating activities for the year ended December 31, 2021. Cash paid for finance leases included $16 million for financing activities and $3 million for operating activities for the year ended December 31, 2020. We added $119 million and $81 million of operating lease liabilities as a result of obtaining operating lease right-of-use assets in the years ended December 31, 2022 and 2021, respectively. We added $70 million and $51 million of finance lease liabilities as a result of obtaining finance lease right-of-use assets in the years ended December 31, 2022 and 2021, respectively. Other Information The tables below present supplemental information related to leases:
| December 31,
Weighted-average remaining lease term (years) | 2022 |  | 2021 |  | 2020
Operating leases | 4.8 |  | 4.2 |  | 3.8
Finance leases | 9.6 |  | 6.9 |  | 6.8
| December 31,
Weighted-average discount rate | 2022 |  | 2021 |  | 2020
Operating leases | 3.32 | % |  | 3.27 | % |  | 3.29 | %
Finance leases | 3.46 | % |  | 3.67 | % |  | 4.04 | %
Maturities of Lease Liabilities The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of December 31, 2022 (in millions):
Period | Operating Leases | Finance Leases
2023 | $ | 62 |  | $ | 31 |
2024 | 50 |  | 24 |
2025 | 40 |  | 16 |
2026 | 31 |  | 11 |
2027 | 20 |  | 6 |
2028 and beyond | 24 |  | 69 |
Total minimum lease payments | 227 |  | 157 |
Less: implied interest | 23 |  | 26 |
Present value of future minimum lease payments | 204 |  | 131 |
Less: current lease obligations | 52 |  | 28 |
Long-term lease obligations | $ | 152 |  | $ | 103 |
LEASES | LEASES The Company leases certain equipment and facilities under both operating and finance leases expiring on various dates through 2050. The nature of these leases generally fall into the following five categories: real estate, material handling equipment, fleet vehicles, office equipment and energy equipment. For leases with initial terms greater than 12 months, we consider these our right-of-use assets and record the related asset and obligation at the present value of lease payments over the term. For leases with initial terms equal to or less than 12 months, we do not consider them as right-of-use assets and instead consider them short-term lease costs that are recognized on a straight-line basis over the lease term. Many of our leases include escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when reasonably certain. These options to extend or terminate a lease are at our discretion. We have elected to take the practical expedient and not separate lease and non-lease components of contracts. We estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our lease agreements do not contain any material residual value guarantees. Balance Sheet Classification The table below presents the lease-related assets and liabilities recorded on the balance sheet (in millions):
|  | December 31,
Leases | Classification on Balance Sheet | 2022 |  | 2021
Assets |  |  |  |
Operating lease assets | Operating lease right-of-use assets | $ | 204 |  |  | $ | 158 |
Finance lease assets | Other non-current assets | 127 |  |  | 95 |
Total lease assets |  | $ | 331 |  |  | $ | 253 |
Liabilities |  |  |  |
Current |  |  |  |
Operating | Current operating lease liabilities | $ | 52 |  |  | $ | 49 |
Finance | Other current liabilities | 28 |  |  | 25 |
Non-Current |  |  |  |
Operating | Non-current operating lease liabilities | 152 |  |  | 109 |
Finance | Long-term debt, net of current portion | 103 |  |  | 74 |
Total lease liabilities |  | $ | 335 |  |  | $ | 257 |
Lease Costs The table below presents lease-related costs (in millions):
| Twelve Months Ended December 31,
| 2022 |  | 2021 |  | 2020
Operating lease cost | $ | 67 |  |  | $ | 69 |  |  | $ | 71 |
Finance lease cost |  |  |  |  |
Amortization | $ | 30 |  |  | $ | 23 |  |  | $ | 16 |
Interest | $ | 4 |  |  | $ | 4 |  |  | $ | 3 |
Short-term lease cost | $ | 12 |  |  | $ | 7 |  |  | $ | 11 |
Variable lease cost | $ | 6 |  |  | $ | 5 |  |  | $ | 5 |
Cash paid for operating leases approximated operating lease expense for the years ended December 31, 2022, 2021 and 2020. Cash paid for finance leases included $30 million for financing activities and $4 million for operating activities for the year ended December 31, 2022. Cash paid for finance leases included $23 million for financing activities and $4 million for operating activities for the year ended December 31, 2021. Cash paid for finance leases included $16 million for financing activities and $3 million for operating activities for the year ended December 31, 2020. We added $119 million and $81 million of operating lease liabilities as a result of obtaining operating lease right-of-use assets in the years ended December 31, 2022 and 2021, respectively. We added $70 million and $51 million of finance lease liabilities as a result of obtaining finance lease right-of-use assets in the years ended December 31, 2022 and 2021, respectively. Other Information The tables below present supplemental information related to leases:
| December 31,
Weighted-average remaining lease term (years) | 2022 |  | 2021 |  | 2020
Operating leases | 4.8 |  | 4.2 |  | 3.8
Finance leases | 9.6 |  | 6.9 |  | 6.8
| December 31,
Weighted-average discount rate | 2022 |  | 2021 |  | 2020
Operating leases | 3.32 | % |  | 3.27 | % |  | 3.29 | %
Finance leases | 3.46 | % |  | 3.67 | % |  | 4.04 | %
Maturities of Lease Liabilities The table below reconciles the undiscounted cash flows for each of the first five years and the total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of December 31, 2022 (in millions):
Period | Operating Leases | Finance Leases
2023 | $ | 62 |  | $ | 31 |
2024 | 50 |  | 24 |
2025 | 40 |  | 16 |
2026 | 31 |  | 11 |
2027 | 20 |  | 6 |
2028 and beyond | 24 |  | 69 |
Total minimum lease payments | 227 |  | 157 |
Less: implied interest | 23 |  | 26 |
Present value of future minimum lease payments | 204 |  | 131 |
Less: current lease obligations | 52 |  | 28 |
Long-term lease obligations | $ | 152 |  | $ | 103 |

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- Definition The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI https://asc.fasb.org/subtopic&trid=77888251 + Details
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