Leases

12 Months Ended

Dec. 31, 2022

The Company has operating leases for production, office and warehouse facilities, manufacturing and office equipment and vehicles. Operating lease assets and obligations included in the accompanying consolidated balance sheet are shown below (in millions):


December 31,	2022		2021
Right-of-use assets under operating leases:
Other long-term assets	$	701.8	$	627.9
Lease obligations under operating leases:
Accrued liabilities	$	136.8	$	125.6
Other long-term liabilities	595.1		523.6
	$	731.9	$	649.2

Maturities of lease obligations as of December 31, 2022, are shown below (in millions):


2023	$	159.7
2024	140.3
2025	119.5
2026	101.1
2027	83.2
Thereafter	215.9
Total undiscounted cash flows	819.7
Less: Imputed interest	(87.8)
Lease obligations under operating leases	$	731.9

In addition to the right-of-use assets obtained in exchange for operating lease obligations shown below, the Company acquired $34.1 million of right-of-use assets and related lease obligations in connection with its acquisition of Kongsberg ICS (Note 4, "Acquisition of Kongsberg ICS") in 2022.

The Company entered into a lease contract that commences in the first quarter of 2023. The contract has a lease term of approximately ten years and a right-of-use asset and related lease obligation of $15.8 million.

Cash flow information related to operating leases is shown below (in millions):


For the year ended December 31,	2022		2021		2020
Non-cash activity:
Right-of-use assets obtained in exchange for operating lease obligations	$	236.1	$	258.4	$	135.1
Operating cash flows:
Cash paid related to operating lease obligations	$	164.3	$	164.2	$	143.8

Lease expense included in the accompanying consolidated statement of income is shown below (in millions):


For the year ended December 31,	2022		2021		2020
Operating lease expense	$	164.5	$	160.3	$	148.6
Short-term lease expense	22.1		19.4		15.4
Variable lease expense	8.4		7.9		8.0
Total lease expense	$	195.0	$	187.6	$	172.0

The Company's short-term lease expense excludes leases with a duration of one month or less.

Variable lease expense includes payments based on performance or usage, as well as changes to index and rate-based lease payments. Additionally, the Company evaluated its supply contracts with its customers and concluded that variable lease expense in these arrangements is not material.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized impairment charges of $6.5 million, $7.2 million and $2.0 million, respectively, related to its right-of-use assets in conjunction with its restructuring actions (Note 5, "Restructuring"). In the year ended December 31, 2022, the Company recognized additional right-of-use asset impairment charges of $7.0 million related to its Russian operations (Note 2, "Current Operating Environment"). The impairment charges are included in cost of sales in the accompanying consolidated statements of income.

The weighted average lease term and discount rate for operating leases as of December 31, 2022, are shown below:


Weighted average remaining lease term	Seven years
Weighted average discount rate	3.5	%