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Leases | 12 Months Ended
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Dec. 31, 2023
Leases [Abstract] |
Leases | Leases The Company recognizes a right of use (“ROU”) asset and a liability for all leases whose term is more than 12 months at the lease inception date. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, which includes any extension the Company reasonably expects to exercise. The Company assesses whether certain service arrangements contain embedded leases where the contract conveys the right to use an asset but is not explicitly identified as a lease arrangement; examples include information technology, third-party logistics and original equipment manufacturers. The Company uses incremental borrowing rates, updated quarterly, that reflect its own external unsecured borrowing rates that are risk-adjusted to approximate secured borrowing rates over similar terms. For certain non-real estate leases, the portfolio approach is used. The Company also has lease agreements with lease and non-lease components, which are accounted for as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease assets and operating lease liabilities are reported as separate lines in the Consolidated Balance Sheets. The current portion of operating lease liabilities is reported in other accrued liabilities in the Consolidated Balance Sheets. For finance leases, lease payments are allocated between interest expense and reduction of the liability in accordance with an amortization schedule. The corresponding asset is amortized on a straight-line basis over the lease term. Assets acquired under finance leases are reported in property, plant and equipment, net in the Consolidated Balance Sheets. The depreciable life of leasehold improvements and other lease-related assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Supplemental consolidated balance sheet information for leases at December 31, is as follows (in millions):
|  | Classification |  | 2023 |  | 2022
Assets |  |  |  |  |  |
Operating leases |  | Operating lease assets |  | $ | 515 |  |  | $ | 578 |
Finance leases |  | Property, plant and equipment, net (1) |  | — |  |  | 2 |
Total lease assets |  |  |  | $ | 515 |  |  | $ | 580 |
Liabilities |  |  |  |  |  |
Current |  |  |  |  |  |
Operating leases |  | Other accrued liabilities |  | $ | 122 |  |  | $ | 121 |
Finance leases |  | Short-term debt and current portion of long-term debt |  | — |  |  | 1 |
Noncurrent |  |  |  |  |  |
Operating leases |  | Operating lease liabilities |  | 446 |  |  | 512 |
Finance leases |  | Long-term debt |  | — |  |  | 1 |
Total lease liabilities |  |  |  | $ | 568 |  |  | $ | 635 |
(1)Net of accumulated depreciation of $4 million and $18 million, respectively. Components of lease expense for the years ended December 31, are as follows (in millions):
|  | 2023 |  | 2022 |  | 2021
Operating lease cost: |  |  |  |  |  |
Operating lease cost (1) |  | $ | 172 |  |  | $ | 172 |  |  | $ | 166 |
Variable lease costs (2) |  | 24 |  |  | 21 |  |  | 23 |
Finance lease cost |  |  |  |  |  |
Amortization of leased assets |  | 1 |  |  | 4 |  |  | 4 |
(1)Includes short-term leases, which are immaterial. (2)Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales. Remaining lease term and discount rates at December 31, are as follows:
| 2023 |  | 2022
Weighted-average remaining lease term (years): |  |  |
Operating leases | 7 |  | 8
Finance leases | 0 |  | 1
Weighted-average discount rate: |  |  |
Operating leases | 4.3% |  | 4.6%
Finance leases | —% |  | 0.8%
Supplemental cash flow information related to leases for the years ended December 31, are as follows (in millions):
| 2023 |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows from operating leases | $ | 162 |  |  | $ | 160 |  |  | $ | 163 |
Financing cash flows from finance leases | — |  |  | 3 |  |  | 4 |
Right of use assets obtained in exchange for lease liabilities: |  |  |  |  |
Operating leases | 46 |  |  | 135 |  |  | 144 |
Maturities of lease liabilities at December 31, 2023, are as follows (in millions):
| Operating Leases |  |
2024 | $ | 146 |  |  |
2025 | 116 |  |  |
2026 | 89 |  |  |
2027 | 68 |  |  |
2028 | 60 |  |  |
Thereafter | 173 |  |  |
Total lease payments | 652 |  |  |
Less: imputed interest | (84) |  |  |
Present value of lease liabilities | $ | 568 |  |  |
Leases | Leases The Company recognizes a right of use (“ROU”) asset and a liability for all leases whose term is more than 12 months at the lease inception date. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, which includes any extension the Company reasonably expects to exercise. The Company assesses whether certain service arrangements contain embedded leases where the contract conveys the right to use an asset but is not explicitly identified as a lease arrangement; examples include information technology, third-party logistics and original equipment manufacturers. The Company uses incremental borrowing rates, updated quarterly, that reflect its own external unsecured borrowing rates that are risk-adjusted to approximate secured borrowing rates over similar terms. For certain non-real estate leases, the portfolio approach is used. The Company also has lease agreements with lease and non-lease components, which are accounted for as a single lease component. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease assets and operating lease liabilities are reported as separate lines in the Consolidated Balance Sheets. The current portion of operating lease liabilities is reported in other accrued liabilities in the Consolidated Balance Sheets. For finance leases, lease payments are allocated between interest expense and reduction of the liability in accordance with an amortization schedule. The corresponding asset is amortized on a straight-line basis over the lease term. Assets acquired under finance leases are reported in property, plant and equipment, net in the Consolidated Balance Sheets. The depreciable life of leasehold improvements and other lease-related assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Supplemental consolidated balance sheet information for leases at December 31, is as follows (in millions):
|  | Classification |  | 2023 |  | 2022
Assets |  |  |  |  |  |
Operating leases |  | Operating lease assets |  | $ | 515 |  |  | $ | 578 |
Finance leases |  | Property, plant and equipment, net (1) |  | — |  |  | 2 |
Total lease assets |  |  |  | $ | 515 |  |  | $ | 580 |
Liabilities |  |  |  |  |  |
Current |  |  |  |  |  |
Operating leases |  | Other accrued liabilities |  | $ | 122 |  |  | $ | 121 |
Finance leases |  | Short-term debt and current portion of long-term debt |  | — |  |  | 1 |
Noncurrent |  |  |  |  |  |
Operating leases |  | Operating lease liabilities |  | 446 |  |  | 512 |
Finance leases |  | Long-term debt |  | — |  |  | 1 |
Total lease liabilities |  |  |  | $ | 568 |  |  | $ | 635 |
(1)Net of accumulated depreciation of $4 million and $18 million, respectively. Components of lease expense for the years ended December 31, are as follows (in millions):
|  | 2023 |  | 2022 |  | 2021
Operating lease cost: |  |  |  |  |  |
Operating lease cost (1) |  | $ | 172 |  |  | $ | 172 |  |  | $ | 166 |
Variable lease costs (2) |  | 24 |  |  | 21 |  |  | 23 |
Finance lease cost |  |  |  |  |  |
Amortization of leased assets |  | 1 |  |  | 4 |  |  | 4 |
(1)Includes short-term leases, which are immaterial. (2)Consists primarily of additional payments for non-lease components, such as maintenance costs, payments of taxes and additional rent based on a level of the Company’s retail store sales. Remaining lease term and discount rates at December 31, are as follows:
| 2023 |  | 2022
Weighted-average remaining lease term (years): |  |  |
Operating leases | 7 |  | 8
Finance leases | 0 |  | 1
Weighted-average discount rate: |  |  |
Operating leases | 4.3% |  | 4.6%
Finance leases | —% |  | 0.8%
Supplemental cash flow information related to leases for the years ended December 31, are as follows (in millions):
| 2023 |  | 2022 |  | 2021
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |
Operating cash flows from operating leases | $ | 162 |  |  | $ | 160 |  |  | $ | 163 |
Financing cash flows from finance leases | — |  |  | 3 |  |  | 4 |
Right of use assets obtained in exchange for lease liabilities: |  |  |  |  |
Operating leases | 46 |  |  | 135 |  |  | 144 |
Maturities of lease liabilities at December 31, 2023, are as follows (in millions):
| Operating Leases |  |
2024 | $ | 146 |  |  |
2025 | 116 |  |  |
2026 | 89 |  |  |
2027 | 68 |  |  |
2028 | 60 |  |  |
Thereafter | 173 |  |  |
Total lease payments | 652 |  |  |
Less: imputed interest | (84) |  |  |
Present value of lease liabilities | $ | 568 |  |  |

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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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + 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 -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//842-20/tableOfContent + Details
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