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LEASES
12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
LEASES LEASES
The Company has operating leases for real estate, an airplane, railcars, fleet, certain machinery and equipment, and information technology assets. The Company’s leases have remaining lease terms of approximately 1 year to 30 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the Company will exercise that option. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability.

Certain of the Company's leases include residual value guarantees. These residual value guarantees are based on a percentage of the lessor's asset acquisition price and the amount of such guarantee declines over the course of the lease term. The portion of residual value guarantees that are probable of payment is included in the related lease liability in the Consolidated Balance Sheet. At December 31, 2022, the Company has future maximum payments for residual value guarantees in operating leases of $21 million with final expirations through 2026. The Company's lease agreements do not contain any material restrictive covenants.

The components of lease cost for operating leases for the years ended December 31, 2022, 2021 and 2020 were as follows:
In millions202220212020
Operating lease cost$113 $105 $136 
Short-term lease cost
Variable lease cost39 38 45 
Less: Sublease income 1
12 11 
Total lease cost$144 $137 $176 
1.Reflects income associated with subleases, not inclusive of all lessor arrangements disclosed below.

Operating cash flows from operating leases, excluding those related to the M&M Divestitures, were $109 million, $105 million, and $134 million for the year ended December 31, 2022, 2021 and 2020, respectively.

New operating lease assets and liabilities entered into during the year ended December 31, 2022 and 2021 were $131 million and $129 million, respectively. Supplemental balance sheet information related to leases was as follows:
In millionsDecember 31, 2022December 31, 2021
Operating Leases
 
Operating lease right-of-use assets 1
$426 $422 
Current operating lease liabilities 2
90 92 
Noncurrent operating lease liabilities 3
333 337 
Total operating lease liabilities
$423 $429 
1.Included in "Deferred charges and other assets" in the Consolidated Balance Sheet.
2.Included in "Accrued and other current liabilities" in the Consolidated Balance Sheet.
3.Included in "Other noncurrent obligations" in the Consolidated Balance Sheet.

Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
Lease Term and Discount Rate for Operating LeasesDecember 31, 2022December 31, 2021
Weighted-average remaining lease term (years)8.18.5
Weighted-average discount rate2.76 %2.01 %
Maturities of lease liabilities were as follows:
Maturity of Lease Liabilities at December 31, 2022Operating Leases
In millions
2023$100 
202485 
202562 
202645 
202735 
2028 and thereafter153 
Total lease payments$480 
Less: Interest57 
Present value of lease liabilities$423 

The Company has leases in which it is the lessor, with the largest being a result of the N&B Transaction. In connection with the N&B Transaction and the M&M Divestiture, DuPont entered into leasing arrangements with IFF and Celanese, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories. These leases are classified as operating leases and lessor revenue and related expenses are not significant to the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations. Lease agreements where the Company is the lessor have final expirations through 2036.
Total lease revenue was $58 million for which the net profits recognized from these leases were approximately $14 million, both recorded in "Selling, general, and administrative expenses" and "Research and development expenses" for the year-ended December 31, 2022. Contractual lease revenue for 2023 through 2027 ranges from $70 million to $80 million annually.
Lessor, Operating Leases LEASES
The Company has operating leases for real estate, an airplane, railcars, fleet, certain machinery and equipment, and information technology assets. The Company’s leases have remaining lease terms of approximately 1 year to 30 years. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend the lease when it is reasonably certain that the Company will exercise that option. Some leasing arrangements require variable payments that are dependent on usage, output, or may vary for other reasons, such as insurance and tax payments. The variable lease payments are not presented as part of the initial ROU asset or lease liability.

Certain of the Company's leases include residual value guarantees. These residual value guarantees are based on a percentage of the lessor's asset acquisition price and the amount of such guarantee declines over the course of the lease term. The portion of residual value guarantees that are probable of payment is included in the related lease liability in the Consolidated Balance Sheet. At December 31, 2022, the Company has future maximum payments for residual value guarantees in operating leases of $21 million with final expirations through 2026. The Company's lease agreements do not contain any material restrictive covenants.

The components of lease cost for operating leases for the years ended December 31, 2022, 2021 and 2020 were as follows:
In millions202220212020
Operating lease cost$113 $105 $136 
Short-term lease cost
Variable lease cost39 38 45 
Less: Sublease income 1
12 11 
Total lease cost$144 $137 $176 
1.Reflects income associated with subleases, not inclusive of all lessor arrangements disclosed below.

Operating cash flows from operating leases, excluding those related to the M&M Divestitures, were $109 million, $105 million, and $134 million for the year ended December 31, 2022, 2021 and 2020, respectively.

New operating lease assets and liabilities entered into during the year ended December 31, 2022 and 2021 were $131 million and $129 million, respectively. Supplemental balance sheet information related to leases was as follows:
In millionsDecember 31, 2022December 31, 2021
Operating Leases
 
Operating lease right-of-use assets 1
$426 $422 
Current operating lease liabilities 2
90 92 
Noncurrent operating lease liabilities 3
333 337 
Total operating lease liabilities
$423 $429 
1.Included in "Deferred charges and other assets" in the Consolidated Balance Sheet.
2.Included in "Accrued and other current liabilities" in the Consolidated Balance Sheet.
3.Included in "Other noncurrent obligations" in the Consolidated Balance Sheet.

Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide the lessor’s implicit rate, the Company uses its incremental borrowing rate at the commencement date in determining the present value of lease payments.
Lease Term and Discount Rate for Operating LeasesDecember 31, 2022December 31, 2021
Weighted-average remaining lease term (years)8.18.5
Weighted-average discount rate2.76 %2.01 %
Maturities of lease liabilities were as follows:
Maturity of Lease Liabilities at December 31, 2022Operating Leases
In millions
2023$100 
202485 
202562 
202645 
202735 
2028 and thereafter153 
Total lease payments$480 
Less: Interest57 
Present value of lease liabilities$423 

The Company has leases in which it is the lessor, with the largest being a result of the N&B Transaction. In connection with the N&B Transaction and the M&M Divestiture, DuPont entered into leasing arrangements with IFF and Celanese, whereby DuPont is leasing certain properties, including office spaces and R&D laboratories. These leases are classified as operating leases and lessor revenue and related expenses are not significant to the Company’s Consolidated Balance Sheet or Consolidated Statement of Operations. Lease agreements where the Company is the lessor have final expirations through 2036.
Total lease revenue was $58 million for which the net profits recognized from these leases were approximately $14 million, both recorded in "Selling, general, and administrative expenses" and "Research and development expenses" for the year-ended December 31, 2022. Contractual lease revenue for 2023 through 2027 ranges from $70 million to $80 million annually.