Leases

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

Leases

The Company has operating and finance leases for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment. The leases have remaining lease terms of 1 month to 24 years, some of which include options to extend the leases for up to 12 years, and some of which include options to terminate the leases within 1 month to 5 years. As of December 31, 2021 and 2020, assets recorded under finance leases included in Property, plant and equipment, net were $55 million and $52 million, respectively, and accumulated depreciation associated with finance leases was $10 million and $6 million as of December 31, 2021 and 2020, respectively.

The Company has elected the practical expedient not to separate lease components from non-lease components for all its underlying assets.

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

The components of lease expense were as follows:

	Year Ended December 31
(Dollars in millions)	2021		2020
Operating lease cost	$	24	$	24
Finance lease cost
Amortization of right-of-use assets	6		4
Interest on lease liabilities	2		2
Total finance lease cost	8		6
Short-term lease cost	1		1
Total lease cost	$	33	$	31

Other information related to leases was as follows:

Supplemental Cash Flows Information	Year Ended December 31
(Dollars in millions)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	23	$	23
Operating cash flows used for finance leases	2		2
Financing cash flows used for finance leases	4		2
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	22		17
Finance leases	6		17

	As of December 31
(Lease term in years and discount rate)	2021		2020
Weighted-average remaining lease term
Operating Leases	6		7
Finance Leases	9		10
Weighted-average discount rate
Operating leases	3.4	%	3.4	%
Finance leases	4.88	%	4.95	%

Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
2022	$	22	$	9
2023	19		9
2024	12		10
2025	9		4
2026	7		4
Thereafter	22		27
Total lease payments	91		63
Less imputed interest	9		13
Total lease liabilities	$	82	$	50

Lease obligations reported as of December 31, 2021 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
Other current liabilities	$	20	$	7
Lease liabilities - non current	62		43
Total lease liabilities	$	82	$	50

As of December 31, 2021, the Company has additional obligations of $16 million relating to leases, primarily for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment, that have not yet commenced. These leases will commence in 2022 with lease terms of 1 year to 12 years.

Leases

Leases

The Company has operating and finance leases for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment. The leases have remaining lease terms of 1 month to 24 years, some of which include options to extend the leases for up to 12 years, and some of which include options to terminate the leases within 1 month to 5 years. As of December 31, 2021 and 2020, assets recorded under finance leases included in Property, plant and equipment, net were $55 million and $52 million, respectively, and accumulated depreciation associated with finance leases was $10 million and $6 million as of December 31, 2021 and 2020, respectively.

The Company has elected the practical expedient not to separate lease components from non-lease components for all its underlying assets.

If the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rate as the discount rate. The Company uses its best judgment when determining the incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term to the lease payments in a similar currency.

The components of lease expense were as follows:

	Year Ended December 31
(Dollars in millions)	2021		2020
Operating lease cost	$	24	$	24
Finance lease cost
Amortization of right-of-use assets	6		4
Interest on lease liabilities	2		2
Total finance lease cost	8		6
Short-term lease cost	1		1
Total lease cost	$	33	$	31

Other information related to leases was as follows:

Supplemental Cash Flows Information	Year Ended December 31
(Dollars in millions)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows used for operating leases	$	23	$	23
Operating cash flows used for finance leases	2		2
Financing cash flows used for finance leases	4		2
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	22		17
Finance leases	6		17

	As of December 31
(Lease term in years and discount rate)	2021		2020
Weighted-average remaining lease term
Operating Leases	6		7
Finance Leases	9		10
Weighted-average discount rate
Operating leases	3.4	%	3.4	%
Finance leases	4.88	%	4.95	%

Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
2022	$	22	$	9
2023	19		9
2024	12		10
2025	9		4
2026	7		4
Thereafter	22		27
Total lease payments	91		63
Less imputed interest	9		13
Total lease liabilities	$	82	$	50

Lease obligations reported as of December 31, 2021 were as follows:

(Dollars in millions)	Operating Leases		Finance Leases
Other current liabilities	$	20	$	7
Lease liabilities - non current	62		43
Total lease liabilities	$	82	$	50

As of December 31, 2021, the Company has additional obligations of $16 million relating to leases, primarily for offices, manufacturing and research buildings, machinery, automobiles, data processing and other equipment, that have not yet commenced. These leases will commence in 2022 with lease terms of 1 year to 12 years.