Leases

12 Months Ended

Dec. 31, 2023

The Company has operating leases of real estate, consisting primarily of administrative offices, manufacturing and distribution facilities, and R&D facilities. We also have operating leases of certain equipment, primarily automobiles, and certain limited supply arrangements.

We elected to apply the practical expedient to not separate lease and non-lease components for our leases except for those related to certain limited supply arrangements. We have also elected to apply the short-term lease recognition exemption which means we will not recognize ROU assets or lease liabilities for leases with an initial term of 12 months of less.

As of December 31, 2023, the Company recognized ROU assets of $245.6 million and total lease liabilities of $248.4 million. The Company’s ROU assets are recorded in other assets. The related lease liability balances are recorded in other current liabilities and other long-term obligations in the consolidated balance sheets. Refer to Note 6 Balance Sheet Components for additional information.

ROU assets and liabilities are recognized at the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use an applicable incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. Options to extend or terminate the ROU assets are reviewed at lease inception and these options are accounted for when they are reasonably certain of being exercised.

Other information related to leases was as follows:


	As of December 31, 2023
Remaining lease terms	1 year to 21 years
Weighted-average remaining lease term	5 years
Weighted-average discount rate	3.3	%

As of December 31, 2023, maturities of lease liabilities were as follows for each of the years ending December 31:


(In millions)

2024	$	79.3
2025	62.7
2026	41.5
2027	30.4
2028	17.3
Thereafter	39.5
Total lease payments	$	270.7
Less imputed interest	22.3
Total lease liability	$	248.4

As of December 31, 2023, the Company had additional leases, primarily for administrative offices, that have not yet commenced totaling approximately $6.1 million. For the years ended December 31, 2023, 2022 and 2021, the Company had operating lease expense of approximately $87.6 million, $90.9 million and $97.6 million, respectively. Operating lease costs are classified primarily as SG&A and cost of sales in the consolidated statements of operations.