Leases

12 Months Ended

Dec. 31, 2021

The Company leases various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles. All leases are classified as operating leases with remaining terms of up to 11 years, with certain leases containing renewal options and termination options.

The Company records ROU assets and lease liabilities on the Consolidated Balance Sheets associated with the fixed lease and non-lease payments of leases with terms greater than one year.

The following table presents activities associated with our leases (in millions):


	December 31,
	2021		2020		2019
Fixed lease expenses	$	39	$	35	$	37
Variable lease expenses	37		34		29
Total lease expenses	$	76	$	69	$	66

Cash paid for leases	$	76	$	69	$	67

ROU assets obtained in exchange for lease obligations	$	32	$	55	$	42
Reductions of ROU assets and lease liabilities	—		(3)		(16)
Net non-cash increases to ROU assets and lease liabilities	$	32	$	52	$	26

Variable lease expenses incurred were not included in the measurement of the Company’s ROU assets and lease liabilities. These expenses consisted primarily of distribution center service costs that were based on product distribution volumes, as well as non-fixed common area maintenance, real estate taxes, and other operating costs associated with various facility leases. Expenses related to short term leases were not significant.

Cash payments for leases are included within Net cash provided by operating activities on the Consolidated Statements of Cash Flows.

ROU assets obtained in exchange for lease obligations primarily include new lease arrangements entered into by the Company. ROU assets obtained in exchange for lease obligations also include contract modifications that extend lease terms and/or provide us additional rights, changes in assessments that render it reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period, as well as lease arrangements obtained through acquisitions.

Reductions of the Company’s ROU assets and lease liabilities generally relate to modifications to lease agreements that result in a reduction to future minimum lease payments, as well as changes in assessments that render it no longer reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period. The Company’s reduction of ROU assets and lease liabilities during 2021 and 2020 were not significant, whereas the 2019 reduction was primarily related to a modification to a distribution center lease agreement that resulted in a reduction to fixed future minimum lease payments.

The weighted average remaining term of the Company’s leases was approximately 6 years each as of December 31, 2021, 2020 and 2019. The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 5% as of December 31, 2021 and 2020, and 6% as of December 31, 2019.

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


2022	$	40
2023	36
2024	30
2025	24
2026	18
Thereafter	27
Total future minimum lease payments	$	175
Less: Interest	(21)
Present value of lease liabilities	$	154

Reported as of December 31, 2021:
Current portion of lease liabilities	$	33
Long-term lease liabilities	121
Present value of lease liabilities	$	154

The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheets.

As of December 31, 2021, the Company had future fixed payments of approximately $40 million related to a new distribution center lease agreement that had not yet commenced. This new lease agreement is expected to commence in 2022 and has a 5 year term.

Revenues earned from lease arrangements under which the Company is a lessor during the years ended December 31, 2021, 2020 and 2019 were not significant.