Leases

12 Months Ended

Dec. 31, 2022

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 10 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,
	2022		2021		2020
Fixed lease expenses	$	48	$	39	$	35
Variable lease expenses	40		37		34
Total lease expenses	$	88	$	76	$	69

Cash paid for leases	$	93	$	76	$	69

ROU assets obtained in exchange for lease obligations	$	72	$	32	$	55
Reductions of ROU assets and lease liabilities	(4)		—		(3)
Net non-cash increases to ROU assets and lease liabilities	$	68	$	32	$	52

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 include new lease arrangements entered into by the Company as well as 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 2022, 2021 and 2020 were not significant.

The weighted average remaining term of the Company’s leases was approximately 6 years each as of December 31, 2022, 2021 and 2020. The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 5% each as of December 31, 2022, 2021, and 2020.

Future minimum lease payments under non-cancellable leases as of December 31, 2022 were as follows (in millions):


2023	$	45
2024	43
2025	31
2026	23
2027	17
Thereafter	48
Total future minimum lease payments	$	207
Less: Interest	(31)
Present value of lease liabilities	$	176

Reported as of December 31, 2022:
Current portion of lease liabilities	$	37
Long-term lease liabilities	139
Present value of lease liabilities	$	176

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

As of December 31, 2022, the Company had future fixed payments of approximately $36 million related to a new office facility lease agreement that had not yet commenced. This new lease agreement is expected to commence in 2023 and has a 10-year term.

Revenues earned from lease arrangements under which the Company is a lessor during the years ended December 31, 2022, 2021 and 2020 were not significant.