Leases

12 Months Ended

Dec. 31, 2023

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,
	2023		2022		2021
Fixed lease expenses	$	52	$	48	$	39
Variable lease expenses	35		40		37
Total lease expenses	$	87	$	88	$	76

Cash paid for leases	$	82	$	93	$	76

ROU assets obtained in exchange for lease obligations	$	55	$	72	$	32
Reductions of ROU assets and lease liabilities	(1)		(4)		—
Net non-cash increases to ROU assets and lease liabilities	$	54	$	68	$	32

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 (used in) 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 2023, 2022 and 2021 were not significant.

The weighted average remaining term of the Company’s leases was approximately 6 years each as of December 31, 2023, 2022 and 2021. The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6% as of December 31, 2023, and 5% as of December 31, 2022 and 2021.

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows (in millions):


2024	$	53
2025	43
2026	35
2027	27
2028	21
Thereafter	58
Total future minimum lease payments	$	237
Less: Interest	(43)
Present value of lease liabilities	$	194

Reported as of December 31, 2023:
Current portion of lease liabilities	$	42
Long-term lease liabilities	152
Present value of lease liabilities	$	194

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

Revenues earned from lease arrangements under which the Company is a lessor during the years ended December 31, 2023, 2022 and 2021 were not significant.