Leases

12 Months Ended

Dec. 31, 2022

Leases

Leases

Note 5 − Leases

Seaboard leases ports, vessels, contract grower assets, and to a lesser extent, land, buildings and machinery and equipment. Seaboard’s non-lease components are primarily for services related to labor associated with crew services on vessel charter arrangements and caring for hogs in its contract grower agreements.

Seaboard’s operating lease assets and liabilities are reported separately in the consolidated balance sheets. The classifications of Seaboard’s finance leases in the consolidated balance sheets were as follows:

(Millions of dollars)			2022		2021
Finance lease right of use assets, net	Property, plant and equipment, net	$	198	$	128
Finance lease liabilities	Other current liabilities		56		23
Non-current finance lease liabilities	Other liabilities		143		104

Lease cost is included in various line items in the consolidated statements of comprehensive income or capitalized to inventory. Operating lease cost and short-term lease cost are recognized on a straight-line basis over the lease term. Finance lease cost is recognized based on the effective interest method for the lease liability and straight-line amortization of the ROU asset. Variable lease payments are recognized when the circumstance on which those payments are assessed occurs.

The components of lease cost were as follows for the years ended December 31:

(Millions of dollars)		2022		2021		2020
Operating lease cost	$	184	$	162	$	145
Finance lease cost:
Amortization of right of use assets		46		17		9
Interest on lease liabilities		6		5		4
Variable lease cost (a)		18		20		8
Short-term lease cost (b)		13		27		25
Sublease income		(6)		(8)		(6)
Total lease cost	$	261	$	223	$	185

(a)   Includes throughput of cargo containers in excess of minimums and changes in indexed charter-hire rates.

(b)   Short-term term leases are primarily for cargo containers and vessels.

Weighted-average lease terms and discount rates were as follows as of December 31, 2022 and 2021:

	Operating Leases		Finance Leases
	2022	2021	2022	2021
Weighted-average remaining term (in years)	5	4	5	7
Weighted-average discount rate	6.13%	5.37%	3.44%	4.16%

Maturities of lease liabilities as of December 31, 2022 were as follows:

		Operating		Finance
(Millions of dollars)		Leases		Leases
2023	$	175	$	61
2024		101		55
2025		69		32
2026		62		18
2027		48		12
Thereafter		108		45
Total undiscounted lease payments		563		223
Less imputed interest		(89)		(24)
Total lease liability	$	474	$	199

The following table includes supplemental cash and non-cash information related to leases. Seaboard reports the amortization of ROU assets and changes in operating lease liabilities in other liabilities, exclusive of debt in the consolidated statements of cash flows.

	December 31,
(Millions of dollars)		2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	194	$	166	$	142
Operating cash flows from finance leases		6		5		4
Financing cash flows from finance leases		44		14		7
ROU assets obtained in exchange for new lease liabilities:
Operating leases	$	118	$	244	$	62
Finance leases		116		54		50