Leases

12 Months Ended

Dec. 31, 2022

As a lessee, the company leases certain logistics, office, and manufacturing facilities, as well as vehicles, copiers, and other equipment. These operating leases generally have remaining lease terms between 1 month and 30 years, and some include options to extend (generally for 1 to 10 years) or have options to terminate the arrangement within 1 year.

The company has guaranteed the residual value of three leased operating facilities with lease terms ending in 2023, 2024 and 2025. The company has agreed with the lessor to comply with certain financial covenants consistent with its other debt arrangements (Note 10). The aggregate maximum guarantee under these three lease arrangements is $147 million. Operating lease ROU assets and lease liabilities for these lease arrangements are recorded on the consolidated balance sheet as of December 31, 2022, but exclude any amounts for residual value guarantees.

As a lessee, the consolidated financial statements include the following relating to operating leases:


(Dollars in millions)	2022			2021			2020





Statement of income
Operating lease costs	$	351		$	254		$	224
Variable lease costs	109			66			49

Statement of cash flows
Cash used in operating activities for payments of amounts included in the measurement of operating lease liabilities	$	289		$	288		$	222
Operating lease ROU assets obtained in exchange for new operating lease liabilities	430			293			202

Balance sheet
ROU assets	$	1,593		$	1,531
Operating lease liabilities - current	272			266
Operating lease liabilities - noncurrent	1,313			1,203

Weighted average at end of year
Remaining operating lease term	9.4 years			9.9 years
Discount rate	3.2		%	2.6		%

ROU assets are classified in other assets in the consolidated balance sheet. Operating lease liabilities are classified in other accrued expenses and other long-term liabilities, respectively, in the consolidated balance sheet.

Lease costs arising from finance leases, short-term leases, and sublease income are not material. See Note 10 for additional information relating to finance leases.

As of December 31, 2022, future payments of operating lease liabilities are as follows:


(In millions)
2023	$	321
2024	293
2025	220
2026	172
2027	136
2028 and thereafter	730
Total lease payments	1,872
Less: imputed interest	287
Total operating lease liability	$	1,585

As a lessor, operating leases, sales-type leases and direct financing leases are not material.