Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

Lessee

The Company has mainly operating lease contracts for buildings, plant and machinery, vehicles, IT equipment and machinery.

Leases with a term of 12 months or less are not recorded in the balance sheet. For the leases the Company recognized, on a straight-line basis over the lease term, lease expense of $13 million and $5 million and for the year ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022 and 2021, the Company incurred operating lease expenses of $74 million and $69 million, respectively.

At December 31, 2022 and 2021, the Company has recorded approximately $225 million and $194 million of a right-of-use asset, respectively, and $228 million and $196 million of lease liability included in Other Assets and Other Liabilities, respectively. At December 31, 2022 and 2021 the weighted average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted average discount rate for operating leases were 5.9 years and 3.8%, and 5.5 years and 3.6%, respectively.

During the year ended December 31, 2022 and 2021, leased assets obtained in exchange for operating lease obligations were $114 million and $50 million, respectively. During the year ended December 31, 2022 and 2021, operating cash outflow for amounts included in the measurement of operating lease obligations was $73 million and $68 million, respectively.

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

	Amount
Operating Leases	(in millions)
2023	$	63
2024	46
2025	37
2026	31
2027	23
2028 and thereafter	59
Total future minimum lease payments	$	259
Less: Interest	31
Total	$	228

Lessor

The Company, primarily through its Financial Services segment, leases equipment to retail customers under operating leases. Our leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenue for non-lease components are accounted for separately.

A summary of equipment on operating leases as of December 31, 2022, and 2021 is as follows:

	2022		2021
	(in millions)
Equipment on operating leases	$	1,894	$	2,167
Accumulated depreciation	(392)		(429)
Net equipment on operating leases	$	1,502	$	1,738

Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $207 million, $241 million and $242 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table sets out a maturity analysis of operating lease payments, showing the undiscounted lease payments to be received after the reporting date:

	Amount
	(in millions)
2023	$	197
2024	134
2025	72
2026	27
2027	8
2028 and thereafter	—
Total undiscounted lease payments	$	438

Leases

Leases

Lessee

The Company has mainly operating lease contracts for buildings, plant and machinery, vehicles, IT equipment and machinery.

Leases with a term of 12 months or less are not recorded in the balance sheet. For the leases the Company recognized, on a straight-line basis over the lease term, lease expense of $13 million and $5 million and for the year ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022 and 2021, the Company incurred operating lease expenses of $74 million and $69 million, respectively.

At December 31, 2022 and 2021, the Company has recorded approximately $225 million and $194 million of a right-of-use asset, respectively, and $228 million and $196 million of lease liability included in Other Assets and Other Liabilities, respectively. At December 31, 2022 and 2021 the weighted average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted average discount rate for operating leases were 5.9 years and 3.8%, and 5.5 years and 3.6%, respectively.

During the year ended December 31, 2022 and 2021, leased assets obtained in exchange for operating lease obligations were $114 million and $50 million, respectively. During the year ended December 31, 2022 and 2021, operating cash outflow for amounts included in the measurement of operating lease obligations was $73 million and $68 million, respectively.

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

	Amount
Operating Leases	(in millions)
2023	$	63
2024	46
2025	37
2026	31
2027	23
2028 and thereafter	59
Total future minimum lease payments	$	259
Less: Interest	31
Total	$	228

Lessor

The Company, primarily through its Financial Services segment, leases equipment to retail customers under operating leases. Our leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenue for non-lease components are accounted for separately.

A summary of equipment on operating leases as of December 31, 2022, and 2021 is as follows:

	2022		2021
	(in millions)
Equipment on operating leases	$	1,894	$	2,167
Accumulated depreciation	(392)		(429)
Net equipment on operating leases	$	1,502	$	1,738

Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $207 million, $241 million and $242 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table sets out a maturity analysis of operating lease payments, showing the undiscounted lease payments to be received after the reporting date:

	Amount
	(in millions)
2023	$	197
2024	134
2025	72
2026	27
2027	8
2028 and thereafter	—
Total undiscounted lease payments	$	438

Leases

Leases

Lessee

The Company has mainly operating lease contracts for buildings, plant and machinery, vehicles, IT equipment and machinery.

Leases with a term of 12 months or less are not recorded in the balance sheet. For the leases the Company recognized, on a straight-line basis over the lease term, lease expense of $13 million and $5 million and for the year ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022 and 2021, the Company incurred operating lease expenses of $74 million and $69 million, respectively.

At December 31, 2022 and 2021, the Company has recorded approximately $225 million and $194 million of a right-of-use asset, respectively, and $228 million and $196 million of lease liability included in Other Assets and Other Liabilities, respectively. At December 31, 2022 and 2021 the weighted average remaining lease term (calculated on the basis of the remaining lease term and the lease liability balance for each lease) and the weighted average discount rate for operating leases were 5.9 years and 3.8%, and 5.5 years and 3.6%, respectively.

During the year ended December 31, 2022 and 2021, leased assets obtained in exchange for operating lease obligations were $114 million and $50 million, respectively. During the year ended December 31, 2022 and 2021, operating cash outflow for amounts included in the measurement of operating lease obligations was $73 million and $68 million, respectively.

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

	Amount
Operating Leases	(in millions)
2023	$	63
2024	46
2025	37
2026	31
2027	23
2028 and thereafter	59
Total future minimum lease payments	$	259
Less: Interest	31
Total	$	228

Lessor

The Company, primarily through its Financial Services segment, leases equipment to retail customers under operating leases. Our leases typically have terms of 3 to 5 years with options available for the lessee to purchase the equipment at the lease term date. Revenue for non-lease components are accounted for separately.

A summary of equipment on operating leases as of December 31, 2022, and 2021 is as follows:

	2022		2021
	(in millions)
Equipment on operating leases	$	1,894	$	2,167
Accumulated depreciation	(392)		(429)
Net equipment on operating leases	$	1,502	$	1,738

Depreciation expense on equipment on operating leases is recorded in "Other, net" and amounted to $207 million, $241 million and $242 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table sets out a maturity analysis of operating lease payments, showing the undiscounted lease payments to be received after the reporting date:

	Amount
	(in millions)
2023	$	197
2024	134
2025	72
2026	27
2027	8
2028 and thereafter	—
Total undiscounted lease payments	$	438