Leases

12 Months Ended

Dec. 31, 2021

NOTE 10. LEASES

We determine if an arrangement is or contains a lease at inception and recognize a right-of-use (“ROU”) asset and a lease liability for all leases with terms greater than 12 months. We have operating leases for office space, warehouses, distribution centers, research and development facilities, manufacturing locations, and certain equipment, primarily automobiles. Many leases include optional terms, ranging from options to terminate the lease in less than one year to options to extend the lease for up to 23 years. We include optional periods as part of the lease term when we determine that we are reasonably certain to exercise the renewal option or we will not early terminate the lease. Reasonably certain is based on economic incentives and represents a high threshold. We have lease agreements with lease and non-lease components, and we have elected the practical expedient for all underlying asset classes to account for the lease and related non-lease component(s) as a single lease component. Our finance lease and lessor arrangements are immaterial.

Lease-related balances are presented in the following three line items on the Consolidated Balance Sheet: (i) operating lease right-of-use assets; (ii) current operating lease liabilities; and (iii) operating lease liabilities.

Operating lease cost was $60 million, $60 million, and $58 million for the years ended December 31, 2021, 2020, and 2019, respectively. Short-term and variable lease cost was immaterial for the years ended December 31, 2021, 2020, and 2019.

During the years ended December 31, 2021 and 2020, cash paid for operating leases included in operating cash flows was $53 million and $52 million, respectively. ROU assets obtained in exchange for operating lease liabilities were $34 million and $55 million for the years ended December 31, 2021 and 2020, respectively.

The following table presents the maturities of our operating lease liabilities as of December 31, 2021 ($ in millions):


2022	$	45.6
2023	36.7
2024	27.6
2025	19.5
2026	15.6
Thereafter	58.3
Total lease payments	203.3
Less: imputed interest	(18.8)
Total lease liabilities	$	184.5

As of December 31, 2021 and 2020, the weighted average lease term of our operating leases was 7.85 years and 7.5 years, respectively, and the weighted average discount rate of our operating leases was 2.6% and 2.8%, respectively. We primarily use our incremental borrowing rate as the discount rate for our operating leases, as we are generally unable to determine the interest rate implicit in the lease.

As of December 31, 2021, we did not enter into any operating leases for which the lease term had not yet commenced.