LEASES

12 Months Ended

Dec. 31, 2022

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 20 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.

Lease-related balances are presented in the following three line items on the Consolidated Balance Sheet: (i) Other assets; (ii) Accrued expenses and Other current liabilities; and (iii) Other long-term liabilities.

Operating lease cost was $56 million, $60 million, and $60 million for the years ended December 31, 2022, 2021, and 2020, respectively.

During the years ended December 31, 2022 and 2021, cash paid for operating leases included in operating cash flows was $50 million and $53 million, respectively. Operating lease ROU assets obtained in exchange for operating lease liabilities were $32

million and $34 million for the years ended December 31, 2022 and 2021, respectively. Operating lease ROU assets were $162.0 million and $175.6 million as of December 31, 2022 and 2021, respectively.

The following table presents the maturities of our operating lease liabilities as of December 31, 2022 ($ in millions):


2023	$	36.2
2024	34.6
2025	26.4
2026	21.7
2027	15.4
Thereafter	52.9
Total lease payments	187.2
Less: imputed interest	(17.8)
Total operating lease liabilities	$	169.4

As of December 31, 2022 and 2021, the weighted average lease term of our operating leases was 7 years and 8 years, respectively, and the weighted average discount rate of our operating leases was 3.0% and 2.6%, 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, 2022, we did not enter into operating leases for which the lease term had not yet commenced.