LEASES

12 Months Ended

Dec. 31, 2023

NOTE 9. 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 recorded within 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 $49 million, $56 million, and $60 million for the years ended December 31, 2023, 2022, and 2021, respectively.

During the years ended December 31, 2023 and 2022, cash paid for operating leases included in operating cash flows was $47 million and $50 million, respectively. Operating lease ROU assets obtained in exchange for operating lease liabilities were $31 million and $32 million for the years ended December 31, 2023 and 2022, respectively. Operating lease ROU assets were $155 million and $162 million as of December 31, 2023 and 2022, respectively. Operating lease liabilities were $164 million and $169 million as of December 31, 2023 and 2022.

The following table presents the maturities of our operating lease liabilities as of December 31, 2023 ($ in millions):


2024	$	42.2
2025	35.9
2026	28.9
2027	22.1
2028	13.5
Thereafter	41.1
Total lease payments	183.7
Less: imputed interest	(19.8)
Total operating lease liabilities	$	163.9

As of December 31, 2023 and 2022, the weighted average lease term of our operating leases was 9 years and 7 years, respectively, and the weighted average discount rate of our operating leases was 3.6% and 3.0%, 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, 2023, we did not enter into operating leases for which the lease term had not yet commenced.