LEASES

12 Months Ended

Dec. 31, 2023

Leases [Abstract]

LEASES

LEASES

The Company leases real estate, machinery, equipment, and vehicles under agreements with contractual periods ranging from 1 month to 24 years. Leases generally contain extension or renewal options, and some leases contain termination options. After considering all relevant economic and financial factors, the Company includes periods covered by renewal or extension options that are reasonably certain to be exercised in the lease term and excludes periods covered by termination options that are reasonably certain to be exercised from the lease term. The Company determines whether a contractual arrangement is or contains a lease at inception.

The Company has lease agreements with lease and non-lease components and has elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, with the exception of leases of real estate which is comprised of land and buildings. For leases of land and buildings, the Company accounts for each component separately based on the relative estimated standalone price of each component. At lease commencement, the Company measures the lease liability at the present value of lease payments not yet paid. All variable payments that are not based on a market rate or an index (e.g., the Consumer Price Index) are excluded from the measurement of the lease liability and instead are recognized as expense when probable the payments will be made. Because the discount rate implicit in the lease is not determinable for most leases, the Company determines the appropriate discount rate using the estimated incremental borrowing rate for the lease based on the information available at lease commencement. Right-of-use assets are measured at the amount of the lease liability, adjusted for prepaid or accrued lease payments, lease incentives, and initial direct costs incurred, as applicable.

Leases that are economically similar to the purchase of an asset are classified as finance leases. The Company’s carrying value of finance leases is not material for the years ended December 31, 2021 and 2022.

The Company and the State of Georgia and the Joint Development Authority of Jasper County, Morgan County, Newton County and Walton County (“JDA”) entered into a development agreement in May 2022 to build the manufacturing facility near Atlanta, Georgia (“Stanton Springs North Facility”). In November 2023, the Company and the JDA entered into a rental agreement, a bond purchase agreement, and an option agreement (the “Project Agreements”) pursuant to which the JDA is leasing land to the Company in exchange for the Company making rent payments totaling $309 million over the lease term. The noncancelable lease term is four years with automatic extensions reasonably certain to be utilized. The lease expires in December 2047 unless earlier terminated per the terms of the agreement. The lease is classified as a finance lease as the Company is reasonably certain to exercise the purchase option at expiration. Under the Project Agreements, the Company is required to make capital expenditures in the project of at least $5 billion by December 31, 2030 in exchange for various development incentives, tax credits and exemptions, and government grants.

Lease expense for operating leases is comprised of rent expense recognized on a straight-line basis over the lease term and amortization of right-of-use assets recognized as the difference between rent expense and imputed interest on the liability using the effective interest method. Lease expense for finance leases is comprised of interest expense on the liability recognized using the effective interest method and amortization of the right-of-use assets recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term. The Company does not recognize right-of-use assets and lease liabilities for short-term leases with an original lease term of 12 months or less. Instead, expense representing the rent payments is recognized on a straight-line basis over the lease term.

Lease assets are recorded net of accumulated amortization. The following tables present the carrying value of operating and finance lease right-of-use assets and lease liabilities recorded within the corresponding line items on the Company’s Consolidated Balance Sheets (in millions):

Operating Leases	December 31, 2022		December 31, 2023
Operating lease assets, net	$	330	$	356
Current portion of lease liabilities and other current liabilities	$	68	$	85
Long-term lease liabilities	311		324
Total operating lease liabilities	$	379	$	409

Finance Leases	December 31, 2023
Property, plant, and equipment, net	$	76
Current portion of lease liabilities and other current liabilities	$	3
Other non-current liabilities	76
Total finance lease liabilities	$	79

The following table summarizes the contractual maturities of lease liabilities as of December 31, 2023 (in millions):

	Operating Leases		Finance Leases
2024	$	120	$	5
2025	103		3
2026	86		2
2027	74		2
2028	50		2
Thereafter	91		301
Total undiscounted liabilities	524		315
Less: Present value discount	(115)		(236)
Total lease liabilities	$	409	$	79

The future minimum lease payments for operating and finance leases that have not yet commenced are not material. The leases will commence in 2024 and 2025 with lease terms ranging from 3 to 12 years.

Total lease cost for the year ended December 31, 2021 was not material. Total lease cost for the years ended December 31, 2022 and 2023 was $86 million and $134 million, respectively, was comprised primarily of operating lease cost and recorded in “Selling, general, and administrative”, “Research and development”, and “Cost of revenues” in the Consolidated Statements of Operations.

The weighted average remaining lease term and weighted average discount rate for leases were as follows:

	December 31, 2021		December 31, 2022		December 31, 2023
Weighted average remaining operating lease term (in years)	6.1		5.9		5.3
Weighted average operating lease discount rate	4.0	%	7.0	%	8.9	%
Weighted average remaining finance lease term (in years)	Not material				22.1
Weighted average finance lease discount rate	Not material				10.7	%

Supplemental cash flow information related to leases is as follows (in millions):

	Years Ended December 31,
	2021		2022		2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	31	$	65	$	102
Right-of-use assets obtained in exchange for operating lease liabilities (non-cash)	$	87	$	158	$	111
Right-of-use assets obtained in exchange for finance lease liabilities (non-cash)	Not material				$	80

LEASES

LEASES

The Company leases real estate, machinery, equipment, and vehicles under agreements with contractual periods ranging from 1 month to 24 years. Leases generally contain extension or renewal options, and some leases contain termination options. After considering all relevant economic and financial factors, the Company includes periods covered by renewal or extension options that are reasonably certain to be exercised in the lease term and excludes periods covered by termination options that are reasonably certain to be exercised from the lease term. The Company determines whether a contractual arrangement is or contains a lease at inception.

The Company has lease agreements with lease and non-lease components and has elected to utilize the practical expedient to account for lease and non-lease components together as a single combined lease component, with the exception of leases of real estate which is comprised of land and buildings. For leases of land and buildings, the Company accounts for each component separately based on the relative estimated standalone price of each component. At lease commencement, the Company measures the lease liability at the present value of lease payments not yet paid. All variable payments that are not based on a market rate or an index (e.g., the Consumer Price Index) are excluded from the measurement of the lease liability and instead are recognized as expense when probable the payments will be made. Because the discount rate implicit in the lease is not determinable for most leases, the Company determines the appropriate discount rate using the estimated incremental borrowing rate for the lease based on the information available at lease commencement. Right-of-use assets are measured at the amount of the lease liability, adjusted for prepaid or accrued lease payments, lease incentives, and initial direct costs incurred, as applicable.

Leases that are economically similar to the purchase of an asset are classified as finance leases. The Company’s carrying value of finance leases is not material for the years ended December 31, 2021 and 2022.

The Company and the State of Georgia and the Joint Development Authority of Jasper County, Morgan County, Newton County and Walton County (“JDA”) entered into a development agreement in May 2022 to build the manufacturing facility near Atlanta, Georgia (“Stanton Springs North Facility”). In November 2023, the Company and the JDA entered into a rental agreement, a bond purchase agreement, and an option agreement (the “Project Agreements”) pursuant to which the JDA is leasing land to the Company in exchange for the Company making rent payments totaling $309 million over the lease term. The noncancelable lease term is four years with automatic extensions reasonably certain to be utilized. The lease expires in December 2047 unless earlier terminated per the terms of the agreement. The lease is classified as a finance lease as the Company is reasonably certain to exercise the purchase option at expiration. Under the Project Agreements, the Company is required to make capital expenditures in the project of at least $5 billion by December 31, 2030 in exchange for various development incentives, tax credits and exemptions, and government grants.

Lease expense for operating leases is comprised of rent expense recognized on a straight-line basis over the lease term and amortization of right-of-use assets recognized as the difference between rent expense and imputed interest on the liability using the effective interest method. Lease expense for finance leases is comprised of interest expense on the liability recognized using the effective interest method and amortization of the right-of-use assets recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term. The Company does not recognize right-of-use assets and lease liabilities for short-term leases with an original lease term of 12 months or less. Instead, expense representing the rent payments is recognized on a straight-line basis over the lease term.

Lease assets are recorded net of accumulated amortization. The following tables present the carrying value of operating and finance lease right-of-use assets and lease liabilities recorded within the corresponding line items on the Company’s Consolidated Balance Sheets (in millions):

Operating Leases	December 31, 2022		December 31, 2023
Operating lease assets, net	$	330	$	356
Current portion of lease liabilities and other current liabilities	$	68	$	85
Long-term lease liabilities	311		324
Total operating lease liabilities	$	379	$	409

Finance Leases	December 31, 2023
Property, plant, and equipment, net	$	76
Current portion of lease liabilities and other current liabilities	$	3
Other non-current liabilities	76
Total finance lease liabilities	$	79

The following table summarizes the contractual maturities of lease liabilities as of December 31, 2023 (in millions):

	Operating Leases		Finance Leases
2024	$	120	$	5
2025	103		3
2026	86		2
2027	74		2
2028	50		2
Thereafter	91		301
Total undiscounted liabilities	524		315
Less: Present value discount	(115)		(236)
Total lease liabilities	$	409	$	79

The future minimum lease payments for operating and finance leases that have not yet commenced are not material. The leases will commence in 2024 and 2025 with lease terms ranging from 3 to 12 years.

Total lease cost for the year ended December 31, 2021 was not material. Total lease cost for the years ended December 31, 2022 and 2023 was $86 million and $134 million, respectively, was comprised primarily of operating lease cost and recorded in “Selling, general, and administrative”, “Research and development”, and “Cost of revenues” in the Consolidated Statements of Operations.

The weighted average remaining lease term and weighted average discount rate for leases were as follows:

	December 31, 2021		December 31, 2022		December 31, 2023
Weighted average remaining operating lease term (in years)	6.1		5.9		5.3
Weighted average operating lease discount rate	4.0	%	7.0	%	8.9	%
Weighted average remaining finance lease term (in years)	Not material				22.1
Weighted average finance lease discount rate	Not material				10.7	%

Supplemental cash flow information related to leases is as follows (in millions):

	Years Ended December 31,
	2021		2022		2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	31	$	65	$	102
Right-of-use assets obtained in exchange for operating lease liabilities (non-cash)	$	87	$	158	$	111
Right-of-use assets obtained in exchange for finance lease liabilities (non-cash)	Not material				$	80