Leased Properties

12 Months Ended

Dec. 31, 2023

We primarily lease real estate for retail stores, branches, distribution centers, office space and land. We also lease equipment (primarily vehicles).

Most real estate leases include one or more options to renew, with renewal terms that generally can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our discretion. We evaluate renewal options at lease inception and on an ongoing basis, and include renewal options that we are reasonably certain to exercise in the expected lease terms when classifying leases and measuring lease liabilities. We elected a policy of not recording leases on the consolidated balance sheets when the leases have a term of 12 months or less and we are not reasonably certain to elect an option to purchase the leased asset. Lease agreements generally do not require material variable lease payments, residual value guarantees or restrictive covenants.

The table below presents the locations of the operating lease assets and liabilities on the consolidated balance sheets:


(in thousands)	Balance Sheet Line Item	December 31, 2023		December 31, 2022
Operating lease assets	Operating lease assets	$	1,268,742	$	1,104,678

Operating lease liabilities:
Current operating lease liabilities	Other current liabilities	$	298,415	$	286,713
Noncurrent operating lease liabilities	Operating lease liabilities	$	979,938	$	836,019
Total operating lease liabilities		$	1,278,353	$	1,122,732

The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term.

Our leases generally do not provide an implicit rate, and therefore we use our incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment. We used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

Our weighted average remaining lease term and weighted average discount rate for operating leases are:


	December 31, 2023		December 31, 2022
Weighted average remaining lease term (in years)	6.34		5.32
Weighted average discount rate	3.67	%	2.51	%

The table below reconciles the undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2023 (in thousands):


2024	$	348,947
2025	303,037
2026	230,009
2027	166,920
2028	112,998
Thereafter	347,113
Total undiscounted future minimum lease payments	1,509,024
Less: Difference between undiscounted lease payments and discounted operating lease liabilities	230,671
Total operating lease liabilities	$	1,278,353

Future minimum lease payments include $52 million related to options to extend lease terms that are reasonably certain of being exercised. Future minimum lease payments exclude $77 million related to operating leases that have not yet commenced. These leases are expected to commence in 2024 with lease terms of 3 to 15 years.

The table below presents operating lease costs and supplemental cash flow information related to leases:


(in thousands)	2023		2022		2021
Operating lease costs	$	380,730	$	350,025	$	336,228
Cash paid for amounts included in the measurement of operating lease liabilities	$	389,610	$	358,767	$	340,243
Operating lease assets obtained in exchange for new operating lease liabilities	$	493,039	$	411,052	$	358,393

Operating lease costs are included within selling, administrative and other expenses on the consolidated statements of income. Short-term lease costs, variable lease costs and sublease income were not material for the periods presented. Cash paid for amounts included in the measurement of operating lease liabilities is included in operating activities in the consolidated statements of cash flows.