Leases (Notes)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Lessee, Operating Leases

.    LEASESOur lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, rail cars to transport our products, and a fleet of vehicles. We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease term for all our leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

As of December 31, 2022, our weighted average discount rate was four percent, and our weighted average remaining lease term was eleven years for operating leases.

Our operating leases are included in our Consolidated Balance Sheets and Consolidated Statement of Incomes as follows (dollars in millions):

	Classification	December 31,
Consolidated Balance Sheet		2022		2021
Assets:
Operating lease assets	Operating lease assets, net	$	44	$	50
Total lease assets		$	44	$	50
Liabilities:
Current
Operating	Accounts payable and accrued liabilities	$	8	$	7
Non-current
Operating	Non-current operating lease liabilities	41		44
Total lease liabilities		$	49	$	51

For the years ended December 31, 2022, and 2021, we incurred operating lease expenses of $10 million and $10 million, respectively, included within costs of sales and selling, general and administrative expenses. We made cash payments of $9 million and $8 million during the years ended December 31, 2022, and 2021, respectively, related to our operating leases.

We obtained right of use (ROU) assets in exchange for new operating lease liabilities of $4 million and $18 million for the years ended December 31, 2022, and 2021, respectively. We did not enter into any financing leases during 2022 or 2021.

The following table sets forth the minimum lease payments that are expected to be made in each of the years indicated (dollars in millions).

	Operating Leases
2023	$	8
2024	6
2025	5
2026	5
2027	4
2028 and thereafter	33
Total lease payments	63
Less: Interest	(13)
Present value of lease liabilities	$	49