Leases

12 Months Ended

Dec. 31, 2023

Note L: Leases

The Company has leases, primarily for equipment, railcars, fleet vehicles, office space, land, information technology equipment and software. The Company’s leases have remaining lease terms ranging from less than one year to 96 years, some of which may include options to extend the leases for up to 30 years, and some of which may include options to terminate the leases within one year.

Certain of the Company’s lease agreements include payments based upon variable rates, including, but not limited to, hours used, tonnage processed and factors related to indices. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The components of lease cost are as follows:


years ended December 31 (in millions)	2023		2022		2021
Operating lease cost	$	76.5	$	73.1	$	72.9
Finance lease cost:
Amortization of right-of-use assets		21.2		18.3		14.3
Interest on lease liabilities		4.8		4.4		3.5
Variable lease cost		18.5		16.5		17.9
Short-term lease cost		46.2		45.2		32.3
Total lease cost	$	167.2	$	157.5	$	140.9

The Company has royalty agreements that are prescriptively excluded from the scope of ASC 842 and generally require royalty payments based on tons produced, tons sold or total sales dollars and also contain minimum payments. Royalty expense was $86.2 million, $78.2 million and $67.1 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The balance sheet classifications of operating and finance leases are as follows:


December 31 (in millions)	2023			2022
Operating leases:
Operating lease right-of-use assets	$	371.6		$	383.5

Current operating lease liabilities	$	53.3		$	52.1
Noncurrent operating lease liabilities		326.7			335.9
Total operating lease liabilities	$	380.0		$	388.0

Finance leases:
Property, plant and equipment	$	253.5		$	236.9
Accumulated depreciation		(58.8	)		(39.4	)
Property, plant and equipment, net	$	194.7		$	197.5

Other current liabilities	$	20.1		$	17.8
Other noncurrent liabilities		179.5			182.1
Total finance lease liabilities	$	199.6		$	199.9

The incremental borrowing rate ranged from 0.0% to 6.0% for the years ended December 31, 2023 and 2022. Weighted-average remaining lease terms and discount rates are as follows:


December 31		2023		2022
Weighted-average remaining lease terms (years):
Operating leases	11.7		12.2
Finance leases	18.3		19.1

Weighted-average discount rates:
Operating leases	4.3%		4.0%
Finance leases	2.6%		2.3%

Future lease payments as of December 31, 2023 are as follows:


	Operating			Finance
(in millions)	Leases			Leases
2024	$	69.1		$	25.0
2025		60.8			21.1
2026		52.2			13.9
2027		42.1			12.8
2028		36.4			12.0
Thereafter		254.3			171.5
Total lease payments		514.9			256.3
Less: imputed interest		(119.4	)		(55.9	)
Present value of lease payments		395.5			200.4
Less: leases classified as held for sale		(15.5	)		(0.8	)
Less: current lease obligations		(53.3	)		(20.1	)
Total long-term lease obligations	$	326.7		$	179.5