NOTE 12 LEASES The Company determines whether a contract contains a lease at the inception of a contract by determining if the contract conveys the right to control the use of identi fied property, plant or equipment for a period of time in exchange for consideration. We lease certain real estate, machinery, equipment, vehicles and office equipment for varying periods. Many of these leases include an option to either renew or termina te the lease. For purposes of calculating lease liabilities, these options are included within the lease term when it has become reasonably certain that the Company will exercise such options. The incremental borrowing rate utilized to calculate our leas e liabilities is based on the information available at commencement date, as most of the leases do not provide an implicit borrowing rate. Our operating lease agreements do not contain any material guarantees or restrictive covenants. The Company does no t have any material finance leases or sublease activities. Short - term leases, defined as leases with initial terms of 12 months or less, are not reflected on the Consolidated Balance Sheets. Lease expense for such short - term leases is not material. The most significant assets in our leasing portfolio relate to real estate and vehicles. For purposes of calculating lease liabilities for such leases, we have combined lease and non - lease components. The components of the Company’s total operating lease cost for the years ended June 30, 2022, 2021 and 2020, were as follows: Years ended June 30 2022 2021 2020 Operating lease cost 220 245 271 Variable lease cost (1) 89 75 76 Total lease cost $ 309 $ 320 $ 347 (1) Includes primarily costs for utilities, common area maintenance, property taxes and other operating costs associated with operating leases that are not included in the lease liability and are recognized in the period in which they are incurred. Supplemental balance sheet and other information related to leases is as follows: As of June 30 2022 2021 Operating leases: Right - of - use assets (Other noncurrent assets) $ 760 $ 808 Current lease liabilities (Accrued and other liabilities) 205 219 Noncurrent lease liabilities (Other noncurrent liabilities) 595 631 Total operating lease liabilities $ 800 $ 850 Weighted average remaining lease term: Operating leases 6.4 years 6.4 years Weighted average discount rate: Operating leases 3.2 % 3.8 % At June 30, 2022, future payments of operating lease liabilities were as follows: Operating Leases June 30, 2022 1 year $ 206 2 years 179 3 years 135 4 years 92 5 years 64 Over 5 years 209 Total lease payments 885 Less: Interest (85) Present value of lease liabilities $ 800 Total cash paid for amounts included in the measurement of lease liabilities was $228 and $253 for the years ended June 30, 2022, and June 30, 2021, respectively. The right - of - use assets obtained in exchange for lease liabilities were $217 and $163 for t he years ended June 30, 2022, and June 30, 2021, respectively. Amounts in millions of dollars except per share amounts or as otherwise specified. 62 The Procter & Gamble Company