LEASESAs disclosed in further detail in Note 2, “SIGNIFICANT ACCOUNTING POLICIES”, the Company leases certain facilities, vehicles and equipment principally under multi-year agreements. In addition, in 2025 the Company entered into a sale and master lease agreement with a third party. Under this agreement, on October 2, 2025, the Company sold various fixed asset equipment, for a sale price of $36 million, and then leased the equipment back through a three-year leaseback transaction. This transaction did not qualify as a sale under the applicable accounting guidance, and, as such, the associated equipment remained included within Property, plant and equipment, net. The Company refers to these failed sale-leasebacks as "other financial liabilities" and recorded the related obligations in Current portion of long-term debt and other financial liabilities and Long-term debt and other financial liabilities in the Consolidated Balance Sheets.
Right-of-use assets and lease liabilities associated with the Company's operating leases and fixed asset equipment and other financial liabilities associated with the Company's leaseback transaction are included in the Consolidated Balance Sheets as follows:
| | | | | | | | | | | |
| (in millions) | December 31, 2025 | | December 31, 2024 |
| Right-of-use assets included in: | | | |
| Other non-current assets | $ | 160 | | | $ | 151 | |
| | | |
| Fixed asset equipment included in: | | | |
| Property, plant and equipment, net | $ | 36 | | | $ | — | |
| | | |
| Lease liabilities included in: | | | |
| Accrued and other current liabilities | $ | 38 | | | $ | 32 | |
| Other non-current liabilities | 125 | | | 120 | |
Current portion of long-term debt and other financial liabilities | 11 | | | — | |
Long-term debt and other financial liabilities | 23 | | | — | |
| Total lease liabilities | $ | 197 | | | $ | 152 | |
As of December 31, 2025 and 2024, the Company's finance leases were not material and for 2025 and 2024 sub-lease income and short-term lease expense were not material. Lease expense for 2025 and 2024 includes:
| | | | | | | | | | | |
| (in millions) | 2025 | | 2024 |
| Operating lease costs | $ | 54 | | | $ | 46 | |
| Variable operating lease costs | $ | 10 | | | $ | 10 | |
| Amortization of other financial liabilities | $ | — | | | $ | — | |
| Interest on other financial liabilities | $ | 1 | | | $ | — | |
Other information related to operating leases and other financial liabilities for 2025 and 2024 is as follows:
| | | | | | | | | | | |
| (dollars in millions) | 2025 | | 2024 |
| Cash paid from operating cash flows for amounts included in the measurement of lease liabilities | $ | 51 | | | $ | 42 | |
| Cash paid from operating cash flows for other financial liabilities | $ | 1 | | | $ | — | |
| Cash paid from financing cash flows for other financial liabilities | $ | 2 | | | $ | — | |
| Cash received from financing cash flows for other financial liabilities | $ | 36 | | | $ | — | |
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | 39 | | | $ | 73 | |
| Weighted-average remaining lease term - operating leases | 7.3 years | | 7.4 years |
| Weighted-average remaining lease term - other financial liabilities | 2.8 years | | — |
| Weighted-average discount rate - operating leases | 7.6 | % | | 7.5 | % |
| Weighted-average discount rate - other financial liabilities | 7.5 | % | | — |
As of December 31, 2025, future payments under noncancellable operating leases, and, under the leaseback agreement that did not qualify as a sale, for each of the five succeeding years ending December 31 and thereafter are as follows:
| | | | | | | | | | | | |
| (in millions) | | Operating Leases | | Other Financial Liabilities |
| 2026 | | $ | 49 | | | $ | 13 | |
| 2027 | | 40 | | | 13 | |
| 2028 | | 28 | | | 12 | |
| 2029 | | 15 | | | — | |
| 2030 | | 13 | | | — | |
| Thereafter | | 72 | | | — | |
| Total | | 217 | | | 38 | |
| Less: Imputed interest | | 54 | | | 4 | |
| Present value of remaining lease payments | | 163 | | | 34 | |
| Less: Current portion | | 38 | | | 11 | |
| Non-current portion | | $ | 125 | | | $ | 23 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.