6. Leases
The following table summarizes the components of lease cost:
| | | | | | | | | | | | | | | | | |
| | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Operating lease cost | $ | 157 | | | $ | 120 | | | $ | 112 | |
| | | | | |
| Finance lease cost | 51 | | | 39 | | | 31 | |
| | | | | |
| | | | | |
| | | | | |
| Variable lease cost | 43 | | | 31 | | | 21 | |
| | | | | |
| Total lease cost | $ | 251 | | | $ | 190 | | | $ | 164 | |
Variable lease cost primarily includes payments for property taxes, maintenance, and insurance.
The following table summarizes supplemental balance sheet and other information related to leases at June 30:
| | | | | | | | | | | |
| (in millions) | 20251 | | 2024 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 758 | | | $ | 475 | |
| | | |
| Current portion of operating lease liabilities | 164 | | | 117 | |
| Long-term operating lease liabilities | 654 | | | 400 | |
| Total operating lease liabilities | 818 | | | 517 | |
| | | |
| Finance Leases | | | |
| Finance lease right-of-use assets | 192 | | | 102 | |
| | | |
| Current portion of finance lease liabilities | 44 | | | 33 | |
| Long-term finance lease liabilities | 157 | | | 75 | |
| Total finance lease liabilities | $ | 201 | | | $ | 108 | |
| | | |
| Weighted-average remaining lease term (years) | | | |
| Operating leases | 5.9 years | | 5.5 years |
| Finance leases | 6.3 years | | 4.1 years |
| | | |
| Weighted-average discount rate | | | |
| Operating leases | 3.9 | % | | 4.1 | % |
| Finance leases | 4.6 | % | | 4.4 | % |
1 Increases in the right-of-use asset and liability balances are primarily due to acquisitions.
Operating leases are included in other assets, other accrued liabilities, and deferred income taxes and other liabilities in our consolidated balance sheets. Finance leases are included in property and equipment, net, current portion of long-term obligations and other short-term borrowings, and long-term obligations, less current portion in our consolidated balance sheets.
The following table summarizes supplemental cash flow information related to leases:
| | | | | | | | | | | | | | | | | |
| | | | | |
| (in millions) | 2025 | | 2024 | | 2023 |
| Cash paid for lease liabilities: | | | | | |
| Operating cash flows paid for operating leases | $ | 167 | | | $ | 124 | | | $ | 119 | |
| | | | | |
| Financing cash flows paid for finance leases | 53 | | | 36 | | | 31 | |
| Non-cash right-of-use assets obtained in exchange for lease obligations: | | | | | |
| New operating leases | 130 | | | 143 | | | 75 | |
| New finance leases | 107 | | | 55 | | | 42 | |
| | | | | |
Future lease payments under non-cancellable leases as of June 30, 2025 were as follows:
| | | | | | | | | | | | | | | | | | |
| (in millions) | Operating Leases | | Finance Leases | | Total | |
| | | | | | |
| 2026 | $ | 197 | | | $ | 52 | | | $ | 249 | | |
| 2027 | 174 | | | 45 | | | 219 | | |
| 2028 | 146 | | | 35 | | | 181 | | |
| 2029 | 111 | | | 25 | | | 136 | | |
| 2030 | 97 | | | 19 | | | 116 | | |
| Thereafter | 199 | | | 57 | | | 256 | | |
| Total future lease payments | 924 | | | 233 | | | 1,157 | | |
| | | | | | |
| Less: imputed interest | 106 | | | 32 | | | 138 | | |
| Total lease liabilities | $ | 818 | | | $ | 201 | | | $ | 1,019 | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
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.