LEASES
The Company enters into operating and finance leases for the use of real estate, vehicles, information technology equipment and certain other equipment. At contract inception, the Company determines a lease exists if the arrangement conveys the right to control an identified asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to obtain substantially all of the economic benefits from the use of an identified asset as well as the right to direct the use of that asset. If a contract is considered to be a lease, the Company recognizes a lease liability based on the present value of the future lease payments with an offsetting entry to recognize a right-of-use asset.
Operating lease right-of-use assets and liabilities are reflected on the Consolidated Balance Sheet as follows:
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| (In millions) | | 2025 | | 2024 |
| Operating lease right-of-use assets | | $ | 546 | | | $ | 554 | |
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| Accrued liabilities | | $ | (142) | | | $ | (135) | |
| Operating lease liabilities | | (418) | | | (432) | |
| Total operating lease liabilities | | $ | (560) | | | $ | (567) | |
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| Weighted-Average Remaining Lease Term (in years) | | 6.4 | | 6.8 |
| Weighted-Average Discount Rate | | 4.6 | % | | 4.5 | % |
Where applicable, the Company accounts for each separate lease component of a contract and its associated non-lease component as a single lease component.
Supplemental cash flow and lease expense information related to operating leases were as follows:
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| (In millions) | | 2025 | | 2024 | | 2023 |
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| Operating cash flows for measurement of operating lease liabilities | | $ | 179 | | | $ | 173 | | | $ | 135 | |
| Operating lease ROU assets obtained in exchange for operating lease obligations | | $ | 100 | | | $ | 112 | | | $ | 50 | |
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| Operating lease expense | | $ | 184 | | | $ | 175 | | | $ | 127 | |
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Operating lease expense is recognized on a straight-line basis over the lease term. In addition, the Company has certain leases that contain variable lease payments which are based on an index, a rate referenced in the lease or on the actual usage of the leased asset. These payments are not included in the right-of-use asset or lease liability and are expensed as incurred as variable lease expense.
Undiscounted maturities of operating lease liabilities as of December 31, 2025, are as follows:
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| (In millions) | | |
| 2026 | | $ | 163 | |
| 2027 | | 124 | |
| 2028 | | 95 | |
| 2029 | | 70 | |
| 2030 | | 50 | |
| Thereafter | | 147 | |
| Total undiscounted lease payments | | 649 | |
| Less: imputed interest | | (89) | |
| Total discounted lease payments | | $ | 560 | |
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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.