LEASES
The Company has leases for corporate offices, manufacturing facilities, research and development facilities and certain transportation and office equipment, the majority of which are operating leases. The Company’s leases have remaining lease terms of up to 50 years, some of which include options to extend the leases for up to 15 years.
The components of lease expense were as follows:
| | | | | | | | | | | | | | | | | |
| December 31, |
| (DOLLARS IN MILLIONS) | 2025 | | 2024 | | 2023 |
| Operating leases | | | | | |
| Operating lease cost | $ | 123 | | | $ | 126 | | | $ | 137 | |
| Variable lease cost | 68 | | | 58 | | | 56 | |
| Total operating lease cost | $ | 191 | | | $ | 184 | | | $ | 193 | |
| Finance leases | | | | | |
| Finance lease cost | $ | 14 | | | $ | 12 | | | $ | 10 | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | | | | | | | |
| December 31, |
| (DOLLARS IN MILLIONS) | 2025 | | 2024 | | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities | | | | | |
| Operating cash flows for operating leases | $ | 131 | | | $ | 122 | | | $ | 122 | |
| Operating cash flows for finance leases | 2 | | | 1 | | | 1 | |
| Financing cash flows for finance leases | 12 | | | 10 | | | 8 | |
| Right-of-use assets obtained in exchange for lease obligations | | | | | |
| Operating leases | 77 | | | 69 | | | 49 | |
| Finance leases | 20 | | | 16 | | | 22 | |
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | | | | |
| December 31, |
| (DOLLARS IN MILLIONS) | 2025 | | 2024 |
| Operating Leases | | | |
| Operating lease right-of-use assets | $ | 579 | | | $ | 589 | |
| | | |
Current operating lease obligations(2) | 92 | | | 82 | |
| Operating lease liabilities | 533 | | | 550 | |
| Total operating lease liabilities | $ | 625 | | | $ | 632 | |
| Finance Leases | | | |
Finance lease right-of-use assets(1) | $ | 32 | | | $ | 27 | |
| | | |
Current finance lease obligations(2) | 12 | | | 10 | |
Finance lease liabilities(3) | 20 | | | 18 | |
| Total finance lease liabilities | $ | 32 | | | $ | 28 | |
_______________________(1)Presented in Other assets on the Consolidated Balance Sheets.
(2)Presented in Other current liabilities on the Consolidated Balance Sheets.
(3)Presented in Other liabilities on the Consolidated Balance Sheets.
Weighted average remaining lease term and discount rate were as follows:
| | | | | | | | | | | |
| December 31, |
| 2025 | | 2024 |
| Weighted average remaining lease term in years | | | |
| Operating leases | 9.3 | | 9.7 |
| Finance leases | 4.4 | | 3.1 |
| Weighted average discount rate | | | |
| Operating leases | 4.07 | % | | 4.39 | % |
| Finance leases | 4.70 | % | | 4.63 | % |
Maturities of lease liabilities as of December 31, 2025 were as follows:
| | | | | | | | | | | | | | | | | |
| (DOLLARS IN MILLIONS) | Operating Leases | | Finance Leases | | Total |
| 2026 | $ | 117 | | | $ | 14 | | | $ | 131 | |
| 2027 | 102 | | | 10 | | | 112 | |
| 2028 | 88 | | | 5 | | | 93 | |
| 2029 | 76 | | | 2 | | | 78 | |
| 2030 | 70 | | | 1 | | | 71 | |
| Thereafter | 322 | | | 4 | | | 326 | |
| Total undiscounted liabilities | 775 | | | 36 | | | 811 | |
| Less: Imputed interest | (150) | | | (4) | | | (154) | |
| Total lease liabilities | $ | 625 | | | $ | 32 | | | $ | 657 | |
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.