Leases
The Company's lease transactions are primarily for the use of facilities, vehicles and office equipment under operating lease arrangements. Total rental expense for operating leases for the twelve months ended December 31, 2025, 2024 and 2023 was $149 million, $143 million and $132 million, respectively. Total rental expense for the twelve months ended December 31, 2025, 2024 and 2023 included $75 million, $65 million and $60 million, respectively, related to short-term operating leases and variable lease payments. Short-term operating leases have original terms of one year or less, or can be terminated at the Company's option with a short notice period and without significant penalty, and are not capitalized.
The following table summarizes information related to the Company's capitalized operating leases for 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | |
| Dollars in millions | 2025 | | 2024 | | 2023 |
| Rental expense related to capitalized operating leases | $ | 74 | | | $ | 78 | | | $ | 72 | |
| Cash paid related to maturities of operating lease liabilities | $ | 70 | | | $ | 77 | | | $ | 70 | |
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | 75 | | | $ | 79 | | | $ | 82 | |
| | | | | |
Right-of-use assets | $ | 294 | | | $ | 266 | | | |
| | | | | |
| Current portion of operating lease liabilities | $ | 62 | | | $ | 57 | | | |
| Long-term portion of operating lease liabilities | 180 | | | 158 | | | |
| Operating lease liabilities | $ | 242 | | | $ | 215 | | | |
| | | | | |
| Weighted-average remaining lease term | 5.1 years | | 4.7 years | | |
| Weighted-average discount rate | 3.53 | % | | 3.30 | % | | |
The right-of-use assets related to operating leases and the current and long-term portions of operating lease liabilities were included in Other assets, Accrued expenses and Other liabilities, respectively, in the Statement of Financial Position. The weighted-average discount rate was based on the incremental borrowing rate of the Company and its subsidiaries. As of December 31, 2025, future maturities of operating lease liabilities for the twelve months ending December 31 were as follows:
| | | | | |
| In millions | |
| 2026 | $ | 69 | |
| 2027 | 60 | |
| 2028 | 44 | |
| 2029 | 31 | |
| 2030 | 22 | |
| 2031 and future years | 41 | |
| Total future minimum lease payments | 267 | |
| Less: Imputed interest | (25) | |
| Operating lease liabilities | $ | 242 | |
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.