| | |
15. Leases and Contingencies |
LEASES
Our operating leases primarily consist of leased office space, automobiles, and information technology equipment and have remaining lease terms of one to nine years.
Our operating right-of-use asset and lease liability balances were $120 million and $129 million, respectively, at December 31, 2025 and $152 million and $162 million, respectively, at December 31, 2024.
At December 31, 2025, maturities of lease liabilities, excluding leases on a month-to-month basis, were as follows: | | | | | | | | |
| (dollars in millions) | | Operating Leases |
| | |
| | |
| | |
| | |
| 2026 | | $ | 54 | |
| 2027 | | 41 | |
| 2028 | | 23 | |
| 2029 | | 12 | |
| 2030 | | 5 | |
| Thereafter | | 3 | |
| Total lease payments | | 138 | |
| Imputed interest | | (9) | |
| Total | | $ | 129 | |
| | | | | | | | |
| Weighted Average Remaining Lease Term | | 3.13 |
| Weighted Average Discount Rate | | 4.99 | % |
Operating lease cost and variable lease cost, which are recorded in Other operating expenses in our consolidated statements of operations, were as follows:
| | | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | | | | | |
| Years Ended December 31, | | 2025 | | 2024 | | 2023 |
| | | | | | |
| Operating lease cost | | $ | 62 | | | $ | 69 | | | $ | 63 | |
| Variable lease cost | | 15 | | | 16 | | | 15 | |
| Total | | $ | 77 | | | $ | 85 | | | $ | 78 | |
Our sublease income was immaterial for the years ended December 31, 2025, 2024, and 2023.
LEGAL CONTINGENCIES
In the normal course of business, we have been named, from time to time, as defendants in various legal actions, including arbitrations, class actions, and other litigation arising in connection with our activities. Some of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. Additionally, we are, from time to time, in the normal course of business, subject to inquiries and investigations by federal, state, and local governmental authorities regarding our products and our operations. These inquiries and investigations may result in fines, restitution, or other penalties, including injunctive relief that may result in restrictions on our business. While we will continue to evaluate legal actions to determine whether a loss is reasonably possible or probable and is reasonably estimable, there can be no assurance that material losses will not be incurred from pending, threatened or future litigation, investigations, examinations, or other claims.
We contest liability and/or the amount of damages, as appropriate, in each pending matter. Where available information indicates that it is probable that a liability had been incurred at the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many actions, however, it is inherently difficult to determine whether any loss is probable or even reasonably possible, or to estimate the amount of any loss. In addition, even where loss is reasonably possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss.
For certain legal actions, we cannot reasonably estimate such losses, particularly for actions that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the actions in question, before a loss or additional loss or range of loss or range of additional loss can be reasonably estimated for any given action.
For certain other legal actions, we can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but do not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on our consolidated financial statements as a whole.