Leases:
PMI has operating and finance leases that are principally for real estate (office space, warehouses and retail store space), machinery and equipment, and vehicles. Lease terms range from 1 year to 68 years, some of which include options to renew, which are reasonably certain to be renewed. Lease terms may also include options to terminate the lease. The exercise of a lease renewal or termination option is at PMI’s discretion.
PMI’s operating and finance leases at December 31, 2025 and 2024, were as follows:
| | | | | | | | | | | | | | |
| At December 31, |
| (in millions) | 2025 | 2024 |
| Operating Leases | Finance Leases | Operating Leases | Finance Leases |
| Assets: | | | | |
| Machinery and equipment | $ | — | | $ | 165 | | $ | — | | $ | 126 | |
| Other assets | 679 | | — | | 585 | | — | |
| Total lease assets | $ | 679 | | $ | 165 | | $ | 585 | | $ | 126 | |
| | | | |
| Liabilities: | | | | |
| Current | | | | |
| Current portion of long-term debt | $ | — | | $ | 35 | | $ | — | | $ | 37 | |
| Accrued liabilities - Other | 207 | | — | | 177 | | — | |
| Noncurrent | | | | |
| Long-term debt | — | | 49 | | — | | 30 | |
| Other liabilities | 526 | | — | | 427 | | — | |
| Total lease liabilities | $ | 733 | | $ | 84 | | $ | 604 | | $ | 67 | |
The components of PMI’s lease cost were as follows for the years ended December 31, 2025, 2024 and 2023:
| | | | | | | | | | | | |
| For the Years Ended December 31, | |
| (in millions) | 2025 | 2024 | 2023 | |
| Operating lease cost | $ | 313 | | $ | 283 | | $ | 266 | | |
| Finance lease cost: | | | | |
| Amortization of right-of-use assets | 58 | | 72 | | 49 | | |
| Interest on lease liabilities | 2 | | 2 | | 1 | | |
| Short-term lease cost | 63 | | 63 | | 59 | | |
| Variable lease cost | 32 | | 28 | | 28 | | |
| Total lease cost | $ | 468 | | $ | 448 | | $ | 403 | | |
Maturity of PMI’s lease liabilities, on an undiscounted basis, as of December 31, 2025, were as follows:
| | | | | | | | |
| (in millions) | Operating Leases | Finance Leases |
| 2026 | $ | 244 | | $ | 38 | |
| 2027 | 177 | | 21 | |
| 2028 | 125 | | 16 | |
| 2029 | 80 | | 11 | |
| 2030 | 53 | | 3 | |
| Thereafter | 204 | | — | |
| Total lease payments | 883 | | 89 | |
| Less: Interest | 150 | | 5 | |
| Present value of lease liabilities | $ | 733 | | $ | 84 | |
Other information related to PMI’s leases was as follows for the years ended December 31, 2025, 2024 and 2023:
| | | | | | | | | | | | | | | | | | | | |
| December 31, |
| (in millions) | 2025 | 2024 | 2023 |
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | Operating Leases | Finance Leases |
Cash paid for amounts included in the measurement of lease liabilities in operating cash flows (1) | $ | 309 | | $ | — | | $ | 281 | | $ | — | | $ | 265 | | $ | — | |
| Cash paid for amounts included in the measurement of lease liabilities in financing cash flows | $ | — | | $ | 41 | | $ | — | | $ | 29 | | $ | — | | $ | 27 | |
| Leased assets obtained in exchange for new lease liabilities | $ | 277 | | $ | 91 | | $ | 214 | | $ | 73 | | $ | 205 | | $ | 55 | |
| Weighted-average remaining lease term (years) | 10.0 | 3.0 | 10.4 | 2.6 | 10.2 | 2.6 |
Weighted-average discount rate(2) (3) | 6.0 | % | 4.2 | % | 5.9 | % | 4.4 | % | 5.1 | % | 4.9 | % |
(1) Cash paid included in the operating cash flows for finance leases is not material.
(2) PMI’s weighted-average discount rate for operating leases is based on its estimated pre-tax cost of debt adjusted for country-specific risk.
(3) PMI’s weighted-average discount rate for finance leases, excluding embedded leases, is based on its estimated pre-tax cost of debt adjusted for country-specific risk and where applicable the interest rate explicit in lease contracts.