Leases
Leasing Arrangements
We lease certain offices, manufacturing buildings, transportation equipment, machinery, computers and other equipment. Our most significant lease liabilities relate to real estate leases. These leases include renewal, termination or purchase options, and we have assessed these to determine whether it is reasonably certain for us to exercise any of the previously mentioned options. All periods relating to options that are reasonably certain to be exercised have been included in the lease term of the respective leases.
We evaluated whether any events or conditions during the 12-month period ended December 31, 2025 to indicate that a reassessment or re-measurement of our existing leases was required. As a result, we recognized a ROU asset impairment of approximately $1 million for the 12-month period ended December 31, 2025 due to strategic decisions to close certain locations and to impair office locations that were no longer being used as intended or weren't able to be subleased.
Our current operating lease liabilities of $87 million and $82 million are included in "accrued and other current liabilities" as of December 31, 2025 and 2024, respectively. Our non-current operating lease liabilities of $321 million and $242 million are included in "Other non-current accrued liabilities" as of December 31, 2025 and 2024, respectively. Our net operating lease ROU asset balances of $391 million and $309 million are included in "other non-current assets" as of December 31, 2025 and 2024, respectively.
Our current finance lease liabilities of $34 million and $27 million are included in accrued and other current liabilities as of December 31, 2025 and 2024, respectively. Our non-current finance lease liabilities of $91 million and $76 million are included in "other non-current accrued liabilities" as of December 31, 2025 and 2024, respectively. Our net finance lease ROU asset balances of $118 million and $97 million are included in "other non-current assets" as of December 31, 2025 and 2024, respectively.
| | | | | | | | | | | | |
| Year Ended December 31, | |
| (in millions) | 2025 | 2024 | 2023 | |
| Lease cost | | | | |
| Finance lease cost: | | | | |
Depreciation of ROU assets | $ | 36 | | $ | 28 | | $ | 16 | | |
| Interest on lease liabilities | 6 | | 4 | | 2 | | |
| Operating lease cost | 111 | | 106 | | 96 | | |
| Short-term lease cost | 3 | | 3 | | 4 | | |
| Variable lease cost | 30 | | 30 | | 23 | | |
| Total lease cost | $ | 186 | | $ | 171 | | $ | 141 | | |
The supplemental cash flow information related to leases are as follows:
| | | | | | | | | | | |
| Year Ended December 31, |
| (in millions) | 2025 | 2024 | 2023 |
| Cash paid for amounts included in the measurement of lease liabilities: | | | |
| Operating cash flows from finance leases | $ | 5 | | $ | 4 | | $ | 2 | |
| Operating cash flows from operating leases | $ | 108 | | $ | 103 | | $ | 92 | |
| Financing cash flows from finance leases | $ | 33 | | $ | 24 | | $ | 14 | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Finance leases | $ | 48 | | $ | 38 | | $ | 34 | |
| Operating leases | $ | 147 | | $ | 57 | | $ | 74 | |
Information relating to the lease term and discount rate are as follows:
| | | | | | | | | |
| Year Ended December 31, | |
| 2025 | 2024 | |
| Weighted-average remaining lease term (years) | | | |
| Operating leases | 7 Years | 5 Years | |
| Finance leases | 4 Years | 4 Years | |
| | | | |
| Weighted-average discount rate | | | |
| Operating leases | 4.0% | 3.5% | |
| Finance leases | 4.7% | 4.5% | |
As of December 31, 2025, the maturities of finance lease liabilities were as follows:
| | | | | | |
| (in millions) | | |
| 2026 | $ | 39 | | |
| 2027 | 35 | | |
| 2028 | 27 | | |
| 2029 | 20 | | |
| 2030 | 11 | | |
| Thereafter | 5 | | |
| Total lease payments | 137 | | |
| Less: Imputed interest | (12) | | |
| Total | $ | 125 | | |
As of December 31, 2025, the maturities of operating lease liabilities were as follows:
| | | | | | |
| (in millions) | | |
| 2026 | $ | 101 | | |
| 2027 | 86 | | |
| 2028 | 69 | | |
| 2029 | 50 | | |
| 2030 | 36 | | |
| Thereafter | 133 | | |
| Total lease payments | 475 | | |
| Less: Imputed interest | (67) | | |
| Total | $ | 408 | | |
Lessor arrangements
Our gross assets available for rent were $360 million and $328 million as of December 31, 2025 and 2024, respectively. The accumulated depreciation related to our gross assets was $221 million and $193 million as of December 31, 2025 and 2024, respectively. Depreciation expense for these assets was $42 million, $38 million and $58 million for the 12 month period ended December 31, 2025, 2024 and 2023, respectively. Total revenue from lease arrangements was $315 million, $289 million and $401 million for the years ended December 31, 2025, 2024 and 2023, respectively.