10. Leases
We have facilities and vehicles under various non-cancellable operating leases with third parties and an equipment finance lease with a third party. The operating leases generally have remaining terms ranging from 1 to 14 years, inclusive of renewal options that are reasonably certain of exercise. The finance lease has a remaining term of 28 years.
Supplemental information for our lease portfolio is as follows:
| | | | | | | | | | | | | | | | | | | | |
| | | | As of December 31, |
| (MILLIONS OF DOLLARS, EXCEPT LEASE TERM AND DISCOUNT RATE AMOUNTS) | | | | 2025 | | 2024 |
| Supplemental Balance Sheet information: | | | | | | |
| Operating lease right-of-use assets | | | | $ | 288 | | | $ | 219 | |
Finance lease right of use assets (in Other noncurrent assets) | | | | 9 | | | 9 | |
| Total lease assets | | | | $ | 297 | | | $ | 228 | |
| | | | | | |
| Lease liabilities: | | | | | | |
Operating lease liabilities - current (in Other current liabilities) | | | | $ | 52 | | | $ | 51 | |
Finance lease liabilities - current (in Other current liabilities) | | | | 1 | | | 1 | |
| Operating lease liabilities - noncurrent | | | | 196 | | | 174 | |
Finance lease liabilities - noncurrent (in Other noncurrent liabilities) | | | | 6 | | | 7 | |
| Total lease liabilities | | | | $ | 255 | | | $ | 233 | |
| | | | | | |
| Weighted-average remaining lease term—operating leases (years) | | | | 6.87 | | 6.57 |
| Weighted-average remaining lease term—finance leases (years) | | | | 27.90 | | 29.19 |
| Weighted-average discount rate—operating leases | | | | 3.91 | % | | 3.65 | % |
| Weighted-average discount rate—finance leases | | | | 4.97 | % | | 4.97 | % |
| | | | | | | | | | | | | | | | | | | | |
| | Year Ended December 31, |
| (MILLIONS OF DOLLARS) | | 2025 | | 2024 | | 2023 |
| Supplemental Income Statement information for operating leases: | | | | | | |
| Operating lease expense | | $ | 68 | | | $ | 59 | | | $ | 56 | |
| Variable lease costs | | 28 | | | 18 | | | 20 | |
| Short-term lease costs not included in the measurement of lease liabilities | | 14 | | | 13 | | | 11 | |
| | | | | | |
| Supplemental Income Statement information for finance leases: | | | | | | |
| Amortization of right-of-use assets | | 1 | | | 1 | | | 1 | |
| | | | | | |
| Total lease costs | | $ | 111 | | | $ | 91 | | | $ | 88 | |
| | | | | | |
| Supplemental Cash Flow information for leases | | | | | | |
| Cash paid for amounts included in the measurement of lease liabilities: | | | | | | |
| Operating cash flows – operating leases | | $ | 67 | | | $ | 61 | | | $ | 57 | |
| | | | | | |
| Financing cash flows – finance leases | | 2 | | | 1 | | | — | |
| Lease obligations obtained in exchange for right-of-use assets - operating (non-cash) | | 76 | | | 46 | | | 73 | |
| Lease obligations obtained in exchange for right-of-use assets – finance (non-cash) | | 1 | | | — | | | 9 | |
Future minimum lease payments under non-cancellable lease contracts as of December 31, 2025 are as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Total | | Less: | | |
| | | | | | | | | | | | After | | Lease | | Imputed | | |
| (MILLIONS OF DOLLARS) | | 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | 2030 | | Payments | | Interest | | Total |
| Operating leases | | $ | 60 | | | $ | 51 | | | $ | 41 | | | $ | 29 | | | $ | 21 | | | $ | 83 | | | $ | 285 | | | $ | (37) | | | $ | 248 | |
| Finance leases | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 1 | | | $ | 5 | | | $ | 10 | | | $ | (3) | | | $ | 7 | |
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.