v3.25.4
LEASES AND COMMITMENTS
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
LEASES AND COMMITMENTS LEASES AND COMMITMENTS
The Company’s lease agreements primarily consist of real estate property, such as manufacturing facilities, warehouses and office buildings, in addition to personal property, such as vehicles, manufacturing and information technology equipment. The Company determines whether a contract is or contains a lease at contract inception. The majority of the Company’s lease arrangements are comprised of fixed payments, and a limited number of these arrangements include a variable payment component
based on certain index fluctuations. As of December 31, 2025, a significant portion of the Company’s leases were classified as operating leases.

Generally, the Company’s operating leases have renewal options that extend the lease terms, and some include options to terminate the agreement or purchase the leased asset. The amortizable life of these assets is the lesser of its useful life or the lease term, including renewal periods reasonably assured of being exercised at lease inception.

All leases with an initial term of 12 months or less without an option to extend or purchase the underlying asset that the Company is reasonably certain to exercise (“short-term leases”) are not recorded on the Consolidated Balance Sheets, and lease expense is recognized on a straight-line basis over the lease term.

The following table presents the lease assets and lease liabilities as of December 31, 2025 and 2024:
December 31,
(in millions)20252024
AssetsBalance Sheet Location
Operating leasesOther non-current assets$151 $177 
Finance leasesProperty, plant and equipment, net16 20 
Total lease assets$167 $197 
Liabilities
Current
Operating leases Other current liabilities$36 $38 
Finance leasesNotes payable and other short-term debt2 3 
Non-current
Operating leasesOther non-current liabilities122 144 
Finance leasesLong-term debt16 20 
Total lease liabilities$176 $205 

The following table presents lease obligations arising from obtaining leased assets for the years ended December 31, 2025 and 2024:
December 31,
(in millions)20252024
Operating leases$7 $66 
Finance leases— 2 
Total lease obligations$7 $68 
The following table presents the maturity of lease liabilities as of December 31, 2025:
(in millions)Operating leasesFinance leases
2026$39 $4 
202731 4 
202825 4 
202920 2 
203015 2 
After 203074 7 
Total (undiscounted) lease payments$204 $23 
Less: Imputed interest46 5 
Present value of lease liabilities$158 $18 

In the years ended December 31, 2025, 2024 and 2023, the Company recorded operating lease expense of $45 million, $41 million and $33 million, respectively.

In the years ended December 31, 2025, 2024 and 2023, the operating cash flows for operating leases were $44 million, $38 million and $33 million, respectively.

In the years ended December 31, 2025, 2024 and 2023, the Company recorded short-term lease costs of $26 million, $24 million and $29 million, respectively.

Finance lease costs and related cash flows were immaterial for the periods presented.

ASC Topic 842, “Leases”, requires that the rate implicit in the lease be used if readily determinable. Generally, implicit rates are not readily determinable in the Company’s agreements, so the incremental borrowing rate is used instead for such lease arrangements. The incremental borrowing rates are determined using rates specific to the term of the lease, economic environments where lease activity is concentrated, value of lease portfolio, and assuming full collateralization of the loans. The following table presents the terms and discount rates:
December 31,
20252024
Weighted average remaining lease term (years)
Operating leases88
Finance leases77
Weighted average discount rate
Operating leases5.8 %5.7 %
Finance leases6.5 %6.3 %
LEASES AND COMMITMENTS LEASES AND COMMITMENTS
The Company’s lease agreements primarily consist of real estate property, such as manufacturing facilities, warehouses and office buildings, in addition to personal property, such as vehicles, manufacturing and information technology equipment. The Company determines whether a contract is or contains a lease at contract inception. The majority of the Company’s lease arrangements are comprised of fixed payments, and a limited number of these arrangements include a variable payment component
based on certain index fluctuations. As of December 31, 2025, a significant portion of the Company’s leases were classified as operating leases.

Generally, the Company’s operating leases have renewal options that extend the lease terms, and some include options to terminate the agreement or purchase the leased asset. The amortizable life of these assets is the lesser of its useful life or the lease term, including renewal periods reasonably assured of being exercised at lease inception.

All leases with an initial term of 12 months or less without an option to extend or purchase the underlying asset that the Company is reasonably certain to exercise (“short-term leases”) are not recorded on the Consolidated Balance Sheets, and lease expense is recognized on a straight-line basis over the lease term.

The following table presents the lease assets and lease liabilities as of December 31, 2025 and 2024:
December 31,
(in millions)20252024
AssetsBalance Sheet Location
Operating leasesOther non-current assets$151 $177 
Finance leasesProperty, plant and equipment, net16 20 
Total lease assets$167 $197 
Liabilities
Current
Operating leases Other current liabilities$36 $38 
Finance leasesNotes payable and other short-term debt2 3 
Non-current
Operating leasesOther non-current liabilities122 144 
Finance leasesLong-term debt16 20 
Total lease liabilities$176 $205 

The following table presents lease obligations arising from obtaining leased assets for the years ended December 31, 2025 and 2024:
December 31,
(in millions)20252024
Operating leases$7 $66 
Finance leases— 2 
Total lease obligations$7 $68 
The following table presents the maturity of lease liabilities as of December 31, 2025:
(in millions)Operating leasesFinance leases
2026$39 $4 
202731 4 
202825 4 
202920 2 
203015 2 
After 203074 7 
Total (undiscounted) lease payments$204 $23 
Less: Imputed interest46 5 
Present value of lease liabilities$158 $18 

In the years ended December 31, 2025, 2024 and 2023, the Company recorded operating lease expense of $45 million, $41 million and $33 million, respectively.

In the years ended December 31, 2025, 2024 and 2023, the operating cash flows for operating leases were $44 million, $38 million and $33 million, respectively.

In the years ended December 31, 2025, 2024 and 2023, the Company recorded short-term lease costs of $26 million, $24 million and $29 million, respectively.

Finance lease costs and related cash flows were immaterial for the periods presented.

ASC Topic 842, “Leases”, requires that the rate implicit in the lease be used if readily determinable. Generally, implicit rates are not readily determinable in the Company’s agreements, so the incremental borrowing rate is used instead for such lease arrangements. The incremental borrowing rates are determined using rates specific to the term of the lease, economic environments where lease activity is concentrated, value of lease portfolio, and assuming full collateralization of the loans. The following table presents the terms and discount rates:
December 31,
20252024
Weighted average remaining lease term (years)
Operating leases88
Finance leases77
Weighted average discount rate
Operating leases5.8 %5.7 %
Finance leases6.5 %6.3 %