v3.25.4
Leases
 12 Months Ended
Dec. 31, 2025
Leases [Abstract]  
Leases LEASES
Accounting for Leases as a Lessee
The following table presents the various components of lease costs.
($ in millions)
For the year ended December 31:202520242023
Finance lease cost$331 $229 $114 
Operating lease cost 1,027 1,018 1,013 
Short-term lease cost6 9 9 
Variable lease cost300 321 331 
Sublease income(25)(39)(61)
Total lease cost$1,639 $1,537 $1,406 
The company did not have any sale and leaseback transactions for the year ended December 31, 2025. The company had net gains on sale and leaseback transactions of $17 million and $145 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below.
($ in millions)
For the year ended December 31:202520242023
Cash paid for amounts included in the measurement of lease liabilities   
Operating cash outflows from finance leases$58 $43 $16 
Financing cash outflows from finance leases280 189 75 
Operating cash outflows from operating leases1,011 961 961 
ROU assets obtained in exchange for new finance lease liabilities 444 698 355 
ROU assets obtained in exchange for new operating lease liabilities 658 988 1,220 
The following table presents the weighted-average lease term and discount rate for finance and operating leases.
At December 31:20252024
Finance leases
Weighted-average remaining lease term (in years)4.96.0
Weighted-average discount rate4.85 %5.03 %
Operating leases
Weighted-average remaining lease term (in years)6.46.4
Weighted-average discount rate5.07 %4.91 %
The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter.
($ in millions)
20262027202820292030Thereafter
Imputed
Interest (1)
Total (2)
Finance leases$331 $313 $225 $182 $94 $152 $(145)$1,153 
Operating leases 935 780 562 430 277 974 (612)3,347 
(1)Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
(2)The company entered into lease agreements, primarily related to operating leases, for certain facilities and equipment with payments totaling approximately $314 million that have not yet commenced as of December 31, 2025, and therefore are not included in this table.
The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.
($ in millions)
At December 31:20252024
ROU assets—Property, plant and equipment$1,170 $984 
Lease liabilities
Short-term debt279 198 
Long-term debt874 803 
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
($ in millions)
For the year ended December 31:202520242023
Lease income—sales-type and direct financing leases
Sales-type lease selling price$2,226 $865 $1,280 
Less: Carrying value of underlying assets (1)
(528)(176)(245)
Gross profit1,697 689 1,034 
Interest income on lease receivables243 268 242 
Total sales-type and direct financing lease income1,940 958 1,276 
Lease income—operating leases43 60 93 
Variable lease income74 68 68 
Total lease income$2,058 $1,085 $1,437 
(1)Excludes unguaranteed residual value.
Sales-Type and Direct Financing Leases
At December 31, 2025 and 2024, the unguaranteed residual values of sales-type and direct financing leases were $545 million and $479 million, respectively. Refer to note K, “Financing Receivables,” for additional information on the company’s net investment in leases.
For the years ended December 31, 2025 and 2024, impairment of residual values was not material.
The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2025.
($ in millions)
Total
2026$1,470 
20271,227 
2028874 
2029509 
2030203 
Thereafter55 
Total undiscounted cash flows$4,338 
Present value of lease payments (recognized as financing receivables) (1)
3,858 
Difference between undiscounted cash flows and discounted cash flows$479 
(1)The present value of the lease payments will not equal the financing receivables balances in note K, "Financing Receivables," due to certain items, including IDCs, allowance for credit losses and residual values, which are included in the financing receivables balances, but are not included in the future lease payments.
Leases LEASES
Accounting for Leases as a Lessee
The following table presents the various components of lease costs.
($ in millions)
For the year ended December 31:202520242023
Finance lease cost$331 $229 $114 
Operating lease cost 1,027 1,018 1,013 
Short-term lease cost6 9 9 
Variable lease cost300 321 331 
Sublease income(25)(39)(61)
Total lease cost$1,639 $1,537 $1,406 
The company did not have any sale and leaseback transactions for the year ended December 31, 2025. The company had net gains on sale and leaseback transactions of $17 million and $145 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below.
($ in millions)
For the year ended December 31:202520242023
Cash paid for amounts included in the measurement of lease liabilities   
Operating cash outflows from finance leases$58 $43 $16 
Financing cash outflows from finance leases280 189 75 
Operating cash outflows from operating leases1,011 961 961 
ROU assets obtained in exchange for new finance lease liabilities 444 698 355 
ROU assets obtained in exchange for new operating lease liabilities 658 988 1,220 
The following table presents the weighted-average lease term and discount rate for finance and operating leases.
At December 31:20252024
Finance leases
Weighted-average remaining lease term (in years)4.96.0
Weighted-average discount rate4.85 %5.03 %
Operating leases
Weighted-average remaining lease term (in years)6.46.4
Weighted-average discount rate5.07 %4.91 %
The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter.
($ in millions)
20262027202820292030Thereafter
Imputed
Interest (1)
Total (2)
Finance leases$331 $313 $225 $182 $94 $152 $(145)$1,153 
Operating leases 935 780 562 430 277 974 (612)3,347 
(1)Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
(2)The company entered into lease agreements, primarily related to operating leases, for certain facilities and equipment with payments totaling approximately $314 million that have not yet commenced as of December 31, 2025, and therefore are not included in this table.
The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.
($ in millions)
At December 31:20252024
ROU assets—Property, plant and equipment$1,170 $984 
Lease liabilities
Short-term debt279 198 
Long-term debt874 803 
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
($ in millions)
For the year ended December 31:202520242023
Lease income—sales-type and direct financing leases
Sales-type lease selling price$2,226 $865 $1,280 
Less: Carrying value of underlying assets (1)
(528)(176)(245)
Gross profit1,697 689 1,034 
Interest income on lease receivables243 268 242 
Total sales-type and direct financing lease income1,940 958 1,276 
Lease income—operating leases43 60 93 
Variable lease income74 68 68 
Total lease income$2,058 $1,085 $1,437 
(1)Excludes unguaranteed residual value.
Sales-Type and Direct Financing Leases
At December 31, 2025 and 2024, the unguaranteed residual values of sales-type and direct financing leases were $545 million and $479 million, respectively. Refer to note K, “Financing Receivables,” for additional information on the company’s net investment in leases.
For the years ended December 31, 2025 and 2024, impairment of residual values was not material.
The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2025.
($ in millions)
Total
2026$1,470 
20271,227 
2028874 
2029509 
2030203 
Thereafter55 
Total undiscounted cash flows$4,338 
Present value of lease payments (recognized as financing receivables) (1)
3,858 
Difference between undiscounted cash flows and discounted cash flows$479 
(1)The present value of the lease payments will not equal the financing receivables balances in note K, "Financing Receivables," due to certain items, including IDCs, allowance for credit losses and residual values, which are included in the financing receivables balances, but are not included in the future lease payments.
Leases LEASES
Accounting for Leases as a Lessee
The following table presents the various components of lease costs.
($ in millions)
For the year ended December 31:202520242023
Finance lease cost$331 $229 $114 
Operating lease cost 1,027 1,018 1,013 
Short-term lease cost6 9 9 
Variable lease cost300 321 331 
Sublease income(25)(39)(61)
Total lease cost$1,639 $1,537 $1,406 
The company did not have any sale and leaseback transactions for the year ended December 31, 2025. The company had net gains on sale and leaseback transactions of $17 million and $145 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below.
($ in millions)
For the year ended December 31:202520242023
Cash paid for amounts included in the measurement of lease liabilities   
Operating cash outflows from finance leases$58 $43 $16 
Financing cash outflows from finance leases280 189 75 
Operating cash outflows from operating leases1,011 961 961 
ROU assets obtained in exchange for new finance lease liabilities 444 698 355 
ROU assets obtained in exchange for new operating lease liabilities 658 988 1,220 
The following table presents the weighted-average lease term and discount rate for finance and operating leases.
At December 31:20252024
Finance leases
Weighted-average remaining lease term (in years)4.96.0
Weighted-average discount rate4.85 %5.03 %
Operating leases
Weighted-average remaining lease term (in years)6.46.4
Weighted-average discount rate5.07 %4.91 %
The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter.
($ in millions)
20262027202820292030Thereafter
Imputed
Interest (1)
Total (2)
Finance leases$331 $313 $225 $182 $94 $152 $(145)$1,153 
Operating leases 935 780 562 430 277 974 (612)3,347 
(1)Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
(2)The company entered into lease agreements, primarily related to operating leases, for certain facilities and equipment with payments totaling approximately $314 million that have not yet commenced as of December 31, 2025, and therefore are not included in this table.
The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.
($ in millions)
At December 31:20252024
ROU assets—Property, plant and equipment$1,170 $984 
Lease liabilities
Short-term debt279 198 
Long-term debt874 803 
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
($ in millions)
For the year ended December 31:202520242023
Lease income—sales-type and direct financing leases
Sales-type lease selling price$2,226 $865 $1,280 
Less: Carrying value of underlying assets (1)
(528)(176)(245)
Gross profit1,697 689 1,034 
Interest income on lease receivables243 268 242 
Total sales-type and direct financing lease income1,940 958 1,276 
Lease income—operating leases43 60 93 
Variable lease income74 68 68 
Total lease income$2,058 $1,085 $1,437 
(1)Excludes unguaranteed residual value.
Sales-Type and Direct Financing Leases
At December 31, 2025 and 2024, the unguaranteed residual values of sales-type and direct financing leases were $545 million and $479 million, respectively. Refer to note K, “Financing Receivables,” for additional information on the company’s net investment in leases.
For the years ended December 31, 2025 and 2024, impairment of residual values was not material.
The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2025.
($ in millions)
Total
2026$1,470 
20271,227 
2028874 
2029509 
2030203 
Thereafter55 
Total undiscounted cash flows$4,338 
Present value of lease payments (recognized as financing receivables) (1)
3,858 
Difference between undiscounted cash flows and discounted cash flows$479 
(1)The present value of the lease payments will not equal the financing receivables balances in note K, "Financing Receivables," due to certain items, including IDCs, allowance for credit losses and residual values, which are included in the financing receivables balances, but are not included in the future lease payments.
Leases LEASES
Accounting for Leases as a Lessee
The following table presents the various components of lease costs.
($ in millions)
For the year ended December 31:202520242023
Finance lease cost$331 $229 $114 
Operating lease cost 1,027 1,018 1,013 
Short-term lease cost6 9 9 
Variable lease cost300 321 331 
Sublease income(25)(39)(61)
Total lease cost$1,639 $1,537 $1,406 
The company did not have any sale and leaseback transactions for the year ended December 31, 2025. The company had net gains on sale and leaseback transactions of $17 million and $145 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below.
($ in millions)
For the year ended December 31:202520242023
Cash paid for amounts included in the measurement of lease liabilities   
Operating cash outflows from finance leases$58 $43 $16 
Financing cash outflows from finance leases280 189 75 
Operating cash outflows from operating leases1,011 961 961 
ROU assets obtained in exchange for new finance lease liabilities 444 698 355 
ROU assets obtained in exchange for new operating lease liabilities 658 988 1,220 
The following table presents the weighted-average lease term and discount rate for finance and operating leases.
At December 31:20252024
Finance leases
Weighted-average remaining lease term (in years)4.96.0
Weighted-average discount rate4.85 %5.03 %
Operating leases
Weighted-average remaining lease term (in years)6.46.4
Weighted-average discount rate5.07 %4.91 %
The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter.
($ in millions)
20262027202820292030Thereafter
Imputed
Interest (1)
Total (2)
Finance leases$331 $313 $225 $182 $94 $152 $(145)$1,153 
Operating leases 935 780 562 430 277 974 (612)3,347 
(1)Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
(2)The company entered into lease agreements, primarily related to operating leases, for certain facilities and equipment with payments totaling approximately $314 million that have not yet commenced as of December 31, 2025, and therefore are not included in this table.
The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.
($ in millions)
At December 31:20252024
ROU assets—Property, plant and equipment$1,170 $984 
Lease liabilities
Short-term debt279 198 
Long-term debt874 803 
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
($ in millions)
For the year ended December 31:202520242023
Lease income—sales-type and direct financing leases
Sales-type lease selling price$2,226 $865 $1,280 
Less: Carrying value of underlying assets (1)
(528)(176)(245)
Gross profit1,697 689 1,034 
Interest income on lease receivables243 268 242 
Total sales-type and direct financing lease income1,940 958 1,276 
Lease income—operating leases43 60 93 
Variable lease income74 68 68 
Total lease income$2,058 $1,085 $1,437 
(1)Excludes unguaranteed residual value.
Sales-Type and Direct Financing Leases
At December 31, 2025 and 2024, the unguaranteed residual values of sales-type and direct financing leases were $545 million and $479 million, respectively. Refer to note K, “Financing Receivables,” for additional information on the company’s net investment in leases.
For the years ended December 31, 2025 and 2024, impairment of residual values was not material.
The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2025.
($ in millions)
Total
2026$1,470 
20271,227 
2028874 
2029509 
2030203 
Thereafter55 
Total undiscounted cash flows$4,338 
Present value of lease payments (recognized as financing receivables) (1)
3,858 
Difference between undiscounted cash flows and discounted cash flows$479 
(1)The present value of the lease payments will not equal the financing receivables balances in note K, "Financing Receivables," due to certain items, including IDCs, allowance for credit losses and residual values, which are included in the financing receivables balances, but are not included in the future lease payments.
Leases LEASES
Accounting for Leases as a Lessee
The following table presents the various components of lease costs.
($ in millions)
For the year ended December 31:202520242023
Finance lease cost$331 $229 $114 
Operating lease cost 1,027 1,018 1,013 
Short-term lease cost6 9 9 
Variable lease cost300 321 331 
Sublease income(25)(39)(61)
Total lease cost$1,639 $1,537 $1,406 
The company did not have any sale and leaseback transactions for the year ended December 31, 2025. The company had net gains on sale and leaseback transactions of $17 million and $145 million for the years ended December 31, 2024 and 2023, respectively.
The following table presents supplemental information relating to the cash flows arising from lease transactions. Cash payments related to variable lease costs and short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below.
($ in millions)
For the year ended December 31:202520242023
Cash paid for amounts included in the measurement of lease liabilities   
Operating cash outflows from finance leases$58 $43 $16 
Financing cash outflows from finance leases280 189 75 
Operating cash outflows from operating leases1,011 961 961 
ROU assets obtained in exchange for new finance lease liabilities 444 698 355 
ROU assets obtained in exchange for new operating lease liabilities 658 988 1,220 
The following table presents the weighted-average lease term and discount rate for finance and operating leases.
At December 31:20252024
Finance leases
Weighted-average remaining lease term (in years)4.96.0
Weighted-average discount rate4.85 %5.03 %
Operating leases
Weighted-average remaining lease term (in years)6.46.4
Weighted-average discount rate5.07 %4.91 %
The following table presents a maturity analysis of expected undiscounted cash flows for operating and finance leases on an annual basis for the next five years and thereafter.
($ in millions)
20262027202820292030Thereafter
Imputed
Interest (1)
Total (2)
Finance leases$331 $313 $225 $182 $94 $152 $(145)$1,153 
Operating leases 935 780 562 430 277 974 (612)3,347 
(1)Imputed interest represents the difference between undiscounted cash flows and discounted cash flows.
(2)The company entered into lease agreements, primarily related to operating leases, for certain facilities and equipment with payments totaling approximately $314 million that have not yet commenced as of December 31, 2025, and therefore are not included in this table.
The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.
($ in millions)
At December 31:20252024
ROU assets—Property, plant and equipment$1,170 $984 
Lease liabilities
Short-term debt279 198 
Long-term debt874 803 
Accounting for Leases as a Lessor
The following table presents amounts included in the Consolidated Income Statement related to lessor activity.
($ in millions)
For the year ended December 31:202520242023
Lease income—sales-type and direct financing leases
Sales-type lease selling price$2,226 $865 $1,280 
Less: Carrying value of underlying assets (1)
(528)(176)(245)
Gross profit1,697 689 1,034 
Interest income on lease receivables243 268 242 
Total sales-type and direct financing lease income1,940 958 1,276 
Lease income—operating leases43 60 93 
Variable lease income74 68 68 
Total lease income$2,058 $1,085 $1,437 
(1)Excludes unguaranteed residual value.
Sales-Type and Direct Financing Leases
At December 31, 2025 and 2024, the unguaranteed residual values of sales-type and direct financing leases were $545 million and $479 million, respectively. Refer to note K, “Financing Receivables,” for additional information on the company’s net investment in leases.
For the years ended December 31, 2025 and 2024, impairment of residual values was not material.
The following table presents a maturity analysis of the lease payments due to IBM on sales-type and direct financing leases over the next five years and thereafter, as well as a reconciliation of the undiscounted cash flows to the financing receivables recognized in the Consolidated Balance Sheet at December 31, 2025.
($ in millions)
Total
2026$1,470 
20271,227 
2028874 
2029509 
2030203 
Thereafter55 
Total undiscounted cash flows$4,338 
Present value of lease payments (recognized as financing receivables) (1)
3,858 
Difference between undiscounted cash flows and discounted cash flows$479 
(1)The present value of the lease payments will not equal the financing receivables balances in note K, "Financing Receivables," due to certain items, including IDCs, allowance for credit losses and residual values, which are included in the financing receivables balances, but are not included in the future lease payments.