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Leases (Tables)

12 Months Ended

Dec. 31, 2025

Schedule of various components of lease costs

The following table presents the various components of lease costs.


($ in millions)
For the year ended December 31:	2025		2024		2023
Finance lease cost	$	331	$	229	$	114
Operating lease cost	1,027		1,018		1,013
Short-term lease cost	6		9		9
Variable lease cost	300		321		331
Sublease income	(25)		(39)		(61)
Total lease cost	$	1,639	$	1,537	$	1,406

Schedule of supplemental information relating to the cash flows arising from lease transactions

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:	2025		2024		2023
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 leases	280		189		75
Operating cash outflows from operating leases	1,011		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

Schedule of weighted-average lease terms and discount rates

The following table presents the weighted-average lease term and discount rate for finance and operating leases.


At December 31:	2025		2024
Finance leases
Weighted-average remaining lease term (in years)	4.9		6.0
Weighted-average discount rate	4.85	%	5.03	%
Operating leases
Weighted-average remaining lease term (in years)	6.4		6.4
Weighted-average discount rate	5.07	%	4.91	%

Schedule of expected undiscounted cash out flows for operating and finance leases

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)
	2026		2027		2028		2029		2030		Thereafter		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.

Schedule of finance lease right of use assets and liability

The following table presents information on the company’s finance leases recognized in the Consolidated Balance Sheet.


($ in millions)
At December 31:	2025		2024
ROU assets—Property, plant and equipment	$	1,170	$	984
Lease liabilities
Short-term debt	279		198
Long-term debt	874		803

Schedule of amounts included in the Consolidated Income Statement related to lessor activity

The following table presents amounts included in the Consolidated Income Statement related to lessor activity.


($ in millions)
For the year ended December 31:	2025		2024		2023
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 profit	1,697		689		1,034
Interest income on lease receivables	243		268		242
Total sales-type and direct financing lease income	1,940		958		1,276
Lease income—operating leases	43		60		93
Variable lease income	74		68		68
Total lease income	$	2,058	$	1,085	$	1,437

(1)Excludes unguaranteed residual value.

Schedule of maturity analysis of the lease payments due to IBM on sales-type and direct financing leases

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
2027	1,227
2028	874
2029	509
2030	203
Thereafter	55
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.