Leases

12 Months Ended

Dec. 31, 2024

We are committed under long-term lease agreements for equipment, lines of road, and other property. We combine lease and non-lease components for new and reassessed leases. Some of these agreements are variable lease agreements that include usage-based payments. These agreements contain payment provisions that depend on an index or rate, initially measured using the index or rate at the lease commencement date, and are therefore not included in our future minimum lease payments. Our long-term lease agreements do not contain any material restrictive covenants.

Our equipment leases have remaining terms of less than 1 year to 7 years and our lines of road and land leases have remaining terms of less than 1 year to 133 years. Some of these leases include options to extend the leases for up to 99 years and some include options to terminate the leases within 30 days. Because we are not reasonably certain to exercise these renewal options, the options are not considered in determining the lease term, and associated payments are excluded from future minimum lease payments.

Leases with an initial term of twelve months or less are not recorded on the balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease amounts included on the Consolidated Balance Sheets are as follows:


		December 31,
		2024		2023
		($ in millions)
	Classification
Assets
Right-of-use (ROU) assets	Other assets	$	271	$	390

Liabilities
Current lease liabilities	Other current liabilities	$	81	$	105
Non-current lease liabilities	Other liabilities	191		287

Total lease liabilities		$	272	$	392

The components of total lease expense, primarily included in “Purchased services and rents,” are as follows:


	2024		2023		2022
	($ in millions)

Operating lease expense	$	102	$	115	$	101
Variable lease expense	84		84		55
Short-term lease expense	10		15		18

Total lease expense	$	196	$	214	$	174

In March 2019, we entered into a non-cancellable lease for an office building. In 2021, the construction of the office building was completed, and the lease commenced. The initial lease term is five years with options to renew, purchase, or sell the office building at the end of the lease term. The lease contains a residual value guarantee of up to eighty-three percent of the total construction cost of $499 million.

Other information related to operating leases is as follows:


	December 31,
	2024		2023

Weighted-average remaining lease term (years) on operating leases	6.64		6.12

Weighted-average discount rates on operating leases	3.96	%	3.78	%

As the rates implicit in most of our leases are not readily determinable, we use a collateralized incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future payments. We use the portfolio approach and group leases into short-, medium-, and long-term categories, applying the corresponding incremental borrowing rates to these categories.

During 2024 and 2023, respectively, ROU assets obtained in exchange for new operating lease liabilities were $21 million and $65 million, respectively. Cash paid for amounts included in the measurement of lease liabilities was $102 million and $117 million in 2024 and 2023, respectively, and is included in operating cash flows.

Future minimum lease payments under non-cancellable operating leases are as follows:


	December 31, 2024
	($ in millions)

2025	$	89
2026	69
2027	47
2028	35
2029	27
2030 and subsequent years	47
Total lease payments	314
Less: Interest	42

Present value of lease liabilities	$	272


	December 31, 2023
	($ in millions)

2024	$	116
2025	105
2026	85
2027	42
2028	30
2029 and subsequent years	66
Total lease payments	444
Less: Interest	52

Present value of lease liabilities	$	392