Lessee

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Lessee

Lessee

Operating Leases

We have operating leases for real estate and vehicles in our domestic and international operations and for certain equipment in our domestic operations. Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations. Our leases have remaining terms of up to eleven years and a variety of renewal and/or termination options.

The components of lease expense are as follows:

	Year Ended December 31,
	2021		2020		2019
Operating lease expense	$	104	$	113	$	125
Short-term lease expense	20		20		21
Variable lease expense(1)	48		47		48
Sublease income	(4)		(2)		(1)
Total Lease expense	$	168	$	178	$	193

_____________

(1)Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs, as well as taxes and insurance.

As of December 31, 2021, we had no additional operating leases that had not yet commenced.

Operating leases ROU assets, net and operating lease liabilities were reported in the Consolidated Balance Sheets as follows:

	December 31,
	2021		2020
Other long-term assets	$	264	$	310
Accrued expenses and other current liabilities	$	79	$	83
Other long-term liabilities	204		250
Total Operating lease liabilities	$	283	$	333

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2021			2020			2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	109		$	119		$	126
Right-of-use assets obtained in exchange for new lease liabilities (1)	41			76			75
Weighted-average remaining lease term	5 years			5 years			4 years
Weighted-average discount rate	4.67		%	5.03		%	5.47		%

_____________

(1)Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Maturities and additional information related to operating lease liabilities are as follows:

	December 31,
	2021		2020
12 months	$	98	$	104
24 months	78		88
36 months	45		68
48 months	31		37
60 months	26		25
Thereafter	35		52
Total Lease payments	313		374
Less: Imputed interest	30		41
Total Operating lease liabilities	$	283	$	333

Finance Leases

Xerox has finance leases for equipment in the U.S. and Europe and related infrastructure, within outsourced warehouse supply arrangements, in the U.S. These leases have remaining maturities up to nine years with a maximum expiration date through December 2030. As of December 31, 2021 and 2020, the remaining lease obligation for all finance leases is $7 and $9, respectively, based on discount rates of 4.51% and 4.34%, respectively. The ROU asset balances associated with these finance leases at December 31, 2021 and 2020 of $9 and $10, respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.

Lessee

Lessee

Operating Leases

We have operating leases for real estate and vehicles in our domestic and international operations and for certain equipment in our domestic operations. Additionally, we have identified embedded operating leases within certain supply chain contracts for warehouses, primarily within our domestic operations. Our leases have remaining terms of up to eleven years and a variety of renewal and/or termination options.

The components of lease expense are as follows:

	Year Ended December 31,
	2021		2020		2019
Operating lease expense	$	104	$	113	$	125
Short-term lease expense	20		20		21
Variable lease expense(1)	48		47		48
Sublease income	(4)		(2)		(1)
Total Lease expense	$	168	$	178	$	193

_____________

(1)Variable lease expense is related to our leased real estate for offices and warehouses and primarily includes labor and operational costs, as well as taxes and insurance.

As of December 31, 2021, we had no additional operating leases that had not yet commenced.

Operating leases ROU assets, net and operating lease liabilities were reported in the Consolidated Balance Sheets as follows:

	December 31,
	2021		2020
Other long-term assets	$	264	$	310
Accrued expenses and other current liabilities	$	79	$	83
Other long-term liabilities	204		250
Total Operating lease liabilities	$	283	$	333

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2021			2020			2019
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	109		$	119		$	126
Right-of-use assets obtained in exchange for new lease liabilities (1)	41			76			75
Weighted-average remaining lease term	5 years			5 years			4 years
Weighted-average discount rate	4.67		%	5.03		%	5.47		%

_____________

(1)Includes the impact of new leases as well as remeasurements and modifications to existing leases.

Maturities and additional information related to operating lease liabilities are as follows:

	December 31,
	2021		2020
12 months	$	98	$	104
24 months	78		88
36 months	45		68
48 months	31		37
60 months	26		25
Thereafter	35		52
Total Lease payments	313		374
Less: Imputed interest	30		41
Total Operating lease liabilities	$	283	$	333

Finance Leases

Xerox has finance leases for equipment in the U.S. and Europe and related infrastructure, within outsourced warehouse supply arrangements, in the U.S. These leases have remaining maturities up to nine years with a maximum expiration date through December 2030. As of December 31, 2021 and 2020, the remaining lease obligation for all finance leases is $7 and $9, respectively, based on discount rates of 4.51% and 4.34%, respectively. The ROU asset balances associated with these finance leases at December 31, 2021 and 2020 of $9 and $10, respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.