Lessee

12 Months Ended

Dec. 31, 2022

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 twelve years and a variety of renewal and/or termination options.

The components of lease expense are as follows:

	Year Ended December 31,
	2022		2021		2020
Operating lease expense	$	97	$	104	$	113
Short-term lease expense	17		20		20
Variable lease expense(1)	49		48		47
Sublease income	(5)		(4)		(2)
Total Lease expense	$	158	$	168	$	178

_____________

(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, 2022, we had no additional operating leases that had not yet commenced.

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

	December 31,
	2022		2021
Other long-term assets	$	215	$	264
Accrued expenses and other current liabilities	$	68	$	79
Other long-term liabilities	161		204
Total Operating lease liabilities	$	229	$	283

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2022			2021			2020
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	101		$	109		$	119
Right-of-use assets obtained in exchange for new lease liabilities (1)	$	45		$	41		$	76
Weighted-average remaining lease term	4 years			5 years			5 years
Weighted-average discount rate	5.19		%	4.67		%	5.03		%

_____________

(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,
	2022		2021
2022			$	98
2023	$	86	78
2024	54		45
2025	38		31
2026	32		26
2027	17
Thereafter	30		35
Total Lease payments	257		313
Less: Imputed interest	28		30
Total Operating lease liabilities	$	229	$	283

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 2031. As of December 31, 2022 and 2021, the remaining lease obligation for all finance leases is $16 and $7, respectively, based on discount rates of 6.40% and 4.51%, respectively. The ROU asset balances associated with these finance leases at December 31, 2022 and 2021 of $18 and $9, 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 twelve years and a variety of renewal and/or termination options.

The components of lease expense are as follows:

	Year Ended December 31,
	2022		2021		2020
Operating lease expense	$	97	$	104	$	113
Short-term lease expense	17		20		20
Variable lease expense(1)	49		48		47
Sublease income	(5)		(4)		(2)
Total Lease expense	$	158	$	168	$	178

_____________

(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, 2022, we had no additional operating leases that had not yet commenced.

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

	December 31,
	2022		2021
Other long-term assets	$	215	$	264
Accrued expenses and other current liabilities	$	68	$	79
Other long-term liabilities	161		204
Total Operating lease liabilities	$	229	$	283

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2022			2021			2020
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	101		$	109		$	119
Right-of-use assets obtained in exchange for new lease liabilities (1)	$	45		$	41		$	76
Weighted-average remaining lease term	4 years			5 years			5 years
Weighted-average discount rate	5.19		%	4.67		%	5.03		%

_____________

(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,
	2022		2021
2022			$	98
2023	$	86	78
2024	54		45
2025	38		31
2026	32		26
2027	17
Thereafter	30		35
Total Lease payments	257		313
Less: Imputed interest	28		30
Total Operating lease liabilities	$	229	$	283

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 2031. As of December 31, 2022 and 2021, the remaining lease obligation for all finance leases is $16 and $7, respectively, based on discount rates of 6.40% and 4.51%, respectively. The ROU asset balances associated with these finance leases at December 31, 2022 and 2021 of $18 and $9, respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.