Lessee

12 Months Ended

Dec. 31, 2023

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,
	2023		2022		2021
Operating lease expense	$	83	$	97	$	104
Short-term lease expense	16		17		20
Variable lease expense(1)	53		49		48
Sublease income	(1)		(5)		(4)
Total Lease expense	$	151	$	158	$	168

_____________

(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, 2023, we had approximately $6 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,
	2023		2022
Other long-term assets	$	172	$	215
Accrued expenses and other current liabilities	$	41	$	68
Other long-term liabilities	141		161
Total Operating lease liabilities	$	182	$	229

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	91		$	101		$	109
Right-of-use assets obtained in exchange for new lease liabilities (1)	$	23		$	45		$	41
Weighted-average remaining lease term	4 years			4 years			5 years
Weighted-average discount rate	6.07		%	5.19		%	4.67		%

_____________

(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, 2023
12 months	$	62
24 months	47
36 months	39
48 months	22
60 months	17
Thereafter	21
Total Lease payments	208
Less: Imputed interest	26
Total Operating lease liabilities	$	182

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 four years with a maximum expiration date through August 2027. As of December 31, 2023 and 2022, the remaining lease obligation for all finance leases is $17 and $16, respectively, based on discount rates of 7.28% and 6.40%, respectively. The ROU asset balances associated with these finance leases at December 31, 2023 and 2022 of $19 and $18, 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,
	2023		2022		2021
Operating lease expense	$	83	$	97	$	104
Short-term lease expense	16		17		20
Variable lease expense(1)	53		49		48
Sublease income	(1)		(5)		(4)
Total Lease expense	$	151	$	158	$	168

_____________

(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, 2023, we had approximately $6 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,
	2023		2022
Other long-term assets	$	172	$	215
Accrued expenses and other current liabilities	$	41	$	68
Other long-term liabilities	141		161
Total Operating lease liabilities	$	182	$	229

Supplemental information related to operating leases is as follows:

	Year Ended December 31,
	2023			2022			2021
Cash paid for amounts included in the measurement of lease liabilities - Operating cash flows	$	91		$	101		$	109
Right-of-use assets obtained in exchange for new lease liabilities (1)	$	23		$	45		$	41
Weighted-average remaining lease term	4 years			4 years			5 years
Weighted-average discount rate	6.07		%	5.19		%	4.67		%

_____________

(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, 2023
12 months	$	62
24 months	47
36 months	39
48 months	22
60 months	17
Thereafter	21
Total Lease payments	208
Less: Imputed interest	26
Total Operating lease liabilities	$	182

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 four years with a maximum expiration date through August 2027. As of December 31, 2023 and 2022, the remaining lease obligation for all finance leases is $17 and $16, respectively, based on discount rates of 7.28% and 6.40%, respectively. The ROU asset balances associated with these finance leases at December 31, 2023 and 2022 of $19 and $18, respectively are included in Land, buildings and equipment, net in the Consolidated Balance Sheets.