Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

Leases

We have entered into various non-cancelable operating lease agreements mostly for certain of our offices, data centers, colocations, and land. We have also entered into various non-cancelable finance lease agreements mostly for certain network infrastructure. Our leases have original lease periods expiring between 2023 and 2093. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs are as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Finance lease cost:
Amortization of right-of-use assets	$	380	$	344	$	259
Interest	16		15		14
Operating lease cost	1,857		1,540		1,391
Variable lease cost and other, net	363		272		269
Total lease cost	$	2,616	$	2,171	$	1,933

During the year ended December 31, 2022, we also recorded $1.71 billion impairment loss for operating lease ROU assets as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

Supplemental balance sheet information related to leases is as follows:

	December 31,
	2022		2021
Weighted-average remaining lease term:
Finance leases	14.4 years		13.9 years
Operating leases	12.5 years		13.0 years
Weighted-average discount rate:
Finance leases	3.1	%	2.7	%
Operating leases	3.2	%	2.8	%

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2022 (in millions):

	Operating Leases		Finance Leases
2023	$	1,739	$	146
2024	2,034		57
2025	1,771		57
2026	1,723		53
2027	1,699		52
Thereafter	11,801		460
Total undiscounted cash flows	20,767		825
Less: Imputed interest	(4,099)		(138)
Present value of lease liabilities (1)	$	16,668	$	687
Lease liabilities, current	$	1,367	$	129
Lease liabilities, non current	15,301		558
Present value of lease liabilities (1)	$	16,668	$	687

_________________

(1)    Lease liabilities include those operating leases that we plan to sublease or abandon as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

The table above does not include lease payments that were not fixed at commencement or lease modification. As of December 31, 2022, we have additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $8.36 billion and $1.43 billion, respectively, mostly for data centers, offices, network infrastructure, and colocations. These operating and finance leases will commence between 2023 and 2028 with lease terms of greater than one year to 30 years.

Supplemental cash flow information related to leases is as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,654	$	1,406	$	1,208
Operating cash flows for finance leases	$	16	$	15	$	14
Financing cash flows for finance leases	$	850	$	677	$	604
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	4,366	$	4,466	$	1,158
Finance leases	$	223	$	160	$	121

Leases

Leases

We have entered into various non-cancelable operating lease agreements mostly for certain of our offices, data centers, colocations, and land. We have also entered into various non-cancelable finance lease agreements mostly for certain network infrastructure. Our leases have original lease periods expiring between 2023 and 2093. Many leases include one or more options to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants.

The components of lease costs are as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Finance lease cost:
Amortization of right-of-use assets	$	380	$	344	$	259
Interest	16		15		14
Operating lease cost	1,857		1,540		1,391
Variable lease cost and other, net	363		272		269
Total lease cost	$	2,616	$	2,171	$	1,933

During the year ended December 31, 2022, we also recorded $1.71 billion impairment loss for operating lease ROU assets as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

Supplemental balance sheet information related to leases is as follows:

	December 31,
	2022		2021
Weighted-average remaining lease term:
Finance leases	14.4 years		13.9 years
Operating leases	12.5 years		13.0 years
Weighted-average discount rate:
Finance leases	3.1	%	2.7	%
Operating leases	3.2	%	2.8	%

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2022 (in millions):

	Operating Leases		Finance Leases
2023	$	1,739	$	146
2024	2,034		57
2025	1,771		57
2026	1,723		53
2027	1,699		52
Thereafter	11,801		460
Total undiscounted cash flows	20,767		825
Less: Imputed interest	(4,099)		(138)
Present value of lease liabilities (1)	$	16,668	$	687
Lease liabilities, current	$	1,367	$	129
Lease liabilities, non current	15,301		558
Present value of lease liabilities (1)	$	16,668	$	687

_________________

(1)    Lease liabilities include those operating leases that we plan to sublease or abandon as a part of our facilities consolidation restructuring efforts. For additional information, see Note 3 — Restructuring.

The table above does not include lease payments that were not fixed at commencement or lease modification. As of December 31, 2022, we have additional operating and finance leases, that have not yet commenced, with lease obligations of approximately $8.36 billion and $1.43 billion, respectively, mostly for data centers, offices, network infrastructure, and colocations. These operating and finance leases will commence between 2023 and 2028 with lease terms of greater than one year to 30 years.

Supplemental cash flow information related to leases is as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	1,654	$	1,406	$	1,208
Operating cash flows for finance leases	$	16	$	15	$	14
Financing cash flows for finance leases	$	850	$	677	$	604
Lease liabilities arising from obtaining right-of-use assets:
Operating leases	$	4,366	$	4,466	$	1,158
Finance leases	$	223	$	160	$	121