| LEASES |
NOTE 13 — LEASES
We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Our leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.
The components of lease expense were as follows:
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(In millions) |
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Three Months Ended September 30, |
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2021 |
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2020 |
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Operating lease cost |
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$ |
588 |
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$ |
498 |
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Finance lease cost: |
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Amortization of right-of-use assets |
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$ |
226 |
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$ |
206 |
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Interest on lease liabilities |
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104 |
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92 |
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Total finance lease cost |
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$ |
330 |
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$ |
298 |
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Supplemental cash flow information related to leases was as follows:
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(In millions) |
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Three Months Ended September 30, |
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2021 |
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2020 |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
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$ |
566 |
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$ |
491 |
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Operating cash flows from finance leases |
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|
104 |
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|
92 |
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Financing cash flows from finance leases |
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|
200 |
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136 |
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Right-of-use assets obtained in exchange for lease obligations: |
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Operating leases |
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1,171 |
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|
678 |
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Finance leases |
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1,389 |
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|
635 |
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Supplemental balance sheet information related to leases was as follows:
|
(In millions, except lease term and discount rate) |
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September 30,
2021 |
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June 30,
2021 |
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Operating Leases |
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Operating lease right-of-use assets |
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$ |
11,575 |
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$ |
11,088 |
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Other current liabilities |
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$ |
2,049 |
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$ |
1,962 |
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Operating lease liabilities |
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|
10,050 |
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|
9,629 |
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Total operating lease liabilities |
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$ |
12,099 |
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$ |
11,591 |
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Finance Leases |
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Property and equipment, at cost |
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$ |
15,285 |
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$ |
14,107 |
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Accumulated depreciation |
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(2,531 |
) |
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(2,306 |
) |
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Property and equipment, net |
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$ |
12,754 |
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$ |
11,801 |
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Other current liabilities |
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$ |
882 |
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$ |
791 |
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Other long-term liabilities |
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|
12,666 |
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11,750 |
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Total finance lease liabilities |
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$ |
13,548 |
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$ |
12,541 |
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Weighted Average Remaining Lease Term |
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Operating leases |
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8 years |
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8 years |
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Finance leases |
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10 years |
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12 years |
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Weighted Average Discount Rate |
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Operating leases |
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2.1% |
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2.2% |
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Finance leases |
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3.3% |
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3.4% |
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The following table outlines maturities of our lease liabilities as of September 30, 2021:
|
(In millions) |
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Year Ending June 30, |
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Operating Leases |
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Finance Leases |
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2022 (excluding the three months ended September 30, 2021) |
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$ |
1,667 |
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$ |
962 |
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2023 |
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|
2,072 |
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|
1,295 |
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2024 |
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|
1,871 |
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|
1,312 |
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2025 |
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|
1,588 |
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|
1,638 |
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2026 |
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|
1,256 |
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|
1,324 |
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Thereafter |
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|
4,647 |
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9,743 |
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Total lease payments |
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|
13,101 |
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|
|
16,274 |
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Less imputed interest |
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|
(1,002 |
) |
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|
(2,726 |
) |
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Total |
|
$ |
12,099 |
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$ |
13,548 |
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As of September 30, 2021, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $5.1 billion and $5.9 billion, respectively. These operating and finance leases will commence between fiscal year 2022 and fiscal year 2026 with lease terms of 1 year to 15 years.
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