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LEASES
 6 Months Ended
Dec. 31, 2021
Leases [Abstract]  
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 20 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:

 

(In millions)

 

 

Three Months Ended

December 31,

 

 

 

Six Months Ended 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

469

 

 

$

503

 

 

$

1,057

 

 

$

1,001

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

264

 

 

$

249

 

 

$

490

 

 

$

455

 

Interest on lease liabilities

 

 

107

 

 

 

94

 

 

 

211

 

 

 

186

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance lease cost

 

$

371

 

 

$

343

 

 

$

701

 

 

$

641

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information related to leases was as follows:

 

(In millions)

 

Three Months Ended

December 31,

 

 

 

Six Months Ended

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

441

 

 

$

482

 

 

$

1,007

 

 

$

973

 

Operating cash flows from finance leases

 

 

107

 

 

 

94

 

 

 

211

 

 

 

186

 

Financing cash flows from finance leases

 

 

222

 

 

 

153

 

 

 

422

 

 

 

289

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Right-of-use assets obtained in exchange for lease obligations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

1,559

 

 

 

1,578

 

 

 

2,730

 

 

 

2,256

 

Finance leases

 

 

985

 

 

 

1,193

 

 

 

2,374

 

 

 

1,828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental balance sheet information related to leases was as follows:

 

(In millions, except lease term and discount rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

2021

 

 

June 30,

2021

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

12,354

 

 

$

11,088

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

2,126

 

 

$

1,962

 

Operating lease liabilities

 

 

10,774

 

 

 

9,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating lease liabilities

 

$

12,900

 

 

$

11,591

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, at cost

 

$

16,152

 

 

$

14,107

 

Accumulated depreciation

 

 

(2,795

)

 

 

(2,306

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

$

13,357

 

 

$

11,801

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

944

 

 

$

791

 

Other long-term liabilities

 

 

13,251

 

 

 

11,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance lease liabilities

 

$

14,195

 

 

$

12,541

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

8 years

 

 

 

8 years

 

Finance leases

 

 

12 years

 

 

 

12 years

 

 

 

 

 

 

 

 

 

 

Weighted Average Discount Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

2.0%

 

 

 

2.2%

 

Finance leases

 

 

3.2%

 

 

 

3.4%

 

 

 

 

 

 

 

 

 

 

 

The following table outlines maturities of our lease liabilities as of December 31, 2021:

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ending June 30,

 

Operating Leases

 

 

Finance Leases

 

 

 

 

2022 (excluding the six months ended December 31, 2021)

 

$

1,149

 

 

$

674

 

2023

 

 

2,206

 

 

 

1,360

 

2024

 

 

2,018

 

 

 

1,374

 

2025

 

 

1,751

 

 

 

1,702

 

2026

 

 

1,422

 

 

 

1,389

 

Thereafter

 

 

5,452

 

 

 

10,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease payments

 

 

13,998

 

 

 

16,958

 

Less imputed interest

 

 

(1,098

)

 

 

(2,763

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

12,900

 

 

$

14,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2021, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $5.8 billion and $6.5 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.