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LEASES
 3 Months Ended
Sep. 30, 2022
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 less than 1 year to 19 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 September 30,

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

Operating lease cost

 

$

662

 

 

$

588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance lease cost:

 

 

 

 

 

 

 

 

Amortization of right-of-use assets

 

$

189

 

 

$

226

 

Interest on lease liabilities

 

 

113

 

 

 

104

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance lease cost

 

$

302

 

 

$

330

 

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information related to leases was as follows:

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

654

 

 

$

566

 

Operating cash flows from finance leases

 

 

113

 

 

 

104

 

Financing cash flows from finance leases

 

 

256

 

 

 

200

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Operating leases

 

 

1,189

 

 

 

1,171

 

Finance leases

 

 

611

 

 

 

1,389

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental balance sheet information related to leases was as follows:

 

(In millions, except lease term and discount rate)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30,

2022

 

 

June 30,

2022

 

 

 

 

Operating Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

$

13,347

 

 

$

13,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

2,224

 

 

$

2,228

 

Operating lease liabilities

 

 

11,660

 

 

 

11,489

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating lease liabilities

 

$

13,884

 

 

$

13,717

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, at cost

 

$

17,322

 

 

$

17,388

 

Accumulated depreciation

 

 

(3,475

)

 

 

(3,285

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

$

13,847

 

 

$

14,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other current liabilities

 

$

1,055

 

 

$

1,060

 

Other long-term liabilities

 

 

13,575

 

 

 

13,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total finance lease liabilities

 

$

14,630

 

 

$

14,902

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Remaining Lease Term

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

8 years

 

 

 

8 years

 

Finance leases

 

 

11 years

 

 

 

12 years

 

 

 

 

 

 

 

 

 

 

Weighted Average Discount Rate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating leases

 

 

2.4%

 

 

 

2.1%

 

Finance leases

 

 

3.2%

 

 

 

3.1%

 

 

 

 

 

 

 

 

 

 

 

The following table outlines maturities of our lease liabilities as of September 30, 2022:

 

(In millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ending June 30,

 

Operating Leases

 

 

Finance Leases

 

 

 

 

2023 (excluding the three months ended September 30, 2022)

 

$

1,913

 

 

$

1,107

 

2024

 

 

2,327

 

 

 

1,480

 

2025

 

 

2,060

 

 

 

1,796

 

2026

 

 

1,706

 

 

 

1,477

 

2027

 

 

1,409

 

 

 

1,482

 

Thereafter

 

 

5,960

 

 

 

10,028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total lease payments

 

 

15,375

 

 

 

17,370

 

Less imputed interest

 

 

(1,491

)

 

 

(2,740

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

13,884

 

 

$

14,630

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September 30, 2022, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $6.5 billion and $10.5 billion, respectively. These operating and finance leases will commence between fiscal year 2023 and fiscal year 2028 with lease terms of less than 1 year to 18 years.