Alight, Inc. / DelawareALIT
Alight, Inc. / Delaware Leases Disclosure
19. Lease Obligations
The Company determines if an arrangement is a lease at inception. Operating leases are included in Other assets, Other current liabilities and Other liabilities in the Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate which is based on the information available at the lease commencement date. The Company’s lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized on a straight-line basis over the expected lease term.
The Company’s most significant leases are office facilities. For these leases, the Company has elected the practical expedient permitted under Accounting Standards Update 2016-02, “Leases (Topic 842)” (“ASC 842”) to combine lease and non-lease components. As a result, non-lease components are accounted for as an element within a single lease. The Company’s remaining operating leases are primarily comprised of equipment leases. The Company also leases certain IT equipment under finance leases which are reflected on the Company’s Consolidated Balance Sheets as computer equipment within Fixed assets, net.
Certain of the Company’s operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, common area maintenance, payments based on the usage of the asset, and rental payments adjusted periodically for inflation. These variable payments are not included in the lease liabilities reflected on the Company’s Consolidated Balance Sheets.
The Company subleases portions of its buildings to third parties. The right of use liability associated with these leases are not offset with expected rental incomes, as we remain primarily obligated for the leases.
The Company’s lease agreements do not contain material residual value guarantees, restrictions, or covenants.
The components of lease expense were as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Operating lease cost | $ | 15 | $ | 16 | $ | 15 | |||||||||||
| Finance lease cost: | |||||||||||||||||
| Amortization of leased assets | 21 | 21 | 24 | ||||||||||||||
| Interest of lease liabilities | 3 | 1 | 2 | ||||||||||||||
| Variable and short-term lease cost | 8 | 5 | 5 | ||||||||||||||
| Sublease income | (5) | (5) | (8) | ||||||||||||||
| Total lease cost | $ | 42 | $ | 38 | $ | 38 | |||||||||||
Supplemental balance sheet information related to leases was as follows (in millions, except lease term and discount rate):
| December 31, 2024 | December 31, 2023 | ||||||||||
| Operating Leases | |||||||||||
| $ | 42 | $ | 56 | ||||||||
| 17 | 28 | ||||||||||
| 56 | 66 | ||||||||||
| Total operating lease liabilities | $ | 73 | $ | 94 | |||||||
| Finance Leases | |||||||||||
| $ | 62 | $ | 19 | ||||||||
| Current finance lease liabilities | 19 | 10 | |||||||||
| 39 | 6 | ||||||||||
| Total finance lease liabilities | $ | 58 | $ | 16 | |||||||
| Weighted Average Remaining Lease Term (in years) | |||||||||||
| Operating leases | 5.2 | 6.0 | |||||||||
| Finance leases | 3.9 | 2.4 | |||||||||
| Weighted Average Discount Rate | |||||||||||
| Operating leases | 5.4 | % | 4.9 | % | |||||||
| Finance leases | 5.8 | % | 3.8 | % | |||||||
Supplemental cash flow and other information related to leases was as follows (in millions):
| Year Ended December 31, | |||||||||||||||||
| 2024 | 2023 | 2022 | |||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | |||||||||||||||||
| Operating cash flows from operating leases | $ | 28 | $ | 30 | $ | 27 | |||||||||||
| Operating cash flows from finance leases | 3 | 1 | 2 | ||||||||||||||
| Financing cash flows from finance leases | 27 | 25 | 30 | ||||||||||||||
| Right-of use assets obtained in exchange for lease obligations | |||||||||||||||||
| Operating leases | $ | 8 | $ | 3 | $ | 11 | |||||||||||
| Finance leases | 62 | 12 | 9 | ||||||||||||||
Future lease payments for lease obligations less expected sublease rental income with initial terms in excess of one year as of December 31, 2024 are as follows (in millions):
Finance Leases | Operating Leases | |||||||||||||
| 2025 | $ | 16 | $ | 18 | ||||||||||
| 2026 | 18 | 16 | ||||||||||||
| 2027 | 16 | 14 | ||||||||||||
| 2028 | 13 | 13 | ||||||||||||
| 2029 | 2 | 11 | ||||||||||||
| Thereafter | — | 7 | ||||||||||||
| Total lease payments | 65 | 79 | ||||||||||||
| Less: amount representing interest | (7) | (10) | ||||||||||||
| Total lease obligations, net | 58 | 69 | ||||||||||||
| Less: current portion of lease obligations, net | (19) | (17) | ||||||||||||
| Total long-term portion of lease obligations, net | $ | 39 | $ | 52 | ||||||||||
The operating lease future lease payments include sublease rental income of $1 million for each of 2027, 2028, 2029, and thereafter.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Feb 27, 2025 | Showing above |
| 2023 | Feb 29, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Mar 10, 2022 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.