ZEBRA TECHNOLOGIES CORPZBRA

ZEBRA TECHNOLOGIES CORP Leases Disclosure

10-KFiled Feb 12, 20263 min read
Leases
The Company leases various manufacturing and repair facilities, distribution centers, research facilities, sales and administrative offices, equipment, and vehicles. All leases are classified as operating leases with remaining terms of up to 10 years, with certain leases containing renewal options and termination options. The Company records ROU assets and lease liabilities on the Consolidated Balance Sheets associated with the fixed lease and non-lease payments of leases with terms greater than one year.

The following table presents activities associated with our leases (in millions):
December 31,
202520242023
Fixed lease expenses$48 $50 $52 
Variable lease expenses17 20 35 
Total lease expenses$65 $70 $87 
Cash paid for leases$67 $72 $82 
ROU assets obtained in exchange for lease obligations$30 $44 $55 
Reductions of ROU assets and lease liabilities(2)(7)(1)
Net non-cash increases to ROU assets and lease liabilities$28 $37 $54 
ROU asset impairments
$8 $— $— 

Variable lease expenses incurred were not included in the measurement of the Company’s ROU assets and lease liabilities. These expenses consisted primarily of distribution center service costs that were based on product distribution volumes, as well as non-fixed common area maintenance, real estate taxes, and other operating costs associated with various facility leases. Expenses related to short-term leases were not significant.

Cash payments for leases are included within Net cash provided by (used in) operating activities on the Consolidated Statements of Cash Flows.

ROU assets obtained in exchange for lease obligations include new lease arrangements entered into by the Company, contract modifications that extend lease terms and/or provide us additional rights, changes in assessments that render it reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period, as well as lease arrangements obtained through acquisitions.

Reductions of the Company’s ROU assets and lease liabilities generally relate to contract modifications to lease agreements that result in a reduction to future minimum lease payments, as well as changes in assessments that render it no longer reasonably certain that lease renewal options will be exercised based on facts and circumstances that arose during the period.
In relation to the Company’s decision to dispose of or exit its robotics automation solutions business, we recognized an impairment loss of $8 million on an ROU asset during the year ended December 31, 2025. See Note 9, Exit and Restructuring Costs for additional information related to the financial statement impacts of these actions.

The weighted average remaining term of the Company’s leases was approximately 5 years as of December 31, 2025 and 6 years each as of December 31, 2024 and 2023. The weighted average discount rate used to measure the ROU assets and lease liabilities was approximately 6% each as of December 31, 2025, 2024 and 2023.
Future minimum lease payments under non-cancellable leases as of December 31, 2025 were as follows (in millions):
2026$49 
202741 
202838 
202932 
203026 
Thereafter48 
Total future minimum lease payments$234 
Less: Interest(39)
Present value of lease liabilities$195 
Reported as of December 31, 2025:
Current portion of lease liabilities$38 
Long-term lease liabilities157 
Present value of lease liabilities$195 

The current portion of lease liabilities is included within Accrued liabilities on the Consolidated Balance Sheets.
Revenues earned from lease arrangements under which the Company is a lessor during the years ended December 31, 2025, 2024 and 2023 were not significant.

Historical Timeline

Fiscal YearFiled
2025Feb 12, 2026Showing above
2024Feb 13, 2025
2023Feb 15, 2024
2022Feb 16, 2023
2021Feb 10, 2022
2020Feb 11, 2021
2019Feb 13, 2020

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.

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