XML 64 R19.htm IDEA: XBRL DOCUMENT

Leases

3 Months Ended

May 01, 2020

VMware has operating and finance leases primarily related to office facilities and equipment, which have remaining lease terms of one month to 26 years. During the three months ended May 1, 2020 and May 3, 2019, lease expense recorded in the condensed consolidated statements of income was $57 million and $48 million, respectively.

The components of lease expense during the period presented were as follows (table in millions):



	Three Months Ended
	May 1,		May 3,
	2020		2019
Operating lease expense	$	46	$	40

Finance lease expense:
Amortization of ROU assets	$	2	$	—
Total finance lease expense	$	2	$	—

Short-term lease expense	$	1	$	1

Variable lease expense	$	8	$	7
Total lease expense	$	57	$	48

From time to time, VMware enters into lease arrangements with Dell. Lease expense incurred for arrangements with Dell was not significant during the three months ended May 1, 2020 and May 3, 2019.

The Company subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income was not significant for all periods presented.

Supplemental cash flow information related to operating and finance leases during the period presented was as follows (table in millions):



	Three Months Ended
	May 1,		May 3,
	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	43	$	46
Financing cash flows from finance leases	1		—
ROU assets obtained in exchange for lease liabilities:
Operating leases	$	74	$	15
Finance leases	1		—

Supplemental balance sheet information related to operating and finance leases as of the period presented was as follows (table in millions):



	May 1, 2020
	Operating Leases		Finance Leases
ROU assets, non-current⁽¹⁾	$	920	$	57

Lease liabilities, current⁽²⁾	$	101	$	4
Lease liabilities, non-current⁽³⁾	787		52
Total lease liabilities	$	888	$	56



	January 31, 2020
	Operating Leases		Finance Leases
ROU assets, non-current⁽¹⁾	$	886	$	58

Lease liabilities, current⁽²⁾	$	109	$	4
Lease liabilities, non-current⁽³⁾	746		55
Total lease liabilities	$	855	$	59

⁽¹⁾ ROU assets for operating leases are included in other assets and ROU assets for finance leases are included in property and equipment, net on the condensed consolidated balance sheets.

⁽²⁾Current lease liabilities are included primarily in accrued expenses and other on the condensed consolidated balance sheets. An immaterial amount is presented in due from related parties, net on the condensed consolidated balance sheets.

⁽³⁾ Non-current operating lease liabilities are presented as operating lease liabilities on the condensed consolidated balance sheets. Non-current finance lease liabilities are included in other liabilities on the condensed consolidated balance sheets.

Lease term and discount rate related to operating and finance leases as of the period presented were as follows:



	May 1,		January 31,
	2020		2020
Weighted-average remaining lease term (in years)
Operating leases	12.9		13.3
Finance leases	9.0		9.2
Weighted-average discount rate
Operating leases	3.7	%	3.8	%
Finance leases	2.9	%	3.1	%

The following represents VMware’s future minimum lease payments under non-cancellable operating and finance leases as of the period presented (table in millions):



	May 1, 2020
	Operating Leases			Finance Leases
2021	$	102		$	4
2022	148			6
2023	133			7
2024	105			7
2025	79			6
Thereafter	597			34
Total future minimum lease payments	1,164			64
Less: Imputed interest	(276		)	(8		)
Total lease liabilities⁽¹⁾	$	888		$	56

⁽¹⁾ Total lease liabilities as of May 1, 2020 excluded legally binding lease payments for leases signed but not yet commenced of $290 million.

Leases