Leases

3 Months Ended

Nov. 30, 2019

The Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment. For leases in the United States, the initial lease term is typically 15 to 25 years, followed by additional terms containing renewal options at five-year intervals, and may include rent escalation clauses. Non-U.S. leases are typically for shorter terms and may include cancellation clauses or renewal options. The commencement date of all lease terms is the earlier of the date the Company becomes legally obligated to make rent payments or the date the Company has the right to control the property. The Company recognizes operating lease rent expense on a straight-line basis over the term of the lease. In addition to minimum fixed rentals, some leases provide for contingent rentals based upon a portion of sales. See note 17, new accounting pronouncements for additional information.

Supplemental balance sheet information related to leases were as follows (in millions):


	November 30, 2019
Operating Leases:
Operating lease right-of-use assets	$	21,674

Operating lease obligations - current	2,288
Operating lease obligations - non current	21,894
Total operating lease obligations	$	24,182
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	755
Lease obligations included in:
Accrued expenses and other liabilities	43
Other non-current liabilities	977
Total finance lease obligations	$	1,020

The components of lease costs were as follows (in millions):


	Three months ended November 30, 2019
Operating lease cost
Fixed	$	830
Variable	14

Finance lease cost
Amortization	$	9
Interest	14
Sublease income	(15)

Other supplemental information were as follows (in millions):


	Three months ended November 30, 2019
Gains on sale-leaseback transactions¹	$	77
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	831
Operating cash flows from finance leases	11
Financing cash flows from finance leases	13
Total	$	855
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	552

¹ Recorded within selling, general and administrative expenses.

Average lease term and discount rate were as follows:


	Three months ended November 30, 2019
Weighted average remaining lease term in years:
Operating leases	11.1
Finance leases	20.8

Weighted average discount rate
Operating leases	4.95	%
Finance leases	5.42	%

The aggregate future lease payments for operating and finance leases as of November 30, 2019 were as follows (in millions):


Fiscal year	Finance lease		Operating lease
2020 (Remaining period)	$	72	$	2,597
2021	94		3,357
2022	93		3,165
2023	92		2,984
2024	89		2,807
2025	87		2,611
Later	1,170		14,092
Total undiscounted minimum lease payments	$	1,697	$	31,615
Less: Present value discount	(677)		(7,433)
Lease liability	$	1,020	$	24,182

Leases