Leases

6 Months Ended

Feb. 29, 2020

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 typically 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):


	February 29, 2020
Operating Leases:
Operating lease right-of-use assets	$	21,755

Operating lease obligations - current	2,278
Operating lease obligations - non current	21,959
Total operating lease obligations	$	24,237
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	802
Lease obligations included in:
Accrued expenses and other liabilities	46
Other non-current liabilities	1,032
Total finance lease obligations	$	1,078

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


	Three months ended February 29, 2020		Six months ended February 29, 2020
Operating lease cost
Fixed	$	841	$	1,670
Variable ¹	208		428
Finance lease cost
Amortization	$	10	$	19
Interest	14		28
Sublease income	(16)		(31)

¹Includes real estate property taxes, common area maintenance, insurance and rental payments based on sales volume.

Other supplemental information were as follows (in millions):


	Six months ended February 29, 2020
Gains on sale-leaseback transactions¹	$	140
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	1,677
Operating cash flows from finance leases	24
Financing cash flows from finance leases	23
Total	$	1,724
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	1,313
Finance leases	65
Total	$	1,378

¹Recorded within selling, general and administrative expenses. For the three months ended February 29, 2020 gain on sales-leaseback was $63 million.

Average lease term and discount rate as of February 29, 2020 were as follows:


	February 29, 2020
Weighted average remaining lease term in years:
Operating leases	10.9
Finance leases	21.1

Weighted average discount rate
Operating leases	4.94	%
Finance leases	5.32	%

The aggregate future lease payments for operating and finance leases as of February 29, 2020 were as follows (in millions):


Fiscal year	Finance lease		Operating lease
2020 (Remaining period)	$	48	$	1,712
2021	95		3,340
2022	92		3,176
2023	89		3,021
2024	89		2,865
2025	87		2,690
Later	1,218		14,682
Total undiscounted minimum lease payments	$	1,718	$	31,486
Less: Present value discount	(640)		(7,249)
Lease liability	$	1,078	$	24,237

Leases