Leases

6 Months Ended

Feb. 28, 2021

Leases [Abstract]

Leases

Leases

The Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment. For leases in the U.S., 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.

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

Balance Sheet supplemental information:	February 28, 2021		August 31, 2020
Operating Leases:
Operating lease right-of-use assets	$	21,908	$	21,453
Operating lease obligations - current	2,360		2,358
Operating lease obligations - non-current	22,134		21,765
Total operating lease obligations	$	24,494	$	24,123
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	750	$	766
Lease obligations included in:
Accrued expenses and other liabilities	27		31
Other non-current liabilities	1,007		1,013
Total finance lease obligations	$	1,034	$	1,044

Supplemental income statement information related to leases were as follows (in millions):

	Three months ended				Six months ended
Income Statement supplemental information:	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Operating lease cost
Fixed	$	818	$	820	$	1,606	$	1,631
Variable 1	159		206		319		424
Finance lease cost
Amortization	$	11	$	10	$	22	$	18
Interest	13		13		26		27
Sublease income	21		16		41		31
Gains on sale-leaseback transactions2	95		63		187		140

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

2Recorded within selling, general and administrative expenses.

Other supplemental information related to leases were as follows (in millions):

	Six months ended
Other Supplemental Information:	February 28, 2021		February 29, 2020
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	1,702	$	1,657
Operating cash flows from finance leases	24		24
Financing cash flows from finance leases	20		21
Total	$	1,746	$	1,702
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	1,492	$	1,284
Finance leases	—		59
Total	$	1,492	$	1,343

Average lease term and discount rate as of February 28, 2021 and August 31, 2020 were as follows:

Weighted average terms and discount rates:	February 28, 2021		August 31, 2020
Weighted average remaining lease term in years:
Operating leases	10.6		10.7
Finance leases	20.6		20.6
Weighted average discount rate:
Operating leases	4.95	%	4.97	%
Finance leases	5.17	%	5.14	%

The aggregate future lease payments for operating and finance leases as of February 28, 2021 were as follows (in millions):

Future lease payments:
Fiscal year	Finance lease		Operating lease
2021 (Remaining period)	$	45	$	1,729
2022	89		3,378
2023	88		3,264
2024	88		3,135
2025	87		2,998
2026	87		2,862
Later	1,147		14,039
Total undiscounted minimum lease payments	$	1,631	$	31,405
Less: Present value discount	(597)		(6,911)
Lease liability	$	1,034	$	24,494

Leases

Leases

The Company leases certain retail stores, warehouses, distribution centers, office space, land and equipment. For leases in the U.S., 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.

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

Balance Sheet supplemental information:	February 28, 2021		August 31, 2020
Operating Leases:
Operating lease right-of-use assets	$	21,908	$	21,453
Operating lease obligations - current	2,360		2,358
Operating lease obligations - non-current	22,134		21,765
Total operating lease obligations	$	24,494	$	24,123
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	750	$	766
Lease obligations included in:
Accrued expenses and other liabilities	27		31
Other non-current liabilities	1,007		1,013
Total finance lease obligations	$	1,034	$	1,044

Supplemental income statement information related to leases were as follows (in millions):

	Three months ended				Six months ended
Income Statement supplemental information:	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Operating lease cost
Fixed	$	818	$	820	$	1,606	$	1,631
Variable 1	159		206		319		424
Finance lease cost
Amortization	$	11	$	10	$	22	$	18
Interest	13		13		26		27
Sublease income	21		16		41		31
Gains on sale-leaseback transactions2	95		63		187		140

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

2Recorded within selling, general and administrative expenses.

Other supplemental information related to leases were as follows (in millions):

	Six months ended
Other Supplemental Information:	February 28, 2021		February 29, 2020
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	1,702	$	1,657
Operating cash flows from finance leases	24		24
Financing cash flows from finance leases	20		21
Total	$	1,746	$	1,702
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	1,492	$	1,284
Finance leases	—		59
Total	$	1,492	$	1,343

Average lease term and discount rate as of February 28, 2021 and August 31, 2020 were as follows:

Weighted average terms and discount rates:	February 28, 2021		August 31, 2020
Weighted average remaining lease term in years:
Operating leases	10.6		10.7
Finance leases	20.6		20.6
Weighted average discount rate:
Operating leases	4.95	%	4.97	%
Finance leases	5.17	%	5.14	%

The aggregate future lease payments for operating and finance leases as of February 28, 2021 were as follows (in millions):

Future lease payments:
Fiscal year	Finance lease		Operating lease
2021 (Remaining period)	$	45	$	1,729
2022	89		3,378
2023	88		3,264
2024	88		3,135
2025	87		2,998
2026	87		2,862
Later	1,147		14,039
Total undiscounted minimum lease payments	$	1,631	$	31,405
Less: Present value discount	(597)		(6,911)
Lease liability	$	1,034	$	24,494