Leases

9 Months Ended

May 31, 2021

Leases [Abstract]

Leases

LeasesThe 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:	May 31, 2021		August 31, 2020
Operating Leases:
Operating lease right-of-use assets	$	21,874	$	21,453
Operating lease obligations - current	2,327		2,358
Operating lease obligations - non-current	22,088		21,765
Total operating lease obligations	$	24,416	$	24,123
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	741	$	766
Lease obligations included in:
Accrued expenses and other liabilities	37		31
Other non-current liabilities	989		1,013
Total finance lease obligations	$	1,025	$	1,044

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

	Three months ended May 31,				Nine months ended May 31,
Statement of Earnings supplemental information:	2021		2020		2021		2020
Operating lease cost
Fixed	$	807	$	806	$	2,406	$	2,436
Variable 1	157		163		477		587
Finance lease cost
Amortization	$	11	$	11	$	33	$	29
Interest	13		14		39		40
Sublease income	21		24		62		56
Impairment of right-of-use assets	8		170		23		182
Impairment of finance lease assets	—		21		—		24
Gains on sale-leaseback transactions2	85		84		273		224

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):

	Nine months ended May 31,
Other Supplemental Information:	2021		2020
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	2,562	$	2,487
Operating cash flows from finance leases	36		36
Financing cash flows from finance leases	31		36
Total	$	2,629	$	2,559
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	2,011	$	1,917
Finance leases	—		65
Total	$	2,011	$	1,982

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

Weighted average terms and discount rates:	May 31, 2021		August 31, 2020
Weighted average remaining lease term in years:
Operating leases	10.4		10.7
Finance leases	20.4		20.6
Weighted average discount rate:
Operating leases	4.93	%	4.97	%
Finance leases	5.18	%	5.14	%

The aggregate future lease payments for operating and finance leases as of May 31, 2021 were as follows (in millions):

Future lease payments:
Fiscal year	Finance lease		Operating lease
2021 (Remaining period)	$	23	$	867
2022	92		3,403
2023	91		3,296
2024	92		3,169
2025	90		3,039
2026	90		2,911
Later	1,194		14,569
Total undiscounted minimum lease payments	$	1,672	$	31,254
Less: Present value discount	(647)		(6,838)
Lease liability	$	1,025	$	24,416

Leases

LeasesThe 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:	May 31, 2021		August 31, 2020
Operating Leases:
Operating lease right-of-use assets	$	21,874	$	21,453
Operating lease obligations - current	2,327		2,358
Operating lease obligations - non-current	22,088		21,765
Total operating lease obligations	$	24,416	$	24,123
Finance Leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	741	$	766
Lease obligations included in:
Accrued expenses and other liabilities	37		31
Other non-current liabilities	989		1,013
Total finance lease obligations	$	1,025	$	1,044

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

	Three months ended May 31,				Nine months ended May 31,
Statement of Earnings supplemental information:	2021		2020		2021		2020
Operating lease cost
Fixed	$	807	$	806	$	2,406	$	2,436
Variable 1	157		163		477		587
Finance lease cost
Amortization	$	11	$	11	$	33	$	29
Interest	13		14		39		40
Sublease income	21		24		62		56
Impairment of right-of-use assets	8		170		23		182
Impairment of finance lease assets	—		21		—		24
Gains on sale-leaseback transactions2	85		84		273		224

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):

	Nine months ended May 31,
Other Supplemental Information:	2021		2020
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	2,562	$	2,487
Operating cash flows from finance leases	36		36
Financing cash flows from finance leases	31		36
Total	$	2,629	$	2,559
Right-of-use assets obtained in exchange for new lease obligations:
Operating leases	$	2,011	$	1,917
Finance leases	—		65
Total	$	2,011	$	1,982

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

Weighted average terms and discount rates:	May 31, 2021		August 31, 2020
Weighted average remaining lease term in years:
Operating leases	10.4		10.7
Finance leases	20.4		20.6
Weighted average discount rate:
Operating leases	4.93	%	4.97	%
Finance leases	5.18	%	5.14	%

The aggregate future lease payments for operating and finance leases as of May 31, 2021 were as follows (in millions):

Future lease payments:
Fiscal year	Finance lease		Operating lease
2021 (Remaining period)	$	23	$	867
2022	92		3,403
2023	91		3,296
2024	92		3,169
2025	90		3,039
2026	90		2,911
Later	1,194		14,569
Total undiscounted minimum lease payments	$	1,672	$	31,254
Less: Present value discount	(647)		(6,838)
Lease liability	$	1,025	$	24,416