Leases

3 Months Ended

Nov. 30, 2022

Leases [Abstract]

Leases

LeasesThe Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. Initial terms for leased premises in the U.S. are 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. Lease commencement is 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 lease term. In addition to minimum fixed rentals, some leases provide for contingent rentals based on sales volume.

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

Balance Sheet supplemental information:	November 30, 2022		August 31, 2022
Operating leases:
Operating lease right-of-use assets	$	21,240	$	21,259
Operating lease obligations - current	2,271		2,286
Operating lease obligations - non-current	21,514		21,517
Total operating lease obligations	$	23,785	$	23,803
Finance leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	641	$	645
Lease obligations included in:
Accrued expenses and other liabilities	38		37
Other non-current liabilities	895		899
Total finance lease obligations	$	933	$	936

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

	Three months ended November 30,
Statement of Earnings supplemental information:	2022		2021
Operating lease cost
Fixed	$	813	$	805
Variable 1	192		205
Finance lease cost
Amortization	$	11	$	11
Interest	12		13
Sublease income	$	29	$	25
Impairment of right-of-use assets	67		68
Gain on sale and leaseback 2	189		87

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

2Recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings.

Other supplemental information was as follows (in millions):

	Three months ended November 30,
Other supplemental information:	2022		2021
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	828	$	846
Operating cash flows from finance leases	11		12
Financing cash flows from finance leases	10		11
Total	$	849	$	869
Right-of-use assets obtained in exchange for new lease obligations
Operating leases	$	602	$	544
Finance leases	1		5
Total	$	603	$	549

Weighted average lease term and discount rate for real estate leases were as follows:

Weighted average lease terms and discount rates:	November 30, 2022		August 31, 2022
Weighted average remaining lease term in years
Operating leases	9.9		10.0
Finance leases	18.8		19.0
Weighted average discount rate
Operating leases	4.90	%	4.83	%
Finance leases	5.20	%	5.19	%

The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):

Future lease payments (fiscal years):	Finance lease		Operating lease
2023 (Remaining period)	$	67	$	2,606
2024	87		3,389
2025	86		3,285
2026	86		3,193
2027	86		3,104
2028	86		2,944
Later	956		11,824
Total undiscounted minimum lease payments	$	1,453	$	30,345
Less: Present value discount	520		6,560
Lease liability	$	933	$	23,785

Leases

LeasesThe Company leases certain retail stores, clinics, warehouses, distribution centers, office space, land, and equipment. Initial terms for leased premises in the U.S. are 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. Lease commencement is 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 lease term. In addition to minimum fixed rentals, some leases provide for contingent rentals based on sales volume.

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

Balance Sheet supplemental information:	November 30, 2022		August 31, 2022
Operating leases:
Operating lease right-of-use assets	$	21,240	$	21,259
Operating lease obligations - current	2,271		2,286
Operating lease obligations - non-current	21,514		21,517
Total operating lease obligations	$	23,785	$	23,803
Finance leases:
Right-of-use assets included in:
Property, plant and equipment, net	$	641	$	645
Lease obligations included in:
Accrued expenses and other liabilities	38		37
Other non-current liabilities	895		899
Total finance lease obligations	$	933	$	936

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

	Three months ended November 30,
Statement of Earnings supplemental information:	2022		2021
Operating lease cost
Fixed	$	813	$	805
Variable 1	192		205
Finance lease cost
Amortization	$	11	$	11
Interest	12		13
Sublease income	$	29	$	25
Impairment of right-of-use assets	67		68
Gain on sale and leaseback 2	189		87

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

2Recorded within Selling, general and administrative expenses within the Consolidated Condensed Statements of Earnings.

Other supplemental information was as follows (in millions):

	Three months ended November 30,
Other supplemental information:	2022		2021
Cash paid for amounts included in the measurement of lease obligations
Operating cash flows from operating leases	$	828	$	846
Operating cash flows from finance leases	11		12
Financing cash flows from finance leases	10		11
Total	$	849	$	869
Right-of-use assets obtained in exchange for new lease obligations
Operating leases	$	602	$	544
Finance leases	1		5
Total	$	603	$	549

Weighted average lease term and discount rate for real estate leases were as follows:

Weighted average lease terms and discount rates:	November 30, 2022		August 31, 2022
Weighted average remaining lease term in years
Operating leases	9.9		10.0
Finance leases	18.8		19.0
Weighted average discount rate
Operating leases	4.90	%	4.83	%
Finance leases	5.20	%	5.19	%

The aggregate future lease payments for operating and finance leases as of November 30, 2022 were as follows (in millions):

Future lease payments (fiscal years):	Finance lease		Operating lease
2023 (Remaining period)	$	67	$	2,606
2024	87		3,389
2025	86		3,285
2026	86		3,193
2027	86		3,104
2028	86		2,944
Later	956		11,824
Total undiscounted minimum lease payments	$	1,453	$	30,345
Less: Present value discount	520		6,560
Lease liability	$	933	$	23,785