Leases (Notes)

3 Months Ended

Feb. 02, 2020

Leases [Abstract]

LesseeOperatingandFinanceLeasesTextBlock [Text Block]

Effective November 4, 2019, we adopted Topic 842 using the optional adoption method and elected practical expedients which allowed us to account for the lease and non-lease components as a single component. In addition, we elected not to reassess whether any expired or existing contracts contain leases and the corresponding lease classification and initial direct costs. The practical expedients were applied across our lease portfolios.

We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date. We recognize ROU assets and lease liabilities for operating and finance leases with terms greater than 12 months. ROU assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments. Operating and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. We use the implicit interest rate or, if not readily determinable, our incremental borrowing rate as of the lease commencement date to determine the present value of lease payments. The incremental borrowing rate is based on our unsecured borrowing rate, adjusted for the effects of collateral. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. Lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term.

We entered into operating and finance leases for our facilities, data centers and certain equipment. For the fiscal quarter ended February 2, 2020, we recorded $25 million of operating lease expense and $2 million of finance lease expense. For the fiscal quarter ended February 3, 2019, rent expense was $67 million.

Other information related to leases was as follows:

	Fiscal Quarter Ended
	February 2, 2020
	(In millions)
Cash paid for operating leases included in operating cash flows	$	32
ROU assets obtained in exchange for operating lease obligation	$	642
ROU assets obtained in exchange for finance lease obligation	$	57
	February 2, 2020
Weighted-average remaining lease term – operating leases (In years)	11
Weighted-average remaining lease term – finance leases (In years)	5
Weighted-average discount rate – operating leases	3.70		%
Weighted-average discount rate – finance leases	3.33		%

Supplemental balance sheet information related to leases was as follows:

	Classification on the Condensed Consolidated Balance Sheet	February 2, 2020
		(In millions)
ROU assets - operating leases	Other long-term assets	$	620
ROU assets - finance leases	Property, plant and equipment, net	$	55
Short-term lease liabilities - operating leases	Other current liabilities	$	95
Long-term lease liabilities - operating leases	Other long-term liabilities	$	568
Short-term lease liabilities - finance leases	Current portion of long-term debt	$	11
Long-term lease liabilities - finance leases	Long-term debt	$	44

The maturities of lease liabilities were as follows:

	February 2, 2020
	Operating Lease		Finance Lease
	(In millions)
2020 (remainder)	$	87	$	9
2021	110		13
2022	87		13
2023	80		13
2024	59		12
Thereafter	403		—
Total undiscounted liabilities	826		60
Less: interest	163		5
Present value of lease liabilities	$	663	$	55

As of November 3, 2019, future minimum lease payments under non-cancelable lease liabilities prior to our adoption of Topic 842 were as follows:

	November 3, 2019
	(In millions)
2020	$	115
2021	99
2022	80
2023	69
2024	47
Thereafter	390
Total minimum lease payments	$	800