Leases

12 Months Ended

May 31, 2021

Leases [Abstract]

Leases

NOTE 19 — LEASES

Lease expense is recognized in Cost of sales or Operating overhead expense within the Consolidated Statements of Income, based on the underlying nature of the leased asset. For the fiscal year ended May 31, 2021, lease expense primarily consisted of operating lease costs of $589 million, along with $347 million primarily related to variable lease costs, which includes an immaterial amount of short-term lease costs. For the fiscal year ended May 31, 2020, lease expense primarily consisted of operating lease costs of $569 million, along with $337 million primarily related to variable lease costs, which includes an immaterial amount of short-term lease costs. Prior to the adoption of Topic 842, and in accordance with ASC Topic 840 - Leases, rent expense, excluding executory costs, was $829 million for the fiscal year ended May 31, 2019. As of and for the fiscal years ended May 31, 2021 and 2020, finance leases were not a material component of the Company's lease portfolio.

The undiscounted cash flows for future maturities of the Company’s operating lease liabilities and the reconciliation to the Operating lease liabilities recognized in the Company’s Consolidated Balance Sheets are as follows:

(Dollars in millions)	AS OF MAY 31, 2021(1)
Fiscal 2022	$	534
Fiscal 2023	530
Fiscal 2024	490
Fiscal 2025	437
Fiscal 2026	357
Thereafter	1,397
Total undiscounted future cash flows related to lease payments	$	3,745
Less: Interest	347
Present value of lease liabilities	$	3,398

(1)Excludes $78 million as of May 31, 2021, of future operating lease payments for lease agreements signed but not yet commenced.

The following table includes supplemental information used to calculate the present value of Operating lease liabilities:

	AS OF MAY 31,
	2021		2020
Weighted-average remaining lease term (in years)	8.3		8.7
Weighted-average discount rate	2.3	%	2.4	%

The following table includes supplemental cash and non-cash information related to operating leases:

	YEAR ENDED MAY 31,
(Dollars in millions)	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	583	$	532
Operating lease right-of-use assets obtained in exchange for new operating lease liabilities	$	489	$	705	(1)

(1)Excludes the amount initially capitalized in conjunction with the adoption of Topic 842.