Leases

3 Months Ended

Dec. 28, 2019

Leases [Abstract]

Leases

Leases

The Company has lease arrangements for certain equipment and facilities, including retail, corporate, manufacturing and data center space. These leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options, some of which are reasonably certain of exercise. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component for leases of retail, corporate, and data center facilities.

Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments are primarily based on purchases of output of the underlying leased assets. Lease costs associated with fixed payments on the Company’s operating leases were $369 million for the three months ended December 28, 2019. Lease costs associated with variable payments on the Company’s leases were $3.0 billion for the three months ended December 28, 2019.

For the three months ended December 28, 2019, the Company made $349 million of fixed cash payments related to operating leases. Non-cash activities involving ROU assets obtained in exchange for lease liabilities were $8.2 billion for the three months ended December 28, 2019, including the impact of adopting the new leases standard.

The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of December 28, 2019 (in millions):

Lease-Related Assets and Liabilities	Financial Statement Line Items	December 28, 2019
Right-of-use assets:
Operating leases	Other non-current assets	$	7,262
Finance leases	Property, plant and equipment, net	629
Total right-of-use assets		$	7,891
Lease liabilities:
Operating leases	Other current liabilities	$	1,245
	Other non-current liabilities	6,573
Finance leases	Other current liabilities	14
	Other non-current liabilities	627
Total lease liabilities		$	8,459

Lease liability maturities as of December 28, 2019, are as follows (in millions):

	Operating Leases			Finance Leases			Total
2020 (remaining nine months)	$	1,051		$	23		$	1,074
2021	1,398			34			1,432
2022	1,218			35			1,253
2023	966			46			1,012
2024	845			25			870
Thereafter	3,579			921			4,500
Total undiscounted liabilities	9,057			1,084			10,141
Less: Imputed interest	(1,239		)	(443		)	(1,682		)
Total lease liabilities	$	7,818		$	641		$	8,459

The weighted-average remaining lease term and discount rate related to the Company’s lease liabilities as of December 28, 2019 were 10.2 years and 2.1%, respectively. The Company’s lease discount rates are generally based on estimates of its incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

As of December 28, 2019, the Company had $2.1 billion of future payments under additional leases, primarily for corporate facilities and retail space, that had not yet commenced. These leases will commence between 2020 and 2022, with lease terms ranging from less than 1 year to 16 years.

Leases

Note 12 – Leases

The Company has lease arrangements for certain equipment and facilities, including retail, corporate, manufacturing and data center space. These leases typically have original terms not exceeding 10 years and generally contain multi-year renewal options, some of which are reasonably certain of exercise. The Company’s lease arrangements may contain both lease and non-lease components. The Company has elected to combine and account for lease and non-lease components as a single lease component for leases of retail, corporate, and data center facilities.

Payments under the Company’s lease arrangements may be fixed or variable, and variable lease payments are primarily based on purchases of output of the underlying leased assets. Lease costs associated with fixed payments on the Company’s operating leases were $369 million for the three months ended December 28, 2019. Lease costs associated with variable payments on the Company’s leases were $3.0 billion for the three months ended December 28, 2019.

For the three months ended December 28, 2019, the Company made $349 million of fixed cash payments related to operating leases. Non-cash activities involving ROU assets obtained in exchange for lease liabilities were $8.2 billion for the three months ended December 28, 2019, including the impact of adopting the new leases standard.

The following table shows ROU assets and lease liabilities, and the associated financial statement line items, as of December 28, 2019 (in millions):

Lease-Related Assets and Liabilities	Financial Statement Line Items	December 28, 2019
Right-of-use assets:
Operating leases	Other non-current assets	$	7,262
Finance leases	Property, plant and equipment, net	629
Total right-of-use assets		$	7,891
Lease liabilities:
Operating leases	Other current liabilities	$	1,245
	Other non-current liabilities	6,573
Finance leases	Other current liabilities	14
	Other non-current liabilities	627
Total lease liabilities		$	8,459

Lease liability maturities as of December 28, 2019, are as follows (in millions):

	Operating Leases			Finance Leases			Total
2020 (remaining nine months)	$	1,051		$	23		$	1,074
2021	1,398			34			1,432
2022	1,218			35			1,253
2023	966			46			1,012
2024	845			25			870
Thereafter	3,579			921			4,500
Total undiscounted liabilities	9,057			1,084			10,141
Less: Imputed interest	(1,239		)	(443		)	(1,682		)
Total lease liabilities	$	7,818		$	641		$	8,459

The weighted-average remaining lease term and discount rate related to the Company’s lease liabilities as of December 28, 2019 were 10.2 years and 2.1%, respectively. The Company’s lease discount rates are generally based on estimates of its incremental borrowing rate, as the discount rates implicit in the Company’s leases cannot be readily determined.

As of December 28, 2019, the Company had $2.1 billion of future payments under additional leases, primarily for corporate facilities and retail space, that had not yet commenced. These leases will commence between 2020 and 2022, with lease terms ranging from less than 1 year to 16 years.