LEASES

3 Months Ended

Aug. 25, 2019

Lessee Disclosure [Abstract]

Lessee Operating Leases

(5) Leases

We determine whether an arrangement is a lease at inception. Our lease portfolio primarily consists of operating lease arrangements for certain warehouse and distribution space, office space, retail shops, production facilitates, rail cars, production and distribution equipment, automobiles, and office equipment. When our lease arrangements include lease and non-lease components, we account for lease components and non-lease components (e.g. common area maintenance) separately based on their relative standalone prices.

Any lease arrangements with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheet, and we recognize lease cost for these lease arrangements on a straight-line basis over the lease term. Many of our lease arrangements provide us with the options to exercise one or more renewal terms or to terminate the lease arrangement. We include these options when we are reasonably certain to exercise them in the lease term used to establish our right of use assets and lease liabilities. Generally, our lease agreements do not include an option to purchase the leased asset, residual value guarantees or material restrictive covenants.

We have certain lease arrangements with variable rental payments. Our lease arrangements for our Häagen-Dazs retail shops often include rental payments that are based on a percentage of retail sales. We have other lease arrangements that are adjusted periodically

based on an inflation index or rate. The future variability of these payments and adjustments are unknown and therefore they are not included as minimum lease payments used to determine our right of use assets and lease liabilities. Variable rental payments are recognized in the period in which the obligation is incurred.

As most of our lease arrangements do not provide an implicit interest rate, we apply an incremental borrowing rate based on the information available at the commencement date of the lease arrangement to determine the present value of lease payments.

Our lease costs associated with finance leases and sale-leaseback transactions and our lease income associated with lessor and sublease arrangements are not material to our Consolidated Financial Statements.

Our operating leases are reported in our Consolidated Balance Sheet as follows:

In Millions	Classification	Aug. 25, 2019
Right of use assets (a)	Other assets	$	409.3
Current lease liabilities	Other current liabilities		103.3
Non-current lease liabilities	Other liabilities		318.1

(a) Net of accumulated amortizationComponents of our lease cost are as follows:

	Quarter Ended
In Millions	Aug. 25, 2019
Operating lease cost	$	32.9
Variable lease cost		5.2
Short-term lease cost		6.4

Rent expense under all operating leases from continuing operations was $184.9 million in fiscal 2019.Maturities of our operating lease obligations by fiscal year are as follows:

In Millions
Fiscal 2020 (a)	$	92.4
Fiscal 2021		106.2
Fiscal 2022		88.4
Fiscal 2023		65.2
Fiscal 2024		49.9
After fiscal 2024		62.6
Total noncancelable future lease obligations	$	464.7
Less: Interest		(43.3)
Present value of lease obligations	$	421.4

(a) Excludes the quarter ended August 25, 2019.The lease payments presented in the table above exclude an immaterial amount of minimum lease payments for operating leases we have committed to but have not yet commenced as of August 25, 2019.Noncancelable future operating lease commitments as of May 26, 2019 were as follows:

In Millions
Fiscal 2020	$	120.0
Fiscal 2021		101.7
Fiscal 2022		85.0
Fiscal 2023		63.8
Fiscal 2024		49.1
After fiscal 2024		63.0
Total noncancelable future lease commitments	$	482.6

The weighted-average remaining lease term and weighted-average discount rate for our operating leases are as follows:

	Aug. 25, 2019
Weighted-average remaining lease term	4.9	years
Weighted-average discount rate	4.2	%

Operating cash flow information and non-cash activity related to our operating leases are as follows:

	Quarter Ended
In Millions	Aug. 25, 2019
Cash paid for amounts included in the measurement of lease liabilities	$	31.8
Right of use assets obtained in exchange for new lease liabilities		3.5