Leases

6 Months Ended

Apr. 26, 2020

A contract contains a lease when Applied has the right to control the use of an identified asset for a period of time in exchange for consideration. Applied leases certain facilities, vehicles and equipment under non-cancelable operating leases, many of which include options to renew. Options that are reasonably certain to be exercised are included in the calculation of the right-of-use asset and lease liability. Applied’s leases do not contain residual value guarantees or significant restrictions that impact the accounting for leases. As implicit rates are not available for the leases, Applied uses the incremental borrowing rate as of the lease commencement date in order to measure the right-of-use asset and liability. Operating lease expense is generally recognized on a straight-line basis over the lease term.

Applied elected the practical expedient to account for lease and non-lease components as a single lease component for all leases. For leases with a term of one year or less, Applied elected not to record a right-of-use asset or lease liability and to account for the associated lease payments as they become due.

The components of lease expense and supplemental information were as follows:

Three Months Ended

Six Months Ended

April 26, 2020

(In millions, except percentages)

Operating lease cost

$21

$34

Weighted-average remaining lease term (in years)

5.4

Weighted-average discount rate

2.0%

Supplemental cash flow information related to leases are as follows:


	Six Months Ended
	April 26, 2020
	(In millions)
Operating cash flows paid for operating leases	$	34
Right-of-use assets obtained in exchange for operating lease liabilities	$	113

As of April 26, 2020, the maturities of lease liabilities are as follows:


	Operating Leases
Fiscal	(In millions)
2020 (remaining 6 months)	$	32
2021	57
2022	45
2023	40
2024	36
Thereafter	48
Total lease payments	$	258
Less imputed interest	(14)
Total	$	244

Prior to the adoption of the new lease standard, future minimum lease payments as of October 27, 2019 , as defined under the previous lease accounting guidance, were as follows:


	Lease Payments
Fiscal	(In millions)
2020	$	45
2021	34
2022	24
2023	21
2024	17
Thereafter	30
	$	171