Leases

9 Months Ended

Aug. 01, 2021

Leases [Abstract]

Leases

Leases

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		Nine Months Ended
	August 1, 2021	July 26, 2020	August 1, 2021	July 26, 2020
	(In millions, except percentages)
Operating lease cost	$20	$17	$58	$51
Weighted-average remaining lease term (in years)			4.7	5.3
Weighted-average discount rate			1.6%	1.9%

Supplemental cash flow information related to leases are as follows:

	Nine Months Ended
	August 1, 2021		July 26, 2020
	(In millions)
Operating cash flows paid for operating leases	$	58	$	51
Right-of-use assets obtained in exchange for operating lease liabilities	$	48	$	142

As of August 1, 2021, the maturities of lease liabilities are as follows: 

	Operating Leases
Fiscal	(In millions)
2021 (remaining 3 months)	$	19
2022	70
2023	63
2024	54
2025	42
Thereafter	31
Total lease payments	$	279
Less imputed interest	(11)
Total	$	268