Leases

12 Months Ended

Feb. 01, 2020

Leases [Abstract]

Leases

10.   Leases

In the first quarter of fiscal 2020, we adopted ASU 2016-02, Leases. See Note 1, Summary of Significant Accounting Policies, for information regarding our adoption and accounting policy for leases.

Supplemental balance sheet information related to our leases was as follows ($ in millions):

	Balance Sheet Location	February 1, 2020
Assets
Operating leases	Operating lease assets	$	2,709
Finance leases	Property under finance leases, net(1)		35
Total lease assets		$	2,744
Liabilities
Current:
Operating leases	Current portion of operating lease liabilities	$	660
Finance leases	Current portion of long-term debt		14
Non-current:
Operating leases	Long-term operating lease liabilities		2,138
Finance leases	Long-term debt		24
Total lease liabilities		$	2,836

(1)Finance leases are recorded net of accumulated depreciation of $54 million.

Components of our total lease cost were as follows ($ in millions):

	Statement of Earnings Location	2020
Operating lease cost(1)	Cost of sales and SG&A(2)	$	780
Finance lease cost:
Depreciation of lease assets	Cost of sales and SG&A(2)		13
Interest on lease liabilities	Interest expense		2
Variable lease cost	Cost of sales and SG&A(2)		265
Sublease income	SG&A		(16)
Total lease cost		$	1,044

(1)Includes short-term leases, which are immaterial.

(2)Supply chain-related amounts are included in Cost of sales.

Other information related to our leases was as follows ($ in millions):

	2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	810
Operating cash flows from finance leases		2
Financing cash flows from finance leases		15
Lease assets obtained in exchange for new lease liabilities:
Operating leases		676
Finance leases		10
Weighted average remaining lease term (in years):
Operating leases		5.3
Finance leases		5.0
Weighted average discount rate:
Operating leases		3.3	%
Finance leases		4.2	%

Future lease payments under our non-cancellable leases as of February 1, 2020, were as follows ($ in millions):

.
	Operating Leases(1)		Finance Leases(1)
Fiscal 2021	$	738	$	15
Fiscal 2022		678		11
Fiscal 2023		521		7
Fiscal 2024		388		3
Fiscal 2025		279		2
Thereafter		456		5
Total future undiscounted lease payments		3,060		43
Less imputed interest		262		5
Total reported lease liability	$	2,798	$	38

(1)Lease payments exclude $158 million of legally binding fixed costs for leases signed but not yet commenced.

In accordance with the prior guidance, ASC 840, Leases, our leases were previously designated as either capital, financing or operating. Previously designated capital leases are now considered finance leases under the new guidance, ASC 842, Leases, while our previously existing financing leases have been derecognized and reclassified as operating leases. The designation of operating leases remains substantially unchanged under the new guidance. The future minimum lease payments by fiscal year as determined prior to the adoption of ASC 842, Leases, under our previously designated capital, financing and operating leases (not including contingent rent) as disclosed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019, were as follows ($ in millions):

	Capital Leases		Financing Leases		Operating Leases(1)
Fiscal 2020	$	14	$	48	$	700
Fiscal 2021		11		42		648
Fiscal 2022		7		35		513
Fiscal 2023		4		24		371
Fiscal 2024		2		16		253
Thereafter		7		40		476
Total minimum lease payments		45		205	$	2,961
Less amount representing interest		(6)		(24)
Present value of minimum lease payments		39		181
Less current maturities		(12)		(43)
Present value of minimum lease maturities, less current maturities	$	27	$	138

(1)Operating lease obligations do not include payments to landlords covering real estate taxes and common area maintenance. These charges, if included, would increase total operating lease obligations by $0.8 billion at February 2, 2019.