Leases Leases

3 Months Ended

Jul. 05, 2019

We lease certain of our facilities, equipment, and data center co-locations under operating leases that expire on various dates through fiscal 2029. Our leases generally have terms that range from 1 year to 17 years for our facilities, 1 year to 6 years for equipment, and 1 year to 6 years for data center co-locations. Some of our leases contain renewal options, escalation clauses, rent concessions, and leasehold improvement incentives.

We determine if an arrangement is a lease at inception. We have elected to not recognize a lease liability or right-of-use (ROU) asset for short-term leases (leases with a term of twelve months or less that do not include an option to purchase the underlying asset). Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The interest rate we use to determine the present value of future payments is our incremental borrowing rate because the rate implicit in our leases is not readily determinable. Our incremental borrowing rate is a hypothetical rate for collateralized borrowings in economic environments where the leased asset is located based on credit rating factors. Our operating lease assets also include adjustments for prepaid lease payments, lease incentives and initial direct costs.

Certain lease contracts include obligations to pay for other services, such as operations and maintenance. We elected the practical expedient whereby we record all lease components and the related minimum non-lease components as a single lease component. Cash payments made for variable lease costs are not included in the measurement of our operating lease assets and liabilities. Many of our lease terms include one or more options to renew. We do not assume renewals in our determination of the lease term unless it is reasonably certain that we will exercise that option. Lease costs for minimum lease payments for operating leases is recognized on a straight-line basis over the lease term. Our lease agreements do not contain any residual value guarantees.

The following summarizes our lease costs for the three months ended July 5, 2019:



	Three Months Ended
(In millions)	July 5, 2019
Operating lease costs	$	15
Short-term lease costs	2
Variable lease costs	8
Total lease costs	$	25

Rent expense under operating leases was $19 million for the three months ended June 29, 2018.

Other information related to our operating leases was as follows:



	Three Months Ended
	July 5, 2019
Weighted-average remaining lease term	5.3 years
Weighted-average discount rate	4.28	%

See Note 6 for additional cash flow information related to our operating leases.

As of July 5, 2019, the maturities of our lease liabilities by fiscal year are as follows:



(In millions)
Remainder of 2020	$	39
2021	53
2022	43
2023	30
2024	26
Thereafter	42
Total lease payments	233
Less: Imputed interest	(25		)
Present value of lease liabilities	$	208

As of March 29, 2019, the minimum future rentals on non-cancelable operating leases by fiscal year, based on the previous lease accounting standard, were as follows:



(In millions)
2020	$	55
2021	49
2022	40
2023	32
2024	26
Thereafter	42
Total minimum future lease payments	$	244