LEASES (Notes)

3 Months Ended

Jan. 31, 2020

13.

LEASES

We determine whether an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities (current and non-current) on our condensed consolidated balance sheet. Finance leases are included in property, plant and equipment, other accrued liabilities, and other long-term liabilities in our condensed consolidated balance sheet. Our finance lease and lessor arrangements are immaterial.

ROU assets and lease obligations are recognized based on their present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate, based on the lease term and economic environment, to discount lease obligations. ROU assets also include any lease payments made and exclude lease incentives and initial direct costs incurred. We initially measure payments based on an index by using the applicable rate at lease commencement. Variable payments that do not depend on an index are not included in the lease liability and are recognized as they are incurred.

We have operating leases for items including office space, order fulfillment, sales and service centers, R&D and certain equipment, primarily automobiles. Our leases have remaining terms of up to 12 years, some of which may include options to extend the leases for 3 to 5 years. We consider options to renew in our lease terms and measurement of ROU assets and lease liabilities if we determined they were reasonably certain to be exercised.

For the three months ended January 31, 2020, operating lease cost was $11 million and variable lease cost was $4 million. Short-term lease and finance lease costs were immaterial for the three months ended January 31, 2020.

Supplemental Information Related to our Leases

During the three months ended January 31, 2020, cash paid for operating leases included in operating cash flows was $11 million. ROU assets obtained in exchange for operating lease obligations was $12 million for the three months ended January 31, 2020. Amounts related to finance lease activities for the three months ended January 31, 2020, were not material.

As of January 31, 2020, the weighted average lease term of our operating leases was 6.3 years and the weighted average discount rate of our operating leases was 3%.

Maturity Analysis of Liabilities

The following table presents the maturity of our operating lease liabilities as of January 31, 2020:



	Operating Leases
	(in millions)
2020 (remainder)	$	31
2021	38
2022	31
2023	21
2024	15
Thereafter	45
Total undiscounted lease liability	181
Imputed Interest	17
Total discounted lease liability	$	164

As of October 31, 2019, future non-cancellable rent obligations as determined under ASC 840 were as follows:



	Operating Leases
	(in millions)
2020	$	48
2021	40
2022	31
2023	19
2024	12
Thereafter	$	46

Leases That Have Not Yet Commenced

As of January 31, 2020, we did not have material leases that had not yet commenced.

Lessor Disclosure

The rental income from leasing out excess facilities of $3 million for the three months ended January 31, 2020 is included in other operating expense (income), net. Other lessor arrangements were immaterial.