New Lease Accounting Standard

Method and Impact of Adoption

On January 28, 2019, we adopted the new lease accounting standard using the optional transition method by recognizing a cumulative-effect adjustment to the consolidated balance sheet and not adjusting comparative information for prior periods. In addition, we elected the package of practical expedients permitted under the transition guidance, which allowed us not to reassess (1) whether any expired or existing contracts are or contain leases, (2) lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases.

The cumulative-effect adjustment upon adoption of the new lease accounting standard resulted in the recognition of $470 million of operating lease assets and $500 million of operating lease liabilities on our Consolidated Balance Sheet. The difference of $30 million represents deferred rent for leases that existed as of the date of adoption, which was an offset to the opening balance of operating lease assets.

Lease Obligations

Our lease obligations consist of operating leases for our headquarters complex, domestic and international office facilities, and data center space, with lease periods expiring between 2019 and 2035.

Future minimum lease payments under our non-cancelable operating leases as of April 28, 2019, are as follows:



	Operating Lease Obligations
	(In millions)
Fiscal Year:
2020 (excluding first quarter of fiscal year 2020)	$	77
2021	100
2022	92
2023	79
2024	57
2025 and thereafter	277
Total	682
Less imputed interest	116
Present value of net future minimum lease payments	566
Less short-term operating lease liabilities	80
Long-term operating lease liabilities	$	486

Future minimum lease payments under our non-cancelable operating leases as of January 27, 2019, based on the previous lease accounting standard, are as follows:



	Lease Obligations
	(In millions)
Fiscal Year:
2020	$	100
2021	97
2022	90
2023	77
2024	54
2025 and thereafter	265
Total	$	683

Operating lease expense for the first quarter of fiscal years 2020 and 2019 was $27 million and $16 million, respectively. Short-term and variable lease expenses for the first quarter of fiscal year 2020 were not significant.

Other information related to leases was as follows:



	Three Months Ended
	April 28, 2019
	(In millions)
Supplemental cash flows information
Operating cash flows used for operating leases	$	24
Operating lease assets obtained in exchange for lease obligations	$	87
Weighted-average remaining lease term - operating leases	8.9 years
Weighted-average remaining discount rate - operating leases	3.73		%