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Property and Leases

9 Months Ended

Nov. 03, 2019

Leases [Abstract]

Property and Leases

PROPERTY AND LEASES

Net Property and Equipment

Net property and equipment includes accumulated depreciation and amortization of $21.7 billion as of November 3, 2019 and $20.6 billion as of February 3, 2019.

Leases

We lease certain retail locations, office space, warehouse and distribution space, equipment, and vehicles. While most of these leases are operating leases, certain retail locations and equipment are leased under finance leases. We consider various factors such as market conditions and the terms of any renewal options that may exist to determine whether we will renew or replace the lease. A substantial majority of our leases have remaining lease terms of one to 20 years, typically with the option to extend the leases for up to five years. Some of our leases may include the option to terminate in less than five years. In the event we are reasonably certain to exercise the option to extend a lease, we will include the extended terms in the related lease assets and liabilities. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under the lease agreements.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Further, certain lease agreements include rental payments based on an index or rate and others include rental payments based on a percentage of sales.

The consolidated balance sheet location of assets and liabilities related to operating and finance leases follow.

in millions	Consolidated Balance Sheet Caption	November 3, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets	$	5,638
Finance lease assets	Net property and equipment	876
Total lease assets		$	6,514
Liabilities:
Current:
Operating lease liabilities	Current operating lease liabilities	$	828
Finance lease liabilities	Current installments of long-term debt	69
Long-term:
Operating lease liabilities	Long-term operating lease liabilities	5,113
Finance lease liabilities	Long-term debt, excluding current installments	1,035
Total lease liabilities		$	7,045

The components of lease cost follow.

in millions	Consolidated Statement of Earnings Caption	Three Months Ended November 3, 2019				Nine Months Ended November 3, 2019
Operating lease cost	Selling, general and administrative	$	211			$	626
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	21				64
Interest on lease liabilities	Interest expense	23				69
Short-term lease cost	Selling, general and administrative	30				73
Variable lease cost	Selling, general and administrative	53				175
Sublease income	Selling, general and administrative	(3		)		(10		)
Net lease cost		$	335			$	997

ASU 2016-02 requires that public companies use a secured incremental borrowing rate as the discount rate for the present value of lease payments when the rate implicit in the contract is not readily determinable. We determine a secured rate on a quarterly basis and update the weighted average discount rate accordingly. Lease terms and discount rates follow.

	November 3, 2019
Weighted Average Remaining Lease Term (Years):
Operating leases	10
Finance leases	13
Weighted Average Discount Rate:
Operating leases	3.1	%
Finance leases	10.9	%

The approximate future minimum lease payments under operating and finance leases at November 3, 2019 follow.

in millions	Operating Leases				Finance Leases
Fiscal 2019	$	239			$	40
Fiscal 2020	953				156
Fiscal 2021	845				154
Fiscal 2022	745				153
Fiscal 2023	650				147
Thereafter	3,274				1,074
Total lease payments	6,706				1,724
Less imputed interest	765				620
Present value of lease liabilities	$	5,941			$	1,104

—————

Note: Amounts presented do not include payments relating to immaterial leases excluded from the consolidated balance sheets as part of transition elections adopted upon implementation of Topic 842. Additionally, we have excluded approximately $1.6 billion of leases (undiscounted basis) that have not yet commenced. These leases will commence between 2019 and 2020 with lease terms of one to 20 years.

The approximate future minimum lease payments under capital and operating leases at February 3, 2019 and accounted for under previous lease guidance follow.

in millions	Operating Leases				Capital Leases
Fiscal 2019	$	976			$	150
Fiscal 2020	912				167
Fiscal 2021	792				143
Fiscal 2022	682				142
Fiscal 2023	584				137
Thereafter	3,090				970
	$	7,036			1,709
Less imputed interest					660
Net present value of capital lease obligations					1,049
Less current installments					57
Long-term capital lease obligations, excluding current installments					$	992

Other lease information follows.

in millions	Nine Months Ended November 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	750
Operating cash flows – finance leases	69
Financing cash flows – finance leases	46
Leased assets obtained in exchange for new operating lease liabilities	589
Leased assets obtained in exchange for new finance lease liabilities	101

Property and Leases

PROPERTY AND LEASES

Net Property and Equipment

Net property and equipment includes accumulated depreciation and amortization of $21.7 billion as of November 3, 2019 and $20.6 billion as of February 3, 2019.

Leases

We lease certain retail locations, office space, warehouse and distribution space, equipment, and vehicles. While most of these leases are operating leases, certain retail locations and equipment are leased under finance leases. We consider various factors such as market conditions and the terms of any renewal options that may exist to determine whether we will renew or replace the lease. A substantial majority of our leases have remaining lease terms of one to 20 years, typically with the option to extend the leases for up to five years. Some of our leases may include the option to terminate in less than five years. In the event we are reasonably certain to exercise the option to extend a lease, we will include the extended terms in the related lease assets and liabilities. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are generally our obligations under the lease agreements.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Further, certain lease agreements include rental payments based on an index or rate and others include rental payments based on a percentage of sales.

The consolidated balance sheet location of assets and liabilities related to operating and finance leases follow.

in millions	Consolidated Balance Sheet Caption	November 3, 2019
Assets:
Operating lease assets	Operating lease right-of-use assets	$	5,638
Finance lease assets	Net property and equipment	876
Total lease assets		$	6,514
Liabilities:
Current:
Operating lease liabilities	Current operating lease liabilities	$	828
Finance lease liabilities	Current installments of long-term debt	69
Long-term:
Operating lease liabilities	Long-term operating lease liabilities	5,113
Finance lease liabilities	Long-term debt, excluding current installments	1,035
Total lease liabilities		$	7,045

The components of lease cost follow.

in millions	Consolidated Statement of Earnings Caption	Three Months Ended November 3, 2019				Nine Months Ended November 3, 2019
Operating lease cost	Selling, general and administrative	$	211			$	626
Finance lease cost:
Amortization of leased assets	Depreciation and amortization	21				64
Interest on lease liabilities	Interest expense	23				69
Short-term lease cost	Selling, general and administrative	30				73
Variable lease cost	Selling, general and administrative	53				175
Sublease income	Selling, general and administrative	(3		)		(10		)
Net lease cost		$	335			$	997

ASU 2016-02 requires that public companies use a secured incremental borrowing rate as the discount rate for the present value of lease payments when the rate implicit in the contract is not readily determinable. We determine a secured rate on a quarterly basis and update the weighted average discount rate accordingly. Lease terms and discount rates follow.

	November 3, 2019
Weighted Average Remaining Lease Term (Years):
Operating leases	10
Finance leases	13
Weighted Average Discount Rate:
Operating leases	3.1	%
Finance leases	10.9	%

The approximate future minimum lease payments under operating and finance leases at November 3, 2019 follow.

in millions	Operating Leases				Finance Leases
Fiscal 2019	$	239			$	40
Fiscal 2020	953				156
Fiscal 2021	845				154
Fiscal 2022	745				153
Fiscal 2023	650				147
Thereafter	3,274				1,074
Total lease payments	6,706				1,724
Less imputed interest	765				620
Present value of lease liabilities	$	5,941			$	1,104

—————

Note: Amounts presented do not include payments relating to immaterial leases excluded from the consolidated balance sheets as part of transition elections adopted upon implementation of Topic 842. Additionally, we have excluded approximately $1.6 billion of leases (undiscounted basis) that have not yet commenced. These leases will commence between 2019 and 2020 with lease terms of one to 20 years.

The approximate future minimum lease payments under capital and operating leases at February 3, 2019 and accounted for under previous lease guidance follow.

in millions	Operating Leases				Capital Leases
Fiscal 2019	$	976			$	150
Fiscal 2020	912				167
Fiscal 2021	792				143
Fiscal 2022	682				142
Fiscal 2023	584				137
Thereafter	3,090				970
	$	7,036			1,709
Less imputed interest					660
Net present value of capital lease obligations					1,049
Less current installments					57
Long-term capital lease obligations, excluding current installments					$	992

Other lease information follows.

in millions	Nine Months Ended November 3, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases	$	750
Operating cash flows – finance leases	69
Financing cash flows – finance leases	46
Leased assets obtained in exchange for new operating lease liabilities	589
Leased assets obtained in exchange for new finance lease liabilities	101

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- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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X

- Definition

The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI http://asc.fasb.org/subtopic&trid=77888251

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