XML 32 R14.htm IDEA: XBRL DOCUMENT
v3.20.4

Leases | 12 Months Ended
--- | ---
Dec. 31, 2020
Leases [Abstract] |
Leases | Leases The Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) on January 1, 2019 on a modified retrospective basis. As a result, the Company’s lease disclosures as of and for the years ended December 31, 2020 and 2019 are reported under ASC 842. Comparative financial information for the year ended December 31, 2018 has not been restated and continues to be reported under ASC 840, the lease accounting standard in effect for that period. Disclosure Subsequent to the Adoption of the New Lease Accounting Standard (ASU 2016-02) The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years. The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years. In addition, the Company leases pharmacy space at the stores of another retail chain for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings. For these pharmacy lease arrangements, the Company concluded that for accounting purposes the lease term was the remaining estimated economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases. The following table is a summary of the components of net lease cost for the years ended December 31, 2020 and 2019:
In millions | 2020 |  | 2019
Operating lease cost | $ | 2,670 |  |  | $ | 2,720 |
Finance lease cost: |  |  |
Amortization of right-of-use assets | 56 |  |  | 38 |
Interest on lease liabilities | 58 |  |  | 44 |
Total finance lease costs | 114 |  |  | 82 |
Short-term lease costs | 22 |  |  | 24 |
Variable lease costs | 599 |  |  | 581 |
Less: sublease income | 55 |  |  | 50 |
Net lease cost | $ | 3,350 |  |  | $ | 3,357 |
Supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019 is as follows:
In millions | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows paid for operating leases | $ | 2,724 |  |  | $ | 2,701 |
Operating cash flows paid for interest portion of finance leases | 58 |  |  | 44 |
Financing cash flows paid for principal portion of finance leases | 34 |  |  | 26 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating leases | 1,679 |  |  | 1,824 |
Finance leases | 313 |  |  | 283 |
Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 is as follows:
In millions, except remaining lease term and discount rate | 2020 |  | 2019
Operating leases: |  |  |
Operating lease right-of-use assets | $ | 20,729 |  | $ | 20,860
Current portion of operating lease liabilities | $ | 1,638 |  | $ | 1,596
Long-term operating lease liabilities | 18,757 |  | 18,926
Total operating lease liabilities | $ | 20,395 |  | $ | 20,522
Finance leases: |  |  |
Property and equipment, gross | $ | 1,107 |  | $ | 790
Accumulated depreciation | (106) |  | (38)
Property and equipment, net | $ | 1,001 |  | $ | 752
Current portion of long-term debt | $ | 33 |  | $ | 27
Long-term debt | 1,050 |  | 781
Total finance lease liabilities | $ | 1,083 |  | $ | 808
Weighted average remaining lease term (in years) |  |  |
Operating leases | 13.3 |  | 13.8
Finance leases | 20.3 |  | 20.5
Weighted average discount rate |  |  |
Operating leases | 4.5 | % |  | 4.6 | %
Finance leases | 5.6 | % |  | 6.7 | %
The following table summarizes the maturity of lease liabilities under finance and operating leases as of December 31, 2020:
In millions | Finance Leases |  | Operating Leases (1) |  | Total
2021 | $ | 100 |  |  | $ | 2,688 |  |  | $ | 2,788 |
2022 | 98 |  |  | 2,583 |  |  | 2,681 |
2023 | 96 |  |  | 2,496 |  |  | 2,592 |
2024 | 95 |  |  | 2,269 |  |  | 2,364 |
2025 | 95 |  |  | 2,089 |  |  | 2,184 |
Thereafter | 1,328 |  |  | 15,017 |  |  | 16,345 |
Total lease payments (2) | 1,812 |  |  | 27,142 |  |  | 28,954 |
Less: imputed interest | (729) |  |  | (6,747) |  |  | (7,476) |
Total lease liabilities | $ | 1,083 |  |  | $ | 20,395 |  |  | $ | 21,478 |
_____________________________________________ (1)Future operating lease payments have not been reduced by minimum sublease rentals of $306 million due in the future under noncancelable subleases. (2)The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. Sale-Leaseback Transactions The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the tables above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Proceeds from sale-leaseback transactions totaled $101 million and $5 million in the years ended December 31, 2020 and 2019, respectively. Gains from sale-leaseback transactions totaled $3 million in the year ended December 31, 2020. There were no material gains from sale-leaseback transactions in the year ended December 31, 2019. Store Rationalization Charges During the first quarter of 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. During the third quarter of 2019, in connection with its annual budgeting process, the Company performed an updated review of its retail stores and determined it would close an additional 22 underperforming retail pharmacy stores during the first quarter of 2020. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended September 30, 2019, the Company recorded a store rationalization charge of $96 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. Comparative Disclosure Prior to the Adoption of the New Lease Accounting Standard (ASU 2016-02) The following table is a summary of the Company’s net rental expense for operating leases for the year ended December 31, 2018:
In millions | 2018 |  |
Minimum rentals | $ | 2,528 |  |  |
Contingent rentals | 28 |  |  |
Rental expense | 2,556 |  |  |
Less: sublease income | (21) |  |  |
Total rental expense, net | $ | 2,535 |  |  |
Leases | Leases The Company adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) on January 1, 2019 on a modified retrospective basis. As a result, the Company’s lease disclosures as of and for the years ended December 31, 2020 and 2019 are reported under ASC 842. Comparative financial information for the year ended December 31, 2018 has not been restated and continues to be reported under ASC 840, the lease accounting standard in effect for that period. Disclosure Subsequent to the Adoption of the New Lease Accounting Standard (ASU 2016-02) The Company leases most of its retail stores and mail order facilities and certain distribution centers and corporate offices under operating or finance leases, typically with initial terms of 15 to 25 years. The Company also leases certain equipment and other assets under operating or finance leases, typically with initial terms of 3 to 10 years. In addition, the Company leases pharmacy space at the stores of another retail chain for which the noncancelable contractual term of the pharmacy lease arrangement exceeds the remaining estimated economic life of the buildings. For these pharmacy lease arrangements, the Company concluded that for accounting purposes the lease term was the remaining estimated economic life of the buildings. Consequently, most of these individual pharmacy leases are finance leases. The following table is a summary of the components of net lease cost for the years ended December 31, 2020 and 2019:
In millions | 2020 |  | 2019
Operating lease cost | $ | 2,670 |  |  | $ | 2,720 |
Finance lease cost: |  |  |
Amortization of right-of-use assets | 56 |  |  | 38 |
Interest on lease liabilities | 58 |  |  | 44 |
Total finance lease costs | 114 |  |  | 82 |
Short-term lease costs | 22 |  |  | 24 |
Variable lease costs | 599 |  |  | 581 |
Less: sublease income | 55 |  |  | 50 |
Net lease cost | $ | 3,350 |  |  | $ | 3,357 |
Supplemental cash flow information related to leases for the years ended December 31, 2020 and 2019 is as follows:
In millions | 2020 |  | 2019
Cash paid for amounts included in the measurement of lease liabilities: |  |  |
Operating cash flows paid for operating leases | $ | 2,724 |  |  | $ | 2,701 |
Operating cash flows paid for interest portion of finance leases | 58 |  |  | 44 |
Financing cash flows paid for principal portion of finance leases | 34 |  |  | 26 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |
Operating leases | 1,679 |  |  | 1,824 |
Finance leases | 313 |  |  | 283 |
Supplemental balance sheet information related to leases as of December 31, 2020 and 2019 is as follows:
In millions, except remaining lease term and discount rate | 2020 |  | 2019
Operating leases: |  |  |
Operating lease right-of-use assets | $ | 20,729 |  | $ | 20,860
Current portion of operating lease liabilities | $ | 1,638 |  | $ | 1,596
Long-term operating lease liabilities | 18,757 |  | 18,926
Total operating lease liabilities | $ | 20,395 |  | $ | 20,522
Finance leases: |  |  |
Property and equipment, gross | $ | 1,107 |  | $ | 790
Accumulated depreciation | (106) |  | (38)
Property and equipment, net | $ | 1,001 |  | $ | 752
Current portion of long-term debt | $ | 33 |  | $ | 27
Long-term debt | 1,050 |  | 781
Total finance lease liabilities | $ | 1,083 |  | $ | 808
Weighted average remaining lease term (in years) |  |  |
Operating leases | 13.3 |  | 13.8
Finance leases | 20.3 |  | 20.5
Weighted average discount rate |  |  |
Operating leases | 4.5 | % |  | 4.6 | %
Finance leases | 5.6 | % |  | 6.7 | %
The following table summarizes the maturity of lease liabilities under finance and operating leases as of December 31, 2020:
In millions | Finance Leases |  | Operating Leases (1) |  | Total
2021 | $ | 100 |  |  | $ | 2,688 |  |  | $ | 2,788 |
2022 | 98 |  |  | 2,583 |  |  | 2,681 |
2023 | 96 |  |  | 2,496 |  |  | 2,592 |
2024 | 95 |  |  | 2,269 |  |  | 2,364 |
2025 | 95 |  |  | 2,089 |  |  | 2,184 |
Thereafter | 1,328 |  |  | 15,017 |  |  | 16,345 |
Total lease payments (2) | 1,812 |  |  | 27,142 |  |  | 28,954 |
Less: imputed interest | (729) |  |  | (6,747) |  |  | (7,476) |
Total lease liabilities | $ | 1,083 |  |  | $ | 20,395 |  |  | $ | 21,478 |
_____________________________________________ (1)Future operating lease payments have not been reduced by minimum sublease rentals of $306 million due in the future under noncancelable subleases. (2)The Company leases pharmacy and clinic space from Target Corporation. Amounts related to such finance and operating leases are reflected above. Pharmacy lease amounts due in excess of the remaining estimated economic life of the buildings of approximately $2.3 billion are not reflected in this table since the estimated economic life of the buildings is shorter than the contractual term of the pharmacy lease arrangement. Sale-Leaseback Transactions The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which generally approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The operating leases that resulted from these transactions are included in the tables above. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions. Proceeds from sale-leaseback transactions totaled $101 million and $5 million in the years ended December 31, 2020 and 2019, respectively. Gains from sale-leaseback transactions totaled $3 million in the year ended December 31, 2020. There were no material gains from sale-leaseback transactions in the year ended December 31, 2019. Store Rationalization Charges During the first quarter of 2019, the Company performed a review of its retail stores and determined it would close 46 underperforming retail pharmacy stores during the second quarter of 2019. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended March 31, 2019, the Company recorded a store rationalization charge of $135 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. During the third quarter of 2019, in connection with its annual budgeting process, the Company performed an updated review of its retail stores and determined it would close an additional 22 underperforming retail pharmacy stores during the first quarter of 2020. As a result, management determined that there were indicators of impairment with respect to the impacted stores, including the associated operating lease right-of-use assets. Accordingly, an interim long-lived asset impairment test was performed. The results of the impairment test indicated that the fair value of each store asset group was lower than the carrying value. The fair value was determined using a discounted cash flow method based on estimated sublease income. In the three months ended September 30, 2019, the Company recorded a store rationalization charge of $96 million, primarily related to these operating lease right-of-use asset impairment charges, which was recorded within operating expenses in the Retail/LTC segment. Comparative Disclosure Prior to the Adoption of the New Lease Accounting Standard (ASU 2016-02) The following table is a summary of the Company’s net rental expense for operating leases for the year ended December 31, 2018:
In millions | 2018 |  |
Minimum rentals | $ | 2,528 |  |  |
Contingent rentals | 28 |  |  |
Rental expense | 2,556 |  |  |
Less: sublease income | (21) |  |  |
Total rental expense, net | $ | 2,535 |  |  |

X
- References No definition available. + Details
Name: | us-gaap_LeasesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 + Details
Name: | us-gaap_LesseeFinanceLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

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 + Details
Name: | us-gaap_LesseeOperatingLeasesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration