NOTE 15 — LEASES
We have operating and finance leases for datacenters, corporate offices, research and development facilities, retail stores, and certain equipment. Our leases have remaining lease terms of 1 year to 20 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.
The components of lease expense were as follows:
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(In millions) |
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Three Months Ended March 31, |
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Nine Months Ended March 31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Operating lease cost |
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$ |
395 |
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$ |
321 |
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$ |
1,182 |
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$ |
1,015 |
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Finance lease cost: |
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Amortization of right-of-use assets |
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$ |
70 |
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$ |
29 |
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$ |
175 |
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$ |
67 |
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Interest on lease liabilities |
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47 |
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19 |
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121 |
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46 |
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Total finance lease cost |
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$ |
117 |
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$ |
48 |
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$ |
296 |
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$ |
113 |
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Supplemental cash flow information related to leases was as follows:
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(In millions) |
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Three Months Ended March 31, |
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Nine Months Ended March 31, |
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2018 |
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2017 |
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2018 |
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2017 |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flows from operating leases |
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$ |
388 |
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$ |
331 |
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$ |
1,132 |
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$ |
912 |
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Operating cash flows from finance leases |
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46 |
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19 |
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|
121 |
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46 |
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Financing cash flows from finance leases |
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37 |
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14 |
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|
93 |
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29 |
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Right-of-use assets obtained in exchange for lease obligations: |
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Operating leases |
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570 |
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|
130 |
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1,269 |
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|
304 |
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Finance leases |
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|
412 |
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296 |
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1,790 |
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1,061 |
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Supplemental balance sheet information related to leases was as follows:
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(In millions, except lease term and discount rate) |
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March 31, |
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June 30, |
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Operating Leases |
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Operating lease right-of-use assets |
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$ |
6,859 |
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$ |
6,555 |
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Other current liabilities |
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$ |
1,382 |
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$ |
1,423 |
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Operating lease liabilities |
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5,751 |
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5,372 |
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Total operating lease liabilities |
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$ |
7,133 |
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$ |
6,795 |
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Finance Leases |
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Property and equipment, gross |
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$ |
4,507 |
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$ |
2,658 |
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Accumulated depreciation |
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(336 |
) |
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(161 |
) |
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Property and equipment, net |
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$ |
4,171 |
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$ |
2,497 |
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Other current liabilities |
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$ |
181 |
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$ |
113 |
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Other long-term liabilities |
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4,150 |
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2,425 |
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Total finance lease liabilities |
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$ |
4,331 |
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$ |
2,538 |
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Weighted Average Remaining Lease Term |
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Operating leases |
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7 years |
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7 years |
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Finance leases |
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14 years |
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13 years |
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Weighted Average Discount Rate |
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Operating leases |
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2.6% |
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2.5% |
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Finance leases |
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5.3% |
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4.7% |
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Maturities of lease liabilities were as follows:
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(In millions) |
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Year Ending June 30, |
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Operating Leases |
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Finance Leases |
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2018 (excluding the nine months ended March 31, 2018) |
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$ |
388 |
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$ |
104 |
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2019 |
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|
1,472 |
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|
|
384 |
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2020 |
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|
1,340 |
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|
391 |
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2021 |
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|
1,076 |
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|
399 |
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2022 |
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|
887 |
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|
|
406 |
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Thereafter |
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|
2,790 |
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|
|
4,442 |
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Total lease payments |
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|
7,953 |
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|
6,126 |
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Less imputed interest |
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|
(820 |
) |
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(1,795 |
) |
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Total |
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$ |
7,133 |
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|
$ |
4,331 |
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As of March 31, 2018, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $845 million and $1.5 billion, respectively. These operating and finance leases will commence between fiscal year 2018 and fiscal year 2020 with lease terms of 1 year to 20 years.