Leases (Tables)

12 Months Ended

Feb. 01, 2020

Summary of Operating and Finance Leases

The following tables summarize our operating and finance leases and where they are presented in our Consolidated Financial Statements:

Consolidated Balance Sheet		February 1, 2020
(Dollars in Millions)	Classification
Assets
Operating leases	Operating leases	$	2,391
Finance leases	Property and equipment, net		672
Total operating and finance leases			3,063
Liabilities
Current
Operating leases	Current portion of operating leases		158
Finance leases	Current portion of finance lease and financing obligations		88
Noncurrent
Operating leases	Operating leases		2,619
Finance leases	Finance lease and financing obligations		877
Total operating and finance leases		$	3,742

Consolidated Statement of Income		2019
(Dollars in Millions)	Classification
Operating leases	Selling, general, and administrative	$	314
Finance leases
Amortization of leased assets	Depreciation and amortization		72
Interest on lease liabilities	Interest expense, net		98
Total operating and finance leases		$	484

Consolidated Statement of Cash Flows	2019
(Dollars in Millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	320
Operating cash flows from finance leases		98
Financing cash flows from finance leases		76

Summary of Future Lease Payments

The following table summarizes future lease payments by fiscal year:

	February 1, 2020
(Dollars in Millions)	Operating Leases			Finance Leases			Total
2020	$	303		$	181		$	484
2021		303			162			465
2022		291			145			436
2023		276			124			400
2024		241			110			351
After 2024		3,426			1,750			5,176
Total lease payments		4,840			2,472			7,312
Amount representing interest		(2,063	)		(1,507	)		(3,570	)
Lease liabilities	$	2,777		$	965		$	3,742

Summary of Weighted-Average Remaining Lease Term and Discount Rates

The following table summarizes weighted-average remaining lease term and discount rates:

	February 1, 2020
Weighted-average remaining term (years)
Operating leases		20
Finance leases		17
Weighted-average discount rate
Operating leases		6	%
Finance leases		11	%

Summary of Financing Obligations

The following tables summarize our financing obligations and where they are presented in our Consolidated Financial Statements:

Consolidated Balance Sheet		February 1, 2020
(Dollars in Millions)	Classification
Assets
Financing obligations	Property and equipment, net	$	76
Liabilities
Current	Current portion of finance lease and financing obligations		36
Noncurrent	Finance lease and financing obligations		490
Total financing obligations		$	526

Consolidated Statement of Income		2019
(Dollars in Millions)	Classification
Amortization of financing obligation assets	Depreciation and amortization	$	11
Interest on financing obligations	Interest expense, net		37
Total financing obligations		$	48

Consolidated Statement of Cash Flows	2019
(Dollars in Millions)
Cash paid for amounts included in the measurement of financing obligations
Operating cash flows from financing obligations	$	37
Financing cash flows from financing obligations		37
Other financing obligations cash activity
Proceeds from financing obligations		11
(Gain) on extinguishment of debt		(9	)

Summary of Future Financing Obligation Payments

The following table summarizes future financing obligation payments by fiscal year:

(Dollars in Millions)	February 1, 2020
2020	$	69
2021		71
2022		68
2023		66
2024		60
After 2024		197
Total financing obligations payments		531
Non-cash gain on future sale of property		225
Amount representing interest		(230	)
Financing obligation liability	$	526

Summary of Weighted-Average Remaining Term and Discount Rate for Financing Obligations

The following table summarizes the weighted-average remaining term and discount rate for financing obligations:

	February 1, 2020
Weighted-average remaining term (years)		9
Weighted-average discount rate		7	%

ASU No. 2016-02 [Member]

Summary of Changes in Consolidated Balance Sheet upon Adoption of New Standard

The following table summarizes changes in our Consolidated Balance Sheet upon adoption of the new standard:

(Dollars in Millions)
Assets
Property and equipment, net	$	(174	)	(a)
Operating leases		2,446		(b)
Other assets		(32	)	(c)
Total assets	$	2,240
Liabilities and Shareholders' Equity
Finance lease and financing obligations	$	(237	)	(a)
Operating leases		2,771		(b)
Accrued and other liabilities		(413	)	(c)
Deferred taxes		31		(d)
Shareholders' equity		88		(d)
Total liabilities and shareholders' equity	$	2,240

(a) The reductions are primarily due to historical failed sale-leaseback and build-to-suit arrangements where we were deemed the owner for accounting purposes. In accordance with ASC 842 transition provisions, they became operating or finance leases.  

(b) The increases include land and other operating leases which were not previously recorded on our balance sheet or were previously recorded as financing obligations.

(c) The reductions are primarily due to the reclassification of lease-related assets and liabilities such as straight-line rent and reserves for closed stores to operating lease assets and liabilities.

(d) The cumulative effect of lease adjustments, net of the deferred tax impact, was recorded as an adjustment to retained earnings. In addition, retained earnings includes a $26 million lease impairment charge.