Leases

12 Months Ended

Jul. 31, 2021


9. Leases

We lease office facilities under non-cancellable operating lease arrangements. Our facility leases generally provide for periodic rent increases and may contain escalation clauses and renewal options. Our leases have remaining lease terms of up to 10 years, some of which include one or more options to extend the leases for up to 10 years per option, generally at rates to be determined in accordance with the agreements. Options to extend the lease are included in the lease liability if they are reasonably certain of being exercised. We do not have significant finance leases.

We sublease certain office facilities to third parties. These subleases have remaining lease terms of up to 4 years, some of which include one or more options to extend the subleases for up to 5 years per option.

In March 2020, we entered into an agreement to terminate an office facility lease and related sublease, which were due to expire in 2025 and 2022, respectively. As a result, we reduced our operating lease right-of-use assets and lease liabilities by $61 million during the twelve months ended July 31, 2020.

The components of lease expense were as follows:


	Twelve Months Ended July 31,
(In millions)	2021		2020
Operating lease cost (1)	$	75	$	69

Variable lease cost	11		13
Sublease income	(16)		(22)
Total net lease cost	$	70	$	60

(1) Includes short-term leases, which are not significant for the twelve months ended July 31, 2021 or 2020.

Prior to the adoption of ASC 842 on August 1, 2019, rent expense under operating leases, net of sublease income was $42 million for the twelve months ended July 31, 2019. Sublease income was $24 million for the twelve months ended July 31, 2019.

Supplemental cash flow information related to operating leases was as follows:


	Twelve Months Ended July 31,
	2021		2020
(In millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	76	$	70

Right-of-use assets obtained in exchange for new operating lease liabilities (1)	$	60	$	346

(1) For the twelve months ended July 31, 2020, this includes $319 million for operating leases existing on August 1, 2019 and $27 million for operating leases that commenced during fiscal 2020.

Other information related to operating leases was as follows at the dates indicated:


	July 31,
	2021		2020
Weighted-average remaining lease term for operating leases	6.8 years		5.5 years
Weighted-average discount rate for operating leases	2.3	%	3.1	%

Future minimum lease payments under non-cancellable operating leases as of July 31, 2021 were as follows:


(In millions)	Operating Leases (1)
Fiscal year ending July 31,
2022	$	76
2023	81
2024	78
2025	62
2026	45
Thereafter	139
Total future minimum lease payments	481
Less imputed interest	(35)
Present value of lease liabilities	$	446

(1) Non-cancellable sublease proceeds for the fiscal years ending July 31, 2022, 2023, 2024, and 2025 of $18 million, $11 million, $8 million, and $4 million, respectively, are not included in the table above.

Supplemental balance sheet information related to operating leases was as follows at the date indicated:


	July 31,
(In millions)	2021		2020

Operating lease right-of-use assets	$	380	$	226

Other current liabilities	$	66	$	46
Operating lease liabilities	380		221
Total operating lease liabilities	$	446	$	267

As of July 31, 2021, we have additional operating leases of $43 million, primarily for office facilities, that have not yet commenced and therefore are not reflected on the consolidated balance sheet nor in the tables above. These operating leases will commence in fiscal year 2022 with lease terms of 1 to 11 years.