Lease Obligations

12 Months Ended

Mar. 31, 2018

We lease facilities and equipment almost solely under operating leases. At March 31, 2018, future minimum lease payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year for years ending March 31 are:



(In millions)	Noncancelable Operating Leases
2019	$	502
2020	443
2021	383
2022	333
2023	277
Thereafter	1,134
Total minimum lease payments ⁽¹⁾	$	3,072


(1)	Amount includes future minimum lease payments for the sale-leaseback transaction of $62 million. Minimum lease payments have not been reduced by minimum sublease income of $147 million due under future noncancelable subleases.

Rent expense under operating leases was $568 million, $474 million and $433 million in 2018, 2017 and 2016. Rent expense increased in 2018 due to our December 2017 acquisition of Rexall Health. We recognize rent expense on a straight-line basis over the term of the lease, taking into account, when applicable, lessor incentives for tenant improvements, periods where no rent payment is required and escalations in rent payments over the term of the lease. Deferred rent is recognized for the difference between the rent expense recognized on a straight-line basis and the payments made per the terms of the lease. Remaining terms for facilities leases generally range from one to sixteen years, while remaining terms for equipment leases range from one to seven years. Most real property leases contain renewal options (generally for five-year increments) and provisions requiring us to pay property taxes and operating expenses in excess of base period amounts. Sublease rental income was not material for 2018, 2017 and 2016.