Note 6. Leases
Lease-related assets and liabilities consisted of the following:
| | | | | | | | | | | |
| As of July 31, |
| (In millions) | 2025 | | 2024 |
| Assets: | | | |
| Operating lease right-of-use assets | $1,763 | | | $1,565 | |
| | | |
| Liabilities: | | | |
| Current portion of operating lease liabilities | $447 | | | $395 | |
| Long-term portion of operating lease liabilities | 1,367 | | | 1,198 | |
| Total lease liabilities | $1,814 | | | $1,593 | |
The components of leasing costs, included in SG&A, consisted of the following:
| | | | | | | | | | | | | | | | | |
| For the years ended July 31, |
| (In millions) | 2025 | | 2024 | | 2023 |
| Operating lease costs | $484 | | | $440 | | | $390 | |
| Variable lease costs | 107 | | | 92 | | | 85 | |
| Short-term lease costs | 33 | | | 28 | | | 23 | |
| Total lease costs | $624 | | | $560 | | | $498 | |
Variable lease costs represent costs incurred in connection with non-lease components, such as common area maintenance, and certain pass-through operating expenses such as real estate taxes and insurance.
The weighted average remaining lease terms and discount rates for the Company’s operating leases were as follows:
| | | | | | | | | | | |
| As of July 31, |
| 2025 | | 2024 |
| Weighted average remaining lease term (years) | 5.4 | | 5.4 |
| Weighted average discount rate | 4.6 | % | | 4.5 | % |
The future minimum rental payments for the next five fiscal years under operating lease obligations, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:
| | | | | |
| As of July 31, |
| (In millions) | 2025 |
| 2026 | $457 | |
| 2027 | 436 | |
| 2028 | 367 | |
| 2029 | 280 | |
| 2030 | 199 | |
| Thereafter | 350 | |
| Total undiscounted lease payments | 2,089 | |
| Less: imputed interest | (275) | |
| Present value of liabilities | $1,814 | |
The future minimum lease payments in the table above exclude payments for leases that have not yet commenced.
Supplemental cash flow information related to leases consisted of the following:
| | | | | | | | | | | | | | | | | |
| For the years ended July 31, |
| (In millions) | 2025 | | 2024 | | 2023 |
| Cash paid for operating leases (operating cash flows) | $469 | | | $424 | | | $379 | |
Lease assets obtained in exchange for new operating lease liabilities (non-cash) | 370 | | | 253 | | | 309 | |
As of July 31, 2025, the Company had $63 million of non-cancelable operating leases with terms similar to the Company’s current operating leases that have not yet commenced. These leases are expected to commence in fiscal year 2026
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.