Leases and Other Commitments

12 Months Ended

Jun. 28, 2024

Leases

The Company leases certain domestic and international facilities and data center space under long-term, non-cancelable operating leases that expire at various dates through 2039. These leases include no material variable or contingent lease payments. Operating lease assets and liabilities are recognized based on the present value of the remaining lease payments discounted using the Company’s incremental borrowing rate. Operating lease assets also include prepaid lease payments minus any lease incentives. Extension or termination options present in the Company’s lease agreements are included in determining the right-of-use asset and lease liability when it is reasonably certain the Company will exercise those options. Lease expense is recognized on a straight-line basis over the lease term.

The following table presents right-of-use lease assets and lease liabilities included in the Company’s Consolidated Balance Sheets:


	June 28, 2024		June 30, 2023
	(in millions)
Operating lease right-of-use assets (included in Other non-current assets)	$	326	$	260

Operating lease liabilities:
Current portion of long-term operating lease liabilities (included in Accrued expenses)	42		40
Long-term operating lease liabilities (included in Other liabilities )	307		244
Total operating lease liabilities	$	349	$	284

The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases:



	June 28, 2024		June 30, 2023		July 1, 2022
	(in millions)
Cost of operating leases	$	64	$	57	$	58
Cash paid for operating leases	69		51		51
Operating lease assets obtained in exchange for operating lease liabilities	178		17		137
Decrease in operating lease liabilities and right-of-use assets due to lease remeasurement	71		—		—

The weighted average remaining lease term and discount rate for the Company’s operating leases were as follows:


	2024		2023
Weighted average remaining lease term in years	10.4		7.6
Weighted average discount rate	6.6	%	4.2	%

As of June 28, 2024, minimum lease payments were as follows:


	Lease Amounts
	(in millions)
2025	$	60
2026	57
2027	50
2028	42
2029	36
Thereafter	254
Total future minimum lease payments	499
Less: imputed interest	150
Present value of lease liabilities	$	349

Sale-Leaseback

During the year ended June 28, 2024, the Company completed a sale and leaseback of its facility in Milpitas, California. The Company received net proceeds of $191 million in cash and recorded a gain of $85 million on the sale. In connection with the sale, the Company agreed to lease back the facility at an annual lease rate of $16 million for the first year, increasing by 3% per year thereafter through January 1, 2039. The lease includes three 5-year renewal options and one 4-year renewal option for the ability to extend through December 2057. The supplemental balance sheet information and supplemental disclosures of operating cost and cash flow information related to the lease are included in the tables above.

Purchase Agreements and Other Commitments

In the normal course of business, the Company enters into purchase orders with suppliers for the purchase of components used to manufacture its products. These purchase orders generally cover forecasted component supplies needed for production during the next quarter, are recorded as a liability upon receipt of the components, and generally may be changed or canceled at any time prior to shipment of the components. The Company also enters into long-term agreements with suppliers that contain fixed future commitments, which are contingent on certain conditions such as performance, quality and technology of the vendor’s components. As of June 28, 2024, the Company had the following minimum long-term commitments:


	Long-term commitments
	(in millions)
Fiscal year:
2025	$	172
2026	96
2027	59
2028	20
2029	20
Thereafter	110
Total	$	477