Leases and Other Commitments

6 Months Ended

Dec. 27, 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 Condensed Consolidated Balance Sheets:


	December 27, 2024		June 28, 2024
	(in millions)
Operating lease right-of-use assets (included in Other non-current assets)	$	321	$	326

Operating lease liabilities:
Current portion of long-term operating lease liabilities (included in Accrued expenses)	45		42
Long-term operating lease liabilities (included in Other liabilities)	298		307
Total operating lease liabilities	$	343	$	349

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


	Three Months Ended				Six Months Ended
	December 27, 2024		December 29, 2023		December 27, 2024		December 29, 2023
	(in millions)
Cost of operating leases	$	17	$	17	$	33	$	31
Cash paid for operating leases	14		17		31		32
Operating lease assets obtained in exchange for operating lease liabilities	8		9		19		177

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


	December 27, 2024		June 28, 2024
Weighted average remaining lease term in years	10.1		10.4
Weighted average discount rate	6.6	%	6.6	%

As of December 27, 2024, minimum lease payments were as follows:


	Lease Amounts
	(in millions)
Remaining six months of 2025	$	31
2026	63
2027	55
2028	44
2029	37
Thereafter	255
Total future minimum lease payments	485
Less: imputed interest	142
Present value of lease liabilities	$	343

Sale-Leaseback

In September 2023, 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 December 27, 2024, the Company had the following minimum long-term commitments:


	Long-Term Commitments
	(in millions)
Remaining six months of 2025	$	112
2026	541
2027	613
2028	570
2029	570
Thereafter	660
Total	$	3,066