Leases

6 Months Ended

Aug. 07, 2022

We lease office facilities under non-cancelable operating lease agreements expiring through July 2032. Our lease agreements do not contain any material residual value guarantees or restrictive covenants.

In June 2022, we entered into an eight-year sublease through July 2030 for a new headquarters facility in Santa Clara, California with total lease payments of $100.2 million that include rent escalation and abatement clauses. The sublease of space with total lease payments of $89.4 million commenced in August 2022. Additional space with lease payments of $10.8 million will commence in May 2024 and end in July 2030. These lease payments are excluded from our future lease payments disclosure below.

We also lease certain test equipment under financing agreements. These finance leases are three years and contain a bargain purchase option at the end of the respective lease term. It is reasonably certain that the bargain purchase option will be exercised.

The components of lease costs during the periods presented were as follows (in thousands):


	Second Quarter of Fiscal				First Two Quarters of Fiscal
	2022		2023		2022		2023
Fixed operating lease cost	$	9,309	$	10,753	$	19,065	$	21,071

Variable lease cost (1)	1,653		1,932		3,648		3,822
Short-term lease cost (12 months or less)	1,032		764		2,133		1,616

Finance lease cost:
Amortization of finance lease right-of-use assets	61		535		61		1,003
Interest on finance lease liabilities	5		59		5		99
Total finance lease cost	$	66	$	594	$	66	$	1,102

Total lease cost	$	12,060	$	14,043	$	24,912	$	27,611

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(1) Variable lease cost predominantly included common area maintenance charges.

Supplemental information related to leases is as follows:


	At the End of
	Fiscal 2022			Second Quarter of Fiscal 2023
Operating leases:
Weighted-average remaining lease term (in years)	4.5			5.6
Weighted-average discount rate	5.7		%	6.1		%

Finance leases:
Finance lease right-of-use assets, gross(1)	$	3,577		$	11,315
Accumulated amortization(1)	(384)			(1,387)
Finance lease right-of-use assets, net(1)	$	3,193		$	9,928
Finance lease liabilities, current(2)	1,035			3,351
Finance lease liabilities, non-current(3)	1,487			5,732
Total finance lease liabilities	$	2,522		$	9,083
Weighted-average remaining lease term (in years)	3.6			3.6
Weighted-average discount rate	2.7		%	4.2		%

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(1) Included in the condensed consolidated balance sheets within property and equipment, net.

(2) Included in the condensed consolidated balance sheets within accrued expenses and other liabilities.

(3) Included in the condensed consolidated balance sheets within other liabilities, non-current.

Supplemental cash flow information related to leases is as follows:


	First Two Quarters of Fiscal
	2022		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows for operating leases	$	17,904	$	27,150
Financing cash outflows for finance leases	$	—	$	1,124
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	2,787	$	77,449
Finance leases	$	1,165	$	7,737

Future lease payments under our non-cancelable leases at the end of the second quarter of fiscal 2023 were as follows (in thousands):


Fiscal Years Ending	Operating Leases		Finance Leases
The remainder of 2023	$	17,944	$	2,669
2024	39,675		3,626
2025	45,542		2,917
2026	37,380		296
2027	22,120		—
Thereafter	66,241		—
Total future lease payments	228,902		9,508
Less: imputed interest	(44,319)		(425)
Present value of total lease liabilities	$	184,583	$	9,083