Leases and Other Commitments

12 Months Ended

Jun. 27, 2025

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. In connection with and subsequent to the separation, the Company entered into various sublease agreements with WDC under long-term, non-cancelable operating leases that expire at various dates through 2031.

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 27, 2025		June 28, 2024
	(in millions)
Operating lease right-of-use assets (included in other non-current assets)	$	214	$	179

Operating lease liabilities:
Current portion of long-term operating lease liabilities (included in accrued expenses)	26		11
Long-term operating lease liabilities (included in other liabilities)	193		171
Total operating lease liabilities	$	219	$	182

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


	June 27, 2025		June 28, 2024		June 30, 2023
	(in millions)
Cost of operating leases	$	38	$	29	$	21
Cash paid for operating leases	33		30		14
Operating lease assets obtained in exchange for operating lease liabilities	49		167		3
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:


	June 27, 2025		June 28, 2024
Weighted average remaining lease term in years	11.00		13.7
Weighted average discount rate	7.3	%	7.5	%

As of June 27, 2025, minimum lease payments were as follows:


	Lease Amounts
	(in millions)
Minimum lease payments by fiscal year:
2026	$	41
2027	35
2028	28
2029	24
2030	20
Thereafter	183
Total future minimum lease payments	331
Less: Imputed interest	112
Present value of lease liabilities	$	219

Sale-Leaseback

In September 2023, WDC completed a sale and leaseback of its facility in Milpitas, California and received net proceeds of $191 million in cash. A substantial majority of these assets are associated with the Company, and as a result, $134 million of the net proceeds from the sale-leaseback transaction were allocated to us on a relative square footage basis and reflected as a cash inflow from investing activities in the Consolidated Statements of Cash Flows for the year ended March 29, 2024. In connection with the sale and leaseback, the Company recorded a gain of $60 million upon the closing of the transaction. For more information, see Note 15, Employee Termination and Other Charges for additional disclosures.

The property is being leased back to the Company at a total annual rate of $16 million for the first year and increasing by 3% per year thereafter through January 1, 2039. The lease includes three five-year renewal options and one four-year renewal option for the ability to extend through December 2057. The associated operating lease liability and right-of-use asset for this facility has been included in the Consolidated Balance Sheets as of June 27, 2025 and June 28, 2024.

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 coming months, 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 upon certain conditions such as performance, quality and technology of the vendor’s components. As of June 27, 2025, the Company had the following minimum long-term commitments:


	Long-term commitments
	(in millions)
Fiscal year:
2026	$	250
2027	583
2028	570
2029	570
2030	570
Thereafter	90
Total	$	2,633