Leases

12 Months Ended

Jun. 30, 2024

Leases [Abstract]

Leases

Leases

The Company leases certain office spaces, manufacturing and warehouse spaces, equipment, and vehicles. While the majority of the Company’s lease arrangements are operating leases, the Company has certain leases that qualify as finance leases.

The components of lease expense were as follows for the years ended June 30, 2024, June 25, 2023, and June 26, 2022:

	Year Ended
	June 30, 2024		June 25, 2023		June 26, 2022
	(in thousands)
Financing lease cost:
Amortization of right-of-use assets	$	5,175	$	7,899	$	7,439
Interest on lease liabilities	756		863		658
Total finance lease cost	$	5,931	$	8,762	$	8,097
Operating lease cost	$	83,476	$	75,660	$	69,250
Variable lease cost	176,641		227,726		259,041

Variable lease payments are expensed as incurred and are not included within the right of use asset and lease liability calculation. Variable lease payments primarily include costs associated with the Company’s third-party logistics arrangements that contain one or more embedded leases. Variable lease costs will fluctuate based on factory output and material receipt volumes. Short-term rental expense, for agreements less than one year in duration, were immaterial for the twelve months ended June 30, 2024, June 25, 2023, and June 26, 2022, respectively.

Supplemental cash flow information related to leases was as follows as of June 30, 2024, June 25, 2023, and June 26, 2022:

	Year Ended
	June 30, 2024		June 25, 2023		June 26, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	97,447	$	74,397	$	64,808
Financing cash flows paid for principal portion of finance leases	255,695		14,985		11,513
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	146,169	$	91,592	$	121,580
Finance leases	226,519		20,161		13,868

Supplemental balance sheet information related to leases was as follows as of June 30, 2024 and June 25, 2023:

	June 30, 2024		June 25, 2023
	(in thousands)
Operating leases
Other assets	$	308,336	$	242,656
Accrued expenses and other current liabilities	$	64,443	$	64,682
Other long-term liabilities	223,273		172,886
Total operating lease liabilities	$	287,716	$	237,568
Finance Leases
Property and Equipment, net	$	24,536	$	53,721
Current portion of long-term debt and lease liabilities	$	3,498	$	7,937
Long-term debt and lease liabilities, less current portion	12,475		38,239
Total finance lease liabilities	$	15,973	$	46,176

	June 30, 2024			June 25, 2023
	Weighted-Average Remaining Lease Term	Weighted-Average Discount Rate		Weighted-Average Remaining Lease Term	Weighted-Average Discount Rate
	(in years)			(in years)
Operating leases	4.9	3.54	%	4.9	3.80	%
Finance leases	5.8	3.39	%	5.2	2.56	%

As of June 30, 2024, the maturities of lease liabilities are as follows:

	Operating Leases		Finance Leases
	(in thousands)
2025	$	72,326	$	3,942
2026	61,810		3,239
2027	48,115		2,840
2028	45,898		2,211
2029	46,964		1,779
Thereafter	42,754		3,475
Total lease payments	$	317,867	$	17,486
Less imputed interest	(30,151)		(1,513)
Total	$	287,716	$	15,973

Selected Leases and Related Guarantees

The Company leases some of its administrative, research and development and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable leases. Certain of the Company’s facility leases for buildings located at its Tualatin, Oregon campus; and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities. Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation.

The Company elected to exercise purchase options available under its finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”) in the three months ended September 24, 2023. As a result, the Company released cash collateral in an aggregate of approximately $250 million of restricted cash that was reported in Other assets in the Company’s Consolidated Balance Sheet. Additionally, guarantees made to the lessor that each property would have a certain minimum residual value totaling $298.4 million as of June 25, 2023 in the aggregate were eliminated with the extinguishment of the California Facility Leases. As a result of the purchase of the improved properties, $250.5 million of additions were made to Property and equipment, net in the Company’s Consolidated Balance Sheets primarily comprised of land ($40.5 million) and buildings and improvements ($210.0 million).

Leases

Leases

The Company leases certain office spaces, manufacturing and warehouse spaces, equipment, and vehicles. While the majority of the Company’s lease arrangements are operating leases, the Company has certain leases that qualify as finance leases.

The components of lease expense were as follows for the years ended June 30, 2024, June 25, 2023, and June 26, 2022:

	Year Ended
	June 30, 2024		June 25, 2023		June 26, 2022
	(in thousands)
Financing lease cost:
Amortization of right-of-use assets	$	5,175	$	7,899	$	7,439
Interest on lease liabilities	756		863		658
Total finance lease cost	$	5,931	$	8,762	$	8,097
Operating lease cost	$	83,476	$	75,660	$	69,250
Variable lease cost	176,641		227,726		259,041

Variable lease payments are expensed as incurred and are not included within the right of use asset and lease liability calculation. Variable lease payments primarily include costs associated with the Company’s third-party logistics arrangements that contain one or more embedded leases. Variable lease costs will fluctuate based on factory output and material receipt volumes. Short-term rental expense, for agreements less than one year in duration, were immaterial for the twelve months ended June 30, 2024, June 25, 2023, and June 26, 2022, respectively.

Supplemental cash flow information related to leases was as follows as of June 30, 2024, June 25, 2023, and June 26, 2022:

	Year Ended
	June 30, 2024		June 25, 2023		June 26, 2022
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows paid for operating leases	$	97,447	$	74,397	$	64,808
Financing cash flows paid for principal portion of finance leases	255,695		14,985		11,513
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	146,169	$	91,592	$	121,580
Finance leases	226,519		20,161		13,868

Supplemental balance sheet information related to leases was as follows as of June 30, 2024 and June 25, 2023:

	June 30, 2024		June 25, 2023
	(in thousands)
Operating leases
Other assets	$	308,336	$	242,656
Accrued expenses and other current liabilities	$	64,443	$	64,682
Other long-term liabilities	223,273		172,886
Total operating lease liabilities	$	287,716	$	237,568
Finance Leases
Property and Equipment, net	$	24,536	$	53,721
Current portion of long-term debt and lease liabilities	$	3,498	$	7,937
Long-term debt and lease liabilities, less current portion	12,475		38,239
Total finance lease liabilities	$	15,973	$	46,176

	June 30, 2024			June 25, 2023
	Weighted-Average Remaining Lease Term	Weighted-Average Discount Rate		Weighted-Average Remaining Lease Term	Weighted-Average Discount Rate
	(in years)			(in years)
Operating leases	4.9	3.54	%	4.9	3.80	%
Finance leases	5.8	3.39	%	5.2	2.56	%

As of June 30, 2024, the maturities of lease liabilities are as follows:

	Operating Leases		Finance Leases
	(in thousands)
2025	$	72,326	$	3,942
2026	61,810		3,239
2027	48,115		2,840
2028	45,898		2,211
2029	46,964		1,779
Thereafter	42,754		3,475
Total lease payments	$	317,867	$	17,486
Less imputed interest	(30,151)		(1,513)
Total	$	287,716	$	15,973

Selected Leases and Related Guarantees

The Company leases some of its administrative, research and development and manufacturing facilities, regional sales/service offices, and certain equipment under non-cancelable leases. Certain of the Company’s facility leases for buildings located at its Tualatin, Oregon campus; and certain other facility leases provide the Company with options to extend the leases for additional periods or to purchase the facilities. Certain of the Company’s facility leases provide for periodic rent increases based on the general rate of inflation.

The Company elected to exercise purchase options available under its finance leases for certain improved properties in Fremont and Livermore, California (the “California Facility Leases”) in the three months ended September 24, 2023. As a result, the Company released cash collateral in an aggregate of approximately $250 million of restricted cash that was reported in Other assets in the Company’s Consolidated Balance Sheet. Additionally, guarantees made to the lessor that each property would have a certain minimum residual value totaling $298.4 million as of June 25, 2023 in the aggregate were eliminated with the extinguishment of the California Facility Leases. As a result of the purchase of the improved properties, $250.5 million of additions were made to Property and equipment, net in the Company’s Consolidated Balance Sheets primarily comprised of land ($40.5 million) and buildings and improvements ($210.0 million).