Leases and Other Commitments

6 Months Ended

Jan. 01, 2021

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 2034. 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 summarizes supplemental balance sheet information related to operating leases as of January 1, 2021:


	Lease Amounts
Minimum lease payments by fiscal year:	($ in millions)
Remaining six months of 2021	$	25
2022	40
2023	33
2024	33
2025	31
Thereafter	147
Total future minimum lease payments	309
Less: Imputed Interest	(55)
Present value of lease liabilities	254
Less: Current portion (included in Accrued expenses)	38
Long-term operating lease liabilities (included in Other liabilities)	$	216

Operating lease right-of-use assets (included in Other non-current assets)	$	239

Weighted average remaining lease term in years	8.8
Weighted average discount rate	4.2		%

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


	Three Months Ended				Six Months Ended
	January 1, 2021		January 3, 2020		January 1, 2021		January 3, 2020
	(in millions)
Cost of operating leases	$	12	$	18	$	25	$	30
Cash paid for operating leases	14		13		26		29
Operating lease assets obtained in exchange for operating lease liabilities	20		1		27		50

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 January 1, 2021, the Company had the following minimum long-term commitments:


	Long-term commitments
	(in millions)
Fiscal year:
Remaining six months of 2021	$	226
2022	613
2023	562
2024	350
2025	148
Thereafter	190
Total	$	2,089