Leases and Other Commitments

3 Months Ended

Sep. 29, 2023

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 summarizes supplemental balance sheet information related to operating leases as of September 29, 2023:


	Lease Amounts
	($ in millions)
Minimum lease payments by year:
Remaining nine months of 2024	$	49
2025	63
2026	65
2027	58
2028	51
Thereafter	329
Total future minimum lease payments	615
Less: Imputed interest	175
Present value of lease liabilities	440
Less: Current portion (included in Accrued expenses)	44
Long-term operating lease liabilities (included in Other liabilities )	$	396

Operating lease right-of-use assets (included in Other non-current assets)	$	419

Weighted average remaining lease term in years	10.5
Weighted average discount rate	6.0		%

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


	Three Months Ended
	September 29, 2023		September 30, 2022
	(in millions)
Cost of operating leases	$	14	$	14
Cash paid for operating leases	15		14
Operating lease assets obtained in exchange for operating lease liabilities	168		4

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 September 29, 2023, the Company had the following minimum long-term commitments:


	Long-Term Commitments
	(in millions)
Year:
Remaining nine months of 2024	$	215
2025	267
2026	75
2027	52
2028	20
Thereafter	130
Total	$	759