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Leases and Other Commitments | 6 Months Ended | 12 Months Ended
--- | --- | ---
Dec. 27, 2024 | Jun. 28, 2024
Leases and Other Commitments [Line Items] |  |
Leases and Other Commitments | Note 10. Leases and Other Commitments 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 fiscal year 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 presents right-of-use lease assets and lease liabilities included in the Company’s Condensed Combined Balance Sheets:
|  | December 27, 2024 |  |  | June 28, 2024 |
|  | (in millions) |
Operating lease right-of-use assets (included in other non-current assets) |  | $ | 191 |  |  | $ | 179 |
Operating lease liabilities: |  |  |  |  |  |  |  |
Current portion of long-term operating lease liabilities (included in accrued expenses) |  |  | 17 |  |  |  | 11 |
Long-term operating lease liabilities (included in other liabilities) |  |  | 179 |  |  |  | 171 |
Total operating lease liabilities |  | $ | 196 |  |  | $ | 182 |
The following table summarizes supplemental disclosures of operating cost and cash flow information related to operating leases:
|  | Six Months Ended |
|  | December 27, 2024 |  |  | December 29, 2023 |
|  | (in millions) |
Cost of operating leases |  | $ | 16 |  |  | $ | 13 |
Cash paid for operating leases |  |  | 14 |  |  |  | 14 |
Operating lease assets obtained in exchange for operating lease liabilities |  |  | 4 |  |  |  | 167 |
The weighted average remaining lease term and discount rate for the Company’s operating leases were as follows:
|  | December 27, 2024 |  |  | June 28, 2024 |
Weighted average remaining lease term in years |  |  | 12.6 |  |  |  | 13.7 |
Weighted average discount rate |  |  | 7.4 | % |  |  | 7.5 | %
As of December 27, 2024, minimum lease payments were as follows:
|  | Lease Amounts |
|  | (in millions) |
Minimum lease payments by fiscal year: |  |  |  |
Remaining six months of 2025 |  | $ | 14 |
2026 |  |  | 30 |
2027 |  |  | 28 |
2028 |  |  | 20 |
2029 |  |  | 20 |
Thereafter |  |  | 198 |
Total future minimum lease payments |  |  | 310 |
Less: Imputed interest |  |  | 114 |
Present value of lease liabilities |  | $ | 196 |
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 has been allocated to us on a relative square footage basis and reflected as a cash inflow from investing activities within the Condensed Combined Statements of Cash Flows for the six months ended December 29, 2023. 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 13, Employee Termination and Other Charges of the Notes to Condensed Combined Financial Statements. 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 Condensed Combined Balance Sheets as of December 27, 2024 and June 28, 2024. This facility is utilized in the Company’s operations, and the total lease expense has been allocated to the Company based on the continued usage of the facility. 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 December 27, 2024, the Company had the following minimum long-term commitments:
|  | Long-term commitments |
|  | (in millions) |
Fiscal year: |  |  |  |
Remaining six months of 2025 |  | $ | 26 |
2026 |  |  | 496 |
2027 |  |  | 586 |
|  | Long-term commitments |
|  | (in millions) |
2028 |  |  | 570 |
2029 |  |  | 570 |
Thereafter |  |  | 660 |
Total |  | $ | 2,908 |
The Flash Business of Western Digital Corporation [Member] |  |
Leases and Other Commitments [Line Items] |  |
Leases and Other Commitments |  | Note 10. Leases and Other Commitments Leases The following table presents right-of-use-lease assets and lease liabilities included in the Business’s Combined Balance Sheets:
|  | June 28, 2024 |  |  | June 30, 2023 |
|  | (in millions) |
Operating lease right-of-use assets (included in other non-current assets) |  | $ | 179 |  |  | $ | 93 |
Operating lease liabilities: |  |  |  |  |  |  |  |
Current portion of long-term operating lease liabilities (included in accrued expenses) |  |  | 11 |  |  |  | 13 |
Long-term operating lease liabilities (included in other liabilities) |  |  | 172 |  |  |  | 87 |
Total operating lease liabilities |  | $ | 183 |  |  | $ | 100 |
The following tables summarize supplemental disclosures of operating cost and cash flow information related to operating leases:
|  | Years ended |
|  | June 28, 2024 |  |  | June 30, 2023 |  |  | July 1, 2022 |
|  | (in millions) |
Cost of operating leases |  | $ | 29 |  |  | $ | 21 |  |  | $ | 22 |
Cash paid for operating leases |  |  | 30 |  |  |  | 14 |  |  |  | 10 |
Operating lease assets obtained in exchange for operating lease liabilities |  |  | 167 |  |  |  | 3 |  |  |  | 107 |
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 Business’s operating leases were as follows:
|  | 2024 |  |  | 2023 |
Weighted average remaining lease term in years |  |  | 13.7 |  |  |  | 7.8 |
Weighted average discount rate |  |  | 7.5 | % |  |  | 3.0 | %
As of June 28, 2024, minimum lease payments were as follows:
|  | Lease Amounts |
|  | (in millions) |
2025 |  | $ | 23 |
2026 |  |  | 22 |
2027 |  |  | 21 |
2028 |  |  | 19 |
2029 |  |  | 19 |
Thereafter |  |  | 199 |
Total future minimum lease payments |  |  | 303 |
Less: Imputed interest |  |  | 120 |
Present value of lease liabilities |  | $ | 183 |
Sale-Leaseback In August 2023, our Parent entered into an agreement for the sale and leaseback of its facility in Milpitas, California and received gross proceeds of $191 million in cash. A substantial majority of these assets are associated with the Business and all are included in our Combined Balance Sheet as of June 30, 2023. As a result, $134 million of consideration from the sale-leaseback transaction has been allocated to us on a relative square footage basis and reflected as a cash inflow from investing activities within the Combined Statements of Cash Flows for fiscal year 2024. In connection with the sale and leaseback, the Business recorded a gain of $60 million upon closing of the transaction in September 2023. For more information, see Note 13, Employee Termination, Asset Impairment and Other . The property is being leased back at an annual rate of $16 million for the first year and 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 full amount of the associated operating lease liability and right of use asset for this facility has been included in the Combined Balance Sheet as of June 28, 2024. This facility is utilized in the Business’s operations and a portion of the total annual lease expense will be allocated to the Business in future periods based on the continued usage of the facility. Purchase Agreements and Other Commitments In the normal course of business, the Business 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 Business 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 June 28, 2024, the Business had the following minimum long-term commitments:
|  | Long-term commitments |
|  | (in millions) |
Fiscal year: |  |  |  |
2025 |  | $ | 43 |
2026 |  |  | 51 |
2027 |  |  | 32 |
2028 |  |  | 20 |
2029 |  |  | 20 |
Thereafter |  |  | 110 |
Total |  | $ | 276 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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