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Leases

9 Months Ended

Mar. 26, 2023

Leases [Abstract]

Leases

Leases

The Company primarily leases manufacturing and office spaces. The Company also has a number of bulk gas leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

The Company's finance lease obligations primarily relate to contract manufacturing space in Malaysia and a 49-year ground lease on the Company's Silicon Carbide device fabrication facility in New York.

Balance Sheet

Lease assets and liabilities and the corresponding balance sheet classifications are as follows (in millions of U.S. Dollars):

Operating Leases:			March 26, 2023						June 26, 2022
Right-of-use asset (1)			$70.0						$48.5
Current lease liability (2)			5.7						4.6
Non-current lease liability (3)			72.9						43.6
Total operating lease liabilities			$78.6						$48.2
Finance Leases:
Finance lease assets (4)			$9.8						$10.3
Current portion of finance lease liabilities			0.5						0.5
Finance lease liabilities, less current portion			9.3						9.6
Total finance lease liabilities			$9.8						$10.1

(1) Within other assets on the consolidated balance sheets.

(2) Within other current liabilities on the consolidated balance sheets.

(3) Within other long-term liabilities on the consolidated balance sheets.

(4) Within property and equipment, net on the consolidated balance sheets.

Statement of Operations

Operating lease expense was $2.7 million and $7.4 million for the three and nine months ended March 26, 2023, respectively, and $1.8 million and $6.6 million for the three and nine months ended March 27, 2022, respectively.

Short-term lease expense, variable lease expense and sublease income were immaterial for the three and nine months ended March 26, 2023 and March 27, 2022.

Finance lease amortization was $0.2 million and $0.6 million and interest expense was $0.1 million and $0.2 million for the three and nine months ended March 26, 2023, respectively. Finance lease amortization was $0.2 million and $0.9 million and interest expense was less than $0.1 million and $0.2 million for the three and nine months ended March 27, 2022, respectively.

Cash Flows

Cash flow information consisted of the following (1):

			Nine months ended
(in millions of U.S. Dollars)			March 26, 2023						March 27, 2022
Cash (used in) provided by operating activities:
Cash paid for operating leases			($4.7)						($5.8)
Cash received from tenant improvement allowance on operating lease			7.4						—
Cash paid for interest portion of financing leases			(0.2)						(0.2)
Cash used in financing activities:
Cash paid for principal portion of finance leases			(0.4)						(0.4)

(1) See Note 5, "Financial Statement Details," for non-cash activities related to leases.

Lease Liability Maturities

Maturities of operating and finance lease liabilities as of March 26, 2023 were as follows (in millions of U.S. Dollars):

Fiscal Year Ending			Operating Leases			Finance Leases			Total
June 25, 2023 (remainder of fiscal 2023)			$1.8			$0.3			$2.1
June 30, 2024			10.3			0.7			11.0
June 29, 2025			11.1			0.7			11.8
June 28, 2026			10.8			0.7			11.5
June 27, 2027			9.5			0.4			9.9
Thereafter			81.2			14.1			95.3
Total lease payments			124.7			16.9			141.6
Future tenant improvement allowances			(14.1)			—			(14.1)
Imputed lease interest			(32.0)			(7.1)			(39.1)
Total lease liabilities			$78.6			$9.8			$88.4

Supplemental Disclosures

			Operating Leases			Finance Leases
Weighted average remaining lease term (in months) (1)			146			470
Weighted average discount rate (2)			4.62		%	2.69		%

(1) Weighted average remaining lease term of finance leases excluding the 49-year ground lease is 42 months.

(2) Weighted average discount rate of finance leases excluding the 49-year ground lease is 3.55%.

Lease Income

As mentioned in Note 2, "Discontinued Operations", on March 1, 2021 and in connection with the sale of its LED Business, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $3.6 million per year. The lease term was 24 months and expired on February 26, 2023.

The Company recognized lease income of $0.6 million and $2.4 million for the three and nine months ended March 26, 2023, respectively. The Company recognized lease income of $0.9 million and $2.7 million for the three and nine months ended March 27, 2022, respectively.

The Company did not recognize any variable lease income for the three and nine months ended March 26, 2023 and March 27, 2022.

Leases

Leases

The Company primarily leases manufacturing and office spaces. The Company also has a number of bulk gas leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

The Company's finance lease obligations primarily relate to contract manufacturing space in Malaysia and a 49-year ground lease on the Company's Silicon Carbide device fabrication facility in New York.

Balance Sheet

Lease assets and liabilities and the corresponding balance sheet classifications are as follows (in millions of U.S. Dollars):

Operating Leases:			March 26, 2023						June 26, 2022
Right-of-use asset (1)			$70.0						$48.5
Current lease liability (2)			5.7						4.6
Non-current lease liability (3)			72.9						43.6
Total operating lease liabilities			$78.6						$48.2
Finance Leases:
Finance lease assets (4)			$9.8						$10.3
Current portion of finance lease liabilities			0.5						0.5
Finance lease liabilities, less current portion			9.3						9.6
Total finance lease liabilities			$9.8						$10.1

(1) Within other assets on the consolidated balance sheets.

(2) Within other current liabilities on the consolidated balance sheets.

(3) Within other long-term liabilities on the consolidated balance sheets.

(4) Within property and equipment, net on the consolidated balance sheets.

Statement of Operations

Operating lease expense was $2.7 million and $7.4 million for the three and nine months ended March 26, 2023, respectively, and $1.8 million and $6.6 million for the three and nine months ended March 27, 2022, respectively.

Short-term lease expense, variable lease expense and sublease income were immaterial for the three and nine months ended March 26, 2023 and March 27, 2022.

Finance lease amortization was $0.2 million and $0.6 million and interest expense was $0.1 million and $0.2 million for the three and nine months ended March 26, 2023, respectively. Finance lease amortization was $0.2 million and $0.9 million and interest expense was less than $0.1 million and $0.2 million for the three and nine months ended March 27, 2022, respectively.

Cash Flows

Cash flow information consisted of the following (1):

			Nine months ended
(in millions of U.S. Dollars)			March 26, 2023						March 27, 2022
Cash (used in) provided by operating activities:
Cash paid for operating leases			($4.7)						($5.8)
Cash received from tenant improvement allowance on operating lease			7.4						—
Cash paid for interest portion of financing leases			(0.2)						(0.2)
Cash used in financing activities:
Cash paid for principal portion of finance leases			(0.4)						(0.4)

(1) See Note 5, "Financial Statement Details," for non-cash activities related to leases.

Lease Liability Maturities

Maturities of operating and finance lease liabilities as of March 26, 2023 were as follows (in millions of U.S. Dollars):

Fiscal Year Ending			Operating Leases			Finance Leases			Total
June 25, 2023 (remainder of fiscal 2023)			$1.8			$0.3			$2.1
June 30, 2024			10.3			0.7			11.0
June 29, 2025			11.1			0.7			11.8
June 28, 2026			10.8			0.7			11.5
June 27, 2027			9.5			0.4			9.9
Thereafter			81.2			14.1			95.3
Total lease payments			124.7			16.9			141.6
Future tenant improvement allowances			(14.1)			—			(14.1)
Imputed lease interest			(32.0)			(7.1)			(39.1)
Total lease liabilities			$78.6			$9.8			$88.4

Supplemental Disclosures

			Operating Leases			Finance Leases
Weighted average remaining lease term (in months) (1)			146			470
Weighted average discount rate (2)			4.62		%	2.69		%

(1) Weighted average remaining lease term of finance leases excluding the 49-year ground lease is 42 months.

(2) Weighted average discount rate of finance leases excluding the 49-year ground lease is 3.55%.

Lease Income

As mentioned in Note 2, "Discontinued Operations", on March 1, 2021 and in connection with the sale of its LED Business, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $3.6 million per year. The lease term was 24 months and expired on February 26, 2023.

The Company recognized lease income of $0.6 million and $2.4 million for the three and nine months ended March 26, 2023, respectively. The Company recognized lease income of $0.9 million and $2.7 million for the three and nine months ended March 27, 2022, respectively.

The Company did not recognize any variable lease income for the three and nine months ended March 26, 2023 and March 27, 2022.

Leases

Leases

The Company primarily leases manufacturing and office spaces. The Company also has a number of bulk gas leases. Lease agreements frequently include renewal provisions and require the Company to pay real estate taxes, insurance and maintenance costs. Variable costs include lease payments that were volume or usage-driven in accordance with the use of the underlying asset, as well as non-lease components incurred with respect to actual terms rather than contractually fixed amounts.

The Company's finance lease obligations primarily relate to contract manufacturing space in Malaysia and a 49-year ground lease on the Company's Silicon Carbide device fabrication facility in New York.

Balance Sheet

Lease assets and liabilities and the corresponding balance sheet classifications are as follows (in millions of U.S. Dollars):

Operating Leases:			March 26, 2023						June 26, 2022
Right-of-use asset (1)			$70.0						$48.5
Current lease liability (2)			5.7						4.6
Non-current lease liability (3)			72.9						43.6
Total operating lease liabilities			$78.6						$48.2
Finance Leases:
Finance lease assets (4)			$9.8						$10.3
Current portion of finance lease liabilities			0.5						0.5
Finance lease liabilities, less current portion			9.3						9.6
Total finance lease liabilities			$9.8						$10.1

(1) Within other assets on the consolidated balance sheets.

(2) Within other current liabilities on the consolidated balance sheets.

(3) Within other long-term liabilities on the consolidated balance sheets.

(4) Within property and equipment, net on the consolidated balance sheets.

Statement of Operations

Operating lease expense was $2.7 million and $7.4 million for the three and nine months ended March 26, 2023, respectively, and $1.8 million and $6.6 million for the three and nine months ended March 27, 2022, respectively.

Short-term lease expense, variable lease expense and sublease income were immaterial for the three and nine months ended March 26, 2023 and March 27, 2022.

Finance lease amortization was $0.2 million and $0.6 million and interest expense was $0.1 million and $0.2 million for the three and nine months ended March 26, 2023, respectively. Finance lease amortization was $0.2 million and $0.9 million and interest expense was less than $0.1 million and $0.2 million for the three and nine months ended March 27, 2022, respectively.

Cash Flows

Cash flow information consisted of the following (1):

			Nine months ended
(in millions of U.S. Dollars)			March 26, 2023						March 27, 2022
Cash (used in) provided by operating activities:
Cash paid for operating leases			($4.7)						($5.8)
Cash received from tenant improvement allowance on operating lease			7.4						—
Cash paid for interest portion of financing leases			(0.2)						(0.2)
Cash used in financing activities:
Cash paid for principal portion of finance leases			(0.4)						(0.4)

(1) See Note 5, "Financial Statement Details," for non-cash activities related to leases.

Lease Liability Maturities

Maturities of operating and finance lease liabilities as of March 26, 2023 were as follows (in millions of U.S. Dollars):

Fiscal Year Ending			Operating Leases			Finance Leases			Total
June 25, 2023 (remainder of fiscal 2023)			$1.8			$0.3			$2.1
June 30, 2024			10.3			0.7			11.0
June 29, 2025			11.1			0.7			11.8
June 28, 2026			10.8			0.7			11.5
June 27, 2027			9.5			0.4			9.9
Thereafter			81.2			14.1			95.3
Total lease payments			124.7			16.9			141.6
Future tenant improvement allowances			(14.1)			—			(14.1)
Imputed lease interest			(32.0)			(7.1)			(39.1)
Total lease liabilities			$78.6			$9.8			$88.4

Supplemental Disclosures

			Operating Leases			Finance Leases
Weighted average remaining lease term (in months) (1)			146			470
Weighted average discount rate (2)			4.62		%	2.69		%

(1) Weighted average remaining lease term of finance leases excluding the 49-year ground lease is 42 months.

(2) Weighted average discount rate of finance leases excluding the 49-year ground lease is 3.55%.

Lease Income

As mentioned in Note 2, "Discontinued Operations", on March 1, 2021 and in connection with the sale of its LED Business, the Company entered into the LED RELA pursuant to which the Company leased to CreeLED approximately 58,000 square feet of the Company’s property and certain facilities in Durham, North Carolina for a total of $3.6 million per year. The lease term was 24 months and expired on February 26, 2023.

The Company recognized lease income of $0.6 million and $2.4 million for the three and nine months ended March 26, 2023, respectively. The Company recognized lease income of $0.9 million and $2.7 million for the three and nine months ended March 27, 2022, respectively.

The Company did not recognize any variable lease income for the three and nine months ended March 26, 2023 and March 27, 2022.

X

- References

No definition available.

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- Definition

The entire disclosure for finance leases of lessee. Includes, but is not limited to, description of lessee's finance lease and maturity analysis of finance lease liability.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=77888251

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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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 20
-URI https://asc.fasb.org/subtopic&trid=77888251

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- Definition

The entire disclosure for lessor's operating leases.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 842
-SubTopic 30
-URI https://asc.fasb.org/subtopic&trid=77888252

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