Note 12. Leases
The Company is a lessee in several operating leases, primarily real estate facilities for office space. The Company's lease arrangements are composed of operating leases with various expiration dates through March 31, 2042. The Company's leases do not contain any material residual value guarantees.
Lease expense and cash flow information related to our operating leases is as follows (in millions):
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| | | June 28, 2025 | | June 29, 2024 |
Operating lease costs(1) | | | $ | 13.0 | | | $ | 12.9 | |
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| Cash paid for amounts included in the measurement of operating lease liabilities | | | $ | 13.0 | | | $ | 14.1 | |
| Operating ROU assets obtained in exchange for operating lease obligations | | | $ | 8.5 | | | $ | 7.2 | |
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| Weighted-average remaining lease term | | | 6.1 years | | 6.3 years |
| Weighted-average discount rate | | | 6.0 | % | | 5.6 | % |
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(1) Total variable lease costs were immaterial during the fiscal years ended June 28, 2025 and June 29, 2024. The total operating costs were included in Cost of revenues, R&D and SG&A in the Consolidated Statements of Operations.
Future minimum operating lease payments as of June 28, 2025 are as follows (in millions):
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| Fiscal Years | | | |
| 2026 | | | $ | 10.6 | |
| 2027 | | | 9.7 | |
| 2028 | | | 6.9 | |
| 2029 | | | 4.1 | |
| 2030 | | | 1.9 | |
| Thereafter | | | 8.0 | |
| Total lease payments | | | 41.2 | |
| Less: Interest | | | (6.9) | |
| Present value of lease liabilities | | | $ | 34.3 | |
The Company’s ARO liability is primarily associated with leasehold improvements which the Company is contractually obligated to remove at the end of a lease to comply with the lease agreement. The Company derecognizes ARO liabilities when the related obligations are settled. As of June 28, 2025 and June 29, 2024, the Consolidated Balance Sheets included ARO balances of $0.4 million and $1.2 million, respectively, in Other current liabilities and $3.5 million and $3.0 million, respectively, in Other non-current liabilities.
A summary of the activity in the ARO accrual is outlined below (in millions):
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| Balance at Beginning of Period | | Liabilities Incurred | | Liabilities Settled | | Accretion Expense | | Revisions to Estimates | | Balance at End of Period |
| Year ended June 28, 2025 | $ | 4.2 | | | $ | 0.4 | | | $ | (0.8) | | | $ | — | | | $ | 0.1 | | | $ | 3.9 | |
| Year ended June 29, 2024 | $ | 4.3 | | | $ | — | | | $ | (0.2) | | | $ | 0.1 | | | $ | — | | | $ | 4.2 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.