2. Supplemental Financial Statement Data

Accounts Receivable

From time to time, in connection with a factoring agreement, the Company sells trade accounts receivable without recourse to a third party purchaser in exchange for cash. The Company did not sell trade accounts receivable during the three months ended January 1, 2016. During the six months ended January 1, 2016, the Company sold trade accounts receivable and received cash proceeds of $200 million. The Company did not sell trade accounts receivable during the three and six months ended January 2, 2015. The discounts on the sales of trade accounts receivable were not material and were recorded within interest and other expense in the condensed consolidated statements of income.

Inventories; Property, Plant and Equipment; and Other Intangible Assets



	January 1, 2016			July 3, 2015
	(in millions)
Inventories:
Raw materials and component parts	$	130		$	168
Work-in-process	474			500
Finished goods	634			700
Total inventories	$	1,238		$	1,368
Property, plant and equipment:
Property, plant and equipment	$	8,716		$	8,604
Accumulated depreciation	(5,915		)	(5,639		)
Property, plant and equipment, net	$	2,801		$	2,965
Other intangible assets:
Other intangible assets	$	1,018		$	1,008
Accumulated amortization	(726		)	(676		)
Other intangible assets, net	$	292		$	332

Warranty

The Company records an accrual for estimated warranty costs when revenue is recognized. The Company generally warrants its products for a period of one to five years. The warranty provision considers estimated product failure rates and trends, estimated replacement costs, estimated repair costs which include scrap costs, and estimated costs for customer compensatory claims related to product quality issues, if any. A statistical warranty tracking model is used to help prepare estimates and assist the Company in exercising judgment in determining the underlying estimates. The statistical tracking model captures specific detail on product reliability, such as factory test data, historical field return rates, and costs to repair by product type. Management’s judgment is subject to a greater degree of subjectivity with respect to newly introduced products because of limited field experience with those products upon which to base warranty estimates. Management reviews the warranty accrual quarterly for products shipped in prior periods and which are still under warranty. Any changes in the estimates underlying the accrual may result in adjustments that impact current period gross profit and income. Such changes are generally a result of differences between forecasted and actual return rate experience and costs to repair. If actual product return trends, costs to repair returned products or costs of customer compensatory claims differ significantly from estimates, future results of operations could be materially affected. Changes in the warranty accrual were as follows (in millions):



	Three Months Ended						Six Months Ended
	January 1, 2016			January 2, 2015			January 1, 2016			January 2, 2015
Warranty accrual, beginning of period	$	218		$	201		$	221		$	182
Charges to operations	43			50			88			99
Utilization	(40		)	(44		)	(94		)	(93		)
Changes in estimate related to pre-existing warranties	4			16			10			35
Warranty accrual, end of period	$	225		$	223		$	225		$	223

The long-term portion of the warranty accrual classified in other liabilities was $81 million as of January 1, 2016 and $71 million as of July 3, 2015.

Investments

The following tables summarize, by major type, the fair value and cost basis of the Company’s investments (in millions):



	January 1, 2016
	Cost Basis		Unrealized Losses			Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	306	$	(1	)	$	305
U.S. Government agency securities	116		—			116
Commercial paper	50		—			50
Certificates of deposit	260		—			260
Total	$	732	$	(1	)	$	731



	July 3, 2015
	Cost Basis		Unrealized Gains (Losses)		Fair Value
Available-for-sale securities:
U.S. Treasury securities	$	287	$	—	$	287
U.S. Government agency securities	95		—		95
Commercial paper	109		—		109
Certificates of deposit	99		—		99
Total	$	590	$	—	$	590

The fair value of the Company’s investments classified as available-for-sale securities at January 1, 2016, by remaining contractual maturity, were as follows (in millions):



	Cost Basis		Fair Value
Due in less than one year (short-term investments):	$	497	$	497
Due in one to five years (included in other non-current assets):	235		234
Total	$	732	$	731

The Company determined no available-for-sale securities were other-than-temporarily impaired during the three and six months ended January 1, 2016 and January 2, 2015. For more information on the Company's available-for-sale securities, see Note 7 to these condensed consolidated financial statements.

From time to time, the Company enters into certain strategic investments for the promotion of business and strategic objectives. These strategic investments are recorded at cost within other non-current assets in the condensed consolidated balance sheets and were not material to the condensed consolidated financial statements as of January 1, 2016 and July 3, 2015.

Joint Venture

In November 2015, the Company entered into an agreement to form a joint venture with Unisplendour Corporation Limited ("Unis") to market and sell the Company's current data center storage systems in China and to develop data storage systems for the Chinese market in the future. The joint venture will be 51% owned by Unis and its subsidiary, Unissoft (Wuxi) Group Co. Ltd., and 49% by the Company.

Other Comprehensive Income (Loss), Net of Tax

Other comprehensive income (loss), net of tax refers to revenue, expenses, gains and losses that are recorded as an element of shareholders’ equity but are excluded from net income. The income tax impact on components of other comprehensive income is immaterial for all periods presented.

The following table illustrates the changes in the balances of each component of accumulated other comprehensive income (loss) for the six months ended January 1, 2016 (in millions):



	Actuarial Pension Gain		Unrealized Gain (Loss) on Foreign Exchange Contracts			Unrealized Loss on Available for Sale Securities			Accumulated Other Comprehensive Income (Loss)
Balance at July 3, 2015	$	5	$	(25	)	$	—		$	(20	)
Other comprehensive loss before reclassifications	—		(40		)	—			(40		)
Amounts reclassified from accumulated other comprehensive income (loss)	—		53			(1		)	52
Net current-period other comprehensive income (loss)	—		13			(1		)	12
Balance at January 1, 2016	$	5	$	(12	)	$	(1	)	$	(8	)

The following table illustrates the changes in the balances of each component of accumulated other comprehensive income (loss) for the six months ended January 2, 2015 (in millions):



	Actuarial Pension Gain		Unrealized Gain (Loss) on Foreign Exchange Contracts			Unrealized Gain (Loss) on Available for Sale Securities		Accumulated Other Comprehensive Income (Loss)
Balance at June 27, 2014	$	7	$	5		$	—	$	12
Other comprehensive loss before reclassifications	—		(57		)	—		(57		)
Amounts reclassified from accumulated other comprehensive income (loss)	—		13			—		13
Net current-period other comprehensive loss	—		(44		)	—		(44		)
Balance at January 2, 2015	$	7	$	(39	)	$	—	$	(32	)