Supplemental Financial Statement Data

3 Months Ended

Oct. 01, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Financial Statement Data

Supplemental Financial Statement Data

Accounts receivable, net

From time to time, in connection with factoring agreements, the Company sells trade accounts receivable without recourse to third party purchasers in exchange for cash. The Company did not sell any trade accounts receivable during the three months ended October 1, 2021. During the three months ended October 2, 2020, the Company sold trade accounts receivable for cash proceeds of $128 million. The discounts on the trade accounts receivable sold were not material and were recorded within Other income, net in the Condensed Consolidated Statements of Operations. There were no factored receivables outstanding as of October 1, 2021 and July 2, 2021.

Inventories

	October 1, 2021		July 2, 2021
	(in millions)
Inventories:
Raw materials and component parts	$	1,720	$	1,623
Work-in-process	1,036		1,088
Finished goods	788		905
Total inventories	$	3,544	$	3,616

Property, plant and equipment, net

	October 1, 2021		July 2, 2021
	(in millions)
Property, plant and equipment:
Land	$	278	$	278
Buildings and improvements	1,875		1,854
Machinery and equipment	8,102		7,860
Computer equipment and software	455		440
Furniture and fixtures	52		51
Construction-in-process	419		476
Property, plant and equipment, gross	11,181		10,959
Accumulated depreciation	(7,921)		(7,771)
Property, plant and equipment, net	$	3,260	$	3,188

Intangible assets

	October 1, 2021		July 2, 2021
	(in millions)
Finite-lived intangible assets	$	5,508	$	5,508
In-process research and development	80		80
Accumulated amortization	(5,224)		(5,146)
Intangible assets, net	$	364	$	442

As part of prior acquisitions, the Company recorded at the time of the acquisition acquired in-process research and development (“IPR&D”) for projects in progress that had not yet reached technological feasibility. IPR&D is initially accounted for as an indefinite-lived intangible asset. Once a project reaches technological feasibility, the Company reclassifies the balance to existing technology and begins to amortize the intangible asset over its estimated useful life.

Product warranty liability

Changes in the warranty accrual were as follows:

	Three Months Ended
	October 1, 2021		October 2, 2020
	(in millions)
Warranty accrual, beginning of period	$	363	$	408
Charges to operations	40		35
Utilization	(23)		(31)
Changes in estimate related to pre-existing warranties	(10)		(21)
Warranty accrual, end of period	$	370	$	391

The current portion of the warranty accrual is classified in Accrued expenses and the long-term portion is classified in Other liabilities as noted below:

	October 1, 2021		July 2, 2021
	(in millions)
Warranty accrual
Current portion (included in Accrued expenses)	$	175	$	175
Long-term portion (included in Other liabilities)	195		188
Total warranty accrual	$	370	$	363

Other liabilities

	October 1, 2021		July 2, 2021
	(in millions)
Other liabilities:
Non-current net tax payable	$	575	$	684
Payables related to unrecognized tax benefits	758		750
Other non-current liabilities	718		633
Total other liabilities	$	2,051	$	2,067

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) (“AOCI”), net of tax refers to expenses, gains and losses that are recorded as an element of shareholders’ equity but are excluded from net income. The following table illustrates the changes in the balances of each component of AOCI:

	Actuarial Pension Gains (Losses)		Foreign Currency Translation Adjustment		Unrealized Gains (Losses) on Derivative Contracts		Total Accumulated Comprehensive Income (Loss)
	(in millions)
Balance at July 2, 2021	$	(35)	$	(38)	$	(124)	$	(197)
Other comprehensive income (loss) before reclassifications	1		4		(17)		(12)
Amounts reclassified from accumulated other comprehensive income	—		—		50		50
Income tax benefit related to items of other comprehensive income	—		—		(8)		(8)
Net current-period other comprehensive income	1		4		25		30
Balance at October 1, 2021	$	(34)	$	(34)	$	(99)	$	(167)

During the three months ended October 1, 2021, the amounts reclassified out of AOCI were losses related to foreign exchange contracts of $37 million that were substantially all charged to Cost of revenue and losses related to interest rate swap contracts of $12 million that were charged to Interest expense in the Condensed Consolidated Statements of Operations. During the three months ended October 2, 2020, the amounts reclassified out of AOCI primarily related to foreign exchange contracts and were substantially all charged to Cost of revenue in the Condensed Consolidated Statements of Operations.

As of October 1, 2021, the amount of existing net losses related to cash flow hedges recorded in AOCI included $19 million related to the Company’s interest rate swaps that is expected to be reclassified to earnings after twelve months. In addition, as of October 1, 2021, the Company did not have any foreign exchange forward contracts with credit-risk-related contingent features.