Income Taxes

9 Months Ended

Mar. 29, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Note L — Income Taxes

On December 22, 2017, H.R.1, also known as the “Tax Cuts and Jobs Act,” was signed into U.S. law (“Tax Act”). Among other provisions, the Tax Act reduced the U.S. statutory corporate income tax rate from a maximum 35 percent to a flat 21 percent, effective January 1, 2018. During the quarter ended December 28, 2018, we completed our accounting for the income tax impact of enactment of the Tax Act, based on prevailing regulations and available information as of December 28, 2018, and there were no material changes from the estimates reported in our Fiscal 2017-2018 Update 8-K. We will continue to monitor additional guidance issued by the Internal Revenue Service.

Effective Tax Rate

Our effective tax rate (income taxes as a percentage of income from continuing operations before income taxes) was 14.1 percent in the quarter ended March 29, 2019 compared with 4.8 percent in the quarter ended March 30, 2018. In the quarter ended March 29, 2019, our effective tax rate benefited from the favorable impact of excess tax benefits related to equity-based compensation and from favorable adjustments recorded upon the filing of our Federal tax returns. In the quarter ended March 30, 2018, our effective tax rate benefited from a $33 million ($.27 per diluted share) adjustment to the provisional amount recorded in the second quarter of fiscal 2018 to revalue our net deferred tax balances as a result of the Tax Act. Additionally, our effective tax rate for the quarter ended March 30, 2018 benefited from the favorable impact of excess tax benefits related to equity-based compensation.

Our effective tax rate was 15.7 percent in the three quarters ended March 29, 2019 compared with 25.3 percent in the three quarters ended March 30, 2018. In addition to the items noted above for the quarter ended March 29, 2019, our effective tax rate for the three quarters ended March 29, 2019 benefited from a reduction in the deferred tax liability maintained on the basis differences related to the unremitted foreign earnings and an increase in the research and development (“R&D”) credit. Our effective tax rate for the three quarters ended March 30, 2018 was impacted by a $25 million ($.20 per diluted share) write-down of existing net deferred tax asset balances based on the lower tax rates and other tax law changes from the Tax Act, $26 million ($.21 per diluted share) of benefit from the associated impact of our lower estimated fiscal 2018 tax rate, $22 million ( $.18 per diluted share) favorable impact of releasing provisions for uncertain tax positions, the favorable impact of differences in GAAP and tax accounting related to investments and the favorable impact of excess tax benefits related to equity-based compensation.