Income Taxes (Tables)

12 Months Ended

Jul. 03, 2015

Domestic and Foreign Components of Income Before Income Taxes

The domestic and foreign components of income before income taxes were as follows for the three years ended July 3, 2015 (in millions):



	2015		2014		2013
Foreign	$	1,501	$	1,664	$	870
Domestic	76		88		352
Income before income taxes	$	1,577	$	1,752	$	1,222

Components of Provision for Income Taxes

The components of the provision for income taxes were as follows for the three years ended July 3, 2015 (in millions):



	2015			2014			2013
Current:
Foreign	$	54		$	47		$	57
Domestic-federal	43			98			149
Domestic-state	(13		)	3			1
Deferred:
Foreign	12			(3		)	(7		)
Domestic-federal	11			(14		)	(46		)
Domestic-state	5			4			88
Income tax provision	$	112		$	135		$	242

Deferred Tax Assets and Liabilities

Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities as of July 3, 2015 and June 27, 2014 were as follows (in millions):



	2015			2014
Deferred tax assets:
Sales related reserves and accrued expenses not currently deductible	$	50		$	38
Accrued compensation and benefits not currently deductible	138			190
Domestic net operating loss carryforward	137			130
Business credit carryforward	167			155
Long-lived assets	49			58
Other	65			65
Total deferred tax assets	606			636
Deferred tax liabilities:
Long-lived assets	(126		)	(152		)
Other	(10		)	(11		)
Total deferred tax liabilities	(136		)	(163		)
Valuation allowances	(166		)	(128		)
Deferred tax assets, net	$	304		$	345
Deferred tax assets:
Current portion (included in other current assets)	$	167		$	184
Non-current portion (included in other non-current assets)	273			324
Total deferred tax assets	440			508
Deferred tax liabilities:
Current portion (included in other current assets)	(1		)	(2		)
Non-current portion (included in other non-current assets)	(135		)	(161		)
Total deferred tax liabilities	(136		)	(163		)
Deferred tax assets, net	$	304		$	345

U.S. Federal Statutory Rate to Company's Effective Tax Rate

Reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows for the three years ended July 3, 2015:



	2015		2014		2013
U.S. Federal statutory rate	35	%	35	%	35	%
Tax rate differential on international income	(29	)	(28	)	(19	)
Tax effect of U.S. permanent differences	1		2		—
State income tax, net of federal tax	—		—		8
Income tax credits	(2	)	(1	)	(4	)
Other	2		—		—
Effective tax rate	7	%	8	%	20	%

Total Amounts of Unrecognized Tax Benefits

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the years ended July 3, 2015, June 27, 2014 and June 28, 2013 (in millions):



	2015			2014			2013
Unrecognized tax benefit at beginning of period	$	300		$	240		$	280
Gross increases related to current year tax positions	44			27			29
Gross increases related to prior year tax positions	6			26			10
Gross decreases related to prior year tax positions	—			(5		)	(8		)
Settlements	—			—			(64		)
Lapse of statute of limitations	(3		)	—			(7		)
Acquisitions	3			12			—
Unrecognized tax benefit at end of period	$	350		$	300		$	240