Supplemental Financial Statement Data

6 Months Ended

Dec. 31, 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 six months ended December 31, 2021. During the six months ended January 1, 2021, the Company sold trade accounts receivable for cash proceeds of $173 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 December 31, 2021 and July 2, 2021.

Inventories

	December 31, 2021		July 2, 2021
	(in millions)
Inventories:
Raw materials and component parts	$	1,685	$	1,623
Work-in-process	1,013		1,088
Finished goods	949		905
Total inventories	$	3,647	$	3,616

Property, plant and equipment, net

	December 31, 2021		July 2, 2021
	(in millions)
Property, plant and equipment:
Land	$	273	$	278
Buildings and improvements	1,870		1,854
Machinery and equipment	8,287		7,860
Computer equipment and software	466		440
Furniture and fixtures	53		51
Construction-in-process	486		476
Property, plant and equipment, gross	11,435		10,959
Accumulated depreciation	(8,068)		(7,771)
Property, plant and equipment, net	$	3,367	$	3,188

Intangible assets

	December 31, 2021		July 2, 2021
	(in millions)
Finite-lived intangible assets	$	5,508	$	5,508
In-process research and development	80		80
Accumulated amortization	(5,288)		(5,146)
Intangible assets, net	$	300	$	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				Six Months Ended
	December 31, 2021		January 1, 2021		December 31, 2021		January 1, 2021
	(in millions)
Warranty accrual, beginning of period	$	370	$	391	$	363	$	408
Charges to operations	36		24		76		59
Utilization	(28)		(24)		(51)		(55)
Changes in estimate related to pre-existing warranties	(27)		(25)		(37)		(46)
Warranty accrual, end of period	$	351	$	366	$	351	$	366

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:

	December 31, 2021		July 2, 2021
	(in millions)
Warranty accrual:
Current portion (included in Accrued expenses)	$	166	$	175
Long-term portion (included in Other liabilities)	185		188
Total warranty accrual	$	351	$	363

Other liabilities

	December 31, 2021		July 2, 2021
	(in millions)
Other liabilities:
Non-current net tax payable	$	572	$	684
Payables related to unrecognized tax benefits	772		750
Other non-current liabilities	677		633
Total other liabilities	$	2,021	$	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		(41)		(71)		(111)
Amounts reclassified from accumulated other comprehensive income (loss)	—		—		94		94
Income tax expense related to items of other comprehensive income (loss)	—		—		(3)		(3)
Net current-period other comprehensive income (loss)	1		(41)		20		(20)
Balance at December 31, 2021	$	(34)	$	(79)	$	(104)	$	(217)

During the three and six months ended December 31, 2021, the amounts reclassified out of AOCI were losses related to foreign exchange contracts and interest rate swap contracts. Losses reclassified out of AOCI related to foreign exchange contracts were $32 million and $69 million, respectively, and were substantially charged to Cost of revenue in the Condensed Consolidated Statements of Operations. Losses reclassified out of AOCI related to interest rate swap contracts were $12 million and $25 million, respectively, and were charged to Interest expense in the Condensed Consolidated Statements of Operations.

As of December 31, 2021, the amount of existing net losses related to cash flow hedges recorded in AOCI included $5 million related to the Company’s interest rate swaps that is expected to be reclassified to earnings after twelve months. In addition, as of December 31, 2021, the Company did not have any foreign exchange forward contracts with credit-risk-related contingent features.