2. Supplemental Financial Statement Data

Inventories


	Sept. 30,		Jul. 1,
	2011		2011
	(in millions)
Raw materials and component parts	$	170	$	172
Work-in-process		275		263
Finished goods		200		142

Total inventories	$	645	$	577

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 repair or replacement 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 assists the Company in exercising judgment in determining the underlying estimates. The statistical tracking model captures specific detail on hard drive 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 margin 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
	Sept. 30,			Oct. 1,
	2011			2010
Warranty accrual, beginning of period	$	170		$	170
Charges to operations		45			44
Utilization		(42	)		(38	)
Changes in estimate related to pre-existing warranties		—			(3	)

Warranty accrual, end of period	$	173		$	173

Accrued warranty also includes amounts classified in other liabilities of $38 million at September 30, 2011 and July 1, 2011.