XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.23.2

Income Taxes | 12 Months Ended
--- | ---
Jun. 25, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before income taxes were as follows:
| Year Ended
| June 25, 2023 |  | June 26, 2022 |  | June 27, 2021
| (in thousands)
United States | $ | 151,759 |  |  | $ | 87,933 |  |  | $ | 120,161 |
Foreign | 4,957,451 |  |  | 5,105,181 |  |  | 4,250,643 |
| $ | 5,109,210 |  |  | $ | 5,193,114 |  |  | $ | 4,370,804 |
Significant components of the provision (benefit) for income taxes attributable to income before income taxes were as follows:
| Year Ended
| June 25, 2023 |  | June 26, 2022 |  | June 27, 2021
| (in thousands)
Federal: |  |  |  |  |
Current | $ | 541,416 |  |  | $ | 620,344 |  |  | $ | 437,525 |
Deferred | (136,178) |  |  | (226,895) |  |  | (139,531) |
| 405,238 |  |  | 393,449 |  |  | 297,994 |
State: |  |  |  |  |
Current | 32,082 |  |  | 20,759 |  |  | 13,560 |
Deferred | (2,813) |  |  | (19,096) |  |  | (8,324) |
| 29,269 |  |  | 1,663 |  |  | 5,236 |
Foreign: |  |  |  |  |
Current | 196,842 |  |  | 204,163 |  |  | 162,738 |
Deferred | (33,070) |  |  | (11,447) |  |  | (3,622) |
| 163,772 |  |  | 192,716 |  |  | 159,116 |
Total provision for income taxes | $ | 598,279 |  |  | $ | 587,828 |  |  | $ | 462,346 |
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, as well as the tax effect of carryforwards. Significant components of the Company’s net deferred tax assets and liabilities were as follows:
| June 25, 2023 |  | June 26, 2022
| (in thousands)
Deferred tax assets: |  |  |
Tax carryforwards | $ | 359,505 |  |  | $ | 315,396 |
Allowances and reserves | 192,374 |  |  | 194,410 |
Equity-based compensation | 9,600 |  |  | 8,845 |
Inventory valuation differences | 57,675 |  |  | 52,323 |
Outside basis differences of foreign subsidiaries | 527,139 |  |  | 421,056 |
R&D capitalization | 36,618 |  |  | — |
Operating lease liabilities | 50,867 |  |  | 50,294 |
Finance lease assets | 32,905 |  |  | 35,754 |
Intangible assets | 4,108 |  |  | 889 |
Other | 31,773 |  |  | 23,955 |
Gross deferred tax assets | 1,302,564 |  |  | 1,102,922 |
Valuation allowance | (352,377) |  |  | (308,724) |
Net deferred tax assets | 950,187 |  |  | 794,198 |
Deferred tax liabilities: |  |  |
Capital assets | (121,948) |  |  | (114,644) |
Amortization of goodwill | (12,515) |  |  | (13,789) |
Right-of-use assets | (50,867) |  |  | (50,294) |
Finance lease liabilities | (50,534) |  |  | (52,379) |
Other | (1,974) |  |  | (2,395) |
Gross deferred tax liabilities | (237,838) |  |  | (233,501) |
Net deferred tax assets | $ | 712,349 |  |  | $ | 560,697 |
The change in gross deferred tax assets, gross deferred tax liabilities, and valuation allowance between fiscal year 2023 and 2022 is primarily due to increases in gross deferred tax assets for outside basis differences of foreign subsidiaries, tax credits, and capitalized research and experimental expenditures. The Company has an accounting policy election to record deferred taxes related to Global Intangible Low-Taxed Income (“GILTI”). Realization of the Company’s net deferred tax assets is based upon the weighting of available evidence, including such factors as the recent earnings history and expected future taxable income. The Company believes it is more likely than not that such deferred tax assets will be realized with the exception of $352.4 million primarily related to California deferred tax assets. At June 25, 2023, the Company continued to record a valuation allowance to offset the entire California deferred tax asset balance due to the single sales factor apportionment resulting in lower taxable income in California. At June 25, 2023, the Company had federal net operating loss carryforwards of $12.9 million. If not utilized, these losses will begin to expire in fiscal year 2024, and are subject to limitation on their utilization. At June 25, 2023, the Company had state net operating loss carryforwards of $171.4 million. If not utilized, these losses will begin to expire in fiscal year 2024, and are subject to limitation on their utilization. At June 25, 2023, the Company had foreign net operating loss carryforwards of $19.6 million. All of these losses can be carried forward indefinitely, and are subject to limitation on their utilization. At June 25, 2023, the Company had state tax credit carryforwards of $530.3 million. Substantially all of these credits can be carried forward indefinitely. A reconciliation of income tax expense provided at the federal statutory rate (21% in fiscal years 2023, 2022, and 2021) to actual income tax expense is as follows:
| Year Ended
| June 25, 2023 |  | June 26, 2022 |  | June 27, 2021
| (in thousands)
Income tax expense computed at federal statutory rate | $ | 1,072,934 |  |  | $ | 1,096,692 |  |  | $ | 917,869 |
State income taxes, net of federal tax benefit | (23,252) |  |  | (35,584) |  |  | (33,478) |
Foreign income taxed at different rates | (430,314) |  |  | (407,989) |  |  | (365,886) |
Settlements and reductions in uncertain tax positions | (28,968) |  |  | (51,227) |  |  | (13,613) |
Tax credits | (103,019) |  |  | (96,440) |  |  | (86,709) |
State valuation allowance, net of federal tax benefit | 49,073 |  |  | 43,502 |  |  | 39,477 |
Equity-based compensation | 15,816 |  |  | (13,168) |  |  | (45,764) |
Other permanent differences and miscellaneous items | 46,009 |  |  | 52,042 |  |  | 50,450 |
| $ | 598,279 |  |  | $ | 587,828 |  |  | $ | 462,346 |
Effective from fiscal year 2022, the Company has a 15-year tax incentive ruling in Malaysia for one of its foreign subsidiaries. The statutory tax rate in Malaysia is 24%. The tax incentive provides exemptions on foreign income earned and is contingent upon meeting certain conditions. The Company expects to apply for renewals upon expiration. The impact of the tax incentive decreased worldwide taxes by approximately $576.0 million for fiscal year 2023. The benefit of the tax incentive on diluted earnings per share was approximately $4.24 in fiscal year 2023. Earnings of the Company’s foreign subsidiaries included in consolidated retained earnings that are indefinitely reinvested in foreign operations aggregated to approximately $1.1 billion at June 25, 2023. If these earnings were remitted to the United States, they would be subject to foreign withholding taxes of approximately $171.1 million at the current statutory rates. The potential tax expense associated with these foreign withholding taxes would be offset by $136.9 million of foreign tax credits that would be generated in the United States upon remittance. On August 16, 2022, the IRA was signed into law. In general, the provisions of the IRA will be effective beginning with the Company’s fiscal year 2024, with certain exceptions. The IRA includes a new 15% corporate minimum tax. The impact on income taxes due to changes in legislation is required under the authoritative guidance of ASC 740, Income Taxes, to be recognized in the period in which the law is enacted. The Company has evaluated the potential impacts of the IRA and does not expect it to have a material impact on the effective tax rate. However, the Company expects future guidance from the Treasury Department and will further analyze when the guidance is issued. The Company’s gross uncertain tax positions were $640.2 million, $617.4 million, and $566.8 million as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively. During fiscal year 2023, gross uncertain tax positions increased by $22.8 million. The amount of uncertain tax positions that, if recognized, would impact the effective tax rate was $550.1 million, $539.6 million, and $504.4 million, as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively. The aggregate changes in the balance of gross uncertain tax positions were as follows:
| (in thousands)
Balance as of June 28, 2020 | $ | 476,695 |
Settlements and effective settlements with tax authorities | (1,443) |
Lapse of statute of limitations | (8,456) |
Increases in balances related to tax positions taken during prior periods | 15,986 |
Decreases in balances related to tax positions taken during prior periods | (2,746) |
Increases in balances related to tax positions taken during current period | 86,735 |
Balance as of June 27, 2021 | 566,771 |
Settlements and effective settlements with tax authorities | (14,440) |
Lapse of statute of limitations | (8,021) |
Increases in balances related to tax positions taken during prior periods | 6,468 |
Decreases in balances related to tax positions taken during prior periods | (28,376) |
Increases in balances related to tax positions taken during current period | 94,971 |
Balance as of June 26, 2022 | 617,373 |
Settlements and effective settlements with tax authorities | (50,238) |
Lapse of statute of limitations | (22,103) |
Increases in balances related to tax positions taken during prior periods | 5,841 |
Decreases in balances related to tax positions taken during prior periods | (4,316) |
Increases in balances related to tax positions taken during current period | 93,615 |
Balance as of June 25, 2023 | $ | 640,172 |
The Company recognizes interest expense and penalties related to the above uncertain tax positions within income tax expense. The Company had accrued $74.4 million, $61.2 million, and $54.6 million cumulatively for gross interest and penalties as of June 25, 2023, June 26, 2022, and June 27, 2021, respectively. The Company is subject to audits by state and foreign tax authorities. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the relevant taxing authorities will occur. The Company files U.S. federal, U.S. state, and foreign income tax returns. As of June 25, 2023, tax years 2005-2023 remain subject to examination in the jurisdictions where the Company operates. The Internal Revenue Service (“IRS”) has examined the Company’s U.S. federal income tax return for the fiscal year ended June 24, 2018. As of September 25, 2022, the IRS has proposed adjustments resulting in a tax liability increase of approximately $50.0 million, which was previously reserved. The Company has agreed to pay the amount and has made a partial cash settlement in the September quarter with the remaining settlement expected to be paid based on the IRS requirements. The IRS is examining the Company’s U.S. federal income tax returns for the fiscal years ended June 30, 2019, and June 28, 2020. To date, no significant adjustments have been proposed by the IRS. The Company is unable to make a reasonable estimate as to when cash settlements, if any, with the IRS will occur. The Company is in various stages of examinations in connection with all of its tax audits worldwide, and it is difficult to determine when these examinations will be settled. It is reasonably possible that over the next 12-month period the Company may experience an increase or decrease in its uncertain tax positions as a result of tax examinations or lapses of statutes of limitation. The change in uncertain tax positions as a result of lapses of statutes of limitation may range up to $9.2 million.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 946 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Publisher FASB -URI https://asc.fasb.org//1943274/2147480990/946-20-50-13 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//740/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 14 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-14 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-21 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 270 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482526/740-270-50-1 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 17 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482685/740-10-50-17 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479360/740-10-S99-2 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 30 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482603/740-30-50-2 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration