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. During the nine months ended March 29, 2019, the Company sold trade accounts receivable and received cash proceeds of $702 million. The discounts on the trade accounts receivable sold during the period were not material and were recorded within Other income (expense), net in the Condensed Consolidated Financial Statements. During the nine months ended March 30, 2018, the Company did not sell any trade accounts receivable.

Inventories



	March 29, 2019		June 29, 2018
	(in millions)
Inventories:
Raw materials and component parts	$	1,122	$	1,048
Work-in-process	955		878
Finished goods	1,363		1,018
Total inventories	$	3,440	$	2,944

Property, plant and equipment, net



	March 29, 2019			June 29, 2018
	(in millions)
Property, plant, and equipment:
Land	$	307		$	306
Buildings and improvements	2,012			1,949
Machinery and equipment	7,593			7,209
Computer equipment and software	460			440
Furniture and fixtures	55			48
Construction-in-process	211			234
Property, plant and equipment, gross	10,638			10,186
Accumulated depreciation	(7,607		)	(7,091		)
Property, plant, and equipment, net	$	3,031		$	3,095

Goodwill

The Company tests for impairment, at a minimum, on an annual basis or earlier where certain events or changes in circumstances indicate that goodwill may more likely than not be impaired. The Company has experienced fluctuations in the market price of its stock, which resulted in the Company’s market capitalization decreasing below book value for eleven trading days near the end of the second quarter and beginning of the third quarter of fiscal 2019. The fair value of the Company using a market capitalization approach based on the Company’s share price would include a control premium based on recent transactions that have occurred in the technology industry. This indicative fair value exceeded the Company’s book value; therefore, management did not believe that it was more likely than not that goodwill was impaired as of March 29, 2019.

The Company’s regularly scheduled annual impairment test is performed as of the first day of its fiscal fourth quarter. The Company uses qualitative factors to determine whether goodwill is more likely than not impaired and whether a quantitative test for impairment is considered necessary. If the Company concludes from the qualitative assessment that goodwill is more likely than not impaired, the Company is required to perform a quantitative assessment to determine the amount of impairment. The Company is required to use judgment when applying the goodwill impairment test, including the identification of reporting units, assignment of assets, liabilities and goodwill to reporting units, and determination of the fair value of each reporting unit. In addition, the estimates used to determine the fair value of reporting units may change based on results of operations, macroeconomic conditions or other factors. The Company is in the process of completing its annual impairment test.

If there are significant decreases in the Company’s stock price in the future or other unfavorable factors, the Company may be required to perform a goodwill impairment assessment, which may result in the recognition of a goodwill impairment that could be material to the Consolidated Financial Statements.

Intangible assets



	March 29, 2019			June 29, 2018
	(in millions)
Finite-lived intangible assets	$	5,824		$	5,818
In-process research and development	72			80
Accumulated amortization	(3,978		)	(3,218		)
Intangible assets, net	$	1,918		$	2,680

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. During the three and nine months ended March 29, 2019, the Company reclassified $8 million of acquired IPR&D to existing technology and commenced amortization over its estimated useful life of 2 years.

Product warranty liability

Changes in the warranty accrual were as follows:



	Three Months Ended						Nine Months Ended
	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
	(in millions)
Warranty accrual, beginning of period	$	337		$	304		$	318		$	311
Charges to operations	38			43			119			133
Utilization	(40		)	(37		)	(108		)	(118		)
Changes in estimate related to pre-existing warranties	(4		)	(5		)	2			(21		)
Warranty accrual, end of period	$	331		$	305		$	331		$	305

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:



	March 29, 2019		June 29, 2018
	(in millions)
Warranty accrual
Current portion	$	179	$	168
Long-term portion	152		150
Total warranty accrual	$	331	$	318

Other liabilities



	March 29, 2019		June 29, 2018
	(in millions)
Other non-current liabilities:
Non-current net tax payable	$	930	$	1,315
Other non-current liabilities	1,248		940
Total other non-current liabilities	$	2,178	$	2,255

Accumulated other comprehensive income (loss)

Other comprehensive income (loss) (“OCI”), 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 Accumulated other comprehensive income (loss) (“AOCI”):



	Actuarial Pension Gains (Losses)			Foreign Currency Translation Adjustment			Unrealized Gains (Losses) on Derivative Contracts			Total Accumulated Comprehensive Income (Loss)
	(in millions)
Balance at June 29, 2018	$	(19	)	$	(21	)	$	1		$	(39	)
Other comprehensive income (loss) before reclassifications	1			(8		)	(26		)	(33		)
Amounts reclassified from accumulated other comprehensive income	—			—			8			8
Income tax benefit related to items of other comprehensive loss	—			(1		)	10			9
Net current-period other comprehensive loss	1			(9		)	(8		)	(16		)
Balance at March 29, 2019	$	(18	)	$	(30	)	$	(7	)	$	(55	)

During the three and nine months ended March 29, 2019 and March 30, 2018, the amounts reclassified out of AOCI related to derivative contracts were not material and substantially all were charged to Cost of revenue in the Condensed Consolidated Statements of Operations.