Supplemental Financial Statement Data

12 Months Ended

Jul. 02, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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. In 2021, 2020 and 2019, the Company sold trade accounts receivable and received cash proceeds of $233 million, $411 million and $1.02 billion, respectively. The discounts on the trade accounts receivable sold during the periods were not material and were recorded within Other income, net in the Consolidated Statements of Operations. As of July 2, 2021 and July 3, 2020, the amount of factored receivables that remained outstanding was $0 million and $113 million, respectively.

Inventories


	July 2, 2021		July 3, 2020
	(in millions)
Inventories:
Raw materials and component parts	$	1,623	$	1,306
Work-in-process	1,088		956
Finished goods	905		808
Total inventories	$	3,616	$	3,070

Property, plant and equipment, net


	July 2, 2021		July 3, 2020
	(in millions)
Property, plant and equipment:
Land	$	278	$	294
Buildings and improvements	1,854		1,837
Machinery and equipment	7,860		7,391
Computer equipment and software	440		429
Furniture and fixtures	51		52
Construction-in-process	476		297
Property, plant and equipment, gross	10,959		10,300
Accumulated depreciation	(7,771)		(7,446)
Property, plant and equipment, net	$	3,188	$	2,854

Depreciation expense of property, plant and equipment totaled $726 million, $797 million and $844 million in 2021, 2020 and 2019, respectively.

Goodwill


	Carrying Amount
	(in millions)











Balance at June 28, 2019	$	10,076
Goodwill recorded in connection with acquisitions	14
Purchase price adjustments to goodwill	(21)
Foreign currency translation adjustment	(2)
Balance at July 3, 2020	10,067


Foreign currency translation adjustment	(1)
Balance at July 2, 2021	$	10,066

Acquisition

On September 10, 2019, the Company acquired substantially all the assets of Kazan Networks, Inc., an innovator in high-performance networking and non-volatile memory express over fabrics technology, and an industry leader in application-specific integrated circuit and adapter solutions to connect storage platforms and systems over ethernet fabrics. The purchase price of this acquisition was $22 million in cash, with net assets acquired primarily consisting of IPR&D of $8 million and $14 million allocated to Goodwill. Goodwill is primarily attributable to the benefits the Company expects to derive from diversifying product offerings in its Data Center Devices and Solutions and Client Solutions end markets as well as the acquired workforce. The expenses incurred by the Company related to the acquisition as well as the revenues and earnings related to the acquisition were not material to the Consolidated Financial Statements.

Dispositions

In September 2019, the Company announced its intention to exit storage systems, which consisted of IntelliFlash and ActiveScale. These actions allow the Company to redirect investments to other high value priorities. In November 2019, the Company completed its sale of IntelliFlash for a price of $28 million, to be collected over the next three years. The sale of the IntelliFlash business included an immaterial amount of inventory, other tangible and intangible assets, and goodwill; and resulted in a gain of approximately $17 million recorded in Employee termination, asset impairment, and other charges in the Consolidated Statements of Operations for the year ended July 3, 2020. Additionally, in March 2020, the Company completed the sale of ActiveScale. The net assets sold and the proceeds from the sale of ActiveScale were not material. The revenues and expenses related to these businesses were not material to the Consolidated Financial Statements and did not qualify to be reported as discontinued operations. The operating results of these businesses have been reflected in the Company’s results from continuing operations in the Consolidated Statements of Operations for all periods presented through the date of disposition.

Intangible assets

The following tables present intangible assets as of July 2, 2021 and July 3, 2020:


	July 2, 2021
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)	(in millions)
Finite:
Existing technology	3	$	4,231	$	(4,165)	$	66
Trade names and trademarks	7	647		(486)		161
Customer relationships	6	618		(491)		127

Leasehold interests	31	12		(4)		8
Total finite intangible assets		5,508		(5,146)		362
In-process research and development		80		—		80
Total intangible assets		$	5,588	$	(5,146)	$	442


	July 3, 2020
	Weighted Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in years)	(in millions)
Finite:
Existing technology	3	$	4,248	$	(3,852)	$	396
Trade names and trademarks	7	648		(398)		250
Customer relationships	6	616		(423)		193

Leasehold interests	31	29		(7)		22
Total finite intangible assets		5,541		(4,680)		861
In-process research and development		80		—		80
Total intangible assets		$	5,621	$	(4,680)	$	941

As part of prior acquisitions, the Company recorded at the time of the acquisition acquired 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 2021, 2020 and 2019, the Company did not record any impairment charges related to intangible assets.

Intangible assets are amortized over the estimated useful lives based on the pattern in which the economic benefits are expected to be received. Intangible asset amortization was as follows:


	2021		2020		2019
	(in millions)
Intangible asset amortization	$	486	$	769	$	968

The following table presents estimated future amortization expense for intangible assets currently subject to amortization as of July 2, 2021:


	Future Intangible Asset Amortization Expenses
	(in millions)
Fiscal year:
2022	$	221
2023	134
2024 and thereafter	7

Total future amortization expense	$	362

Product warranty liability

Changes in the warranty accrual were as follows:



	2021		2020		2019
	(in millions)
Warranty accrual, beginning of period	$	408	$	350	$	318

Charges to operations	137		203		162
Utilization	(106)		(151)		(142)
Changes in estimate related to pre-existing warranties	(76)		6		12
Warranty accrual, end of period	$	363	$	408	$	350

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:


	2021		2020
	(in millions)
Warranty accrual
Current portion (included in Accrued expenses)	$	175	$	205
Long-term portion (included in Other liabilities)	188		203
Total warranty accrual	$	363	$	408

Other liabilities


	2021		2020
	(in millions)
Other liabilities:
Non-current net tax payable	$	684	$	815
Payables related to unrecognized tax benefits	750		720
Other non-current liabilities	633		881
Total other liabilities	$	2,067	$	2,416

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 June 28, 2019	$	(53)	$	4	$	(19)	$	(68)
Other comprehensive loss before reclassifications	(1)		(7)		(87)		(95)
Amounts reclassified from accumulated other comprehensive loss	—		—		(6)		(6)
Income tax benefit (expense) related to items of other comprehensive loss	(4)		1		15		12
Net current-period other comprehensive loss	(5)		(6)		(78)		(89)
Balance at July 3, 2020	(58)		(2)		(97)		(157)
Other comprehensive income (loss) before reclassifications	27		(36)		42		33
Amounts reclassified from accumulated other comprehensive income (loss)	—		—		(75)		(75)
Income tax benefit (expense) related to items of other comprehensive income (loss)	(4)		—		6		2
Net current-period other comprehensive income (loss)	23		(36)		(27)		(40)
Balance at July 2, 2021	$	(35)	$	(38)	$	(124)	$	(197)

During 2021, the amounts reclassified out of AOCI included losses of $50 million on interest rate swap contracts that were charged to Interest expense and losses of $25 million related to foreign exchange contracts that were substantially all charged to Cost of revenue in the Consolidated Statements of Operations. During 2020, the amounts reclassified out of AOCI primarily related to foreign exchange contracts and were substantially all charged to Cost of revenue in the Consolidated Statements of Operations.