XML 49 R21.htm IDEA: XBRL DOCUMENT
v3.24.2.u1

Income Tax Expense | 12 Months Ended
--- | ---
Jun. 28, 2024
Income Tax Disclosure [Abstract] |
Income Tax Expense | Income Tax Expense Income (Loss) Before Taxes The domestic and foreign components of Income (loss) before taxes were as follows:
| 2024 |  | 2023 |  | 2022
| (in millions)
Foreign | $ | (351) |  |  | $ | (2,019) |  |  | $ | 1,432 |
Domestic | (310) |  |  | 469 |  |  | 739 |
Income (loss) before taxes | $ | (661) |  |  | $ | (1,550) |  |  | $ | 2,171 |
Income Tax Expense The components of the income tax expense were as follows:
| 2024 |  | 2023 |  | 2022
| (in millions)
Current: |  |  |  |  |
Foreign | $ | 260 |  |  | $ | 153 |  |  | $ | 143 |
Domestic - Federal | 34 |  |  | 35 |  |  | 341 |
Domestic - State | 4 |  |  | (6) |  |  | 25 |
| 298 |  |  | 182 |  |  | 509 |
Deferred: |  |  |  |  |
Foreign | 13 |  |  | (6) |  |  | 29 |
Domestic - Federal | (152) |  |  | (36) |  |  | 84 |
Domestic - State | (22) |  |  | (6) |  |  | 3 |
| (161) |  |  | (48) |  |  | 116 |
Income tax expense | $ | 137 |  |  | $ | 134 |  |  | $ | 625 |
The Tax Cuts and Jobs Act (the “2017 Act”), enacted on December 22, 2017, includes a broad range of tax reform proposals affecting businesses. The Company completed its accounting for the tax effects of the enactment of the 2017 Act during the second quarter of 2019. However, the U.S. Treasury and the Internal Revenue Services (“IRS”) have issued tax guidance on certain provisions of the 2017 Act since the enactment date, and the Company anticipates the issuance of additional regulatory and interpretive guidance. The Company applied a reasonable interpretation of the 2017 Act along with the then-available guidance in finalizing its accounting for the tax effects of the 2017 Act. Any additional regulatory or interpretive guidance would constitute new information, which may require further refinements to the Company’s estimates in future periods. On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which contained significant law changes related to tax, climate, energy and health care. The tax measures include, among other things, a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income (“AFSI”) exceeding $1.00 billion. The corporate alternative minimum tax is effective for the Company beginning with 2024. The Company is not subject to the CAMT of 15% for fiscal year 2024 as its average annual AFSI did not exceed $1.00 billion for the preceding three-year period. Deferred Taxes Temporary differences and carryforwards, which give rise to a significant portion of deferred tax assets and liabilities were as follows:
| June 28, 2024 |  | June 30, 2023
| (in millions)
Deferred tax assets: |  |  |
Sales related reserves and accrued expenses not currently deductible | $ | 66 |  |  | $ | 69 |
Accrued compensation and benefits not currently deductible | 116 |  |  | 88 |
Net operating loss carryforward | 175 |  |  | 183 |
Business credit carryforward | 528 |  |  | 478 |
Long-lived assets | 75 |  |  | 72 |
Interest and hedging costs not currently deductible | 254 |  |  | 76 |
Other | 59 |  |  | 71 |
Total deferred tax assets | 1,273 |  |  | 1,037 |
Deferred tax liabilities: |  |  |
Long-lived assets | (46) |  |  | (57) |
Unremitted earnings of certain non-U.S. entities | (286) |  |  | (291) |
Other | (33) |  |  | (7) |
Total deferred tax liabilities | (365) |  |  | (355) |
Valuation allowances | (582) |  |  | (565) |
Deferred tax assets, net | $ | 326 |  |  | $ | 117 |
The increase in the deferred tax assets is attributable primarily to the IRS interest payments made in connection with the notice of deficiency received for years 2008 through 2011 that are not currently deductible under §163(j) of the Internal Revenue Code of 1986, as amended, and the unamortized original issue discount (“OID”) related to the premium paid to purchase Capped Calls in connection with the offering of the 2028 Convertible Notes. As described in Note 7, Debt, the deferred tax asset related to the unamortized OID was recorded as a decrease to Additional paid-in capital. The assessment of valuation allowances against deferred tax assets requires estimations and significant judgment. The Company continues to assess and adjust its valuation allowance based on operating results and market conditions. After weighing both the positive and negative evidence available, including, but not limited to, earnings history, projected future outcomes, industry and market trends and the nature of each of the deferred tax assets, the Company determined that it is able to realize its deferred tax assets except for certain loss and credit carryforwards. The Company is permanently reinvested with respect to certain foreign earnings. There is no unrecognized deferred tax liability associated with the repatriation of these foreign undistributed earnings as it can be achieved without additional federal tax consequences. Effective Tax Rate Reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows:
| 2024 |  | 2023 |  | 2022
U.S. Federal statutory rate | 21 | % |  | 21 | % |  | 21 | %
Tax rate differential on international income | (46) |  |  | (33) |  |  | (9) |
Tax effect of U.S. foreign income inclusion | (2) |  |  | (1) |  |  | — |
Tax effect of U.S. foreign minimum tax | — |  |  | — |  |  | 5 |
Tax effect of U.S. foreign derived intangible income | 3 |  |  | 4 |  |  | (1) |
Tax effect of U.S. non-deductible stock-based compensation | (1) |  |  | (1) |  |  | 1 |
Tax effect of U.S. permanent differences | 1 |  |  | — |  |  | — |
IRS Settlement | (1) |  |  | 1 |  |  | 15 |
Change in valuation allowance | (3) |  |  | 1 |  |  | 1 |
Unremitted earnings of certain non-U.S. entities | (4) |  |  | — |  |  | 1 |
Foreign income tax credits | 1 |  |  | — |  |  | (3) |
R&D tax credits | 8 |  |  | 5 |  |  | (4) |
U.S. return to provision | — |  |  | (2) |  |  | — |
Tax reserves | 1 |  |  | (1) |  |  | 2 |
Other | 1 |  |  | (3) |  |  | — |
Effective tax rate | (21) | % |  | (9) | % |  | 29 | %
Tax Holidays and Carryforwards A substantial portion of the Company’s manufacturing operations in Malaysia, the Philippines and Thailand operate under various tax holidays and tax incentive programs, which will expire in whole or in part at various dates during 2025 through 2031. Certain tax holidays and tax incentive programs may be extended if specific conditions are met. On November 1, 2023, one of the Company’s tax holidays in Malaysia expired. The Company has applied for an extension and anticipates this extension, if granted, will be applied retroactively and begin on November 2, 2023. Because the exact terms of the extension are not currently known, the Company is applying the Malaysia corporate statutory tax rate on the expired tax holiday income. If a retroactive extension is granted, the Company will make an adjustment to its effective tax rate in that period. The net impact of these tax holidays and tax incentives was an increase to the Company’s net earnings by $209 million, or $0.64 per diluted share, $140 million, or $0.44 per diluted share, and $566 million, or $1.79 per diluted share, in 2024, 2023 and 2022, respectively. As of June 28, 2024, the Company had varying amounts of federal and state NOL/tax credit carryforwards that do not expire or, if not used, expire in various years. Following is a summary of the Company’s federal and state NOL/tax credit carryforwards and the related expiration dates of these NOL/tax credit carryforwards:
Jurisdiction | NOL/Tax Credit Carryforward Amount |  | Expiration
| (in millions) |  |
Federal NOL (Pre 2017 Act Generation) | $ | 578 |  |  | 2026 to 2038
State NOL | 342 |  |  | 2037 to 2045
Federal tax credits | 61 |  |  | 2025 to 2044
State tax credits | 746 |  |  | No expiration
The federal and state NOLs and credits relating to various acquisitions are subject to limitations under Sections 382 and 383 of the Internal Revenue Code. The Company expects the total amount of federal and state NOLs ultimately realized will be reduced as a result of these provisions by $116 million and $240 million, respectively. The Company expects the total amount of federal and state credits ultimately realized will be reduced as a result of these provisions by $27 million and $2 million, respectively. As of June 28, 2024, the Company had varying amounts of foreign NOL carryforwards that do not expire or, if not used, expire in various years, depending on the country. The major jurisdictions that the Company receives foreign NOL carryforwards and the related amounts and expiration dates of these NOL carryforwards are as follows:
Jurisdiction | NOL Carryforward Amount |  | Expiration
| (in millions) |  |
Belgium | $ | 114 |  |  | No expiration
Malaysia | 108 |  |  | 2028 to 2030
Japan | 61 |  |  | 2025 to 2026
Spain | 46 |  |  | No expiration
Netherlands | 12 |  |  | 2026
Uncertain Tax Positions With the exception of certain unrecognized tax benefits that are directly associated with the tax position taken, unrecognized tax benefits are presented gross in the Consolidated Balance Sheets. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits excluding accrued interest and penalties:
| 2024 |  | 2023 |  | 2022
| (in millions)
Unrecognized tax benefit, beginning balance | $ | 1,021 |  |  | $ | 1,047 |  |  | $ | 748 |
Gross increases related to current year tax positions | 25 |  |  | 7 |  |  | 12 |
Gross increases related to prior year tax positions | 73 |  |  | 22 |  |  | 358 |
Gross decreases related to prior year tax positions | (32) |  |  | (47) |  |  | (65) |
Settlements | (363) |  |  | (5) |  |  | (1) |
Lapse of statute of limitations | (3) |  |  | (3) |  |  | (5) |
Unrecognized tax benefit, ending balance | $ | 721 |  |  | $ | 1,021 |  |  | $ | 1,047 |
As of June 28, 2024, June 30, 2023 and July 1, 2022, the portion of the gross unrecognized tax benefits, if recognized, that would affect the effective tax rate is $555 million, $855 million and $903 million, respectively. Interest and penalties related to unrecognized tax benefits are recognized in liabilities recorded for uncertain tax positions and are recorded in the provision for income taxes. Accrued interest and penalties included in the Company’s liability related to unrecognized tax benefits as of June 28, 2024, June 30, 2023 and July 1, 2022 was $181 million, $289 million and $254 million, respectively. As of June 28, 2024, June 30, 2023 and July 1, 2022, the Company’s payables related to unrecognized tax benefits, including accrued interest and penalties, were $736 million, $1.14 billion and $1.16 billion, respectively. Of these amounts, the Company believes it is reasonably likely that payments of $185 million may be made within the next twelve months and have classified that portion of these unrecognized tax benefits, including interest, in Income taxes payable on the Consolidated Balance Sheets as of June 28, 2024. The remaining payables related to unrecognized tax benefits are included in Other liabilities on the Consolidated Balance Sheets as of June 28, 2024, June 30, 2023 and July 1, 2022. The Company files U.S. Federal, U.S. state and foreign tax returns. For both federal and state tax returns, with few exceptions, the Company is subject to examination for 2016 through 2023. The Company is no longer subject to examination by the IRS for periods prior to 2016, although carry forwards generated prior to those periods may still be adjusted upon examination by the IRS or state taxing authority if they either have been or will be used in a subsequent period. In the following major foreign jurisdictions where there is no tax holiday, the Company could be subject to examination as noted below:
Jurisdiction |  | Period Subject to Examination
China (calendar) |  | 2014-2023
Ireland (fiscal) |  | 2020-2023
India (fiscal) |  | 2009-2023
Israel (fiscal) |  | 2014-2023
Japan (fiscal) |  | 2015-2023
Malaysia (fiscal) |  | 2017-2023
Thailand (fiscal) |  | 2014-2023
Singapore (fiscal) |  | 2020-2023
United Kingdom (fiscal) |  | 2022-2023
The Company had previously reached a final agreement with the IRS regarding notices of deficiency with respect to years 2008 through 2012 and in February 2024, reached a final agreement for resolving the notices of proposed adjustments with respect to years 2013 through 2015. During 2024, the Company made payments of $363 million for tax and $161 million for interest with respect to years 2008 through 2012 and recognized adjustments to align with IRS calculations, resulting in a remaining liability of $185 million related to all years from 2008 through 2015. The Company expects to pay any remaining balance with respect to this matter within the next twelve months. In connection with settlements for the years 2008 through 2015, the Company expects to realize reductions to its mandatory deemed repatriation tax obligations and tax savings from interest deductions in future years aggregating to $165 million. Of this amount, $34 million of the interest savings from the interest paid with respect to years 2008 through 2012 is classified as a deferred tax asset due to interest expense limitation rules. The Company believes that adequate provision has been made for any adjustments that may result from any other tax examinations. However, the outcome of such tax examinations cannot be predicted with certainty. If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs. As of June 28, 2024, with the exception of the final agreement with the IRS, it was not possible to estimate the amount of change, if any, in the unrecognized tax benefits that is reasonably possible within the next twelve months. Any significant change in the amount of the Company’s liability for unrecognized tax benefits would most likely result from additional information relating to the examination of the Company’s tax returns.

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 tax. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 231 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482663/740-10-55-231 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12C -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12B -Publisher FASB -URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B Reference 5: 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/1943274/2147477891/740-270-50-1 Reference 6: 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 7: 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 8: 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 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 740 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/740/tableOfContent Reference 10: 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 11: 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 12: 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 13: 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 14: 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