XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.7.0.1

Income Taxes | 12 Months Ended
--- | ---
Jun. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for (benefit from) income taxes consisted of the following:
| Fiscal Years Ended
(Dollars in millions) | June 30, 2017 |  | July 1, 2016 |  | July 3, 2015
Current income tax expense (benefit): |  |  |  |  |
U.S. Federal | $ | — |  |  | $ | 1 |  |  | $ | — |
U.S. State | 1 |  |  | 2 |  |  | 4 |
Non-U.S. | 39 |  |  | 25 |  |  | 222 |
Total Current | 40 |  |  | 28 |  |  | 226 |
Deferred income tax expense (benefit): |  |  |  |  |
U.S. Federal | (5 | ) |  | — |  |  | (6 | )
U.S. State | — |  |  | — |  |  | (2 | )
Non-U.S. | 8 |  |  | (2 | ) |  | 10 |
Total Deferred | 3 |  |  | (2 | ) |  | 2 |
Provision for (benefit from) income taxes | $ | 43 |  |  | $ | 26 |  |  | $ | 228 |
Income (loss) before income taxes consisted of the following:
| Fiscal Years Ended
(Dollars in millions) | June 30, 2017 |  | July 1, 2016 |  | July 3, 2015
U.S. | $ | (22 | ) |  | $ | — |  |  | $ | 101 |
Non-U.S. | 837 |  |  | 274 |  |  | 1,869 |
| $ | 815 |  |  | $ | 274 |  |  | $ | 1,970 |
The Company recorded no excess tax benefits associated with stock option deductions in fiscal year 2017. The Company recorded $0.6 million and $2.0 million of excess tax benefits associated with stock option deductions in fiscal years 2016 and 2015, respectively. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company's deferred tax assets and liabilities were as follows:
| Fiscal Years Ended
(Dollars in millions) | June 30, 2017 |  | July 1, 2016
Deferred tax assets |  |  |
Accrued warranty | $ | 85 |  |  | $ | 74 |
Inventory carrying value adjustments | 43 |  |  | 32 |
Receivable allowance | 19 |  |  | 11 |
Accrued compensation and benefits | 99 |  |  | 85 |
Depreciation | 109 |  |  | 173 |
Restructuring accruals | (1 | ) |  | 14 |
Other accruals and deferred items | 51 |  |  | 50 |
Net operating losses and tax credit carry-forwards | 1,224 |  |  | 1,252 |
Other assets | 11 |  |  | 2 |
Total deferred tax assets | 1,640 |  |  | 1,693 |
Valuation allowance | (966 | ) |  | (984 | )
Net deferred tax assets | 674 |  |  | 709 |
Deferred tax liabilities |  |  |
Unremitted earnings of certain non-U.S. entities | (7 | ) |  | (11 | )
Acquisition-related items | (65 | ) |  | (92 | )
Total deferred tax liabilities | (72 | ) |  | (103 | )
Deferred taxes on intra-entity transactions | 2 |  |  | — |
Total net deferred tax assets | $ | 604 |  |  | $ | 606 |
As Reported on the Balance Sheet |  |  |  |  |
Deferred income taxes | $ | 609 |  |  | $ | 616 |
Other non-current liabilities | (5 | ) |  | (10 | )
Total net deferred income taxes | $ | 604 |  |  | $ | 606 |
The deferred tax asset valuation allowance decreased by $18 million in fiscal year 2017 and increased by $55 million and $41 million in fiscal years 2016 and 2015, respectively. At June 30, 2017, the Company recorded $602 million of net deferred tax assets, excluding $2 million of deferred taxes on intra-entity transactions. The realization of most of these deferred tax assets is primarily dependent on the Company's ability to generate sufficient U.S. and certain non-U.S. taxable income in future periods. Although realization is not assured, the Company's management believes it is more likely than not that these deferred tax assets will be realized. The amount of deferred tax assets considered realizable, however, may increase or decrease in subsequent periods when the Company reevaluates the underlying basis for its estimates of future U.S. and certain non-U.S. taxable income. At June 30, 2017, the Company had U.S. federal, state and non-U.S. tax net operating loss carryforwards of approximately $3.4 billion, $2.0 billion and $173 million, respectively, which will expire at various dates beginning in fiscal year 2018, if not utilized. Net operating loss carryforwards of approximately $68 million are scheduled to expire in fiscal year 2018. At June 30, 2017, the Company had U.S. federal and state tax credit carryforwards of $444 million and $105 million, respectively, which will expire at various dates beginning in fiscal year 2018, if not utilized. As of June 30, 2017, approximately $560 million and $101 million of the Company's total U.S. net operating loss and tax credit carryforwards, respectively, are subject to annual limitations ranging from $1 million to $45 million pursuant to U.S. tax law. For purposes of the reconciliation between the provision for (benefit from) income taxes at the statutory rate and the effective tax rate, the Irish statutory rate of 25% was applied as follows:
| Fiscal Years Ended
(Dollars in millions) | June 30, 2017 |  | July 1, 2016 |  | July 3, 2015
Provision at statutory rate | $ | 204 |  |  | $ | 69 |  |  | $ | 493 |
Net U.S. federal and state income taxes | 1 |  |  | 3 |  |  | 7 |
Permanent differences | 19 |  |  | 10 |  |  | 2 |
Valuation allowance | (11 | ) |  | (1 | ) |  | 15 |
Non-U.S. losses with no tax benefits | 17 |  |  | 1 |  |  | 2 |
Non-U.S. earnings taxed at other than statutory rate | (186 | ) |  | (37 | ) |  | (463 | )
Audit assessment | — |  |  | — |  |  | 173 |
Reversal of previously recorded taxes | (4 | ) |  | (19 | ) |  | (5 | )
Other individually immaterial items | 3 |  |  | — |  |  | 4 |
Provision for (benefit from) income taxes | $ | 43 |  |  | $ | 26 |  |  | $ | 228 |
A substantial portion of the Company's operations in Malaysia, Singapore and Thailand operate under various tax holiday programs, which expire in whole or in part at various dates through 2024. Certain tax holidays may be extended if specific conditions are met. The net impact of these tax holiday programs was to increase the Company's net income by approximately $163 million in fiscal year 2017 ($0.54 per share, diluted), to increase the Company's net income by approximately $67 million in fiscal year 2016 ($0.22 per share, diluted), and to increase the Company's net income by approximately $349 million in fiscal year 2015 ($1.05 per share, diluted). The Company consists of an Irish tax resident parent holding company with various U.S. and non-U.S. subsidiaries that operate in multiple non-Irish taxing jurisdictions. The amount of temporary differences (including undistributed earnings) related to outside basis differences in the stock of non-Irish resident subsidiaries considered indefinitely reinvested outside of Ireland for which Irish income taxes have not been provided as of June 30, 2017, was approximately $1.5 billion. If such amount were remitted to Ireland as a dividend, it is likely that tax at 25%, or approximately $375 million would result. As of June 30, 2017 and July 1, 2016, the Company had approximately $74 million and $76 million, respectively, of unrecognized tax benefits excluding interest and penalties. The amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate are $74 million and $76 million as of June 30, 2017 and July 1, 2016, respectively, subject to certain future valuation allowance offsets. The following table summarizes the activity related to the Company's gross unrecognized tax benefits:
| Fiscal Years Ended
(Dollars in millions) | June 30, 2017 |  | July 1, 2016 |  | July 3, 2015
Balance of unrecognized tax benefits at the beginning of the year | $ | 76 |  |  | $ | 89 |  |  | $ | 120 |
Gross increase for tax positions of prior years | 2 |  |  | 12 |  |  | 12 |
Gross decrease for tax positions of prior years | (7 | ) |  | (8 | ) |  | (4 | )
Gross increase for tax positions of current year | 16 |  |  | 11 |  |  | 9 |
Gross decrease for tax positions of current year | — |  |  | — |  |  | — |
Settlements | — |  |  | — |  |  | (45 | )
Lapse of statutes of limitation | (13 | ) |  | (27 | ) |  | (3 | )
Non-U.S. exchange (gain)/loss | — |  |  | (1 | ) |  | — |
Balance of unrecognized tax benefits at the end of the year | $ | 74 |  |  | $ | 76 |  |  | $ | 89 |
It is the Company's policy to include interest and penalties related to unrecognized tax benefits in the provision for income taxes on the Consolidated Statements of Operations. During fiscal year 2017, the Company recognized net income tax benefit for interest and penalties of $1 million, as compared to net income tax benefit of $8 million during fiscal year 2016, and income tax expense of $26 million during fiscal year 2015. As of June 30, 2017, the Company had $4 million of accrued interest and penalties related to unrecognized tax benefits compared to $6 million in fiscal year 2016. During the 12 months beginning July 1, 2017, the Company expects that its unrecognized tax benefits could be reduced by approximately $14 million as a result of the expiration of certain statutes of limitation. The Company is required to file U.S. federal, U.S. state and non-U.S. income tax returns. The Company is no longer subject to examination of its U.S. federal income tax returns for years prior to fiscal year 2014. With respect to U.S. state and non-U.S. income tax returns, the Company is generally no longer subject to tax examination for years ending prior to fiscal year 2006.

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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration