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IncomeTaxes
Werecordedanincometaxprovisionof$26millionforfiscalyear2016comparedtoanincometaxprovisionof$228millionforfiscalyear2015.Ourfiscal
year2016incometaxprovisionincludedapproximately$22millionofincometaxbenefitsprimarilyassociatedwiththereleaseoftaxreservesduetothe
expirationofcertainstatutesoflimitation.Ourfiscalyear2015incometaxprovisionincludedapproximately$193millionofnetincometaxexpenseduetothe
finalauditassessmentreceivedfromtheJiangsuProvinceStateTaxBureauofthePeople'sRepublicofChina(Chinaassessment)forcalendaryears2007through
2013.
OurIrishtaxresidentparentholdingcompanyownsvariousU.S.andnon-U.S.subsidiariesthatoperateinmultiplenon-Irishincometaxjurisdictions.Our
worldwideoperatingincomeiseithersubjecttovaryingratesofincometaxorisexemptfromincometaxduetotaxholidayprogramsweoperateunderin
Malaysia,SingaporeandThailand.Thesetaxholidaysarescheduledtoexpireinwholeorinpartatvariousdatesthrough2024.
Ourincometaxprovisionrecordedforfiscalyear2016differedfromtheprovisionforincometaxesthatwouldbederivedbyapplyingtheIrishstatutoryrate
of25%toincomebeforeincometaxes,primarilyduetotheneteffectof(i)taxbenefitsrelatedtonon-U.S.earningsgeneratedinjurisdictionsthataresubjecttotax
holidaysortaxincentiveprogramsandareconsideredindefinitelyreinvestedoutsideofIreland,(ii)taxbenefitsassociatedwiththereversalofpreviouslyrecorded
taxes,and(iii)adecreaseinvaluationallowanceforcertaindeferredtaxassets.TheacquisitionofDotHillSystemCorporationdidnothaveamaterialimpacton
oureffectivetaxrate.Ourincometaxprovisionrecordedforfiscalyear2015differedfromtheprovisionforincometaxesthatwouldbederivedbyapplyingthe
Irishstatutoryrateof25%toincomebeforeincometaxes,primarilyduetotheneteffectof(i)taxbenefitsrelatedtonon-U.S.earningsgeneratedinjurisdictions
thataresubjecttotaxholidaysortaxincentiveprogramsandareconsideredindefinitelyreinvestedoutsideofIreland,(ii)taxexpenseassociatedwiththeChina
assessmentrecordedduringtheDecember2014quarter,and(iii)anincreaseinvaluationallowanceforcertaindeferredtaxassets.TheacquisitionofLSI'sFlash
Businessdidnothaveamaterialimpactonoureffectivetaxrate.
OnDecember18,2015,theProtectingAmericansfromTaxHikes("PATH")Actof2015wasenacted.Among,otherprovisions,thePATHActretroactively
reinstatedandpermanentlyextendedthefederalResearchandDevelopment("R&D")taxcreditfromDecember31,2014.ThepermanentextensionoftheR&D
credithadnoimmediateimpactonourincometaxprovisionduetovaluationallowancesonourU.S.deferredtaxassets.NoneoftheotherPATHActchangeshad
amaterialimpactonourincometaxprovision.
Basedonournon-U.S.ownershipstructureandsubjectto(i)potentialfutureincreasesinourvaluationallowancefordeferredtaxassets;and(ii)afuture
changeinourintentiontoindefinitelyreinvestearningsfromoursubsidiariesoutsideofIreland,weanticipatethatoureffectivetaxrateinfutureperiodswill
generallybelessthantheIrishstatutoryrate.
AtJuly1,2016,ourdeferredtaxassetvaluationallowancewasapproximately$984million.
AtJuly1,2016,wehadnetdeferredtaxassetsof$606million.Therealizationofthesedeferredtaxassetsisprimarilydependentonourabilitytogenerate
sufficientU.S.andcertainnon-U.S.taxableincomeinfutureperiods.Althoughrealizationisnotassured,webelievethatitismorelikelythannotthatthese
deferredtaxassetswillberealized.Theamountofdeferredtaxassetsconsideredrealizable,however,mayincreaseordecreaseinsubsequentperiodswhenwere-
evaluatetheunderlyingbasisforourestimatesoffutureU.S.andcertainnon-U.S.taxableincome.
50
FiscalYearsEnded
(Dollarsinmillions)
July1,
2016
July3,
2015 Change
%
Change
Provisionforincometaxes $ 26 $ 228 $ (202) (89)%