Discontinued Operations

12 Months Ended

Jul. 03, 2015

Discontinued Operations [Abstract]

DISCONTINUED OPERATIONS

NOTE 3: DISCONTINUED OPERATIONS

In the third quarter of fiscal 2012, our Board of Directors approved a plan to exit our cyber integrated solutions operation (“CIS”), which provided remote cloud hosting, and to dispose of the related assets, and we reported CIS as discontinued operations beginning with our financial results presented in our Quarterly Report on Form 10-Q for the third quarter of fiscal 2012. On August 27, 2013, we completed the sale of the remaining assets of CIS for $35 million, including $28 million in cash and a $7 million subordinated promissory note,which we collected in the first quarter of fiscal 2015.

In the fourth quarter of fiscal 2012, our Board of Directors approved a plan to divest our broadcast communications operation (“Broadcast Communications”), which provided digital media management solutions in support of broadcast customers, and we reported Broadcast Communications as discontinued operations beginning with our financial results presented in our Annual Report on Form 10-K for fiscal 2012. On February 4, 2013, we completed the sale of Broadcast Communications to an affiliate of The Gores Group, LLC pursuant to a definitive Asset Sale Agreement entered into December 5, 2012 for $225 million, including $160 million in cash, subject to customary adjustments (including a post-closing working capital adjustment, which is currently in arbitration), a $15 million subordinated promissory note (which was collected in fiscal 2014) and an earnout of up to $50 million based on future performance. In the arbitration noted above, the current range of possible outcomes is no additional adjustment to the purchase price, based on our calculation of post-closing working capital, on one hand, to an additional downward adjustment of $67 million to the purchase price, based on the Buyer's claims in its calculation of post-closing working capital, on the other hand. We are not able to determine the likely outcome of the arbitration, but we believe the Buyer's claims in its calculation of post-closing working capital are without merit and its asserted additional downward adjustment to the purchase price is significantly overstated, and we intend to defend against the Buyer's claims and asserted additional downward adjustment to the purchase price vigorously.

Both CIS and Broadcast Communications were formerly part of our Integrated Network Solutions segment.

Discontinued operations in fiscal 2014 consisted of an$18million ($7 million after-tax) increase in the loss on sale of Broadcast Communications from miscellaneous adjustments for contingencies related to the disposition, and a $3 million ($2 million after-tax) gain on sale of the remaining assets of CIS. In fiscal 2014, the $10 million discontinued operations tax benefit includeda $5 million tax benefit recorded in the third quarter of fiscal 2014, primarily related to the realization of additional tax deductions in respect of Broadcast Communications on various fiscal 2013 tax returns compared with our recorded estimates at the end of fiscal 2013.

Discontinued operations in fiscal 2013 included a loss of $33 million ($32million after-tax) on the sale of Broadcast Communications in the third quarter of fiscal 2013, as well as non-cash impairment charges totaling $314 million ($297 million after-tax) recorded during the first two quarters of fiscal 2013 related to Broadcast Communications based on indicators of value, including financial performance, market conditions, indications of value from interested parties and our entering into a definitive Asset Sale Agreement relating to the sale of Broadcast Communications. Additionally, based on market indications during fiscal 2013, we recorded non-cash impairment charges totaling $16 million ($10 million after-tax) to write down assets of CIS to their estimated fair value, less estimated costs to sell.

We did not have any discontinued operations in fiscal 2015. Summarized financial information for our discontinued operations in fiscal 2014 and 2013 related to CIS and Broadcast Communications is as follows:

			2014		2013
		(In millions)
Revenue from product sales and services		$	―	$	260
Loss before income taxes		$	―	$	(342)
Income taxes			―		21
Loss from discontinued operations			―		(321)
Loss on sale of discontinued operations, net of income tax benefit
	of $10 million and $1 million in fiscal 2014 and 2013, respectively		(5)		(32)
Discontinued operations, net of income taxes		$	(5)	$	(353)