Acquisitions And Divestitures

6 Months Ended

Oct. 03, 2014

Business Combinations [Abstract]

Acquisitions and Divestitures

Fiscal 2015 Acquisition

On July 31, 2014, CSC acquired a privately held entity for $35 million in an all cash transaction. CSC acquired this entity primarily to enhance its cyber security, systems engineering, and software development service offerings in the federal intelligence sector. The purchase price was allocated to assets acquired and liabilities assumed based on preliminary estimates of fair value at the date of acquisition, as follows: $4 million to current assets, $9 million to an intangible asset other than goodwill, $9 million to current liabilities, and $31 million to goodwill. The intangible asset, which is associated with the Company's customer relationships and government programs, will be amortized over 15 years. The goodwill is associated with the Company's North American Public Sector (NPS) segment and is expected to be tax deductible. Pro forma financial information for this acquisition is not presented as the effects of the acquisition are not material to CSC's consolidated results. The allocation of purchase price is preliminary and is subject to additional information related to the liabilities that existed as of the acquisition date.

Fiscal 2014 Acquisition

On August 5, 2013, CSC acquired Infochimps, Inc. (Infochimps), a privately-held company, in an all-cash transaction for $27 million. The acquisition complements CSC’s existing Big Data business by providing a flexible, scalable, platform-as-a-service offering. The purchase price has been allocated to assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition: $2 million to current and other long-term assets, $2 million to current and long-term liabilities, and $27 million to goodwill. As of the acquisition date, the fair value of trade receivables approximated book value and was considered fully recoverable. The goodwill is associated with the Company's GBS segment and is not tax-deductible. Pro forma financial information for this acquisition was not presented as the effects of the acquisition were not material to CSC's consolidated results.

Fiscal 2015 Divestiture

On July 31, 2014, CSC completed the sale of a German software business to a strategic investor for cash consideration of $3 million. This divestiture, which was a part of the GBS segment's healthcare group, resulted in a pre-tax loss of $22 million, representing the excess of the carrying value of the net assets of the business and transaction costs over the net proceeds. The divested assets and liabilities included: current assets of $54 million (including $21 million of cash); goodwill of $0; other noncurrent assets of $25 million; current liabilities of $33 million; and noncurrent liabilities of $23 million. The historical results of this business have been presented as discontinued operationsin the Company's unaudited Consolidated Condensed Statement of Operations.

Fiscal 2014 Divestitures

On July 19, 2013, CSC's NPS segment completed the sale of its base operations, aviation and range services business unit, Applied Technology Division (ATD), to a strategic investor for cash consideration of approximately $178 million, plus a net working capital adjustment receivable of $6 million, for a pre-tax gain on disposal of $77 million. During the first quarter of fiscal 2015, NPS recorded a $1 million final net working capital adjustment, which reduced the total gain on sale of ATD.

On May 21, 2013, CSC completed the divestiture of its flood insurance-related business process outsourcing practice (flood insurance BPO) to a financial investor for cash consideration of $43 million plus a net working capital adjustment of $4 million, for a pre-tax gain on disposal of $25 million. During the fourth quarter of fiscal 2014, the Company received cash of $3 million, representing the final net working capital adjustment, and reduced the gain on disposal by $1 million. During the first quarter of fiscal 2015, CSC received an additional $2 million as a purchase price adjustment related to this divestiture, which was recorded as additional gain on sale on disposition.

Pursuant to the pension accounting policy change (see Note 2), the income from discontinued operations, net of taxes, for the second quarter and first six months of fiscal 2014 increased $17 million and $19 million, respectively due to the reduced pension expense.

A summary of the results of the discontinued operations is presented below:

	Quarter Ended					Six Months Ended
	October 3, 2014			September 27, 2013		October 3, 2014			September 27, 2013
Operations
Revenue	$	3		$	41	$	10		$	220
(Loss) income from discontinued operations, before taxes	(2		)	5		(11		)	12
Tax expense	—			2		—			5
Net (loss) income from discontinued operations	$	(2	)	$	3	$	(11	)	$	7
Disposal
(Loss) gain on disposition, before taxes	$	(22	)	$	79	$	(21	)	$	104
Tax (benefit) expense	(3		)	2		(3		)	15
(Loss) gain on disposition, net of taxes	$	(19	)	$	77	$	(18	)	$	89
(Loss) income from discontinued operations, net of taxes	$	(21	)	$	80	$	(29	)	$	96