Goodwill and Other Intangible Assets

6 Months Ended

Oct. 03, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment for the six months ended October 3, 2014:



(Amounts in millions)	GBS			GIS			NPS		Total
Goodwill, gross	$	1,370		$	2,273		$	788	$	4,431
Accumulated impairment losses	(690		)	(2,074		)	—		(2,764		)
Balance as of March 28, 2014, net	680			199			788		1,667

Additions	—			—			31		31
Foreign currency translation	(13		)	(1		)	—		(14		)

Goodwill, gross	1,357			2,272			819		4,448
Accumulated impairment losses	(690		)	(2,074		)	—		(2,764		)
Balance as of October 3, 2014, net	$	667		$	198		$	819	$	1,684

The fiscal 2015 addition to goodwill is due to the second quarter NPS acquisition described in Note 4. The foreign currency translation amount reflects the impact of currency movements on non-U.S. dollar-denominated goodwill balances.

As of the beginning of fiscal 2015, a reassignment of goodwill occurred because of changes to the way in which GBS segment leadership began to regularly review the operating results within the GBS segment and because of the availability of discrete financial information. Goodwill was reassigned using a relative fair value allocation approach. CSC performed a quantitative and qualitative goodwill impairment assessment for the changed reporting units and determined that there was no indication that goodwill was impaired for those reporting units as of the end of the first quarter of fiscal 2015.

The Company tests goodwill for impairment on an annual basis, as of the first day of the second fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. For the Company’s annual goodwill impairment assessment as of July 5, 2014, the Company first assesses qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude that it is more likely than not that the fair value of any of its reporting units was below their carrying amounts. If the Company determines that it is not more likely than not, then proceeding to step one of the two-step goodwill impairment test is not necessary. The Company determined that, based on its qualitative assessment of such factors for all reporting units, no reporting units met the more-likely-than-not threshold; accordingly, the Company did not perform further analysis.

At the end of the second quarter of fiscal 2015, the Company assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below their carrying amounts and require an interim goodwill impairment test. The Company determined that there were no such indicators and, as a result, it was unnecessary to perform an interim impairment test as of October 3, 2014.

Other Intangible Assets

A summary of amortizable intangible assets is as follows:



	As of October 3, 2014
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	1,438	$	1,078	$	360
Software	2,545		1,751		794
Customer and other intangible assets	492		325		167
Total intangible assets	$	4,475	$	3,154	$	1,321



	As of March 28, 2014
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	1,465	$	1,038	$	427
Software	2,330		1,680		650
Customer and other intangible assets	588		315		273
Total intangible assets	$	4,383	$	3,033	$	1,350

Amortization related to intangible assets was $107 million and $94 million for the quarters ended October 3, 2014, and September 27, 2013, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $8 million and $8 million and for amortization of contract related intangible assets of $2 million and $3 million, respectively. Amortization expense related to capitalized software was $56 million and $45 million for the quarters ended October 3, 2014, and September 27, 2013, respectively.

Amortization related to intangible assets was $222 million and $192 million for the six months ended October 3, 2014, and September 27, 2013, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $17 million and $17 million and for amortization of contract related intangible assets of $5 million and $6 million, respectively. Amortization expense related to capitalized software was $110 million and $89 million for the six months ended October 3, 2014, and September 27, 2013, respectively.

Estimated amortization expense related to intangible assets as of October 3, 2014, for the remainder of fiscal 2015 is $198 million, and for each of the fiscal years 2016, 2017, 2018 and 2019, is as follows: $325 million, $249 million, $200 million and $179 million, respectively.

During the second quarter and first six months of fiscal 2015, CSC sold certain intangible assets to a third party for total consideration of $19 million and $43 million of which cash consideration was received of $10 million and $14 million, respectively. As a result, CSC recorded a gain on sale of $19 million and $43 million, respectively, as a reduction of cost of sales in its GIS segment. As of October 3, 2014, CSC had $29 million of outstanding receivables related to these sales, which will be paid in quarterly installments.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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