Goodwill and Other Intangible Assets

9 Months Ended

Jan. 02, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table summarizes the changes in the carrying amount of goodwill by segment for the nine months ended January 2, 2015:



(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
Deductions	(2		)	—			—		(2		)
Foreign currency translation	(27		)	—			—		(27		)

Goodwill, gross	1,341			2,273			819		4,433
Accumulated impairment losses	(690		)	(2,074		)	—		(2,764		)
Balance as of January 2, 2015, net	$	651		$	199		$	819	$	1,669

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 assessed qualitative factors to determine whether events or circumstances existed that would lead the Company to conclude that it was more likely than not that the fair value of any of its reporting units was below their carrying amounts. 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 third 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 its carrying amount and require performing Step 1 of the traditional two-step 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 January 2, 2015.

Other Intangible Assets

A summary of amortizing intangible assets is as follows:



	As of January 2, 2015
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	1,333	$	1,003	$	330
Software	2,457		1,681		776
Customer and other intangible assets	478		323		155
Total intangible assets	$	4,268	$	3,007	$	1,261



	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 $103 million and $97 million for the quarters ended January 2, 2015 and December 27, 2013, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $8 million and $9 million and for amortization of contract related intangible assets of $2 million and $2 million, respectively. Amortization expense related to capitalized software was $53 million and $44 million for the quarters ended January 2, 2015 and December 27, 2013, respectively.

Amortization related to intangible assets was $325 million and $289 million for the nine months ended January 2, 2015, and December 27, 2013, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $25 million and $26 million and for amortization of contract related intangible assets of $7 million and $8 million, respectively. Amortization expense related to capitalized software was $163 million and $134 million for the nine months ended January 2, 2015 and December 27, 2013, respectively.

Estimated amortization expense related to intangible assets as of January 2, 2015, for the remainder of fiscal 2015 is $112 million, and for each of the fiscal years 2016, 2017, 2018 and 2019, is as follows: $325 million, $256 million, $205 million and $176 million, respectively.

During the first nine months of fiscal 2015, CSC sold certain intangible assets to a third party for total consideration of $43 million of which cash consideration was received of $17 million. As a result, CSC recorded a gain on sale of $43 million as a reduction of cost of sales in its GIS segment. As of January 2, 2015, CSC had $26 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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