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Sale of Receivables
3 Months Ended
Jul. 03, 2015
Transfers and Servicing of Financial Assets [Abstract]  
Sale of Receivables
Sale of Receivables

On April 21, 2015, CSC entered into a Master Accounts Receivable Purchase Agreement (the Purchase Agreement) with The Royal Bank of Scotland, PLC (RBS) as Purchaser, along with Mitsubishi UFJ Financial Group Ltd. and Bank of Nova Scotia, each as a Participant, for the continuous non-recourse sale of its eligible NPS segment trade receivables. The agreement established a one-year uncommitted receivables purchase facility (the Facility) for amounts up to $450 million. The Company expects to use the proceeds from receivable sales under the Facility for general corporate purposes. Under the Facility, CSC sells eligible NPS receivables including billed receivables and certain unbilled receivables arising from “cost plus fixed fee” and “time and materials” contracts. CSC has no retained interests in the transferred receivables, and only performs collection and administrative functions for the Purchaser for a servicing fee.

CSC accounts for these receivable transfers as sales under ASC 860 "Transfers and Servicing" and derecognizes the sold receivables from its Consolidated Condensed Balance Sheets. The fair value of the sold receivables approximated their book value due to their short-term nature, and as a result no gain or loss on sale of receivables was recorded. CSC estimated that its servicing fee was at fair value and therefore, no servicing asset or liability related to these services was recognized as of July 3, 2015.

During the first quarter of fiscal 2016, CSC sold $794 million of billed and unbilled receivables to RBS for cash and remitted $548 million to RBS as first quarter collections. As of July 3, 2015, there was also $13 million of cash collected but not remitted to RBS, which was recorded as restricted cash, and included in prepaid expenses and other current assets with the offsetting liability included within accrued expenses and other current liabilities, on the unaudited Consolidated Condensed Balance Sheet. As a result, during the first quarter of fiscal 2016, the Company had net proceeds of $233 million related to the sale of receivables to RBS. The Company also holds $2 million in restricted cash as recourse for RBS for accrued purchase discount and administrative fees. This restricted cash balance, being long-term in nature, is included in Other Assets on the unaudited Consolidated Condensed Balance Sheets. CSC incurred purchase discount and administrative fees of under $1 million associated with the transaction, which was recorded, net of servicing income, within Other Income (Expense), net in the unaudited Consolidated Condensed Statement of Operations.

The net cash proceeds under the Facility, except for the $2 million escrow and $13 million of cash collected but not remitted to RBS, are reported as operating activities in the unaudited Consolidated Condensed Statement of Cash Flows because both cash received from RBS and cash collections are not subject to significant interest rate risk. The $2 million escrow is reported as investing activity, and the $13 million of cash collected but not remitted to RBS is reported as a financing inflow and a corresponding investing outflow, in the unaudited Consolidated Condensed Statement of Cash Flows.