Goodwill and Other Intangible Assets

6 Months Ended

Oct. 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 six months ended October 2, 2015:



(Amounts in millions)	GBS			GIS			NPS			Total
Goodwill, gross	$	1,340		$	2,260		$	833		$	4,433
Accumulated impairment losses	(701		)	(2,061		)	—			(2,762		)
Balance as of April 3, 2015, net	639			199			833			1,671

Additions	105			80			—			185
Deductions	—			—			(7		)	(7		)
Foreign currency translation	(7		)	—			—			(7		)

Goodwill, gross	1,438			2,340			826			4,604
Accumulated impairment losses	(701		)	(2,061		)	—			(2,762		)
Balance as of October 2, 2015, net	$	737		$	279		$	826		$	1,842

The fiscal 2016 additions to goodwill are due to the second quarter GBS and GIS acquisitions described in Note 4. The fiscal 2016 deduction to goodwill is due to the first quarter NPS divestiture described in Note 4. The foreign currency translation amount reflects the impact of currency movements on non-U.S. dollar-denominated goodwill balances.

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 4, 2015, 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 chose to bypass the initial qualitative assessment and proceeded directly to the first step of the impairment test for all reporting units. Based on the results of the first step of the impairment test, the Company concluded that the fair value of each reporting unit significantly exceeded its carrying value and therefore the second step of the goodwill impairment test was not required.

At the end of the second quarter of fiscal 2016, 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 goodwill to be tested for impairment. The Company determined that there have been no such indicators and therefore, it was unnecessary to perform an interim goodwill impairment test as of October 2, 2015.

Other Intangible Assets

A summary of amortizable intangible assets is as follows:



	As of October 2, 2015
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	803	$	465	$	338
Software	2,388		1,614		774
Customer and other intangible assets	548		344		204
Total intangible assets	$	3,739	$	2,423	$	1,316



	As of April 3, 2015
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Outsourcing contract costs	$	802	$	476	$	326
Software	2,393		1,642		751
Customer and other intangible assets	476		327		149
Total intangible assets	$	3,671	$	2,445	$	1,226

Amortization related to intangible assets was $78 million and $107 million for the quarters ended October 2, 2015 and October 3, 2014, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $3 million and $8 million and for amortization of contract related intangible assets of $3 million and $2 million, respectively. Amortization expense related to capitalized software, included in the amounts above, was $45 million and $56 million for the quarters ended October 2, 2015 and October 3, 2014, respectively.

Amortization related to intangible assets was $156 million and $222 million for the six months ended October 2, 2015 and October 3, 2014, respectively, including reductions of revenue for amortization of outsourcing contract cost premiums of $6 million and $17 million and for amortization of contract related intangible assets of $5 million and $5 million, respectively. Amortization expense related to capitalized software, included in the amounts above, was $90 million and $110 million for the six months ended October 2, 2015 and October 3, 2014, respectively.

Estimated amortization expense related to intangible assets as of October 2, 2015, for the remainder of fiscal 2016 is $179 million, and for each of the fiscal years 2017, 2018, 2019 and 2020, is as follows: $293 million, $240 million, $207 million and $161 million, respectively.

During the first quarter of fiscal 2016, CSC sold certain intangible assets to a third party for total cash consideration of $31 million. As a result, CSC recorded a gain on sale of $31 million, respectively, as a reduction of cost of sales in its GIS segment. There were no sales of intangible assets to a third party in the second quarter of fiscal 2016.

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 2, 2015, CSC had $14 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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