Discontinued Operations

12 Months Ended

Jun. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 4. DISCONTINUED OPERATIONS

During the first quarter of fiscal 2016, management approved a plan to dispose of the Company’s digital education business. As a result of the plan and the discontinuation of further significant business activities in the Digital Education segment, the assets and liabilities of this segment were classified as held for sale and the results of operations have been classified as discontinued operations for all periods presented in accordance with ASC 205-20, “Discontinued Operations.”

In the first quarter of fiscal 2016, the Company recognized a pre-tax non-cash impairment charge of $76 million reflecting a write down of the digital education business to its fair value less costs to sell. The Company completed the sale of the Amplify Insight and Amplify Learning businesses on September 30, 2015 and incurred approximately $17 million in severance and lease termination costs in conjunction with the sale. These amounts are included in Loss before income tax benefit in the table below for the fiscal year ended June 30, 2016. Additionally, during the first quarter of fiscal 2016, the Company recognized a tax benefit of $144 million upon reclassification of the Digital Education segment to discontinued operations. This amount is included in Income tax benefit in the table below for the fiscal year ended June 30, 2016.

During the fourth quarter of fiscal 2015, as part of the Company’s long-range planning process, the Company changed its strategy and related outlook with respect to the Amplify reporting unit which resulted in a reduction in expected future cash flows for the business. As a result, the Company determined that the fair value of this reporting unit declined below its carrying value and recorded a non-cash impairment charge of $371 million, with no associated tax impact, in the fiscal year ended June 30, 2015. The charge primarily consisted of a write-down of the Company’s goodwill of $325 million and a write-down of capitalized software development costs of $45 million. Significant unobservable inputs utilized in the income approach valuation method were discount rates (ranging from 12%-45%) and long-term growth rates (ranging from 0%-4%). The impairment charges are included in Loss before income tax benefit in the table below for the fiscal year ended June 30, 2015.

The following table summarizes the results of operations from the discontinued segment:

	For the fiscal years ended June 30,
	2016			2015			2014
	(in millions)
Revenues	$	27		$	109		$	88
Loss before income tax benefit		(159	)		(496	)		(219	)
Income tax benefit		174			51			77
Income (loss) from discontinued operations, net of tax	$	15		$	(445	)	$	(142	)

The following table summarizes the cash flows from discontinued operations:

	For the fiscal years ended June 30,
	2016			2015			2014
	(in millions)
Net cash used in operating activities	$	(74	)	$	(157	)	$	(175	)
Net cash provided by (used in) investing activities		13			(70	)		(21	)
Net cash used in financing activities		—			—			—
Net decrease in cash and cash equivalents	$	(61	)	$	(227	)	$	(196	)

Assets and liabilities held for sale related to discontinued operations as of June 30, 2016 and June 30, 2015 are included in Other current liabilities and Other current assets, respectively, in the Balance Sheets as follows:

	As of June 30, 2016			As of June 30, 2015
	(in millions)
Current assets	$	1		$	54
Non-current assets		—			100
Total assets	$	1		$	154
Current Liabilities		7			46
Non-current liabilities		—			16
Total liabilities	$	7		$	62
Net (liabilities) assets held for sale	$	(6	)	$	92