Subsequent Events

CapRock Divestiture

On January 1, 2017, we completed the sale of our CapRock business pursuant to a definitive agreement with SpeedCast entered into on November 1, 2016 for $425 million in cash, subject to customary adjustments (including a post-closing working capital adjustment). CapRock, which was formerly part of our Critical Networks segment, provided wireless, terrestrial and satellite communications services to energy and maritime customers. We will provide various transition services to SpeedCast for a period of up to 12 months following the close of the transaction pursuant to a separate agreement.

Following the quarter ended December 30, 2016, we used $248 million of the cash proceeds from the CapRock divestiture to repay principal on our term loans ($215 million of voluntary prepayments of principal and $33 million of scheduled repayments).

IT Services Divestiture

On January 26, 2017, we entered into a definitive agreement to sell our government IT services business (“IT Services”) to an affiliate of Veritas Capital Fund Management, L.L.C. for $690 million in cash, subject to customary purchase price adjustments as set forth in the agreement. We have determined IT Services, which primarily provides IT and engineering managed services to U.S. Government agencies, is no longer strategic to our overall Company. Our air traffic management business, primarily serving the Federal Aviation Authority (“FAA”), and our Pacific Missile Range Facility program are not part of the transaction and will remain part of the Company. The transaction is subject to regulatory review and other customary closing conditions. We expect the transaction to close before the end of fiscal 2017; however, there can be no assurances that the conditions will be satisfied (or waived, if applicable) or that closing will occur either before the end of 2017 or at all. We intend to use cash proceeds from the IT Services divestiture and remaining proceeds from the CapRock divestiture to support our capital allocation strategy, including share repurchases and approximately $400 million of voluntary pension contributions.

The following table summarizes the approximate carrying amount of the major classes of assets and liabilities of IT Services as of December 30, 2016:



	(In millions)
Assets
Current assets	$	270
Goodwill	460
Other intangible assets	250
Other assets	20
Liabilities
Current liabilities	$	110

IT Services met the held for sale criteria in January 2017, and consequently IT Services’ assets and liabilities will be classified as held for sale, and its financial results will be reported in discontinued operations, beginning in the third quarter of fiscal 2017. IT Services’ financial results for periods prior to the third quarter of fiscal 2017 were reported as part of our Critical Networks segment. We expect to record in discontinued operations in the third quarter of fiscal 2017 a non-cash charge to write down to fair value IT Services’ net assets that are held for sale, resulting in an estimated loss on the sale of IT Services of approximately $130 million net of deferred tax adjustments triggered in connection with the transaction. We completed a goodwill impairment assessment of the reporting unit that includes our IT Services and our air traffic management business and concluded it was not more likely than not that an impairment existed as of December 30, 2016.

Business Segments

In connection with the pending IT Services divestiture, our other remaining operations that were part of our Critical Networks segment, including our air traffic management business and our Pacific Missile Range Facility program, will be operated as part of our Electronic Systems segment effective for the third quarter of fiscal 2017, and our Critical Networks segment will no longer exist. As a result, we will report financial results of our operations in the following three business segments beginning in the third quarter of fiscal 2017: Communication Systems, Space and Intelligence Systems and Electronic Systems. There are no changes to our Communication Systems or Space and Intelligence Systems business segments as a result of this reorganization.

New Share Repurchase Program

On January 26, 2017, our Board of Directors approved a new $1 billion share repurchase program, which is in addition to our current share repurchase program. Our new repurchase program does not have a stated expiration date and authorizes repurchases through open market purchases, private transactions, transactions structured through investment banking institutions or any combination thereof. The level of our repurchases depends on a number of factors, including our financial condition, capital requirements, cash flows, results of operations, future business prospects and other factors our Board of Directors may deem relevant. The timing, volume and nature of repurchases are subject to market conditions, applicable securities laws and other factors and are at our discretion and may be suspended or discontinued at any time.