Discontinued Operations

6 Months Ended

Dec. 30, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

The major components of the discontinued operations in our Condensed Consolidated Statement of Income (Unaudited) include the following:

	Quarter Ended						Two Quarters Ended
	December 30, 2016			January 1, 2016			December 30, 2016			January 1, 2016
	(In millions)
Revenue from product sales and services	$	69		$	95		$	145		$	196
Cost of product sales and services	(53		)	(77		)	(109		)	(154		)
Engineering, selling and administrative expenses	(11		)	(22		)	(26		)	(43		)
Impairment of goodwill and other assets	—			(367		)	—			(367		)
Non-operating income	7			—			7			—
Income (loss) before income taxes	12			(371		)	17			(368		)
Loss on sale of discontinued operation	—			(21		)	—			(21		)
Income tax (expense) benefit	(3		)	43			(4		)	42
Discontinued operations, net of income taxes	$	9		$	(349	)	$	13		$	(347	)

The carrying amounts of the major classes of assets and liabilities included in discontinued operations in our Condensed Consolidated Balance Sheet (Unaudited) as of December 30, 2016 and July 1, 2016, are as follows:

	December 30, 2016 (1)		July 1, 2016
	(In millions)
Assets
Receivables	$	50	$	67
Inventories	12		14
Property, plant and equipment	69		—
Goodwill	132		—
Other intangible assets	22		—
Other current assets	59		31
Current assets of discontinued operations	$	344	$	112
Property, plant and equipment	$	—	$	73
Goodwill	—		136
Other intangible assets	—		24
Other non-current assets	—		46
Non-current assets of discontinued operations	$	—	$	279
Liabilities
Accounts payable	$	15	$	11
Post-closing adjustment liability	2		27
Other current liabilities	50		53
Current liabilities of discontinued operations	$	67	$	91
Non-current liabilities of discontinued operations	$	—	$	26
(1) The assets and liabilities of discontinued operations held for sale are classified as current in our Condensed Consolidated Balance Sheet (Unaudited) as of December 30, 2016 because it was probable the sale would occur and proceeds would be collected within one year.

Cumulative foreign currency translation loss, net of taxes, associated with the assets and liabilities of discontinued operations held for sale was $63 million and $67 million as of December 30, 2016 and July 1, 2016, respectively.

Depreciation and amortization, capital expenditures, and significant noncash items of discontinued operations for all periods presented in our Condensed Consolidated Statement of Income (Unaudited) include the following:

	Quarter Ended				Two Quarters Ended
	December 30, 2016		January 1, 2016		December 30, 2016		January 1, 2016
	(In millions)
Depreciation and amortization	$	3	$	12	$	11	$	25
Capital expenditures	2		4		4		8
Significant noncash items:
Impairment of goodwill and other assets	—		367		—		367

CapRock

On November 1, 2016, we entered into a definitive agreement to sell our CapRock business to SpeedCast International Ltd. (“SpeedCast”) 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 consider the CapRock divestiture to be a strategic shift because we are exiting the energy and maritime industry. 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.

On January 1, 2017, following the close of the second quarter of fiscal 2017, we completed the sale of CapRock to SpeedCast. We subsequently 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).

Broadcast Communications

On February 4, 2013, we completed the sale of Broadcast Communications to an affiliate of The Gores Group, LLC (the “Buyer”) pursuant to a definitive Asset Sale Agreement entered into December 5, 2012 for $225 million, including $160 million in cash, subject to customary adjustments (including a post-closing working capital adjustment), a $15 million subordinated promissory note (which was collected in fiscal 2014) and an earnout of up to $50 million based on future performance. Broadcast Communications was recorded as discontinued operations in connection with the sale.

Based on a dispute between us and the Buyer over the amount of the post-closing working capital adjustment, we and the Buyer previously appointed a nationally recognized accounting firm to render a final determination of such dispute. On January 29, 2016, the accounting firm rendered its final determination as to the disputed items, in which it concluded substantially in our favor and partly in the Buyer’s favor. As a result of such determination, we recorded a loss in discontinued operations in the second quarter of fiscal 2016 of $21 million ($17 million after-tax or $0.14 per diluted share).