DISCONTINUED OPERATIONS AND DIVESTITURES (Tables)

12 Months Ended

Jun. 30, 2017

Discontinued Operations and Disposal Groups [Abstract]

Summarized financial information of discontinued operations

The following table presents assets and liabilities related to IT Services included in “Current assets of discontinued operations,” “Non-current assets of discontinued operations,” “Current liabilities of discontinued operations” and “Non-current liabilities of discontinued operations” in our Consolidated Balance Sheet:

	June 30, 2017		July 1, 2016
	(In millions)
Assets
Receivables	$	—	$	196
Inventories	—		83
Other current assets	—		6
Current assets of discontinued operations	$	—	$	285
Property, plant and equipment	$	—	$	18
Goodwill	—		487
Other intangible assets	—		287
Non-current deferred income taxes	—		4
Other non-current assets	—		2
Non-current assets of discontinued operations	$	—	$	798
Liabilities
Accounts payable	$	—	$	98
Advance payments and unearned income	—		20
Other current liabilities	2		40
Current liabilities of discontinued operations	$	2	$	158
Non-current liabilities of discontinued operations	$	—	$	13

The following table presents the key financial results of IT Services included in “Discontinued operations, net of income taxes” in our Consolidated Statement of Income:

	Fiscal Years Ended
	2017			2016			2015
	(In millions)
Revenue from product sales and services	$	895		$	1,168		$	781
Cost of product sales and services	(777		)	(1,002		)	(665		)
Engineering, selling and administrative expenses	(68		)	(84		)	(64		)
Impairment of goodwill and other assets	(240		)	—			(2		)
Non-operating loss	(9		)	—			—
Income (loss) before income taxes	(199		)	82			50
Loss on sale of discontinued operation	(28		)	—			—
Income tax benefit (expense)	69			(30		)	(16		)
Discontinued operations, net of income taxes	$	(158	)	$	52		$	34

The following table presents the key financial results of CapRock included in “Discontinued operations, net of income taxes” included in our Consolidated Statement of Income:

	Fiscal Years Ended
	2017			2016			2015
	(In millions)
Revenue from product sales and services	$	144		$	361		$	464
Cost of product sales and services	(108		)	(284		)	(360		)
Engineering, selling and administrative expenses	(23		)	(66		)	(59		)
Impairment of goodwill and other assets	—			(367		)	(14		)
Non-operating income	4			—			—
Income (loss) before income taxes	17			(356		)	31
Gain on sale of discontinued operation	14			—			—
Income tax benefit (expense)	41			38			(18		)
Discontinued operations, net of income taxes	$	72		$	(318	)	$	13

Summarized financial information for Aerostructures is as follows:

	Fiscal Years Ended
	2016		2015
	(In millions)
Revenue from product sales and services	$	60	$	8
Income before income taxes	5		—
Net gain on sale of business	10		—

	Fiscal Years Ended
	2017			2016			2015
	(In millions)
Revenue from product sales and services	$	144		$	361		$	464
Cost of product sales and services	(108		)	(284		)	(360		)
Engineering, selling and administrative expenses	(23		)	(66		)	(59		)
Impairment of goodwill and other assets	—			(367		)	(14		)
Non-operating income	4			—			—
Income (loss) before income taxes	17			(356		)	31
Gain on sale of discontinued operation	14			—			—
Income tax benefit (expense)	41			38			(18		)
Discontinued operations, net of income taxes	$	72		$	(318	)	$	13

Indications of potential impairment of goodwill related to CapRock (which was part of our former Critical Networks segment) were present at the end of the second quarter of fiscal 2016 due to the downturn in the energy market and its impact on customer operations, which also resulted in a decrease in the fiscal 2016 outlook for CapRock. Consequently, in connection with the preparation of our financial statements for the second quarter of fiscal 2016, we performed an interim test of CapRock’s goodwill for impairment as of the end of the second quarter of fiscal 2016.

To test for potential impairment of goodwill related to CapRock, we prepared an estimate of the fair value of the reporting unit based on projected discounted cash flows. The current carrying value of the CapRock reporting unit exceeded its estimated fair value, and accordingly, we allocated the estimated fair value to the assets and liabilities of the CapRock reporting unit to estimate the implied fair value of goodwill.

In conjunction with the above-described impairment test, we also conducted a test for impairment of other assets related to CapRock, including amortizable intangible assets and fixed assets, and impairment of these assets was considered prior to the conclusion of the goodwill impairment test. The estimated fair value of these other assets related to CapRock was determined based, in part, on an analysis of projected cash flows.

As a result of these impairment tests, we concluded that goodwill and other assets related to CapRock were impaired as of January 1, 2016, and we recorded an estimated non-cash impairment charge of $367 million, of which $290 million related to goodwill, which is included in the “Discontinued operations, net of income taxes” line item in our Consolidated Statement of Income for fiscal 2016. Most of the $367 million impairment charge is not deductible for tax purposes.

The following table presents assets and liabilities related to CapRock included in “Current assets of discontinued operations,” “Non-current assets of discontinued operations,” “Current liabilities of discontinued operations” and “Non-current liabilities of discontinued operations” in our Consolidated Balance Sheet:

	June 30, 2017		July 1, 2016
	(In millions)
Assets
Receivables	$	—	$	67
Inventories	—		14
Other current assets	—		31
Current assets of discontinued operations	$	—	$	112
Property, plant and equipment	$	—	$	73
Goodwill	—		136
Other intangible assets	—		24
Non-current deferred income taxes	—		43
Other non-current assets	—		3
Non-current assets of discontinued operations	$	—	$	279
Liabilities
Accounts payable	$	—	$	11
Advance payments and unearned income	—		5
Other current liabilities	6		44
Current liabilities of discontinued operations	$	6	$	60
Non-current liabilities of discontinued operations	$	14	$	26

The carrying amounts of the major classes of assets and liabilities included in discontinued operations in our Consolidated Balance Sheet are as follows:

	June 30, 2017		July 1, 2016
	(In millions)
Assets
Receivables	$	—	$	263
Inventories	—		97
Other current assets	—		37
Current assets of discontinued operations	$	—	$	397
Property, plant and equipment	$	—	$	91
Goodwill	—		623
Non-current deferred income taxes	—		47
Other intangible assets	—		311
Other non-current assets	—		5
Non-current assets of discontinued operations	$	—	$	1,077
Liabilities
Accounts payable	$	—	$	109
Advance payments and unearned income	—		25
Other current liabilities (1)	12		114
Current liabilities of discontinued operations	$	12	$	248
Non-current liabilities of discontinued operations (2)	$	21	$	45

(1) “Other current liabilities” included $4 million and $30 million of liabilities related to Broadcast Communications as of June 30, 2017 and July 1, 2016, respectively.

(2) “Non-current liabilities of discontinued operations” included $7 million and $6 million of liabilities related to Broadcast Communications as of June 30, 2017 and July 1, 2016, respectively.

Depreciation and amortization, capital expenditures, and significant noncash items of discontinued operations included the following:

	Fiscal Years Ended
	2017			2016			2015
	(In millions)
Depreciation and amortization	$	39		$	78		$	84
Capital expenditures	4			19			34
Significant noncash items:
Impairment of goodwill and other assets	(240		)	(367		)	(16		)
Loss on sale of discontinued operations, net	(11		)	(21		)	—

The major components of the discontinued operations in our Consolidated Statement of Income include the following:

	2017			2016			2015
	(In millions)
Revenue from product sales and services	$	1,039		$	1,529		$	1,245
Cost of product sales and services	(885		)	(1,286		)	(1,025		)
Engineering, selling and administrative expenses	(91		)	(150		)	(123		)
Impairment of goodwill and other assets	(240		)	(367		)	(16		)
Non-operating loss, net (1)	(7		)	(4		)	—
Income (loss) before income taxes	(184		)	(278		)	81
Loss on sale of discontinued operations, net (2)	(11		)	(21		)	—
Income tax benefit (expense), net (3)	110			12			(34		)
Discontinued operations, net of income taxes	$	(85	)	$	(287	)	$	47

(1) “Non-operating loss, net” included losses of $2 millionin fiscal 2017 and $4 million in fiscal 2016 related to our former broadcast communications business (“Broadcast Communications”), which was divested in fiscal 2013.

(2) “Loss on sale of discontinued operations, net” included a $3 million decrease and $21 million increase to the loss on the sale of Broadcast Communications in fiscal 2017 and 2016, respectively.

(3) “Income tax benefit (expense), net” included a $4 million income tax benefit in fiscal 2016 related to Broadcast Communications.