Divestitures

During fiscal 2014 and 2013, the Company divested certain non-core businesses as a part of its service portfolio optimization initiative to focus on the next-generation technology services. Certain of the divestitures met the criteria of discontinued operations presentation, and consequently their historical results have been presented as discontinued operations in the Company's Consolidated Statement of Operations.

Discontinued Operations

Fiscal 2014 Divestitures

In September 2013, CSC committed to a plan to sell a small software business, a part of the GBS segment's Industry Software & Solutions group (GBS-IS&S). CSC is actively marketing this business for sale and expects the divestiture to be completed during the first half of fiscal 2015. As of March 28, 2014, the assets and liabilities of this business are classified as held-for-sale, and include: current assets of $25 million, property and equipment and other long-term assets of $31 million, current liabilities of $31 million, and long-term liabilities of $25 million. No goodwill has been allocated to this business.

On July 19, 2013, CSC completed the sale of its base operations, aviation and ranges services business unit, the Applied Technology Division (ATD) within its NPS Segment, to a strategic investor for cash consideration of $178 million plus a net working capital adjustment receivable of $6 million. The ATD divestiture resulted in a pre-tax gain of $77 million, representing the excess of the sale price over the carrying value of the net assets of the divested business, less transaction costs of $5 million. The divested assets and liabilities included: current assets of $142 million (including cash of $7 million), goodwill of $41 million, other long-term assets of $11 million, current liabilities of $66 million, long-term liabilities of $35 million, and accumulated other comprehensive loss, net of noncontrolling interests, of $9 million.

On May 21, 2013, CSC completed the divestiture of its flood insurance-related business process outsourcing practice (flood insurance BPO), within the GBS segment, to a financial investor for cash consideration of $43 million plus a net working capital adjustment receivable of $4 million. The divestiture resulted in a pre-tax gain of $25 million, representing the excess of the net proceeds over the carrying value of the net assets of the divested business and the related transaction costs. The divested assets and liabilities included: current assets of $9 million, goodwill of $12 million, $2 million of other long-lived assets, and current liabilities of $1 million. During the fourth quarter, the Company received cash of $3 million, representing the final net working capital adjustment, and reduced the gain on disposal by $1 million.

Fiscal 2013 Divestitures

During fiscal 2013, CSC completed the sales of three businesses within its GBS Segment: the U.S.-based credit services business, an enterprise systems integration business with operations in Malaysia and Singapore, and the Italian consulting and system integration business.

For the sale of its U.S.-based credit services business, the Company received cash proceeds of $1,003 million, of which $2 million was received in the first quarter of fiscal 2014 for a subsequent net working capital adjustment. For the sale of its enterprise system integration business, the Company received $90 million in cash and an additional $13 million for subsequent working capital adjustments. For the disposal of its Italian consulting and system integration business, the Company paid $35 million (plus $8 million of cash included in the divested entity's net assets) and received $6 million from the buyer, during the second quarter of fiscal 2014, for a net working capital adjustment.

These three divestitures resulted in a total pre-tax gain of $769 million (after-tax gain of $417 million), representing the excess of the net proceeds over the carrying value of the net assets of the divested businesses and transaction costs of $11 million. The fiscal 2013 divested assets and liabilities included current assets of $129 million, property and equipment and other long-lived assets of $11 million, goodwill of $241 million, and liabilities of $85 million.

During fiscal 2012, CSC recorded a pre-tax loss from discontinued operations of $2 million, representing purchase price adjustments related to a fiscal 2011 divestiture. In fiscal 2012, CSC also recorded a $3 million adjustment to the taxes on gain on discontinued operations recorded in fiscal 2011. The adjustment reflects a change in the estimated tax provision made in fiscal 2011.

Following is the summary of the results of the discontinued operations:



	Twelve Months Ended
(Amounts in millions)	March 28, 2014		March 29, 2013		March 30, 2012
	(As Adjusted)		(As Adjusted)		(As Restated and Adjusted)
Operations
Revenue	$	235	$	1,193	$	1,401

(Loss) income from discontinued operations, before taxes	9		116		135
Tax expense (benefit)	7		51		(26		)
Net (loss) income from discontinued operations	2		65		161

Disposal
Gain (loss) on disposition	$	101	$	769	$	(2	)
Tax expense (benefit)	15		352		(3		)
Gain on disposition, net of taxes	86		417		1

Income from discontinued operations, net of taxes	$	88	$	482	$	162

The tax expense on the gain on sale of ATD was minimal primarily due to the difference between the book and tax basis of the assets sold. The primary difference between the book and tax gains on the sale of the flood insurance BPO business was the write-off of approximately $12 million of goodwill, the majority of which was not deductible for tax purposes.

In connection with the sale of the U.S.-based credit services business, the primary difference between the book and tax gain was the write-off of approximately $241 million of goodwill, a majority of which was not deductible for tax purposes. The income tax expense recorded included an allocation of a deferred tax charge related to such goodwill. In addition, a significant tax benefit was realized on the divestment of the Italian consulting and system integration business. The gain from the sale of the enterprise systems integration business with operations in Malaysia and Singapore was exempt from income tax.

For fiscal 2012, discontinued operations reflects a tax benefit of approximately $82 million due to the change in tax status of one of the Company's foreign subsidiaries. This change in tax status resulted in a deemed liquidation for U.S. tax purposes and triggered various deductions which resulted in an income tax benefit. This benefit was allocable to discontinued operations as such foreign subsidiary was disposed of during the current fiscal year.

Other Divestitures

During the fourth quarter of fiscal 2013, the Company sold Paxus, its Australian IT staffing business unit, included within the Company's GBS Segment. This divestiture did not qualify to be presented as discontinued operations due to CSC's significant continuing business relationship with the divested entity. The total consideration for this divestiture was $79 million, of which $63 million was received in cash and $16 million was recorded as a receivable. During the first quarter of fiscal 2014, CSC collected cash of $10 million and offset the remaining $6 million against a current payable due to the buyer to settle this consideration receivable. The sale of Paxus resulted in a pre-tax gain of $38 million, representing the excess of the proceeds over the carrying value of the net assets divested, net of transaction costs of $3 million. The divested assets and liabilities included current assets of $41 million, property and equipment and other long-lived assets of $2 million, and liabilities of $5 million. The Company recognized no tax expense or benefit on the gain on sale because it had sufficient capital losses in its Australian business unit to completely offset the capital gain.