Discontinued Operations

3 Months Ended

Jul. 01, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

On January 29, 2016, we completed the sale of our former information management business ("Veritas") to The Carlyle Group and received net consideration of $6.6 billion in cash excluding transaction costs and 40 million B common shares of Veritas, and Veritas assumed certain liabilities in connection with the acquisition. The results of Veritas are presented as discontinued operations in our Condensed Consolidated Statements of Income and thus have been excluded from continuing operations and segment results for all reported periods.

In connection with the divestiture of Veritas, the Company and Veritas entered into Transition Service Agreements ("TSA") pursuant to which the Company provides Veritas certain limited services including financial support services, information technology services, and access to facilities, and Veritas provides the Company certain limited financial support services. The TSAs commenced with the close of the transaction and expire at various dates through fiscal 2019. During the three months ended July 1, 2016, the Company recorded income of approximately $9 million for all services provided to Veritas, which is presented as part of other income, net in the Condensed Consolidated Statements of Income.

The Company also has retained various customer relationships and contracts that were reported historically as a part of the Veritas business. Approximately $243 million related to these relationships and contracts have been reported as part of the Company's deferred revenue in the Condensed Consolidated Balance Sheet as of July 1, 2016, along with a $111 million asset representing the service and maintenance rights the Company has under an agreement with Veritas. These balances will be amortized to discontinued operations through the remaining term of the underlying contracts.

The following table presents information regarding certain components of income from discontinued operations, net of income taxes:

	Three Months Ended
	July 1, 2016			July 3, 2015
	(Dollars in millions)
Net revenues	$	72		$	587
Cost of revenues	(3		)	(96		)
Operating expenses	(24		)	(373		)
Gain on sale of Veritas	38			—
Other income (expense), net	2			(5		)
Income from discontinued operations before income taxes	85			113
Provision for income taxes	16			21
Income from discontinued operations, net of income taxes	$	69		$	92

During the three months ended July 1, 2016, the Company received an additional payment of $38 million, which represented a purchase price adjustment for the sale of Veritas.