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Discontinued Operations | 6 Months Ended
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Dec. 29, 2017
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | Discontinued Operations We completed two significant divestitures during fiscal 2017, the divestiture of our government IT services business (“IT Services”) and the divestiture of our Harris CapRock Communications commercial business (“CapRock”), which are described in more detail below. These divestitures individually and collectively represented a strategic shift away from non-core markets (for example, energy, maritime and government IT services). The decision to divest these businesses was part of our strategy to simplify our operating model to focus on technology-differentiated, high-margin businesses, and had a major effect on our operations and financial results. As a result, IT Services and CapRock are reported as discontinued operations in the accompanying Condensed Consolidated Financial Statements (Unaudited) and these Notes, and our historical financial results have been restated to account for IT Services and CapRock as discontinued operations for all periods presented in the accompanying Condensed Consolidated Financial Statements (Unaudited) and these Notes. Except for disclosures related to our cash flows, or unless otherwise specified, disclosures in the accompanying Condensed Consolidated Financial Statements (Unaudited) and these Notes relate solely to our continuing operations. The major components of discontinued operations in our Condensed Consolidated Statement of Income (Unaudited) included the following:
|  | Quarter Ended |  | Two Quarters Ended
|  | December 30, 2016 |  | December 29, 2017 |  | December 30, 2016
|  | (In millions)
Revenue from product sales and services | $ | 336 |  |  | $ | — |  |  | $ | 687 |
Cost of product sales and services | (281 | ) |  | — |  |  | (570 | )
Engineering, selling and administrative expenses | (34 | ) |  | — |  |  | (72 | )
Impairment of goodwill and other assets | (2 | ) |  | — |  |  | (2 | )
Non-operating income (loss) | 7 |  |  | (3 | ) |  | 7 |
Income (loss) before income taxes | 26 |  |  | (3 | ) |  | 50 |
Loss on sale of discontinued operations (1) | (5 | ) |  | — |  |  | (7 | )
Income tax expense | (7 | ) |  | (3 | ) |  | (14 | )
Discontinued operations, net of income taxes | $ | 14 |  |  | $ | (6 | ) |  | $ | 29 |
(1) | “Loss on sale of discontinued operations” in the quarter and two quarters ended December 30, 2016 consisted of transaction costs associated with the divestiture of IT Services.
Depreciation and amortization and capital expenditures of discontinued operations in our Condensed Consolidated Statement of Income (Unaudited) included the following:
| Quarter Ended |  | Two Quarters Ended
| December 30, 2016 |  | December 30, 2016
| (In millions)
Depreciation and amortization | $ | 12 |  |  | $ | 29 |
Capital expenditures | 2 |  |  | 5 |
IT Services On April 28, 2017, we completed the divestiture to an affiliate of Veritas Capital Fund Management, L.L.C. (“Veritas”) of IT Services, which primarily provided IT and engineering managed services to U.S. Government customers, for net cash proceeds of $646 million, after transaction expenses and estimated purchase price adjustments in respect of net cash and working capital, and subject to post-closing finalization of those adjustments as set forth in the definitive sales agreement entered into January 26, 2017. We recognized a pre-tax loss of $28 million on the sale of IT Services (a gain of $55 million after certain tax benefits related to the transaction or $.44 per diluted share). The decision to divest IT Services was part of our strategy to simplify our operating model to focus on technology-differentiated, high-margin businesses. IT Services was part of our former Critical Networks segment and in connection with the definitive agreement to sell IT Services, as described above, the remaining operations that had been part of the Critical Networks segment, including our air traffic management (“ATM”) business, primarily serving the Federal Aviation Administration (“FAA”), were integrated with our Electronic Systems segment effective for the third quarter of fiscal 2017, and our Critical Networks segment was eliminated. We agreed to provide various transition services to Veritas for a period of up to 18 months following the closing of the transaction pursuant to a separate agreement. The following table presents the key financial results of IT Services included in “Discontinued operations, net of income taxes” in our Condensed Consolidated Statement of Income (Unaudited):
| Quarter Ended |  | Two Quarters Ended
| December 30, 2016 |  | December 29, 2017 |  | December 30, 2016
| (In millions)
Revenue from product sales and services | $ | 268 |  |  | $ | — |  |  | $ | 543 |
Cost of product sales and services | (228 | ) |  | — |  |  | (462 | )
Engineering, selling and administrative expenses | (25 | ) |  | — |  |  | (49 | )
Impairment of goodwill and other assets | (2 | ) |  | — |  |  | (2 | )
Non-operating loss | — |  |  | (2 | ) |  | — |
Income (loss) before income taxes | 13 |  |  | (2 | ) |  | 30 |
Loss on sale of discontinued operation | (5 | ) |  | — |  |  | (7 | )
Income tax expense | (4 | ) |  | (3 | ) |  | (10 | )
Discontinued operations, net of income taxes | $ | 4 |  |  | $ | (5 | ) |  | $ | 13 |
CapRock On January 1, 2017, we completed the divestiture to SpeedCast International Ltd. (“SpeedCast”) of CapRock, which provided wireless, terrestrial and satellite communications services to energy and maritime customers, for net cash proceeds of $368 million, after transaction expenses and purchase price adjustments in respect of net cash and working capital as set forth in the definitive sales agreement entered into November 1, 2016. We recognized a pre-tax gain of $14 million on the sale of CapRock (a gain of $61 million after certain tax benefits related to the transaction, including reversal of valuation allowances on capital losses and net operating losses, or $.49 per diluted share). The following table presents the key financial results of CapRock included in “Discontinued operations, net of income taxes” in our Condensed Consolidated Statement of Income (Unaudited):
| Quarter Ended |  | Two Quarters Ended
| December 30, 2016 |  | December 29, 2017 |  | December 30, 2016
| (In millions)
Revenue from product sales and services | $ | 68 |  |  | $ | — |  |  | $ | 144 |
Cost of product sales and services | (53 | ) |  | — |  |  | (108 | )
Engineering, selling and administrative expenses | (9 | ) |  | — |  |  | (23 | )
Non-operating income (loss) | 8 |  |  | (1 | ) |  | 8 |
Income (loss) before income taxes | 14 |  |  | (1 | ) |  | 21 |
Income tax expense | (3 | ) |  | — |  |  | (4 | )
Discontinued operations, net of income taxes | $ | 11 |  |  | $ | (1 | ) |  | $ | 17 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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