Discontinued Operations

12 Months Ended

Jan. 31, 2013

Note 16—Discontinued Operations:

In fiscal 2013, the Company sold certain components of its business, which were historically included in the Company’s Health, Energy and Civil Solutions segment, primarily focused on providing operational test and evaluation services to U.S. Government customers. The Company received net proceeds of $51 million resulting in a gain on sale before income taxes of $17 million related to this sale.

In fiscal 2012, in order to better align its business portfolio with its strategy, the Company sold certain components of its business, which were historically included in the Company’s Health, Energy and Civil Solutions segment, primarily focused on providing information technology services to international oil and gas companies. The Company received net proceeds of $167 million resulting in a gain on sale before income taxes of $111 million related to this sale.

Under the terms of the definitive agreement, the Company retained the assets and obligations of its defined benefit pension plan in the United Kingdom. The Company has classified the operating results of these business components, including pension expense through the date of sale, as discontinued operations for all periods presented. Following the sale, as a result of retaining the pension obligation, the remaining components of ongoing pension expense, primarily interest costs and assumed return on plan assets following the sale date, are recorded in continuing operations.

The pre-sale operating results of business components sold by the Company for each of the three years ended January 31, 2013 were as follows:


	Year Ended January 31
	2013		2012		2011
	(in millions)
Revenues	$	56	$	160	$	319
Costs and expenses:
Cost of revenues		50		131		258
Selling, general and administrative expenses		3		13		31
Operating income	$	3	$	16	$	30

Operating income from discontinued operations also includes other activity that is immaterial and not reflected in the table above.

In March 2001, the Company’s former subsidiary Telcordia Technologies, Inc. (Telcordia) instituted arbitration proceedings against a customer, Telkom South Africa, as a result of a contract dispute. Pursuant to the definitive agreement for the fiscal 2006 sale of Telcordia, the Company was entitled to receive the net proceeds from any settlement after deduction for tax liabilities incurred by Telcordia. In July 2010, Telcordia and Telkom South Africa settled all claims related to these arbitration proceedings. Under the settlement, Telkom South Africa paid $80 million plus amounts for value added taxes (VAT). In fiscal 2011, the Company and Telcordia subsequently executed an agreement which resolved matters related to the Telkom South Africa settlement and certain other contingencies related to the fiscal 2006 sale of Telcordia. The Company recorded pre-tax gains of $77 million in discontinued operations related to these actions during fiscal 2011.

Science Applications International Corporation

Discontinued Operations

Note 16—Discontinued Operations:

The pre-sale operating results of business components sold by the Company for each of the three years ended January 31, 2013 were as follows:


	Year Ended January 31
	2013		2012		2011
	(in millions)
Revenues	$	56	$	160	$	319
Costs and expenses:
Cost of revenues		50		131		258
Selling, general and administrative expenses		3		13		31
Operating income	$	3	$	16	$	30

Operating income from discontinued operations also includes other activity that is immaterial and not reflected in the table above.

- Definition

The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations).

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+ Details

SCIENCE APPLICATIONS INTERNATIONAL CORP 10-K