4. Discontinued Operations
During fiscal 2012, we sold our Touch Solutions business for net cash proceeds of $380 million and recognized an insignificant pre-tax gain on the transaction. The agreement includes contingent earn-out provisions through 2015 based on business performance. In connection with the divestiture, we incurred an income tax charge of $65 million, which is included in income (loss) from discontinued operations, net of income taxes on the Consolidated Statement of Operations for fiscal 2012. This charge was primarily driven by the inability to fully realize a tax benefit associated with the write-off of goodwill at the time of the sale.
During fiscal 2012, we sold our TE Professional Services business for net cash proceeds of $28 million and recognized an insignificant pre-tax gain on the transaction. Additionally, during fiscal 2012, we recorded a pre-tax impairment charge of $28 million, which is included in income (loss) from discontinued operations, net of income taxes on the Consolidated Statement of Operations, to write the carrying value of this business down to its estimated fair value less costs to sell.
In December 2011, the New York Court of Claims entered judgment in our favor in the amount of $25 million, payment of which was received in fiscal 2012, in connection with our former Wireless Systems business's State of New York contract. This judgment resolved all outstanding issues between the parties in this matter. This partial recovery of a previously recognized loss, net of legal fees, is reflected in income (loss) from discontinued operations, net of income taxes on the Consolidated Statement of Operations for fiscal 2012.
The following table presents net sales, pre-tax income (loss), pre-tax gain (loss) on sale, and income tax (expense) benefit from discontinued operations:
| |
Fiscal | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| |
2013 | 2012 | 2011 | |||||||
| |
(in millions) |
|||||||||
|
Net sales from discontinued operations |
$ | — | $ | 355 | $ | 534 | ||||
|
Pre-tax income (loss) from discontinued operations |
$ |
(1 |
) |
$ |
19 |
$ |
54 |
|||
|
Pre-tax gain (loss) on sale of discontinued operations |
(4 | ) | 7 | (4 | ) | |||||
|
Income tax (expense) benefit |
5 | (77 | ) | (28 | ) | |||||
|
Income (loss) from discontinued operations, net of income taxes |
$ | — | $ | (51 | ) | $ | 22 | |||
The Touch Solutions, TE Professional Services, and Wireless Systems businesses met the discontinued operations criteria and have been included as such in all periods presented on our Consolidated Financial Statements. Prior to reclassification to discontinued operations, the Touch Solutions and TE Professional Services businesses were included in the former Communications and Industrial Solutions segment and the Network Solutions segment, respectively. The Wireless Systems business was a component of the former Wireless Systems segment.