A Letter from Mike Lawrie
“The DXC Technology brand will be built on a foundation of trust and transformation, and a relentless drive to help clients thrive on change.”
Mike Lawrie
Chairman, President and
Chief Executive Officer,
DXC Technology
On April 1, 2017, we began a new chapter in our transformation by completing the combination of CSC with the Enterprise Services business of Hewlett Packard Enterprise Company (HPE). DXC Technology Company (DXC), which began trading on the New York Stock Exchange under the ticker symbol “DXC” on April 3, is now the world’s leading independent, end-to-end IT services company, with a mission of leading clients on their digital transformation journeys.
DXC was created in direct response to the seismic shifts taking place in the technology industry — specifically the need for large enterprises to digitally transform their end-to-end operations.
So when we announced the merger on May 24, 2016, we set out to create a new company with a highly differentiated brand and culture that would produce greater value for clients, partners and stockholders, along with growth opportunities for our people. In a little more than 10 months, we delivered on our promise and launched DXC with an ambitious agenda and the overwhelming support of our stockholders.
From the outset, our vision behind combining two highly complementary businesses was to create a more powerful and versatile global technology services business — an enterprise that would be well positioned to innovate, compete and serve clients in a rapidly changing marketplace. We have been steadfast in our pursuit of this vision.
● | We combined the best of both businesses to create a compelling value proposition that has been well received among clients, partners, employees, investors and analysts. |
● | Our people worked tirelessly and collaboratively to build the foundation for our operational and organizational models, along with our go-to-market strategy. |
In DXC, we have a distinctive brand that boldly captures who we are and how we do business: a force multiplier, enabling clients to seize the opportunities presented by today’s rapidly changing technologies. | |||
● | We have a strong leadership team in place — individuals who can best help our company and our people realize the tremendous opportunity ahead of us. | ||
● | Our people possess the ability to help drive the changes necessary to create a strong and winning culture. | ||
● | Our board of directors brings exceptional knowledge, experience and talent to our new company. | ||
On March 27, 2017, holders of approximately 85 percent of the outstanding shares of CSC common stock voted in favor of the merger, representing approximately 99 percent of the votes cast at the special meeting, a showing of broad support for the merger and our business transformation. | |||
CSC FY17 in Review | |||
In fiscal year 2017, CSC delivered strong growth in revenue, adjusted earnings before interest and taxes (EBIT) and adjusted free cash flow. Non-GAAP diluted earnings per share from continuing operations was $3.10 in fiscal year 2017.1 Reflecting merger-related integration and transaction costs, as well as pension and restructuring costs, CSC’s diluted earnings per share from continuing operations was $(0.88). | |||
1Please see non-GAAP reconciliation to EPS on page 32 of the 10-K. | |||
2 | |||
At CSC, we advanced our transformation and strategic priorities, especially with respect to growth and next-gen IT capabilities, client focus, alliance partnerships and people development: | ||
● | We acquired Xchanging and Aspediens, extending our leadership in key industries and offerings. | |
● | We expanded our strategic alliances with AT&T, AWS, Dell EMC, HDS, IBM, SAP and ServiceNow, and created a new strategic alliance with PwC. | |
● | We made strategic investments in Racemi and Virtual Clarity as well as eBECS to help clients accelerate their transformations to the public cloud and drive more value from their Microsoft-centric projects. | |
● | We consolidated our offering families and created a seamless Build-Sell-Deliver operating model that is more closely aligned with our clients’ needs. | |
● | We continued to strengthen our workforce with the launch of the new CSC University. | |
● | We were recognized in more than 100 industry analyst assessments across seven influential analyst firms. Our next-gen offerings were ranked as leaders 24 different times, in areas such as cloud, cybersecurity and infrastructure. We also garnered recognition for our leadership in insurance and healthcare, and our Procurement as a Service capabilities. |
In summary, CSC’s final fiscal year was approached with vigor and passion. We sent a strong message to the marketplace about our ability to thrive on change. Even while our teams did the hard work of integration, we maintained a relentless focus on our clients and built positive momentum. | |||
3 |
As a company, DXC will invest in skills development, training and recruitment of top talent to strengthen our foundation and ability to serve clients. We are fully committed to corporate responsibility and sustainability across our global operations, and recently we were recognized byCorporate Responsibility Magazine as a 2017 Best Corporate Citizen.
DXC leads clients through accelerating change, helping them harness the power of technology to deliver new outcomes for their businesses. We strive to support a culture of performance, matched with integrity. Our CLEAR Values guide our instincts and inform our actions:Client-Focused,Leadership, ExecutionExcellence,Aspiration,Results.
The debut of DXC was soundly embraced across all the communities we serve. Our journey has been immeasurably challenging and fulfilling. Together, we have been part of a historic, memorable and, for most, once-in-a-lifetime experience. Your ongoing commitment to our vision, mission and goals made our new venture possible. I extend my personal thanks to everyone who helped make this happen.
For DXC, our work has just now begun.
Our success will be measured by the trust we earn from clients, working shoulder to shoulder with them and with our partner network to solve complex challenges in ways that minimize business risk and maximize opportunity. Our world-class talent must be part of our clients’ teams, innovating with them and putting the right technology to work for their organizations. In this way, collaborative client relationships that flex and grow will be integral to meeting new challenges with confidence, speed and agility.
Thank you. We have a great deal to look forward to as DXC.
MIKE LAWRIE
Chairman, President and Chief Executive Officer |
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2017 Directors and Executive Officers of DXC |
Board of Directors
J. Michael Lawrie
Mukesh Aghi ² U.S.-India Business Council
Amy E. Alving ³ Former Chief Technology Officer,
David L. Herzog ¹ Former Executive Vice President
Sachin Lawande ² President and Chief Executive Officer,
| Julio A. Portalatin ² Chief Executive Officer,
Peter Rutland * ¹ Partner and Global Co-Head
Manoj P. Singh ³ Former Chief Operating Officer and
Margaret C. Whitman ³ President and Chief Executive Officer,
Robert F. Woods ¹ Former Senior Vice President and
| Executive Officers
J. Michael Lawrie
Paul N. Saleh Executive Vice President and
William L. Deckelman Jr.
Michael G. Nefkens Executive Vice President and
Stephen Hilton Executive Vice President,
Joanne Mason Executive Vice President and
Neil A. Manna Senior Vice President, Controller |
Committee memberships
1. Audit 2. Compensation 3. Nominating/Corporate Governance
* Lead Independent Director
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DXC Shareholder Information |
Stock Information
Common stock symbol: DXC, listed and traded on the New York Stock Exchange. Shares of common stock outstanding were 284,644,845 shares as of June 12, 2017. There were 52,208 stockholders of record as of June 12, 2017.
Transfer Agent and Registrar
All inquiries concerning registered shareholder accounts and stock transfer matters, including address changes and consolidation of multiple accounts, should be directed to Wells Fargo Shareowner Services, DXC’s transfer agent and registrar.
Shareholder correspondence should be mailed to:
Regular mail:
First Class, registered and certified mail: Wells Fargo Shareowner Services
By phone: | Financial Community Information
Institutional and individual investors, financial analysts and portfolio managers should contact:
DXC Investor Relations
Written requests, including requests for DXC filings with the U.S. Securities and Exchange Commission (SEC), should be directed to:
DXC Investor Relations
To enroll in electronic delivery of DXC’s Proxy Statement, Annual Report and other materials, log on to: http://www.icsdelivery.com
DXC Website
Additional DXC information is available at www.dxc.technology, including all of the documents DXC files with or furnishes to the SEC, which are available free of charge.
| Annual Meeting
The Annual Meeting of Stockholders will be held on August 10, 2017, at 10:30 a.m. Eastern Time, and will be a virtual meeting conducted via live webcast. Attend the meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting/ DXC. To participate in the Annual Meeting, you will need the 16-digit control number included on your notice of internet availability of the proxy materials, on your proxy card or on the instructions that accompany your proxy materials.
Dividend Policy
On April 3, 2017, DXC announced a dividend policy targeting $0.72 per share for full year fiscal 2018, subject to customary Board review and approval.
Independent Auditors
Deloitte & Touche LLP 7900 Tysons One Place, Suite 800 |
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Forward-Looking Statements | |
All statements in this Annual Report that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. For a written description of these factors, see the section titled “Risk Factors” in Computer Sciences Corporation’s (CSC) Form 10-K for the fiscal | year ended March 31, 2017, and DXC’s (formerly named Everett SpinCo, Inc.) Form S-4 filed on February 24, 2017, and any updating information in subsequent SEC filings. No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events except as required by law. |
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Explanatory Note | |
DXC was formed through the spin-off of the Enterprise Services business (Everett) of HPE on March 31, 2017, and merger of a wholly-owned subsidiary of DXC with CSC on April 1, 2017, which resulted in CSC becoming a wholly owned subsidiary of DXC. Because CSC is deemed the acquirer in this combination for accounting purposes under U.S. Generally Accepted Accounting Principles (GAAP), CSC is considered DXC’s predecessor, and the historical financial statements of CSC prior to April 1, 2017, will be reflected in DXC’s future quarterly and annual reports as DXC’s historical financial statements. Accordingly, this Annual Report for the fiscal year ended March 31, 2017, includes the Form 10-K solely of CSC. The consolidated financial statements, other financial information and the business information set forth within the CSC Form 10-K relates to CSC and its subsidiaries. The CSC Form 10-K includes the consolidated balance sheets of CSC and its subsidiaries as of March 31, 2017, and April 1, 2016, and the related consolidated statements of operations, comprehensive (loss) income, cash flows and changes in equity for each of the three fiscal years in the period ended March 31, 2017, which periods predate the April 1, 2017, effective date of the merger transaction involving CSC and Everett. | Set forth below is a supplemental brief description of the Everett business before it became part of DXC upon consummation of the spin-off on March 31, 2017, and merger on April 1, 2017, which was described in further detail in the registration statement on Form S-4 (Registration No. 333-214393) filed by Everett in connection with the merger.
Business Segments, Products and Services
Everett consists of the Enterprise Services segment of HPE excluding (a) the Mphasis Limited reporting unit and (b) the Communications and Media Solutions product group. The Everett business has been organized into the following two segments:
● Infrastructure Technology Outsourcing.Everett’s Infrastructure Technology Outsourcing group delivers services that streamline and help optimize clients’ technology infrastructure to efficiently enhance performance, reduce costs, mitigate risk and enable business optimization. These services encompass the transition, transformation and management of data centers, IT security, cloud computing, workplace mobility, networks, unified communications and enterprise service management. Everett also offers a set of managed services that provide a cross- | section of broader infrastructure services for smaller, discrete engagements.
● Application and Business Services. Everett’s Application and Business Services portfolio helps clients develop, transform and manage their applications and information assets. Everett’s complete application life cycle approach encompasses application development, testing, modernization, system integration, maintenance and management for both packaged and custom-built applications and cloud offerings. Everett’s Application and Business Services portfolio also includes intellectual property-based industry solutions, along with technologies and related services, all of which help clients better manage their critical industry processes for customer relationship management, finance and administration, human resources, payroll and document processing.
Sales, Marketing and Distribution
Everett has managed its business and reported its financial results based on the segments described above. Everett’s customers are organized by commercial and large enterprise groups, including business and public sector enterprises, and purchases of solutions and services may be |
9
Explanatory Note (Continued) | |||||
fulfilled directly by Everett or indirectly through a variety of partners, including:
● Resellers that sell Everett’s services, frequently with their own value-added products or services, to targeted customer groups;
● Distribution partners that supply Everett’s solutions to resellers;
● Original equipment manufacturers that integrate Everett’s services with their own products and services, and sell the integrated solution;
● Independent software vendors that provide their clients with specialized software products and often assist Everett in selling its services to clients purchasing their products;
● Systems integrators that provide expertise in designing and implementing custom IT solutions and often partner with Everett to extend their expertise or influence the sale of Everett’s solutions and services; and
● Advisory firms that provide various levels of management and IT consulting, including some systems integration work, and typically partner with Everett on client solutions that require Everett’s unique solutions and services.
The mix of Everett’s business conducted by direct sales or channel differs substantially by business and region. Based on | customer buying patterns and different regional market conditions, Everett has tailored sales and marketing efforts accordingly. Everett has focused on driving the depth and breadth of its coverage, in addition to identifying efficiencies and productivity gains, in both direct and indirect businesses.
International
Everett’s services are available worldwide. Everett developed this geographic diversity, allowing it to meet demand on a worldwide basis for customers, to draw on business and technical expertise from an international workforce, to provide stability to operations, to provide revenue streams that may offset geographic economic trends, as well as to build future growth.
Product Development, Services and Manufacturing
The locations of Everett’s headquarters of geographic operations and major services development and delivery operations facilities are as follows:
Headquarters of Geographic Operations
Americas
Plano, TX, United States
| Asia Pacific
Singapore India: Bangalore, Chennai
Europe, Middle East, Africa
Bracknell, United Kingdom
Services Development, Delivery Operations
Americas
Brazil: Sao Paulo United States: Herndon, VA; Houston
Europe, Middle East, Africa
Bulgaria: Sofia Newcastle, Glasgow, Thames Valley
|
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SECURITIES AND EXCHANGE COMMISSION
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
COMPUTER SCIENCES CORPORATION | ||
(Exact name of Registrant as specified in its charter) |
Nevada | 95-2043126 |
(State of incorporation or organization) | (I.R.S. Employer Identification No.) |
1775 Tysons Boulevard | |
Tysons, Virginia | 22102 |
(Address of principal executive offices) | (zip code) |
Registrant's telephone number, including area code: (703) 245-9700 | |
Securities registered pursuant to Section 12(b) of the Act: | |
Title of each class: | Name of each exchange on which registered |
Common Stock, $1.00 par value per share | New York Stock Exchange |
Preferred Stock Purchase Rights | |
Securities registered pursuant to Section 12(g) of the Act: None |
Item | Page | ||
1. | |||
1A. | |||
1B. | |||
2. | |||
3. | |||
4. | |||
5. | |||
6. | |||
7. | |||
7A. | |||
8. | |||
9. | |||
9A. | |||
9B. | |||
10. | |||
11. | |||
12. | |||
13. | |||
14. | |||
PART IV | |||
15. |
• | the integration with DXC’s other businesses, operations and culture and the ability to operate as effectively and efficiently as expected, and the combined company's ability to successfully manage and integrate acquisitions generally; |
• | the ability to realize the synergies and benefits expected to result from the Merger (defined herein) within the anticipated time frame or in the anticipated amounts; |
• | other risks related to the Merger including anticipated tax treatment, unforeseen liabilities and future capital expenditures; |
• | changes in governmental regulations or the adoption of new laws or regulations that may make it more difficult or expensive to operate our business; |
• | changes in senior management, the loss of key employees or the ability to retain and hire key personnel and maintain relationships with key business partners; |
• | business interruptions in connection with our technology systems; |
• | the competitive pressures faced by our business; |
• | the effects of macroeconomic and geopolitical trends and events; |
• | the need to manage third-party suppliers and the effective distribution and delivery of our products and services; |
• | the protection of our intellectual property assets, including intellectual property licensed from third parties; |
• | the risks associated with international operations; |
• | the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; |
• | the execution and performance of contracts by us and our suppliers, customers, clients and partners; |
• | the resolution of pending investigations, claims and disputes; and |
• | the other factors described under “Risk Factors.” |
Fiscal Years Ended | ||||||||
March 31, 2017 | April 1, 2016 | April 3, 2015 | ||||||
Global Business Services | 55 | % | 51 | % | 50 | % | ||
Global Infrastructure Services | 45 | 49 | 50 | |||||
Total Revenues | 100 | % | 100 | % | 100 | % |
Item 1A. | RISK FACTORS |
• | successfully integrate the operations, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems, of acquired businesses with existing operations and systems; |
• | maintain third-party relationships previously established by acquired companies; |
• | attract and retain senior management and other key personnel at acquired businesses; and |
• | successfully manage new business lines, as well as acquisition-related workload. |
• | making it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults; |
• | experiencing events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses; |
• | subjecting us to the risk of increased sensitivity to interest rate increases in our outstanding indebtedness that bears interest at variable rates and could cause our debt service obligations to increase significantly; |
• | increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability for debt financing; |
• | reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; |
• | limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy; |
• | placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged; and |
• | increasing our vulnerability to the impact of adverse economic and industry conditions. |
• | ongoing instability or changes in a country’s or region’s economic or political conditions, including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts; |
• | longer collection cycles and financial instability among customers; |
• | trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign competitors; |
• | local labor conditions and regulations; |
• | managing our geographically dispersed workforce; |
• | changes in the international, national or local regulatory and legal environments; |
• | differing technology standards or customer requirements; |
• | difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner and |
• | changes in tax laws. |
• | the substantial cost and managerial time and effort that we spend to prepare bids and proposals for contracts that may or may not be awarded to us; |
• | the need to estimate accurately the resources and costs that will be required to service any contracts we are awarded, sometimes in advance of the final determination of their full scope and design; |
• | the expense and delay that may arise if our competitors protest or challenge awards made to us pursuant to competitive bidding; |
• | the requirement to resubmit bids protested by our competitors and in the termination, reduction, or modification of the awarded contracts; and |
• | the opportunity cost of not bidding on and winning other contracts we might otherwise pursue. |
• | integration activities while carrying on ongoing operations; |
• | the challenge of integrating the business cultures of HPES and CSC, which may prove to be incompatible; |
• | the challenge and cost of integrating certain information technology systems and other systems; and |
• | the potential difficulty in retaining key officers and other personnel. |
Properties Owned | Approximate Square Footage | General Usage | |||
Blythewood, South Carolina | 456,000 | Delivery Center and Office | |||
Copenhagen, Denmark | 368,000 | Office | |||
Aldershot, United Kingdom | 211,000 | Office | |||
Newark, Delaware | 179,000 | Co-location | |||
Norwich, Connecticut | 144,000 | Data Center | |||
Meriden, Connecticut | 118,000 | Data Center | |||
Shimoga, India | 80,000 | Delivery Center and Office | |||
Maidstone, United Kingdom | 79,000 | Data Center | |||
Petaling Jaya, Malaysia | 63,000 | Co-location | |||
Jacksonville, Illinois | 60,000 | Office | |||
Chesterfield, United Kingdom | 51,000 | Delivery Center and Office | |||
Tunbridge Wells, United Kingdom | 43,000 | Data Center | |||
Sterling, Virginia | 41,000 | Delivery Center and Office | |||
Various other U.S. and foreign locations | 40,000 | Data Center and Office |
Properties Leased | Approximate Square Footage | General Usage | |||
India | 3,061,000 | Co-location | |||
Australia & other Pacific Rim locations | 649,000 | Co-location | |||
France | 263,000 | Data Center and Office | |||
Texas | 180,000 | Co-location | |||
Germany | 176,000 | Data Center and Office | |||
Illinois | 172,000 | Data Center and Office | |||
United Kingdom | 130,000 | Data Center and Office | |||
Washington, D.C. area | 130,000 | Data Center and Office | |||
Spain | 127,000 | Delivery Center and Office | |||
Connecticut | 125,000 | Co-location | |||
Sweden | 119,000 | Data Center and Office | |||
China | 118,000 | Co-location | |||
Colombia | 106,000 | Delivery Center and Office | |||
Denmark | 101,000 | Delivery Center and Office | |||
Bulgaria | 101,000 | Delivery Center and Office | |||
Various other U.S. and foreign locations | 923,000 | Co-location |
Fiscal 2017 | Fiscal 2016(1) | |||||||||||||||
Fiscal Quarter | High | Low | High | Low | ||||||||||||
1st | $ | 52.55 | $ | 32.51 | $ | 71.00 | $ | 63.85 | ||||||||
2nd | 53.46 | 45.37 | 68.57 | 58.77 | ||||||||||||
3rd | 63.34 | 50.41 | 71.15 | 29.51 | ||||||||||||
4th | 74.92 | 57.06 | 34.49 | 24.27 |
Indexed Return Table (2012 = 100) | |||||||||||||||||
Return 2013 | Return 2014 | Return 2015 | Return 2016 | Return 2017 | Compound Annual Growth Rate | ||||||||||||
CSC common stock | 65.81 | % | 105.70 | % | 127.03 | % | 181.01 | % | 472.74 | % | 41.80 | % | |||||
S&P 500 Index | 14.38 | % | 37.64 | % | 57.09 | % | 60.95 | % | 87.40 | % | 13.40 | % | |||||
S&P North American Technology Index(1) | 3.80 | % | 30.21 | % | 50.61 | % | 66.05 | % | 108.79 | % | 15.90 | % |
As of | ||||||||||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | March 28, 2014 | March 29, 2013 | |||||||||||||||
Total assets | $ | 8,663 | $ | 7,736 | $ | 10,221 | $ | 11,361 | $ | 11,210 | ||||||||||
Debt | ||||||||||||||||||||
Long-term, net of current maturities | $ | 2,225 | $ | 1,934 | $ | 1,635 | $ | 2,207 | $ | 2,498 | ||||||||||
Short-term | 646 | 559 | — | 444 | — | |||||||||||||||
Current maturities | 92 | 151 | 883 | 237 | 234 | |||||||||||||||
Total Debt | $ | 2,963 | $ | 2,644 | $ | 2,518 | $ | 2,888 | $ | 2,732 | ||||||||||
Stockholders’ equity | $ | 2,166 | $ | 2,032 | $ | 2,965 | $ | 3,950 | $ | 3,166 | ||||||||||
Net debt-to-total capitalization | 33.1 | % | 31.4 | % | 8.1 | % | 6.5 | % | 11.5 | % |
Fiscal Years Ended | ||||||||||||||||||||
(in millions, except per-share amounts) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Revenues | $ | 7,607 | $ | 7,106 | $ | 8,117 | $ | 8,899 | $ | 9,533 | ||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 5,545 | 5,185 | 6,159 | 6,032 | 7,455 | |||||||||||||||
Selling, general and administrative - SEC settlement related charges(1) | — | — | 197 | — | — | |||||||||||||||
Restructuring costs | 238 | 23 | 256 | 74 | 251 | |||||||||||||||
Debt extinguishment costs(2) | — | 95 | — | — | — | |||||||||||||||
(Loss) income from continuing operations, before taxes | (174 | ) | 10 | (671 | ) | 694 | (249 | ) | ||||||||||||
Income tax (benefit) expense | (74 | ) | (62 | ) | (464 | ) | 174 | (248 | ) | |||||||||||
(Loss) income from continuing operations, net of taxes | (100 | ) | 72 | (207 | ) | 520 | (1 | ) | ||||||||||||
Income from discontinued operations, net of taxes | — | 191 | 224 | 448 | 780 | |||||||||||||||
Net (loss) income attributable to CSC common stockholders | (123 | ) | 251 | 2 | 947 | 760 | ||||||||||||||
(Loss) earnings per common share: | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.51 | $ | (1.45 | ) | $ | 3.52 | $ | (0.01 | ) | |||||||
Discontinued operations | — | 1.31 | 1.46 | 2.89 | 4.92 | |||||||||||||||
$ | (0.88 | ) | $ | 1.82 | $ | 0.01 | $ | 6.41 | $ | 4.91 | ||||||||||
Diluted: | ||||||||||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.50 | $ | (1.45 | ) | $ | 3.45 | $ | — | ||||||||
Discontinued operations | — | 1.28 | 1.46 | 2.83 | 4.89 | |||||||||||||||
$ | (0.88 | ) | $ | 1.78 | $ | 0.01 | $ | 6.28 | $ | 4.89 | ||||||||||
Cash dividend per common share | $ | 0.56 | $ | 2.99 | $ | 0.92 | $ | 0.80 | $ | 0.80 |
1. | provide a narrative on the consolidated financial statements, as presented through the eyes of management; |
2. | enhance the disclosures in the consolidated financial statements and related notes by providing context to analyze the consolidated financial statements; and |
3. | provide information to assist the reader in ascertaining the predictive value of the reported financial results. |
• | bid on and win new contract awards; |
• | satisfy existing customers and obtain add-on business and win contract recompetes; |
• | compete with respect to services offered, delivery models offered, technical ability and innovation, quality, flexibility, global reach, experience and results created; and |
• | identify and integrate acquisitions and leverage them to generate new revenues. |
• | integrate acquisitions and eliminate redundant costs; |
• | develop offshore capabilities and migrate compatible service offerings offshore; |
• | control costs, particularly labor costs, subcontractor expenses and overhead costs including healthcare, pension and general and administrative costs; |
• | anticipate talent needs to avoid staff shortages or excesses; |
• | accurately estimate various factors incorporated in contract bids and proposals; and |
• | effectively manage foreign currency fluctuations related to international operations through the use of short-term foreign currency forward and option contracts. |
• | the ability to efficiently manage capital resources and expenditures; |
• | timely management of receivables and payables; |
• | investment opportunities available, particularly related to business acquisitions and implementations, dispositions and large outsourcing contracts; and |
• | tax obligations. |
Fiscal Years Ended | ||||||||||||
(In millions, except per-share amounts) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Revenues | $ | 7,607 | $ | 7,106 | $ | 8,117 | ||||||
(Loss) income from continuing operations, before taxes | (174 | ) | 10 | (671 | ) | |||||||
Income tax benefit | (74 | ) | (62 | ) | (464 | ) | ||||||
(Loss) income from continuing operations | (100 | ) | 72 | (207 | ) | |||||||
Income from discontinued operations, net of taxes | — | 191 | 224 | |||||||||
Net (loss) income | $ | (100 | ) | $ | 263 | $ | 17 | |||||
Diluted (loss) earnings per share: | ||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.50 | $ | (1.45 | ) | ||||
Discontinued operations | — | 1.28 | 1.46 | |||||||||
$ | (0.88 | ) | $ | 1.78 | $ | 0.01 |
Fiscal Years Ended | ||||||||||||||||||
March 31, 2017 | April 1, 2016 | April 3, 2015 | ||||||||||||||||
(in millions) | Amount | Percent Change | Amount | Percent Change | Amount | |||||||||||||
GBS | $ | 4,173 | 14.7 | % | $ | 3,637 | (9.9 | )% | $ | 4,036 | ||||||||
GIS | 3,434 | (1.0 | )% | 3,469 | (15.0 | )% | 4,081 | |||||||||||
Total Revenues | $ | 7,607 | 7.1 | % | $ | 7,106 | (12.5 | )% | $ | 8,117 |
Fiscal Years Ended March 31, 2017 vs. April 1, 2016 | Increase at Constant Currency | Approximate Impact of Currency Fluctuations | Total | ||||||
GBS | 18.0 | % | (3.3 | )% | 14.7 | % | |||
GIS | 2.0 | % | (3.0 | )% | (1.0 | )% | |||
Cumulative Net Percentage | 10.2 | % | (3.1 | )% | 7.1 | % |
Fiscal Years Ended April 1, 2016 vs. April 3, 2015 | Decrease at Constant Currency | Approximate Impact of Currency Fluctuations | Total | ||||||
GBS | (3.8 | )% | (6.1 | )% | (9.9 | )% | |||
GIS | (9.6 | )% | (5.4 | )% | (15.0 | )% | |||
Cumulative Net Percentage | (6.7 | )% | (5.8 | )% | (12.5 | )% |
Fiscal Years Ended | Percentage of Revenues | ||||||||||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | 2017 | 2016 | 2015 | |||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | $ | 5,545 | $ | 5,185 | $ | 6,159 | 72.9 | % | 73.0 | % | 76.0 | % | |||||||||
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs) | 1,279 | 1,040 | 1,220 | 16.8 | 14.6 | 15.0 | |||||||||||||||
Selling, general and administrative - SEC settlement related charges | — | — | 197 | — | — | 2.4 | |||||||||||||||
Depreciation and amortization | 647 | 658 | 840 | 8.5 | 9.3 | 10.3 | |||||||||||||||
Restructuring costs | 238 | 23 | 256 | 3.1 | 0.3 | 3.2 | |||||||||||||||
Separation costs | — | 19 | — | — | 0.3 | — | |||||||||||||||
Interest expense, net | 82 | 85 | 106 | 1.1 | 1.2 | 1.3 | |||||||||||||||
Debt extinguishment costs | — | 95 | — | — | 1.3 | — | |||||||||||||||
Other (income) expense, net | (10 | ) | (9 | ) | 10 | (0.1 | ) | (0.1 | ) | 0.1 | |||||||||||
Total costs and expenses | $ | 7,781 | $ | 7,096 | $ | 8,788 | 102.3 | % | 99.9 | % | 108.3 | % |
• | A change in the valuation allowance that primarily consists of an aggregate income tax detriment for the increase in the valuation allowances on tax attributes primarily in the U.S., Germany and Luxembourg, which decreased the overall income tax benefit and decreased the ETR by $135 million and 78%, respectively. Offset by an aggregate income tax benefit related to the release of valuation allowances on tax attributes primarily in the U.K., Denmark and Japan, which increased the overall income tax benefit and increased the ETR by $75 million and 43.0%, respectively. |
• | An income tax detriment for transaction costs incurred that are not deductible for tax purposes, which resulted in a decrease to the overall tax benefit and decreased the ETR by $21 million and 12.1%, respectively. |
• | An income tax benefit from excess tax benefits realized from employee share-based payment awards, which resulted in an increase in the overall income tax benefit and increased the ETR by $20 million and 11.3%, respectively. |
• | The adoption of a new accounting standard on excess tax benefits realized from share options vested or exercised. This increased the overall income tax benefit and the ETR by $23 million and 230%, respectively. |
• | An increase in the overall valuation allowance primarily due to the Separation related to state net operating losses and state tax credits. This decreased the overall income tax benefit and ETR by $27 million and 270%, respectively. |
• | The release of a liability for uncertain tax positions following the closure of the U.K. tax audit for fiscal 2010 to 2012. This increased the income tax benefit by $58 million and increased the ETR by 580%. |
• | Adjustments to uncertain tax positions in the U.S. that increased the overall income tax benefit by $24 million and increased the ETR by 240%, respectively. |
• | The non-deductible SEC settlement of $190 million, which decreased the income tax benefit and the ETR by $73 million and 10.9%, respectively. |
• | Local losses on investments in Luxembourg increased the foreign rate differential and the ETR by $325 million and 48.4%, respectively, with an offsetting decrease in the ETR due to an increase in the valuation allowance of the same amount. |
• | Changes in valuation allowances in certain jurisdictions, including a valuation allowance release in the U.K. The total impact of the valuation allowance release increased the income tax benefit and the ETR by $235 million and 35.0%, respectively. There was a net decrease in valuation allowances in fiscal 2015. |
• | Favorable change in pension and OPEB actuarial and settlement losses of $485 million, or $3.43 per share; |
• | Non-recurrence of fiscal 2015 special restructuring charges of $241 million, or $1.71 per share; |
• | Non-recurrence of fiscal 2015 SEC settlement and related charges of $200 million, or 1.42 per share; |
• | Partially offset by debt extinguishment costs of $95 million, or (0.67) per share. |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
(Loss) income from continuing operations | $ | (100 | ) | $ | 72 | $ | (207 | ) | ||||
Non-GAAP income from continuing operations | $ | 470 | $ | 363 | $ | 326 | ||||||
Consolidated segment operating income | $ | 357 | $ | 515 | $ | 459 | ||||||
Net (loss) income | $ | (100 | ) | $ | 263 | $ | 17 | |||||
EBIT | $ | (92 | ) | $ | 95 | $ | (565 | ) |
• | Restructuring costs - Reflects restructuring costs related to workforce optimization and real estate charges. |
• | Transaction and integration-related costs - Reflects costs related to (1) the Separation, (2) integration planning, financing and advisory fees associated with the Merger and (3) acquisitions and related intangible amortization. |
• | Certain overhead costs - Reflects certain fiscal 2016 and 2015 costs historically allocated to our former NPS segment but not included in discontinued operations due to accounting rules. These costs are expected to be largely eliminated on a prospective basis. |
• | U.S. Pension and OPEB - Reflects the impact of certain U.S. pension and other OPEB plans historically included in CSC's financial results that have been transferred to CSRA as part of the Separation. |
• | Pension and OPEB actuarial and settlement losses - Reflects pension and OPEB actuarial and settlement losses from mark-to-market accounting. |
• | SEC settlement-related items - Reflects costs associated with certain SEC charges and settlements. |
• | Debt extinguishment costs - Reflects costs related to the fiscal 2016 redemption of all outstanding 6.50% term notes due March 2018. |
• | Tax adjustment - Reflects the adoption of a new accounting standard in fiscal 2016 changing excess tax benefits on share-based compensation to be recorded as a reduction to income tax expense, the release of tax valuation allowances in certain jurisdictions and the application of an approximate 20% tax rate for fiscal 2016 periods, which is at the low end of the prospective targeted effective tax rate range of 20% to 25% and effectively excludes the impact of discrete tax adjustments for those periods. |
Fiscal Year Ended March 31, 2017 | ||||||||||||||||||||
(in millions, except per-share amounts) | As reported | Restructuring costs | Transaction and integration-related costs | Pension and OPEB actuarial and settlement losses | Non-GAAP results | |||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | $ | 5,545 | $ | — | $ | — | $ | (72 | ) | $ | 5,473 | |||||||||
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs) | 1,279 | — | (305 | ) | (15 | ) | 959 | |||||||||||||
(Loss) income from continuing operations, before taxes | (174 | ) | (247 | ) | (403 | ) | (87 | ) | 563 | |||||||||||
Income tax benefit | (74 | ) | (39 | ) | (111 | ) | (17 | ) | 93 | |||||||||||
(Loss) income from continuing operations | (100 | ) | (208 | ) | (292 | ) | (70 | ) | 470 | |||||||||||
Net (loss) income | (100 | ) | (208 | ) | (292 | ) | (70 | ) | 470 | |||||||||||
Less: net income attributable to noncontrolling interest, net of tax | 23 | — | — | — | 23 | |||||||||||||||
Net (loss) income attributable to CSC common stockholders | $ | (123 | ) | $ | (208 | ) | $ | (292 | ) | $ | (70 | ) | $ | 447 | ||||||
Effective Tax Rate | 42.5 | % | 16.5 | % | ||||||||||||||||
Basic EPS from continuing operations | $ | (0.88 | ) | $ | (1.48 | ) | $ | (2.08 | ) | $ | (0.50 | ) | $ | 3.18 | ||||||
Diluted EPS from continuing operations | $ | (0.88 | ) | $ | (1.44 | ) | $ | (2.02 | ) | $ | (0.49 | ) | $ | 3.10 | ||||||
Weighted average common shares outstanding for: | ||||||||||||||||||||
Basic EPS | 140.39 | 140.39 | 140.39 | 140.39 | 140.39 | |||||||||||||||
Diluted EPS | 140.39 | 144.31 | 144.31 | 144.31 | 144.31 |
Fiscal Year Ended April 1, 2016 | ||||||||||||||||||||||||||||||||||||||||
(in millions, except per-share amounts) | As reported | Certain overhead costs | U.S. pension and OPEB | Transaction and integration-related costs | Restructuring costs | Pension & OPEB actuarial & settlement losses | SEC settlement-related items | Debt extinguishment costs | Tax adjustment | Non-GAAP results | ||||||||||||||||||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | $ | 5,185 | $ | (41 | ) | $ | 32 | $ | (5 | ) | $ | — | $ | (100 | ) | $ | — | $ | — | $ | — | $ | 5,071 | |||||||||||||||||
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs) | 1,040 | (47 | ) | 6 | (55 | ) | — | 1 | (5 | ) | — | — | 940 | |||||||||||||||||||||||||||
Income from continuing operations, before taxes | 10 | (88 | ) | 38 | (95 | ) | (66 | ) | (99 | ) | (5 | ) | (100 | ) | — | 425 | ||||||||||||||||||||||||
Income tax (benefit) expense | (62 | ) | (34 | ) | 15 | (23 | ) | (18 | ) | (18 | ) | (2 | ) | (40 | ) | (4 | ) | 62 | ||||||||||||||||||||||
Income from continuing operations | 72 | (54 | ) | 23 | (72 | ) | (48 | ) | (81 | ) | (3 | ) | (60 | ) | 4 | 363 | ||||||||||||||||||||||||
Net income | 263 | (54 | ) | 23 | (72 | ) | (48 | ) | (81 | ) | (3 | ) | (60 | ) | 4 | 554 | ||||||||||||||||||||||||
Less: net income attributable to noncontrolling interest, net of tax | 12 | — | — | — | — | — | — | — | — | 12 | ||||||||||||||||||||||||||||||
Net income attributable to CSC common stockholders | $ | 251 | $ | (54 | ) | $ | 23 | $ | (72 | ) | $ | (48 | ) | $ | (81 | ) | $ | (3 | ) | $ | (60 | ) | $ | 4 | $ | 542 | ||||||||||||||
Effective Tax Rate | (620.0 | )% | 14.6 | % | ||||||||||||||||||||||||||||||||||||
Basic EPS from continuing operations | $ | 0.51 | $ | (0.39 | ) | $ | 0.17 | $ | (0.52 | ) | $ | (0.35 | ) | $ | (0.59 | ) | $ | (0.02 | ) | $ | (0.43 | ) | $ | 0.03 | $ | 2.63 | ||||||||||||||
Diluted EPS from continuing operations | $ | 0.50 | $ | (0.38 | ) | $ | 0.16 | $ | (0.51 | ) | $ | (0.34 | ) | $ | (0.57 | ) | $ | (0.02 | ) | $ | (0.42 | ) | $ | 0.03 | $ | 2.57 | ||||||||||||||
Weighted average common shares outstanding for: | ||||||||||||||||||||||||||||||||||||||||
Basic EPS | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | 138.28 | ||||||||||||||||||||||||||||||
Diluted EPS | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 | 141.33 |
Fiscal Year Ended April 3, 2015 | ||||||||||||||||||||||||||||||||
(in millions, except per-share amounts) | As reported | Certain overhead costs | U.S. Pension and OPEB | Pension and OPEB actuarial and settlement losses | SEC settlement-related items | Restructuring costs | Tax adjustment | Non-GAAP results | ||||||||||||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | $ | 6,159 | $ | (32 | ) | $ | 43 | $ | (525 | ) | $ | — | $ | — | $ | — | $ | 5,645 | ||||||||||||||
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs) | 1,220 | (72 | ) | 8 | (59 | ) | (3 | ) | — | — | 1,094 | |||||||||||||||||||||
(Loss) income from continuing operations, before taxes | (671 | ) | (104 | ) | 51 | (584 | ) | (200 | ) | (241 | ) | — | 407 | |||||||||||||||||||
Income tax benefit | (464 | ) | (40 | ) | 20 | (135 | ) | (2 | ) | (50 | ) | (338 | ) | 81 | ||||||||||||||||||
(Loss) income from continuing operations | (207 | ) | (64 | ) | 31 | (449 | ) | (198 | ) | (191 | ) | 338 | 326 | |||||||||||||||||||
Net income | 17 | (64 | ) | 31 | (449 | ) | (198 | ) | (191 | ) | 338 | 550 | ||||||||||||||||||||
Less: net income attributable to noncontrolling interest, net of tax | 15 | — | — | — | — | — | — | 15 | ||||||||||||||||||||||||
Net income attributable to CSC common stockholders | $ | 2 | $ | (64 | ) | $ | 31 | $ | (449 | ) | $ | (198 | ) | $ | (191 | ) | $ | 338 | $ | 535 | ||||||||||||
Effective Tax Rate | 69.2 | % | 19.9 | % | ||||||||||||||||||||||||||||
Basic EPS from continuing operations | $ | (1.45 | ) | $ | (0.45 | ) | $ | 0.22 | $ | (3.15 | ) | $ | (1.39 | ) | $ | (1.34 | ) | $ | 2.37 | $ | 2.29 | |||||||||||
Diluted EPS from continuing operations | $ | (1.45 | ) | $ | (0.44 | ) | $ | 0.21 | $ | (3.08 | ) | $ | (1.36 | ) | $ | (1.31 | ) | $ | 2.32 | $ | 2.24 | |||||||||||
�� | ||||||||||||||||||||||||||||||||
Weighted average common shares outstanding for: | ||||||||||||||||||||||||||||||||
Basic EPS | 142.56 | 142.56 | 142.56 | 142.56 | 142.56 | 142.56 | 142.56 | 142.56 | ||||||||||||||||||||||||
Diluted EPS | 142.56 | 145.78 | 145.78 | 145.78 | 145.78 | 145.78 | 145.78 | 145.78 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Consolidated segment operating income | $ | 357 | $ | 515 | $ | 459 | ||||||
Corporate G&A | (372 | ) | (216 | ) | (230 | ) | ||||||
Pension and OPEB actuarial and settlement losses | (87 | ) | (99 | ) | (584 | ) | ||||||
SEC settlement related charges & other | — | — | (200 | ) | ||||||||
Separation costs | — | (19 | ) | — | ||||||||
Interest expense | (117 | ) | (123 | ) | (126 | ) | ||||||
Interest income | 35 | 38 | 20 | |||||||||
Debt extinguishment costs | — | (95 | ) | — | ||||||||
Other income (expense), net | 10 | 9 | (10 | ) | ||||||||
(Loss) income from continuing operations, before taxes | $ | (174 | ) | $ | 10 | $ | (671 | ) |
Fiscal Year Ended March 31, 2017 | |||||||||||||||||||
(in millions) | Consolidated segment operating income | Restructuring costs | Transaction and integration-related costs | Consolidated segment adjusted operating income | Consolidated segment adjusted operating margin | ||||||||||||||
Global Business Services | $ | 305 | $ | (116 | ) | $ | (77 | ) | $ | 498 | 11.9 | % | |||||||
Global Infrastructure Services | 107 | (131 | ) | (71 | ) | 309 | 9.0 | % | |||||||||||
Total Commercial | 412 | (247 | ) | (148 | ) | 807 | 10.6 | % | |||||||||||
Corporate and Eliminations | (55 | ) | — | (3 | ) | (52 | ) | — | % | ||||||||||
Total | $ | 357 | $ | (247 | ) | $ | (151 | ) | $ | 755 | 9.9 | % |
Fiscal Year Ended April 1, 2016 | |||||||||||||||||||||||||||
(in millions) | Consolidated segment operating income | Certain overhead costs | U.S Pension & OPEB | Restructuring costs | Transaction and integration-related costs | Consolidated segment adjusted operating income | Consolidated segment adjusted operating margin | ||||||||||||||||||||
Global Business Services | $ | 381 | $ | — | $ | 11 | $ | (37 | ) | $ | (16 | ) | $ | 423 | 11.6 | % | |||||||||||
Global Infrastructure Services | 216 | — | 27 | (28 | ) | (20 | ) | 237 | 6.8 | % | |||||||||||||||||
Total Commercial | 597 | — | 38 | (65 | ) | (36 | ) | 660 | 9.3 | % | |||||||||||||||||
Corporate and Eliminations | (82 | ) | (48 | ) | — | (1 | ) | (5 | ) | (28 | ) | — | % | ||||||||||||||
Total | $ | 515 | $ | (48 | ) | $ | 38 | $ | (66 | ) | $ | (41 | ) | $ | 632 | 8.9 | % |
Fiscal Year Ended April 3, 2015 | |||||||||||||||||||||||
(in millions) | Consolidated segment operating income | Certain overhead costs | U.S. Pension and OPEB | Restructuring costs | Consolidated segment adjusted operating income | Consolidated segment adjusted operating margin | |||||||||||||||||
Global Business Services | $ | 405 | $ | — | $ | 16 | $ | (125 | ) | $ | 514 | 12.7 | % | ||||||||||
Global Infrastructure Services | 162 | — | 35 | (112 | ) | 239 | 5.9 | % | |||||||||||||||
Total Commercial | 567 | — | 51 | (237 | ) | 753 | 9.3 | % | |||||||||||||||
Corporate and Eliminations | (108 | ) | (38 | ) | — | (4 | ) | (66 | ) | — | % | ||||||||||||
Total | $ | 459 | $ | (38 | ) | $ | 51 | $ | (241 | ) | $ | 687 | 8.5 | % |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Adjusted EBIT | $ | 627 | $ | 503 | $ | 513 | ||||||
Restructuring costs | (247 | ) | (66 | ) | (241 | ) | ||||||
Transaction and integration-related costs | (385 | ) | (93 | ) | — | |||||||
SEC settlement-related items | — | (5 | ) | (200 | ) | |||||||
Pension and OPEB actuarial and settlement losses | (87 | ) | (99 | ) | (584 | ) | ||||||
Debt extinguishment costs | — | (95 | ) | — | ||||||||
Certain overhead costs | — | (88 | ) | (104 | ) | |||||||
U.S. Pension and OPEB | — | 38 | 51 | |||||||||
EBIT | $ | (92 | ) | $ | 95 | $ | (565 | ) | ||||
Interest expense | (117 | ) | (123 | ) | (126 | ) | ||||||
Interest income | 35 | 38 | 20 | |||||||||
Income tax benefit | 74 | 62 | 464 | |||||||||
(Loss) income from continuing operations | $ | (100 | ) | $ | 72 | $ | (207 | ) | ||||
Income from discontinued operations, net of taxes | — | 191 | 224 | |||||||||
Net (loss) income | $ | (100 | ) | $ | 263 | $ | 17 |
Fiscal Year Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Net cash provided by operating activities | $ | 978 | $ | 802 | $ | 1,473 | ||||||
Net cash used in investing activities | (926 | ) | (1,180 | ) | (536 | ) | ||||||
Net cash provided by (used in) financing activities | 93 | (485 | ) | (1,078 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (60 | ) | (57 | ) | (204 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | $ | 85 | $ | (920 | ) | $ | (345 | ) | ||||
Cash and cash equivalents at beginning of year | 1,178 | 2,098 | 2,443 | |||||||||
Cash and cash equivalents at the end of period | $ | 1,263 | $ | 1,178 | $ | 2,098 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Short-term debt and current maturities of long-term debt | $ | 738 | $ | 710 | ||||
Long-term debt, net of current maturities | 2,225 | 1,934 | ||||||
Total debt | $ | 2,963 | $ | 2,644 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Total debt | $ | 2,963 | $ | 2,644 | ||||
Cash and cash equivalents | 1,263 | 1,178 | ||||||
Net debt(1) | $ | 1,700 | $ | 1,466 | ||||
Total debt | $ | 2,963 | $ | 2,644 | ||||
Equity | 2,166 | 2,032 | ||||||
Total capitalization | $ | 5,129 | $ | 4,676 | ||||
Debt-to-total capitalization | 57.8 | % | 56.5 | % | ||||
Net debt-to-total capitalization(1) | 33.1 | % | 31.4 | % |
As of | ||||
(in millions) | March 31, 2017 | |||
Cash and cash equivalents | $ | 1,263 | ||
Available borrowings under our revolving credit facility | 2,272 | |||
Available borrowings under our lease credit facility | 62 | |||
Total liquidity | $ | 3,597 |
(in millions) | Less than 1 year | 2-3 years | 4-5 years | More than 5 years | Total | |||||||||||||||
Debt (1) | $ | 55 | $ | 372 | $ | 1,271 | $ | 515 | $ | 2,213 | ||||||||||
Interest and preferred dividend payments (2) | 49 | 69 | 55 | 12 | 185 | |||||||||||||||
Capitalized lease liabilities | 37 | 59 | 11 | — | 107 | |||||||||||||||
Operating leases | 124 | 161 | 64 | 97 | 446 | |||||||||||||||
Minimum purchase obligations(3) | 407 | 731 | 731 | — | 1,869 | |||||||||||||||
Total(4) | $ | 672 | $ | 1,392 | $ | 2,132 | $ | 624 | $ | 4,820 |
March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||
Discount rates | 3.1 | % | 3.0 | % | 4.4 | % | |||
Expected long-term rates of return on assets | 6.3 | % | 6.3 | % | 7.1 | % |
(in millions) | Change | Approximate Change in Net Periodic Pension Expense | Approximate Change in Settlement and Contractual Termination Charges | |||||||
Expected long-term return on plan assets | 0.5% | $ | (13 | ) | $ | 12 | ||||
Expected long-term return on plan assets | (0.5)% | 13 | (12 | ) | ||||||
Discount rate | 0.5% | 4 | (305 | ) | ||||||
Discount rate | (0.5)% | $ | (7 | ) | $ | 305 |
Page | |
CONSOLIDATED BALANCE SHEETS
As of | ||||||||
(in millions, except per share and share amounts) | March 31, 2017 | April 1, 2016 | ||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,263 | $ | 1,178 | ||||
Receivables, net of allowance for doubtful accounts of $26 and $31 | 1,643 | 1,831 | ||||||
Prepaid expenses and other current assets | 341 | 403 | ||||||
Total current assets | 3,247 | 3,412 | ||||||
Intangible assets, net of accumulated amortization of $2,293 and $2,228 | 1,794 | 1,328 | ||||||
Goodwill | 1,855 | 1,277 | ||||||
Deferred income taxes, net | 381 | 345 | ||||||
Property and equipment, net of accumulated depreciation of $2,816 and $2,894 | 903 | 1,025 | ||||||
Other assets | 483 | 349 | ||||||
Total Assets | $ | 8,663 | $ | 7,736 | ||||
LIABILITIES and EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt and current maturities of long-term debt | 738 | 710 | ||||||
Accounts payable | 410 | 341 | ||||||
Accrued payroll and related costs | 248 | 288 | ||||||
Accrued expenses and other current liabilities | 998 | 720 | ||||||
Deferred revenue and advance contract payments | 518 | 509 | ||||||
Income taxes payable | 38 | 40 | ||||||
Total current liabilities | 2,950 | 2,608 | ||||||
Long-term debt, net of current maturities | 2,225 | 1,934 | ||||||
Non-current deferred revenue | 286 | 348 | ||||||
Non-current pension obligations | 342 | 298 | ||||||
Non-current income tax liabilities and deferred tax liabilities | 423 | 356 | ||||||
Other long-term liabilities | 271 | 160 | ||||||
Total Liabilities | 6,497 | 5,704 | ||||||
Commitments and contingencies | ||||||||
CSC stockholders’ equity: | ||||||||
Preferred stock, par value $1 per share; authorized 1,000,000 shares; none issued | — | — | ||||||
Common stock, par value $1 per share; authorized 750,000,000 shares; issued 151,932,040 and 148,746,672 | 152 | 149 | ||||||
Additional paid-in capital | 2,565 | 2,439 | ||||||
(Accumulated deficit) retained earnings | (170 | ) | 33 | |||||
Accumulated other comprehensive loss | (162 | ) | (111 | ) | ||||
Treasury stock, at cost, 10,633,243 and 10,365,811 shares | (497 | ) | (485 | ) | ||||
Total CSC stockholders’ equity | 1,888 | 2,025 | ||||||
Noncontrolling interest in subsidiaries | 278 | 7 | ||||||
Total Equity | 2,166 | 2,032 | ||||||
Total Liabilities and Equity | $ | 8,663 | $ | 7,736 |
CONSOLIDATED STATEMENTS OF OPERATIONS
Fiscal Years Ended | ||||||||||||
(in millions, except per-share amounts) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Revenues | $ | 7,607 | $ | 7,106 | $ | 8,117 | ||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 5,545 | 5,185 | 6,159 | |||||||||
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs) | 1,279 | 1,040 | 1,220 | |||||||||
Selling, general and administrative - SEC settlement related charges | — | — | 197 | |||||||||
Depreciation and amortization | 647 | 658 | 840 | |||||||||
Restructuring costs | 238 | 23 | 256 | |||||||||
Separation costs | — | 19 | — | |||||||||
Interest expense | 117 | 123 | 126 | |||||||||
Interest income | (35 | ) | (38 | ) | (20 | ) | ||||||
Debt extinguishment costs | — | 95 | — | |||||||||
Other (income) expense, net | (10 | ) | (9 | ) | 10 | |||||||
Total costs and expenses | 7,781 | 7,096 | 8,788 | |||||||||
(Loss) income from continuing operations, before taxes | (174 | ) | 10 | (671 | ) | |||||||
Income tax benefit | (74 | ) | (62 | ) | (464 | ) | ||||||
(Loss) income from continuing operations | (100 | ) | 72 | (207 | ) | |||||||
Income from discontinued operations, net of taxes | — | 191 | 224 | |||||||||
Net (loss) income | (100 | ) | 263 | 17 | ||||||||
Less: net income attributable to noncontrolling interest, net of tax | 23 | 12 | 15 | |||||||||
Net (loss) income attributable to CSC common stockholders | $ | (123 | ) | $ | 251 | $ | 2 | |||||
(Loss) earnings per common share | ||||||||||||
Basic: | ||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.51 | $ | (1.45 | ) | ||||
Discontinued operations | — | 1.31 | 1.46 | |||||||||
$ | (0.88 | ) | $ | 1.82 | $ | 0.01 | ||||||
Diluted: | ||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.50 | $ | (1.45 | ) | ||||
Discontinued operations | — | 1.28 | 1.46 | |||||||||
$ | (0.88 | ) | $ | 1.78 | $ | 0.01 | ||||||
Cash dividend per common share | $ | 0.56 | $ | 2.99 | $ | 0.92 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Fiscal Years Ended | ||||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||||
Net (loss) income | $ | (100 | ) | $ | 263 | $ | 17 | |||||||
Other comprehensive loss, net of taxes: | ||||||||||||||
Foreign currency translation adjustments, net of tax expense of $5, $4 and $3 | (75 | ) | (83 | ) | (310 | ) | ||||||||
Foreign currency forward contracts, net of tax expense of $12, $0 and $0 | 21 | 1 | (2 | ) | ||||||||||
Pension and other post-retirement benefit plans, net of tax: | ||||||||||||||
Prior service credit, net of tax expense of $0, $1 and $37 | — | 2 | 57 | |||||||||||
Amortization of transition obligation, net of tax expense of $0 | 1 | — | 1 | |||||||||||
Amortization of prior service cost, net of tax benefit of $5, $10 and $7 | (12 | ) | (20 | ) | (16 | ) | ||||||||
Foreign currency exchange loss, net of tax benefit of $1, $0 and $0 | (2 | ) | (1 | ) | — | |||||||||
Pension and other post-retirement benefit plans, net of tax | (13 | ) | (19 | ) | 42 | |||||||||
Other comprehensive loss, net of taxes | (67 | ) | (101 | ) | (270 | ) | ||||||||
Comprehensive (loss) income | (167 | ) | 162 | (253 | ) | |||||||||
Less: comprehensive income attributable to noncontrolling interest | 7 | 12 | 15 | |||||||||||
Comprehensive (loss) income attributable to CSC common stockholders | $ | (174 | ) | $ | 150 | $ | (268 | ) |
CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net (loss) income | $ | (100 | ) | $ | 263 | $ | 17 | |||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 658 | 767 | 977 | |||||||||
Pension & other post-employment benefits, actuarial & settlement losses | 87 | 92 | 782 | |||||||||
Share-based compensation | 75 | 45 | 68 | |||||||||
Deferred taxes | (92 | ) | (37 | ) | (449 | ) | ||||||
Loss (gain) on dispositions | 6 | (41 | ) | (22 | ) | |||||||
Provision for losses on accounts receivable | 4 | 6 | 2 | |||||||||
Unrealized foreign currency exchange losses (gain) | 24 | 43 | (4 | ) | ||||||||
Impairment losses and contract write-offs | 8 | 2 | — | |||||||||
Debt extinguishment costs | — | 95 | — | |||||||||
Amortization of prepaid debt issuance costs | 17 | — | — | |||||||||
Cash surrender value in excess of premiums paid | (7 | ) | (10 | ) | (9 | ) | ||||||
Other non-cash charges, net | — | — | 39 | |||||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||||||
Decrease in receivables | 586 | 129 | 237 | |||||||||
Increase in deferred purchase price receivable | (252 | ) | — | — | ||||||||
Increase in prepaid expenses and other current assets | (29 | ) | (15 | ) | (36 | ) | ||||||
Increase (decrease) in accounts payable and accruals | 54 | (357 | ) | (313 | ) | |||||||
SEC settlement related charges | — | (190 | ) | 190 | ||||||||
(Decrease) increase in income taxes payable and income tax liability | (32 | ) | 58 | (33 | ) | |||||||
(Decrease) increase in advances contract payments and deferred revenue | (67 | ) | (37 | ) | 11 | |||||||
Other operating activities, net | 38 | (11 | ) | 16 | ||||||||
Net cash provided by operating activities | 978 | 802 | 1,473 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchases of property and equipment | (246 | ) | (356 | ) | (381 | ) | ||||||
Payments for outsourcing contract costs | (101 | ) | (101 | ) | (68 | ) | ||||||
Short-term investing | — | (70 | ) | — | ||||||||
Software purchased and developed | (140 | ) | (184 | ) | (199 | ) | ||||||
Payments for acquisitions, net of cash acquired | (434 | ) | (554 | ) | (49 | ) | ||||||
Business dispositions | 3 | 37 | (13 | ) | ||||||||
Proceeds from sale of assets | 57 | 61 | 155 | |||||||||
Other investing activities, net | (65 | ) | (13 | ) | 19 | |||||||
Net cash used in investing activities | (926 | ) | (1,180 | ) | (536 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Borrowings of commercial paper | 2,191 | 821 | — | |||||||||
Repayments of commercial paper | (2,086 | ) | (263 | ) | — |
Borrowings under lines of credit and short-term debt | 920 | 2,206 | — | |||||||||
Repayment of borrowings under lines of credit | (789 | ) | (1,825 | ) | (32 | ) | ||||||
Borrowings on long-term debt, net of discount | 159 | 928 | — | |||||||||
Principal payments on long-term debt | (313 | ) | (1,869 | ) | (242 | ) | ||||||
Proceeds from structured sale of facility | 85 | — | — | |||||||||
Proceeds from stock options and other common stock transactions | 54 | 82 | 196 | |||||||||
Taxes paid related to net share settlements of share-based compensation awards | (13 | ) | (48 | ) | (22 | ) | ||||||
Debt extinguishment costs | — | (95 | ) | — | ||||||||
Repurchase of common stock and advance payment for accelerated share repurchase | — | (73 | ) | (842 | ) | |||||||
Dividend payments | (78 | ) | (430 | ) | (128 | ) | ||||||
Borrowings for CSRA spin transaction | — | 1,508 | — | |||||||||
Transfers of cash to CSRA upon Separation | — | (1,440 | ) | — | ||||||||
Other financing activities, net | (37 | ) | 13 | (8 | ) | |||||||
Net cash provided by (used in) financing activities | 93 | (485 | ) | (1,078 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (60 | ) | (57 | ) | (204 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 85 | (920 | ) | (345 | ) | |||||||
Cash and cash equivalents at beginning of year | 1,178 | 2,098 | 2,443 | |||||||||
Cash and cash equivalents at end of year | $ | 1,263 | $ | 1,178 | $ | 2,098 |
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions, except shares in thousands) | Common Stock | Additional Paid-in Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock (2) | Total CSC Equity | Non- Controlling Interest | Total Equity | |||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||
Balance at March 28, 2014 | 154,721 | $ | 155 | $ | 2,304 | $ | 1,598 | $ | 279 | $ | (418 | ) | $ | 3,918 | $ | 32 | $ | 3,950 | |||||||||
Net (loss) income | 2 | 2 | 15 | 17 | |||||||||||||||||||||||
Other comprehensive loss | (270 | ) | (270 | ) | (270 | ) | |||||||||||||||||||||
Share-based compensation expense | 67 | 67 | 67 | ||||||||||||||||||||||||
Acquisition of treasury stock | (28 | ) | (28 | ) | (28 | ) | |||||||||||||||||||||
Share repurchase program | (11,716 | ) | (12 | ) | (295 | ) | (529 | ) | (836 | ) | (836 | ) | |||||||||||||||
Stock option exercises and other common stock transactions | 5,369 | 5 | 210 | 215 | 215 | ||||||||||||||||||||||
Dividends declared | (131 | ) | (131 | ) | (131 | ) | |||||||||||||||||||||
Noncontrolling interest distributions and other | (12 | ) | 12 | — | (19 | ) | (19 | ) | |||||||||||||||||||
Balance at April 3, 2015 | 148,374 | $ | 148 | $ | 2,286 | $ | 928 | $ | 21 | $ | (446 | ) | $ | 2,937 | $ | 28 | $ | 2,965 | |||||||||
Net (loss) income | 251 | 251 | 12 | 263 | |||||||||||||||||||||||
Other comprehensive loss | (101 | ) | (101 | ) | (101 | ) | |||||||||||||||||||||
Share-based compensation expense | 45 | 45 | 45 | ||||||||||||||||||||||||
Acquisition of treasury stock | (39 | ) | (39 | ) | (39 | ) | |||||||||||||||||||||
Share repurchase program | (3,750 | ) | (4 | ) | 36 | (106 | ) | (74 | ) | (74 | ) | ||||||||||||||||
Stock option exercises and other common stock transactions | 4,123 | 5 | 72 | 77 | 77 | ||||||||||||||||||||||
Dividends declared | (104 | ) | (104 | ) | (104 | ) | |||||||||||||||||||||
Special dividend | (317 | ) | (317 | ) | (317 | ) | |||||||||||||||||||||
Capital contributions | — | 6 | 6 | ||||||||||||||||||||||||
Noncontrolling interest distributions and other | — | (9 | ) | (9 | ) | ||||||||||||||||||||||
Divestiture of NPS | (619 | ) | (31 | ) | (650 | ) | (30 | ) | (680 | ) | |||||||||||||||||
Balance at April 1, 2016 | 148,747 | $ | 149 | $ | 2,439 | $ | 33 | $ | (111 | ) | $ | (485 | ) | $ | 2,025 | $ | 7 | $ | 2,032 | ||||||||
Net (loss) income | (123 | ) | (123 | ) | 23 | (100 | ) | ||||||||||||||||||||
Other comprehensive loss | (51 | ) | (51 | ) | (16 | ) | (67 | ) | |||||||||||||||||||
Share-based compensation expense | 73 | 73 | 73 | ||||||||||||||||||||||||
Acquisition of treasury stock | (12 | ) | (12 | ) | (12 | ) | |||||||||||||||||||||
Stock option exercises and other common stock transactions | 3,185 | 3 | 53 | 56 | 56 | ||||||||||||||||||||||
Dividends declared | (80 | ) | (80 | ) | (80 | ) | |||||||||||||||||||||
Noncontrolling interest distributions and other | — | (17 | ) | (17 | ) | ||||||||||||||||||||||
Noncontrolling interest from acquisition(1) | — | 281 | 281 | ||||||||||||||||||||||||
Balance at March 31, 2017 | 151,932 | $ | 152 | $ | 2,565 | $ | (170 | ) | $ | (162 | ) | $ | (497 | ) | $ | 1,888 | $ | 278 | $ | 2,166 |
(1) | See Note 2: "Acquisitions" |
(2) | 10,633,243 treasury shares as of March 31, 2017 |
Property and Equipment: | |
Buildings | Up to 40 years |
Computers and related equipment | 4 to 5 years |
Furniture and other equipment | 2 to 15 years |
Leasehold improvements | Shorter of lease term or useful life |
Software | 2 to 10 years |
Outsourcing contract costs | Contract life, excluding option years |
Customer related intangibles | Expected customer service life |
Acquired contract related intangibles | Contract life and first contract renewal, where applicable |
ASU 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," as clarified by ASU 2015-15, "Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements," requires that debt issuance costs are presented in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Presentation of fees under line-of-credit ("LOC") arrangements had not been specified in ASU 2015-03; as a result, ASU 2015-15 was issued. ASU 2015-15 states that the SEC staff would not object to an entity deferring LOC commitment fees as an asset and subsequently amortizing ratably over the term of the underlying LOC arrangement, regardless of whether there are outstanding borrowings under that LOC arrangement. CSC adopted both ASUs retrospectively effective April 2, 2016 and the impact upon its consolidated financial statements was immaterial.
ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement," issued guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement does not contain a software license, the customer should account for the arrangement as a service contract. If the arrangement includes software licenses, it should be accounted for and considered as other licenses of intangible assets. CSC elected to adopt this ASU prospectively effective April 2, 2016. The adoption of this ASU did not have a material impact on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash a consensus of the FASB Emerging Issues Task Force,” which requires that amounts described as restricted cash or cash equivalents must be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 will be effective for CSC in fiscal 2019 and must be applied retrospectively to all periods presented. CSC is currently evaluating the impact, if any, that the adoption of ASU 2016-18 may have on its consolidated statements of cash flows in future reporting periods.
• | The Company’s IT and business process outsourcing arrangements comprise a series of distinct services, for which revenue is expected to be recognized as the services are provided in a manner that is generally consistent with current practices. |
• | The Company has certain arrangements involving the sale of proprietary software and related services for which VSOE of fair value may not exist, resulting in the deferral of revenue. Under the new standard, estimates of standalone selling price will be necessary for all software performance obligations, which may result in the acceleration of revenue. |
• | The Company currently does not capitalize commission costs, which will be required in certain cases under the new standard and amortized over the period that services or goods are transferred to the customer. However, the Company will need to further assess the impact of the standard on commission plans of the combined company. |
The purchase consideration included cash of $8 million paid at closing, the estimated fair value of contingent consideration as of the acquisition date of $6 million and $1 million being withheld by the Company for one year following the closing of the acquisition as security for potential claims against the seller. The estimated amount of contingent consideration increased by $1 million to $7 million as of March 31, 2017. The purchase price was allocated to assets acquired and liabilities assumed as follows: $9 million to current assets, $1 million to noncurrent assets, $9 million to intangible assets other than goodwill, $8 million to current liabilities, $5 million to long-term liabilities and $9 million to goodwill. The goodwill was associated with the Company's GBS segment and is not tax deductible. The amortizable lives associated with the intangible assets acquired includes customer relationships which have a ten-year estimated useful life. Transaction costs associated with the acquisition were less than $1 million and were included within selling, general and administrative expenses in the consolidated statements of operations. For fiscal 2017, Aspediens contributed revenues and income from continuing operations that were immaterial to the Company's overall results.
(in millions) | Estimated Fair Value | |||
Cash and cash equivalents | $ | 201 | ||
Accounts receivable and other current assets | 195 | |||
Intangible assets - developed technology | 97 | |||
Intangible assets - customer relationships | 457 | |||
Intangible assets - trade names | 10 | |||
Intangible assets - other | 18 | |||
Deferred tax asset, long-term | 68 | |||
Property and equipment and other noncurrent assets | 31 | |||
Accounts payable, accrued payroll, accrued expenses and other current liabilities | (215 | ) | ||
Deferred revenue and advance contract payments | (52 | ) | ||
Debt | (254 | ) | ||
Deferred tax liability, long-term | (140 | ) | ||
Other long-term liabilities | (122 | ) | ||
Total identifiable net assets acquired | 294 | |||
Goodwill | 680 | |||
Noncontrolling interest | (281 | ) | ||
Total estimated consideration | $ | 693 |
Description | Estimated Useful Lives (Years) | |
Developed technology | 7-8 | |
Customer relationships | 15 | |
Trade names | 3-5 |
Fiscal Years Ended | ||||||||
(in millions) | April 1, 2016(1) | April 3, 2015 | ||||||
Revenues | $ | 2,504 | $ | 4,056 | ||||
Costs of services | 1,935 | 3,375 | ||||||
Selling, general and administrative | 52 | 120 | ||||||
Depreciation and amortization | 90 | 137 | ||||||
Restructuring costs | 1 | 5 | ||||||
Separation and merger costs | 103 | — | ||||||
Interest expense | 15 | 22 | ||||||
Other (income) expense, net | (21 | ) | 2 | |||||
Income from discontinued operations before income taxes | 329 | 395 | ||||||
Income tax expense | (138 | ) | (142 | ) | ||||
Income from discontinued operations, net of tax | $ | 191 | $ | 253 |
(in millions) | As of November 27, 2015 | |||
Assets: | ||||
Cash and cash equivalents | $ | 1,440 | ||
Receivables, net | 470 | |||
Property and equipment, net | 472 | |||
Goodwill, net | 826 | |||
Other assets | 307 | |||
Total assets | $ | 3,515 | ||
Liabilities: | ||||
Accounts payable | $ | 45 | ||
Accrued expenses and other current liabilities | 409 | |||
Debt | 1,702 | |||
Other long-term liabilities | 692 | |||
Total liabilities | $ | 2,848 | ||
Net assets distributed | $ | 667 |
Fiscal Years Ended | ||||||||
(in millions) | April 1, 2016(1) | April 3, 2015 | ||||||
Depreciation | $ | 75 | $ | 114 | ||||
Amortization | $ | 15 | $ | 23 | ||||
Capital expenditures | $ | (75 | ) | $ | (75 | ) | ||
Significant operating non-cash items: | ||||||||
Net gain on disposition of business | $ | 22 | $ | (3 | ) | |||
Significant investing non-cash items: | ||||||||
Capital expenditures through capital lease obligations | $ | — | $ | (10 | ) | |||
Capital expenditures in accounts payable | $ | (7 | ) | $ | (14 | ) | ||
Disposition of assets | $ | (8 | ) | $ | 1 |
Fiscal Years Ended | ||||||||||||
(in millions, except per-share amounts) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Net (loss) income attributable to CSC common shareholders: | ||||||||||||
From continuing operations | $ | (123 | ) | $ | 71 | $ | (207 | ) | ||||
From discontinued operations | — | 180 | 209 | |||||||||
$ | (123 | ) | $ | 251 | $ | 2 | ||||||
Common share information: | ||||||||||||
Weighted average common shares outstanding for basic EPS | 140.39 | 138.28 | 142.56 | |||||||||
Dilutive effect of stock options and equity awards | — | 3.05 | — | |||||||||
Weighted average common shares outstanding for diluted EPS | 140.39 | 141.33 | 142.56 | |||||||||
EPS: | ||||||||||||
Basic | ||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.51 | $ | (1.45 | ) | ||||
Discontinued operations | — | 1.31 | 1.46 | |||||||||
Total | $ | (0.88 | ) | $ | 1.82 | $ | 0.01 | |||||
Diluted | ||||||||||||
Continuing operations | $ | (0.88 | ) | $ | 0.50 | $ | (1.45 | ) | ||||
Discontinued operations | — | 1.28 | 1.46 | |||||||||
Total | $ | (0.88 | ) | $ | 1.78 | $ | 0.01 |
Fiscal Years Ended | |||||||||
March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||
Stock Options | 3,317,041 | 2,064,951 | 7,686,587 | ||||||
RSUs | 845,315 | 201,581 | 2,062,625 | ||||||
PSUs | 1,540,152 | — | 1,749,055 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Billed trade receivables | $ | 732 | $ | 1,061 | ||||
Unbilled recoverable amounts under contracts in progress | 402 | 595 | ||||||
Related party receivables | — | 45 | ||||||
Other receivables | 509 | 130 | ||||||
Total | $ | 1,643 | $ | 1,831 |
As of and for Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Beginning balance | $ | 31 | $ | 26 | $ | 32 | ||||||
Additions charged to costs and expenses | 10 | 6 | 2 | |||||||||
Deductions(1) | (13 | ) | (3 | ) | (4 | ) | ||||||
Other(2) | (2 | ) | 2 | (4 | ) | |||||||
Ending balance | $ | 26 | $ | 31 | $ | 26 |
(1) | Represents write-offs and recoveries of prior year charges. |
(2) | Includes balances from acquisitions, changes in foreign currency exchange rates and the impact of the AR securitization facility. |
As of and for the Fiscal Year Ended | ||||
(in millions) | March 31, 2017 | |||
Beginning balance | $ | — | ||
Transfers of receivables | 1,195 | |||
Collections | (943 | ) | ||
Ending balance | $ | 252 |
Fair Value Hierarchy | ||||||||||||||||
(in millions) | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | March 31, 2017 | |||||||||||||||
Money market funds and money market deposit accounts | $ | 406 | $ | 406 | $ | — | $ | — | ||||||||
Deferred purchase price receivable | 252 | — | — | 252 | ||||||||||||
Total assets | $ | 658 | $ | 406 | $ | — | $ | 252 | ||||||||
Liabilities: | ||||||||||||||||
Contingent consideration | $ | 7 | $ | — | $ | — | $ | 7 | ||||||||
Total liabilities | $ | 7 | $ | — | $ | — | $ | 7 |
April 1, 2016 | ||||||||||||||||
Assets: | ||||||||||||||||
Money market funds and money market deposit accounts | $ | 348 | $ | 348 | $ | — | $ | — | ||||||||
Time deposits | 1 | 1 | — | — | ||||||||||||
Available for sale equity investments | 66 | 66 | ||||||||||||||
Total assets | $ | 415 | $ | 415 | $ | — | $ | — |
Derivative Assets | ||||||||||
As of | ||||||||||
(in millions) | Balance Sheet Line Item | March 31, 2017 | April 1, 2016 | |||||||
Derivatives designated for hedge accounting: | ||||||||||
Interest rate swaps | Other assets | $ | 5 | $ | — | |||||
Foreign currency forward contracts | Prepaid expenses and other current assets | 27 | 3 | |||||||
Total fair value of derivatives designated for hedge accounting | $ | 32 | $ | 3 | ||||||
Derivatives not designated for hedge accounting: | ||||||||||
Foreign currency forward contracts | Prepaid expenses and other current assets | $ | 15 | $ | 12 | |||||
Total fair value of derivatives not designated for hedge accounting | $ | 15 | $ | 12 |
Derivative Liabilities | ||||||||||
As of | ||||||||||
(in millions) | Balance Sheet Line Item | March 31, 2017 | April 1, 2016 | |||||||
Derivatives designated for hedge accounting: | ||||||||||
Interest rate swaps | Other long-term liabilities | $ | 1 | $ | — | |||||
Foreign currency forward contracts | Accrued expenses and other current liabilities | — | 4 | |||||||
Total fair value of derivatives designated for hedge accounting: | $ | 1 | $ | 4 | ||||||
Derivatives not designated for hedge accounting: | ||||||||||
Foreign currency forward contracts | Accrued expenses and other current liabilities | $ | 12 | $ | 7 | |||||
Total fair value of derivatives not designated for hedge accounting | $ | 12 | $ | 7 |
Derivative Instrument | Hedged Item | |||||||||||||||||||
(in millions) | Statements of Operations Line Item | Gain for the Fiscal Years Ended | Balance Sheet Line Item | (Loss) for the Fiscal Years Ended | ||||||||||||||||
March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | |||||||||||||||||
Interest rate swaps | Other Income | $ | — | $ | 5 | Long-term debt, net | $ | — | $ | (5 | ) |
(in millions) | Gain (Loss) Recognized in AOCI (Effective Portion) for the Fiscal Years Ended | Gain (Loss) Reclassified into Cost of Services from AOCI (Effective Portion) for the Fiscal Years Ended | Gain (Loss) Recognized in Other Income (Expense)(Ineffective Portion) for the Fiscal Years Ended | ||||||||||||||
March 31, 2017 | |||||||||||||||||
Foreign currency forward contracts | $ | (28 | ) | $ | — | $ | — | ||||||||||
Interest rate swaps | $ | (5 | ) | $ | — | $ | — | ||||||||||
April 1, 2016 | |||||||||||||||||
Foreign currency forward contracts | $ | 1 | $ | — | $ | — |
Fiscal Years Ended | ||||||||||||||
(in millions) | Statement of Operations Line Item | March 31, 2017 | April 1, 2016 | April 3, 2015 | ||||||||||
Total return swaps | Cost of services and Selling, general & administrative | $ | 2 | $ | — | $ | (8 | ) | ||||||
Foreign currency forwards | Other (income) expense, net | (84 | ) | 19 | 9 | |||||||||
Total | $ | (82 | ) | $ | 19 | $ | 1 |
Fair Value as of | ||||||||||||||||
March 31, 2017 | April 1, 2016 | |||||||||||||||
(in millions) | Assets | Liabilities | Assets | Liabilities | ||||||||||||
Gross amount of derivative instruments recognized in consolidated balance sheets | $ | 47 | $ | 13 | $ | 15 | $ | 11 | ||||||||
Gross amounts not offset in the consolidated balance sheets (1) | 1 | 2 | 3 | 1 | ||||||||||||
Net amount | $ | 46 | $ | 11 | $ | 12 | $ | 10 |
(1) | These amounts represent the fair value of derivative instruments subject to enforceable master netting arrangements that the Company has elected to not offset. The Company's derivative contracts do not require it to hold or post financial collateral. |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Property and equipment — gross: | ||||||||
Land, buildings and leasehold improvements | $ | 873 | $ | 921 | ||||
Computers and related equipment | 2,695 | 2,794 | ||||||
Furniture and other equipment | 141 | 197 | ||||||
Construction in progress | 10 | 7 | ||||||
3,719 | 3,919 | |||||||
Less: accumulated depreciation and amortization | 2,816 | 2,894 | ||||||
Property and equipment, net | $ | 903 | $ | 1,025 |
As of March 31, 2017 | ||||||||||||
(in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Software | $ | 2,347 | $ | 1,554 | $ | 793 | ||||||
Outsourcing contract costs | 793 | 475 | 318 | |||||||||
Customer and other intangible assets | 947 | 264 | 683 | |||||||||
Total intangible assets | $ | 4,087 | $ | 2,293 | $ | 1,794 |
As of April 1, 2016 | ||||||||||||
(in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Software | $ | 2,243 | $ | 1,531 | $ | 712 | ||||||
Outsourcing contract costs | 828 | 494 | 334 | |||||||||
Customer and other intangible assets | 485 | 203 | 282 | |||||||||
Total intangible assets | $ | 3,556 | $ | 2,228 | $ | 1,328 |
Fiscal Year | (in millions) | |||
2018 | $ | 320 | ||
2019 | $ | 295 | ||
2020 | $ | 264 | ||
2021 | $ | 220 | ||
2022 | $ | 178 |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Purchased software | $ | 223 | $ | 206 | ||||
Internally developed commercial software | 341 | 352 | ||||||
Internally developed internal-use software | 229 | 154 | ||||||
Total | $ | 793 | $ | 712 |
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Purchased software | $ | 82 | $ | 99 | $ | 129 | ||||||
Internally developed commercial software | 58 | 56 | 61 | |||||||||
Internally developed internal-use software | 20 | 9 | 6 | |||||||||
Total | $ | 160 | $ | 164 | $ | 196 |
(in millions) | GBS | GIS | Total | |||||||||
Goodwill, gross | $ | 1,615 | $ | 2,424 | $ | 4,039 | ||||||
Accumulated impairment losses | (701 | ) | (2,061 | ) | (2,762 | ) | ||||||
Balance as of April 1, 2016, net | 914 | 363 | 1,277 | |||||||||
Additions | 655 | 34 | 689 | |||||||||
Foreign currency translation | (99 | ) | (12 | ) | (111 | ) | ||||||
Goodwill, gross | 2,171 | 2,446 | 4,617 | |||||||||
Accumulated impairment losses | (701 | ) | (2,061 | ) | (2,762 | ) | ||||||
Balance as of March 31, 2017, net | $ | 1,470 | $ | 385 | $ | 1,855 |
(in millions) | GBS | GIS | Total | |||||||||
Goodwill, gross | $ | 1,340 | $ | 2,260 | $ | 3,600 | ||||||
Accumulated impairment losses | (701 | ) | (2,061 | ) | (2,762 | ) | ||||||
Balance as of April 3, 2015, net | 639 | 199 | 838 | |||||||||
Additions | 285 | 161 | 446 | |||||||||
Foreign currency translation | (10 | ) | 3 | (7 | ) | |||||||
Goodwill, gross | 1,615 | 2,424 | 4,039 | |||||||||
Accumulated impairment losses | (701 | ) | (2,061 | ) | (2,762 | ) | ||||||
Balance as of April 1, 2016, net | $ | 914 | $ | 363 | $ | 1,277 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Domestic entities | $ | (157 | ) | $ | (222 | ) | $ | (761 | ) | |||
Entities outside the U.S. | (17 | ) | 232 | 90 | ||||||||
Total | $ | (174 | ) | $ | 10 | $ | (671 | ) |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Current: | ||||||||||||
Federal | $ | (32 | ) | $ | (79 | ) | $ | (123 | ) | |||
State | 14 | (22 | ) | (43 | ) | |||||||
Foreign | 36 | 59 | 94 | |||||||||
18 | (42 | ) | (72 | ) | ||||||||
Deferred: | ||||||||||||
Federal | (7 | ) | (39 | ) | (76 | ) | ||||||
State | (1 | ) | 48 | (14 | ) | |||||||
Foreign | (84 | ) | (29 | ) | (302 | ) | ||||||
(92 | ) | (20 | ) | (392 | ) | |||||||
Total income tax (benefit) expense | $ | (74 | ) | $ | (62 | ) | $ | (464 | ) |
Fiscal Years Ended | |||||||||
March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||
Statutory rate | (35.0 | )% | 35.0 | % | (35.0 | )% | |||
State income tax, net of federal tax | (4.0 | ) | (145.7 | ) | (4.1 | ) | |||
Change in uncertain tax positions | (3.4 | ) | (685.0 | ) | (0.7 | ) | |||
Foreign tax rate differential | (41.1 | ) | (377.4 | ) | (52.4 | ) | |||
Capitalized transaction costs | 12.1 | 22.3 | — | ||||||
Change in valuation allowances | 34.3 | 743.6 | 13.4 | ||||||
Excess tax benefits for stock compensation | (11.3 | ) | (230.0 | ) | (0.1 | ) | |||
Prepaid tax asset amortization | 7.1 | 78.8 | (1.1 | ) | |||||
Income Tax Credits | (2.0 | ) | (58.0 | ) | (0.8 | ) | |||
Other items, net | 0.8 | (3.6 | ) | 11.6 | |||||
Effective tax rate | (42.5 | )% | (620.0 | )% | (69.2 | )% |
• | A change in the valuation allowance that primarily consists of an aggregate income tax detriment for the increase in the valuation allowances on tax attributes in the U.S., Germany and Luxembourg, which decreased the overall income tax benefit and decreased the ETR by $135 million and 78%, respectively. Offset by an income tax benefit from the release of valuation allowances on tax attributes in Denmark, Japan and the U.K. which increased the overall income tax benefit and increased the ETR by $75 million and 43.0%, respectively. |
• | An income tax detriment for transaction costs incurred that are not deductible for tax purposes, which resulted in a decrease to the overall tax benefit and decreased the ETR by $21 million and 12.1%, respectively. |
• | An income tax benefit from excess tax benefits realized from employee share-based payment awards, which resulted in an increase in the overall income tax benefit and increased the ETR by $20 million and 11.3%, respectively. |
• | The early adoption of ASU 2016-09 “Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” resulted in a tax benefit from the excess tax benefits realized from share options vested or exercised. This increased the overall income tax benefit and the ETR by $23 million and 230%, respectively. |
• | Local losses on investments in Luxembourg (i) increased the valuation allowance and the ETR by $47 million and 470%, respectively, and (ii) decreased the foreign rate differential and ETR by $47 million and by 470%, respectively. |
• | An increase in the overall valuation allowance primarily due to the divestiture of the Company's former NPS business division, which resulted in an increase in the valuation allowances related to state net operating losses and state tax credits. This decreased the overall income tax benefit and ETR by $27 million and 270%, respectively. |
• | The release of a liability for uncertain tax positions following the closure of the U.K. tax audit for fiscal 2010 to 2012. This increased the overall income tax benefit by $58 million and the ETR by 580%. |
• | The Company recognized adjustments to uncertain tax positions in the U.S. that increased the overall income tax benefit by $24 million and the ETR by 240%, respectively. |
• | The impact of the non-deductible SEC settlement of $190 million, which decreased the income tax benefit and the ETR by $73 million and 10.9%, respectively. |
• | Local losses on investments in Luxembourg increased the foreign rate differential and increased the ETR by $325 million and 48.4%, respectively, with an offsetting decrease in the ETR due to an increase in the valuation allowance of the same amount. |
• | Changes in valuation allowances in certain jurisdictions, including a valuation allowance release in the U.K. The total impact of the valuation allowance release increased the income tax benefit and the ETR by $235 million and 35.0%, respectively. There was a net decrease in valuation allowances in fiscal 2015. |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Deferred tax assets | ||||||||
Employee benefits | $ | 172 | $ | 153 | ||||
Tax loss/credit carryforwards | 1,307 | 1,158 | ||||||
Accrued interest | 16 | 20 | ||||||
Contract accounting | 89 | 110 | ||||||
Other assets | 83 | 56 | ||||||
Total deferred tax assets | 1,667 | 1,497 | ||||||
Valuation allowance | (1,094 | ) | (1,036 | ) | ||||
Net deferred tax assets | 573 | 461 | ||||||
Deferred tax liabilities | ||||||||
Depreciation and amortization | (282 | ) | (183 | ) | ||||
Investment basis differences | (103 | ) | (91 | ) | ||||
Other liabilities | (45 | ) | (23 | ) | ||||
Total deferred tax liabilities | (430 | ) | (297 | ) | ||||
Total net deferred tax assets | $ | 143 | $ | 164 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Current: | ||||||||
Income tax receivables | $ | 146 | $ | 60 | ||||
$ | 146 | $ | 60 | |||||
Non-current: | ||||||||
Income taxes receivable and prepaid taxes | $ | 50 | $ | 81 | ||||
Deferred tax assets | 381 | 345 | ||||||
$ | 431 | $ | 426 | |||||
Total | $ | 577 | $ | 486 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Current: | ||||||||
Liability for uncertain tax positions | $ | (17 | ) | $ | (18 | ) | ||
Income taxes payable | (21 | ) | (22 | ) | ||||
$ | (38 | ) | $ | (40 | ) | |||
Non-current: | ||||||||
Deferred tax liabilities | (238 | ) | (181 | ) | ||||
Liability for uncertain tax positions | (185 | ) | (175 | ) | ||||
$ | (423 | ) | $ | (356 | ) | |||
Total | $ | (461 | ) | $ | (396 | ) |
As of March 31, 2017 | As of April 1, 2016 | |||||||||||||||||||||||||||
(in millions) | Total | With No Expiration | With Expiration | Expiration Dates Through | Total | With No Expiration | With Expiration | Expiration Dates Through | ||||||||||||||||||||
Net operating loss carryforwards | ||||||||||||||||||||||||||||
Federal | $ | 65 | $ | — | $ | 65 | 2037 | $ | 42 | $ | — | $ | 42 | 2035 | ||||||||||||||
State | $ | 911 | $ | — | $ | 911 | 2037 | $ | 556 | $ | — | $ | 556 | 2035 | ||||||||||||||
Foreign | $ | 4,608 | $ | 4,537 | $ | 71 | 2036 | $ | 4,045 | $ | 3,986 | $ | 59 | 2028 | ||||||||||||||
Tax credit carryforwards | ||||||||||||||||||||||||||||
Federal | $ | 7 | $ | — | $ | 7 | 2024 | $ | 7 | $ | — | $ | 7 | 2024 | ||||||||||||||
State | $ | 45 | $ | 10 | $ | 35 | 2026 | $ | 42 | $ | 10 | $ | 32 | 2026 | ||||||||||||||
Foreign | $ | 10 | $ | — | $ | 10 | 2020 | $ | — | $ | — | $ | — | N/A | ||||||||||||||
Capital loss carryforwards | ||||||||||||||||||||||||||||
Federal | $ | — | $ | — | $ | — | N/A | $ | — | $ | — | $ | — | N/A | ||||||||||||||
State | $ | 289 | $ | — | $ | 289 | 2018 | $ | 258 | $ | — | $ | 258 | 2018 | ||||||||||||||
Foreign | $ | 235 | $ | 235 | $ | — | N/A | $ | 73 | $ | 73 | $ | — | N/A |
Fiscal Years Ended | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Tax | $ | 192 | $ | 180 | ||||
Interest | 25 | 33 | ||||||
Penalties | 11 | 11 | ||||||
Net of tax attributes | (26 | ) | (31 | ) | ||||
Total | $ | 202 | $ | 193 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Balance at beginning of fiscal year | $ | 180 | $ | 304 | $ | 298 | ||||||
Gross increases related to prior year tax positions | 14 | 21 | 45 | |||||||||
Gross decreases related to prior year tax positions | (12 | ) | (101 | ) | (13 | ) | ||||||
Gross increases related to current year tax positions | 10 | 7 | 12 | |||||||||
Settlements and statute of limitation expirations | (7 | ) | (48 | ) | (27 | ) | ||||||
Acquisitions | 6 | 3 | — | |||||||||
Foreign exchange and others | 1 | (6 | ) | (11 | ) | |||||||
Balance at end of fiscal year | $ | 192 | $ | 180 | $ | 304 |
As of and for the Fiscal Years Ended | ||||||||||||
March 31, 2017 | April 1, 2016 | April 3, 2015 | ||||||||||
(in millions) | Increase (Decrease) | |||||||||||
Interest | $ | (8 | ) | $ | (6 | ) | $ | 9 | ||||
Interest, net of tax | $ | (9 | ) | $ | (4 | ) | $ | 10 | ||||
Accrued penalties | $ | — | $ | 2 | $ | (10 | ) | |||||
Liability for interest | $ | 25 | $ | 33 | $ | 39 | ||||||
Liability for interest, net of tax | $ | 20 | $ | 29 | $ | 33 | ||||||
Liability for penalties | $ | 11 | $ | 11 | $ | 9 |
Jurisdiction: | Tax Years that Remain Subject to Examination (Fiscal Year Ending): | |
United States – Federal | 2008 and forward | |
United States – Various States | 2008 and forward | |
Australia | 2012 and forward | |
Canada | 2010 and forward | |
Denmark | 2010 and forward | |
France | 2013 and forward | |
Germany | 2010 and forward | |
India | 1998 and forward | |
United Kingdom | 2013 and forward |
(in millions) | Interest Rates | Fiscal Year Maturities | March 31, 2017 | April 1, 2016 | ||||||||
Short-term debt and current maturities of long-term debt | ||||||||||||
Euro-denominated commercial paper | (0.1)% - 0.2%(1) | 2018 | $ | 646 | $ | 559 | ||||||
Current maturities of long-term debt | Various | 2018 | 55 | 79 | ||||||||
Current maturities of capitalized lease liabilities | 1.1% - 7.2% | 2018 | 37 | 72 | ||||||||
Short-term debt and current maturities of long term debt | $ | 738 | $ | 710 | ||||||||
Long-term debt, net of current maturities | ||||||||||||
GBP term loan | 0.7% | 2017 | $ | — | $ | 71 | ||||||
GBP term loan | 1.0% - 1.2%(2) | 2019 | 233 | 284 | ||||||||
USD term loan | 1.7% - 2.0%(3) | 2021 | 571 | 575 | ||||||||
AUD term loan | 2.9% - 3.0%(4) | 2022 | 76 | — | ||||||||
Senior notes | 4.5% | 2023 | 453 | 454 | ||||||||
Revolving credit facility(5) | 1.4% - 3.3% | 2021 - 2022 | 678 | 395 | ||||||||
Lease credit facility | 1.4% - 1.9% | 2020 - 2022 | 60 | 49 | ||||||||
Capitalized lease liabilities | 1.1% - 7.2% | 2018 - 2022 | 104 | 141 | ||||||||
Borrowings for assets acquired under long-term financing | 1.7% - 4.8% | 2018 - 2021 | 77 | 51 | ||||||||
Mandatorily redeemable preferred stock outstanding | 3.5% | 2023 | 61 | 61 | ||||||||
Other borrowings | 0.5% -14.0% | 2018 - 2023 | 4 | 4 | ||||||||
Long-term debt | 2,317 | 2,085 | ||||||||||
Less: current maturities of long-term debt | 92 | 151 | ||||||||||
Long-term debt, net of current maturities | $ | 2,225 | $ | 1,934 |
(1) | Approximate weighted average interest rate |
Fiscal Year | (in millions) | |||
2018 | $ | 37 | ||
2019 | 36 | |||
2020 | 23 | |||
2021 | 10 | |||
2022 | 1 | |||
Thereafter | — | |||
Total minimum lease payments | 107 | |||
Less: Amount representing interest and executory costs | (3 | ) | ||
Present value of net minimum lease payments | 104 | |||
Less: Current maturities of capital lease obligations | (37 | ) | ||
Long-term capitalized lease liabilities | $ | 67 |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Property and equipment | $ | 23 | $ | 50 | ||||
Software | $ | 99 | $ | 94 | ||||
Outsourcing contract costs | $ | 44 | $ | 44 |
Fiscal Year | (in millions) | |||
2018 | $ | 55 | ||
2019 | 307 | |||
2020 | 65 | |||
2021 | 542 | |||
2022 | 729 | |||
Thereafter | 515 | |||
Total | $ | 2,213 |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Projected benefit obligation at beginning of year | $ | 2,879 | $ | 3,061 | ||||
Service cost | 23 | 25 | ||||||
Interest cost | 82 | 92 | ||||||
Plan participants’ contributions | 3 | 4 | ||||||
Amendments | — | (3 | ) | |||||
Business/contract acquisitions/divestitures | 313 | 1 | ||||||
Contractual termination benefits | 1 | 6 | ||||||
Settlement/curtailment | (13 | ) | (14 | ) | ||||
Actuarial loss (gain) | 413 | (92 | ) | |||||
Benefits paid | (120 | ) | (104 | ) | ||||
Foreign currency exchange rate changes | (283 | ) | (95 | ) | ||||
Other | (1 | ) | (2 | ) | ||||
Projected benefit obligation at end of year | $ | 3,297 | $ | 2,879 |
March 31, 2017 | April 1, 2016 | |||||
Discount rate | 2.5 | % | 3.1 | % | ||
Rates of increase in compensation levels | 2.2 | % | 2.6 | % |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Fair value of plan assets at beginning of year | $ | 2,597 | $ | 2,828 | ||||
Actual return on plan assets | 483 | (49 | ) | |||||
Employer contribution | 123 | 21 | ||||||
Plan participants’ contributions | 3 | 4 | ||||||
Benefits paid | (120 | ) | (104 | ) | ||||
Business/contract acquisitions/divestitures | 199 | — | ||||||
Contractual termination benefits | 6 | 11 | ||||||
Plan settlement | (13 | ) | (14 | ) | ||||
Foreign currency exchange rate changes | (279 | ) | (100 | ) | ||||
Other | (1 | ) | — | |||||
Fair value of plan assets at end of year | $ | 2,998 | $ | 2,597 | ||||
Funded status at end of year | $ | (299 | ) | $ | (282 | ) |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Other assets | $ | 73 | $ | 44 | ||||
Accrued expenses and other current liabilities | (7 | ) | (5 | ) | ||||
Non-current pension obligations | (342 | ) | (298 | ) | ||||
Other long-term liabilities - OPEB | (23 | ) | (24 | ) | ||||
Net amount recorded | $ | (299 | ) | $ | (283 | ) | ||
Accumulated benefit obligation | $ | 3,262 | $ | 2,835 |
Benefit Plans with Projected Benefit Obligation in Excess of Plan Assets | Benefit Plans with Accumulated Benefit Obligation in Excess of Plan Assets | |||||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | ||||||||||||
Projected benefit obligation | $ | 996 | $ | 693 | $ | 938 | $ | 668 | ||||||||
Accumulated benefit obligation | $ | 963 | $ | 658 | $ | 913 | $ | 640 | ||||||||
Fair value of plan assets | $ | 624 | $ | 366 | $ | 574 | $ | 346 |
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | ||||||||||
Service cost | $ | 23 | $ | 25 | $ | 23 | |||||||
Interest cost | 82 | 81 | 92 | 118 | |||||||||
Expected return on assets | (161 | ) | (179 | ) | (183 | ) | |||||||
Amortization of transition obligation | 1 | 1 | 1 | ||||||||||
Amortization of prior service costs | (17 | ) | (19 | ) | (10 | ) | |||||||
Contractual termination benefit | 1 | 6 | 3 | ||||||||||
Settlement (gain) loss | — | (2 | ) | 1 | |||||||||
Recognition of actuarial loss (gain) | 87 | 127 | 278 | ||||||||||
Net periodic pension expense (income) | $ | 16 | $ | 51 | $ | 231 |
March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||
Discount or settlement rates | 3.1 | % | 3.0 | % | 4.4 | % | |||
Expected long-term rates of return on assets | 6.3 | % | 6.3 | % | 7.1 | % | |||
Rates of increase in compensation levels | 2.6 | % | 2.8 | % | 4.2 | % |
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Net transition obligation | $ | — | $ | 1 | ||||
Prior service cost | (269 | ) | (289 | ) | ||||
Accumulated other comprehensive (loss) income | $ | (269 | ) | $ | (288 | ) |
(in millions) | ||||
Employer contributions: | ||||
2018 | $ | 29 | ||
Benefit Payments: | ||||
2018 | $ | 100 | ||
2019 | $ | 104 | ||
2020 | $ | 111 | ||
2021 | $ | 116 | ||
2022 | $ | 120 | ||
2023 and thereafter | $ | 679 |
As of March 31, 2017 | |||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity: | |||||||||||||||||
Global/International Equity commingled funds | $ | 1 | $ | 710 | $ | — | $ | 711 | |||||||||
Global equity mutual funds | 1 | 251 | — | 252 | |||||||||||||
U.S./North American Equity commingled funds | 1 | 39 | — | 40 | |||||||||||||
Fixed Income: | |||||||||||||||||
Non-U.S. Government funds | — | 3 | — | 3 | |||||||||||||
Fixed income commingled funds | 1 | 991 | — | 992 | |||||||||||||
Fixed income mutual funds | 3 | — | — | 3 | |||||||||||||
Alternatives: | |||||||||||||||||
Other Alternatives (1) | 3 | 412 | 343 | 758 | |||||||||||||
Hedge Funds(2) | — | 1 | — | 1 | |||||||||||||
Insurance contracts | — | 131 | 5 | 136 | |||||||||||||
Cash and cash equivalents | 94 | 8 | — | 102 | |||||||||||||
Totals | $ | 104 | $ | 2,546 | $ | 348 | $ | 2,998 |
As of April 1, 2016 | |||||||||||||||||
(in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Equity: | |||||||||||||||||
Global/International Equity commingled funds | $ | 1 | $ | 419 | $ | — | $ | 420 | |||||||||
Global equity mutual funds | — | 230 | — | 230 | |||||||||||||
U.S./North American Equity commingled funds | 1 | 264 | — | 265 | |||||||||||||
Fixed Income: | |||||||||||||||||
Fixed income commingled funds | 1 | 846 | — | 847 | |||||||||||||
Alternatives: | |||||||||||||||||
Other Alternatives (1) | 3 | 373 | 165 | 541 | |||||||||||||
Hedge Funds(2) | — | — | 146 | 146 | |||||||||||||
Insurance contracts | — | 135 | 4 | 139 | |||||||||||||
Cash equivalents | 5 | 4 | — | 9 | |||||||||||||
Totals | $ | 11 | $ | 2,271 | $ | 315 | $ | 2,597 |
(in millions) | ||||
Balance as of April 3, 2015 | $ | 289 | ||
Actual return on plan assets held at the reporting date | 6 | |||
Purchases, sales and settlements | 34 | |||
Changes due to exchange rates | (14 | ) | ||
Balance as of April 1, 2016 | 315 | |||
Actual return on plan assets held at the reporting date | 60 | |||
Purchases, sales and settlements | 9 | |||
Changes due to exchange rates | (36 | ) | ||
Balance as of March 31, 2017 | $ | 348 |
Asset Category | March 31, 2017 | April 1, 2016 | ||||
Equity securities | 33 | % | 35 | % | ||
Debt securities | 33 | % | 33 | % | ||
Alternatives | 25 | % | 26 | % | ||
Cash and other | 9 | % | 6 | % | ||
Total | 100 | % | 100 | % |
Fiscal Year | Number of shares repurchased | Average Price Per Share | Amount (In millions) | ||||||
2016 | |||||||||
Open market purchases | 3,587,224 | $48.28 | $ | 173 | |||||
ASR (1) | 162,908 | $0.00 | — | ||||||
Total | 3,750,132 | $46.18 | $ | 173 | |||||
2015 | |||||||||
Open market purchases (2) | 7,560,358 | $60.71 | $ | 459 | |||||
ASR | 4,155,193 | $66.69 | 277 | ||||||
Total | 11,715,551 | $62.83 | $ | 736 |
(1) | Reflects additional shares received during fiscal 2016 for the fourth quarter ASR arrangement discussed below. |
(2) | The Company paid $6 million during the first quarter of fiscal 2015 for shares purchased during the fourth quarter of fiscal 2014 that had not yet settled as of March 28, 2014. |
Program | Contract Maturity | Total Value of ASR (in millions) | Number of Shares Repurchased | Consideration (in millions) | Average Price Per Share | ||||||||||||
Second quarter ASR arrangement (1) | November 6, 2014 | $ | 125 | 1,290,481 | $ | 75 | $ | 58.12 | |||||||||
Fourth quarter ASR arrangement (2) | November 8, 2015 | 302 | 3,027,620 | 202 | $ | 66.75 | |||||||||||
Total | $ | 427 | 4,318,101 | $ | 277 | $ | 64.17 |
(1) | In the third quarter of fiscal 2015, the Company received an additional 31,830 shares and a refund of the $50 million prepayment in cash upon settlement of the second quarter ASR arrangement. |
(2) | Consideration includes transaction costs. During the second quarter of fiscal 2016, the Company received an additional 162,908 shares. During the third quarter of fiscal 2016, the Company received a refund of a $100 million prepayment in cash upon settlement of the fourth quarter ASR arrangement that was initially included within equity during fiscal 2015. |
Cash Dividends Declared | ||||||||||||
(in millions, except per share amounts) | Per Common Share | Total | Unpaid at Fiscal Year End | |||||||||
Fiscal 2017 | $ | 0.56 | $ | 80 | $ | 20 | ||||||
Fiscal 2016* | $ | 2.99 | $ | 421 | $ | 19 | ||||||
Fiscal 2015 | $ | 0.92 | $ | 131 | $ | 32 |
(in millions) | Foreign Currency Translation Adjustments | Cash Flow Hedges | Pension and Other Post-retirement Benefit Plans | Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Balance at March 28, 2014 | $ | (6 | ) | $ | — | $ | 285 | $ | 279 | |||||||
Current-period other comprehensive (loss) income | (310 | ) | (2 | ) | 57 | (255 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes | — | — | (3 | ) | (3 | ) | ||||||||||
Balance at April 3, 2015 | $ | (316 | ) | $ | (2 | ) | $ | 339 | $ | 21 | ||||||
Current-period other comprehensive (loss) income | (83 | ) | 1 | 1 | (81 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes | — | — | (20 | ) | (20 | ) | ||||||||||
Transfer to CSRA | — | — | (31 | ) | (31 | ) | ||||||||||
Balance at April 1, 2016 | $ | (399 | ) | $ | (1 | ) | $ | 289 | $ | (111 | ) | |||||
Current-period other comprehensive (loss) income | (59 | ) | 21 | (2 | ) | (40 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes | — | — | (11 | ) | (11 | ) | ||||||||||
Balance at March 31, 2017 | $ | (458 | ) | $ | 20 | $ | 276 | $ | (162 | ) |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Total | $ | 75 | $ | 46 | $ | 68 | ||||||
Total, net of tax | $ | 50 | $ | 29 | $ | 43 |
Fiscal Year | |||||||||
2017 | 2016 | 2015 | |||||||
Risk-free interest rate | 1.60 | % | 1.81 | % | 2.07 | % | |||
Expected volatility | 29 | % | 31 | % | 33 | % | |||
Expected term (in years) | 6.09 | 6.23 | 6.22 | ||||||
Dividend yield | 1.56 | % | 1.39 | % | 1.50 | % |
Number of Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (in millions) | ||||||||||
Outstanding as of March 28, 2014 | 9,829,611 | $ | 43.30 | 5.73 | $ | 167 | |||||||
Granted | 1,331,862 | $ | 60.89 | ||||||||||
Exercised | (4,476,715 | ) | $ | 45.19 | $ | 82 | |||||||
Canceled/Forfeited | (1,057,332 | ) | $ | 42.67 | |||||||||
Expired | (71,117 | ) | $ | 45.53 | |||||||||
Outstanding as of April 3, 2015 | 5,556,309 | $ | 46.08 | 5.93 | $ | 107 | |||||||
Granted | 1,052,129 | $ | 30.70 | ||||||||||
Issued due to Separation modification | 1,614,465 | $ | 28.40 | ||||||||||
Exercised | (2,372,109 | ) | $ | 19.27 | $ | 46 | |||||||
Canceled/Forfeited | (434,578 | ) | $ | 28.59 | |||||||||
Expired | (49,595 | ) | $ | 20.87 | |||||||||
Outstanding as of April 1, 2016 | 5,366,621 | $ | 24.83 | 7.06 | $ | 51 | |||||||
Granted | 2,450,976 | $ | 50.91 | ||||||||||
Exercised | (2,544,955 | ) | $ | 21.84 | $ | 73 | |||||||
Canceled/Forfeited | (448,505 | ) | $ | 36.94 | |||||||||
Expired | (56,741 | ) | $ | 14.36 | |||||||||
Outstanding as of March 31, 2017 | 4,767,396 | $ | 38.70 | 8.01 | $ | 145 | |||||||
Vested and expected to vest in the future as of March 31, 2017 | 4,496,499 | $ | 38.14 | 7.94 | $ | 139 | |||||||
Exercisable as of March 31, 2017 | 1,249,801 | $ | 24.34 | 5.67 | $ | 56 |
As of March 31, 2017 | ||||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||
Range of Option Exercise Price | Number Outstanding | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Number Exercisable | Weighted Average Exercise Price | |||||||||||
$10.35 - $29.70 | 1,024,551 | $ | 22.44 | 5.12 | 886,308 | $ | 21.66 | |||||||||
$30.31 - $48.61 | 1,496,474 | $ | 31.26 | 8.12 | 360,258 | $ | 30.72 | |||||||||
$49.24 - 61.75 | 2,246,371 | $ | 51.07 | 9.25 | 3,235 | $ | 49.24 | |||||||||
4,767,396 | 1,249,801 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding as of March 28, 2014 | 3,187,741 | $ | 41.34 | |||
Granted | 1,000,150 | $ | 60.91 | |||
Settled | (829,861 | ) | $ | 40.81 | ||
Canceled/Forfeited | (778,355 | ) | $ | 42.62 | ||
Outstanding as of April 3, 2015 | 2,579,675 | $ | 48.70 | |||
Granted | 3,234,197 | $ | 27.97 | |||
Issued due to Separation modification | 419,160 | $ | 29.95 | |||
Settled | (1,783,664 | ) | $ | 28.87 | ||
Canceled/Forfeited | (851,369 | ) | $ | 40.97 | ||
Outstanding as of April 1, 2016 | 3,597,999 | $ | 29.25 | |||
Granted | 1,150,185 | $ | 47.70 | |||
Settled | (602,467 | ) | $ | 27.29 | ||
Canceled/Forfeited | (434,732 | ) | $ | 32.86 | ||
Outstanding as of March 31, 2017 | 3,710,985 | $ | 34.86 |
Number of Shares | Weighted Average Grant Date Fair Value | |||||
Outstanding as of March 28, 2014 | 184,146 | $ | 42.07 | |||
Granted | 22,100 | $ | 59.63 | |||
Settled | (62,260 | ) | $ | 44.10 | ||
Canceled/Forfeited | — | $ | — | |||
Outstanding as of April 3, 2015 | 143,986 | $ | 30.02 | |||
Granted | 65,188 | $ | 31.75 | |||
Settled | (107,878 | ) | $ | 33.11 | ||
Canceled/Forfeited | (12,250 | ) | $ | 33.96 | ||
Outstanding as of April 1, 2016 | 89,046 | $ | 27.00 | |||
Granted | 33,600 | $ | 47.35 | |||
Settled | (32,080 | ) | $ | 28.58 | ||
Canceled/Forfeited | (4,800 | ) | $ | 30.31 | ||
Outstanding as of March 31, 2017 | 85,766 | $ | 34.19 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Cash paid for: | ||||||||||||
Interest | $ | 103 | $ | 124 | $ | 144 | ||||||
Taxes on income, net of refunds | $ | 63 | $ | 65 | $ | 146 | ||||||
Non-cash activities: | ||||||||||||
Investing: | ||||||||||||
Capital expenditures in accounts payable and accrued expenses | $ | 43 | $ | 42 | $ | 39 | ||||||
Capital expenditures through capital lease obligations | $ | 52 | $ | 47 | $ | 24 | ||||||
Assets acquired under long-term financing | $ | 87 | $ | 1 | $ | 64 | ||||||
Financing: | ||||||||||||
Dividends declared but not yet paid | $ | 20 | $ | 19 | $ | 32 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Foreign currency (gain) loss | $ | (8 | ) | $ | (1 | ) | $ | 11 | ||||
Other gain | (2 | ) | (8 | ) | (1 | ) | ||||||
Totals | $ | (10 | ) | $ | (9 | ) | $ | 10 |
(in millions) | GBS | GIS | Corporate | Total | ||||||||||||
Fiscal Year Ended March 31, 2017 | ||||||||||||||||
Revenues | $ | 4,173 | $ | 3,434 | $ | — | $ | 7,607 | ||||||||
Consolidated segment operating income (loss) | $ | 305 | $ | 107 | $ | (55 | ) | $ | 357 | |||||||
Depreciation and amortization | $ | 154 | $ | 429 | $ | 64 | $ | 647 | ||||||||
Fiscal Year Ended April 1, 2016 | ||||||||||||||||
Revenues | $ | 3,637 | $ | 3,469 | $ | — | $ | 7,106 | ||||||||
Consolidated segment operating income (loss) | $ | 381 | $ | 216 | $ | (82 | ) | $ | 515 | |||||||
Depreciation and amortization | $ | 124 | $ | 491 | $ | 43 | $ | 658 | ||||||||
Fiscal Year Ended April 3, 2015 | ||||||||||||||||
Revenues | $ | 4,036 | $ | 4,081 | $ | — | $ | 8,117 | ||||||||
Consolidated segment operating income (loss) | $ | 405 | $ | 162 | $ | (108 | ) | $ | 459 | |||||||
Depreciation and amortization | $ | 149 | $ | 673 | $ | 18 | $ | 840 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Consolidated segment operating income | $ | 357 | $ | 515 | $ | 459 | ||||||
Corporate G&A | (372 | ) | (216 | ) | (230 | ) | ||||||
Pension and OPEB actuarial and settlement losses | (87 | ) | (99 | ) | (584 | ) | ||||||
SEC settlement related charges and other (1) | — | — | (200 | ) | ||||||||
Separation costs | — | (19 | ) | — | ||||||||
Interest expense | (117 | ) | (123 | ) | (126 | ) | ||||||
Interest income | 35 | 38 | 20 | |||||||||
Debt extinguishment costs | — | (95 | ) | — | ||||||||
Other income (expense), net | 10 | 9 | (10 | ) | ||||||||
(Loss) income from continuing operations, before taxes | $ | (174 | ) | $ | 10 | $ | (671 | ) |
Fiscal Year Ended March 31, 2017 | ||||||||||||||||||||||||
(in millions) | United States | United Kingdom | Australia | Other Europe | Other International | Total | ||||||||||||||||||
Revenues | $ | 2,986 | $ | 1,482 | $ | 921 | $ | 1,594 | $ | 624 | $ | 7,607 | ||||||||||||
Property and Equipment, net | $ | 389 | $ | 235 | $ | 58 | $ | 134 | $ | 87 | $ | 903 | ||||||||||||
Total Assets | $ | 4,925 | $ | 1,019 | $ | 978 | $ | 358 | $ | 1,383 | $ | 8,663 | ||||||||||||
Capital Expenditures | $ | 127 | $ | 69 | $ | 14 | $ | 43 | $ | 39 | $ | 292 |
Fiscal Year Ended April 1, 2016 | ||||||||||||||||||||||||
United States | United Kingdom | Australia | Other Europe | Other International | Total | |||||||||||||||||||
Revenues | $ | 3,057 | $ | 1,570 | $ | 483 | $ | 1,474 | $ | 522 | $ | 7,106 | ||||||||||||
Property and Equipment, net | $ | 466 | $ | 244 | $ | 63 | $ | 157 | $ | 95 | $ | 1,025 | ||||||||||||
Total Assets | $ | 3,330 | $ | 1,053 | $ | 703 | $ | 1,580 | $ | 1,070 | $ | 7,736 | ||||||||||||
Capital Expenditures | $ | 249 | $ | 66 | $ | 17 | $ | 48 | $ | 32 | $ | 412 |
Fiscal Year Ended April 3, 2015 | ||||||||||||||||||||||||
United States | United Kingdom | Australia | Other Europe | Other International | Total | |||||||||||||||||||
Revenues | $ | 3,268 | $ | 1,721 | $ | 608 | $ | 1,928 | $ | 592 | $ | 8,117 | ||||||||||||
Property and Equipment, net | $ | 505 | $ | 257 | $ | 54 | $ | 176 | $ | 118 | $ | 1,110 | ||||||||||||
Total Assets | $ | 5,979 | $ | 1,621 | $ | 368 | $ | 1,197 | $ | 1,056 | $ | 10,221 | ||||||||||||
Capital Expenditures | $ | 225 | $ | 58 | $ | 19 | $ | 73 | $ | 31 | $ | 406 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
Costs of services | $ | 219 | $ | 7 | $ | 248 | ||||||
Selling, general and administrative | 19 | 16 | 8 | |||||||||
Total | $ | 238 | $ | 23 | $ | 256 |
As of | ||||||||
(in millions) | March 31, 2017 | April 1, 2016 | ||||||
Accrued expenses and other current liabilities | $ | 171 | $ | 84 | ||||
Other long-term liabilities | 6 | 5 | ||||||
Total | $ | 177 | $ | 89 |
Restructuring Liability as of April 1, 2016 | Costs Expensed | Costs Reversed | Costs not affecting restructuring liability(1) | Cash Paid | Foreign Currency Translation Adjustments | Restructuring Liability as of March 31, 2017 | ||||||||||||||||||||||
Fiscal 2017 Plans | ||||||||||||||||||||||||||||
Workforce Reductions | $ | — | $ | 239 | $ | — | $ | (6 | ) | $ | (79 | ) | $ | 1 | $ | 155 | ||||||||||||
Facilities Costs | — | 9 | — | — | (3 | ) | — | 6 | ||||||||||||||||||||
Total | $ | — | $ | 248 | $ | — | $ | (6 | ) | $ | (82 | ) | $ | 1 | $ | 161 | ||||||||||||
Fiscal 2016 Plan | ||||||||||||||||||||||||||||
Workforce Reductions | $ | 29 | $ | — | $ | (3 | ) | $ | — | $ | (17 | ) | $ | (1 | ) | $ | 8 | |||||||||||
Facilities Costs | 30 | — | (4 | ) | — | (20 | ) | (1 | ) | 5 | ||||||||||||||||||
Total | $ | 59 | $ | — | $ | (7 | ) | $ | — | $ | (37 | ) | $ | (2 | ) | $ | 13 | |||||||||||
Fiscal 2015 Plan | ||||||||||||||||||||||||||||
Workforce Reductions | $ | 29 | $ | — | $ | (3 | ) | $ | — | $ | (22 | ) | $ | (1 | ) | $ | 3 | |||||||||||
Facilities Costs | — | — | — | — | — | — | — | |||||||||||||||||||||
Total | $ | 29 | $ | — | $ | (3 | ) | $ | — | $ | (22 | ) | $ | (1 | ) | $ | 3 |
Restructuring Liability as of April 3, 2015 | Costs Expensed | Costs Reversed | Cash Paid | Foreign Currency Translation Adjustments | Restructuring Liability as of April 1, 2016 | |||||||||||||||||||
Fiscal 2016 Plan | ||||||||||||||||||||||||
Workforce Reductions | $ | — | $ | 29 | $ | — | $ | (6 | ) | $ | 6 | $ | 29 | |||||||||||
Facilities Costs | — | 37 | — | (9 | ) | 2 | 30 | |||||||||||||||||
Total | $ | — | $ | 66 | $ | — | $ | (15 | ) | $ | 8 | $ | 59 | |||||||||||
Fiscal 2015 Plan | ||||||||||||||||||||||||
Workforce Reductions | $ | 230 | $ | — | $ | (42 | ) | $ | (152 | ) | $ | (7 | ) | $ | 29 | |||||||||
Facilities Costs | 1 | — | — | — | (1 | ) | — | |||||||||||||||||
Total | $ | 231 | $ | — | $ | (42 | ) | $ | (152 | ) | $ | (8 | ) | $ | 29 |
Fiscal Years Ended | ||||||||||||
(in millions) | March 31, 2017 | April 1, 2016 | April 3, 2015 | |||||||||
GBS | $ | 110 | $ | 20 | $ | 137 | ||||||
GIS | 128 | 3 | 114 | |||||||||
Corporate | — | — | 5 | |||||||||
Total | $ | 238 | $ | 23 | $ | 256 |
Fiscal year | ||||||||
(in millions) | Real Estate | Equipment | ||||||
2018 | $ | 107 | $ | 17 | ||||
2019 | 86 | 11 | ||||||
2020 | 59 | 5 | ||||||
2021 | 37 | 2 | ||||||
2022 | 25 | — | ||||||
Thereafter | 97 | — | ||||||
Minimum fixed rentals | 411 | 35 | ||||||
Less: Sublease rental income | (12 | ) | — | |||||
Totals | $ | 399 | $ | 35 |
Fiscal year | Minimum Purchase Commitment | |||
(in millions) | ||||
2018 | $ | 407 | ||
2019 | 383 | |||
2020 | 348 | |||
Thereafter | 731 | |||
Total | $ | 1,869 |
(in millions) | Fiscal 2018 | Fiscal 2019 | Fiscal 2020 and Thereafter | Totals | ||||||||||||
Surety bonds | $ | 17 | $ | — | $ | — | $ | 17 | ||||||||
Letters of credit | 4 | 3 | 33 | 40 | ||||||||||||
Stand-by letters of credit | 6 | 8 | 17 | 31 | ||||||||||||
Totals | $ | 27 | $ | 11 | $ | 50 | $ | 88 |
Fiscal 2017 | ||||||||||||||||
(in millions, except per-share amounts) | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||||||||
Revenues | $ | 1,930 | $ | 1,871 | $ | 1,917 | $ | 1,889 | ||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 1,421 | 1,363 | 1,347 | 1,414 | ||||||||||||
Gross profit | $ | 509 | $ | 508 | $ | 570 | $ | 475 | ||||||||
Restructuring costs | $ | 57 | $ | 25 | $ | 3 | $ | 153 | ||||||||
(Loss) income from continuing operations before taxes | $ | (36 | ) | $ | (1 | ) | $ | 50 | $ | (187 | ) | |||||
(Loss) income from continuing operations, net of taxes | $ | (20 | ) | $ | 21 | $ | 37 | $ | (138 | ) | ||||||
Net (loss) income attributable to CSC common shareholders | $ | (21 | ) | $ | 15 | $ | 31 | $ | (148 | ) | ||||||
(Loss) earnings per common share(1) | ||||||||||||||||
Basic | $ | (0.15 | ) | $ | 0.11 | $ | 0.22 | $ | (1.05 | ) | ||||||
Diluted | $ | (0.15 | ) | $ | 0.10 | $ | 0.21 | $ | (1.05 | ) | ||||||
Cash dividend per common share | $ | 0.14 | $ | 0.14 | $ | 0.14 | $ | 0.14 | ||||||||
Fiscal 2016 | ||||||||||||||||
(in millions, except per-share amounts) | 1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||||||||
Revenues | $ | 1,804 | $ | 1,745 | $ | 1,750 | $ | 1,807 | ||||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 1,272 | 1,237 | 1,216 | 1,460 | ||||||||||||
Gross profit | $ | 532 | $ | 508 | $ | 534 | $ | 347 | ||||||||
Restructuring costs | $ | — | $ | 5 | $ | 7 | $ | 11 | ||||||||
Debt extinguishment costs(2) | $ | — | $ | — | $ | — | $ | 95 | ||||||||
Income (loss) from continuing operations before taxes | $ | 72 | $ | 47 | $ | 78 | $ | (187 | ) | |||||||
Income (loss) from continuing operations, net of taxes (3) | $ | 65 | $ | 93 | $ | 22 | $ | (108 | ) | |||||||
Income (loss) from discontinued operations, net of taxes | $ | 102 | $ | 84 | $ | 30 | $ | (25 | ) | |||||||
Net income (loss) attributable to CSC common shareholders (3) | $ | 163 | $ | 171 | $ | 50 | $ | (133 | ) | |||||||
Earnings per common share(1) | ||||||||||||||||
Basic | ||||||||||||||||
EPS from continuing operations (3) | $ | 0.47 | $ | 0.68 | $ | 0.16 | $ | (0.78 | ) | |||||||
EPS from discontinued operations | $ | 0.71 | $ | 0.56 | $ | 0.20 | $ | (0.18 | ) | |||||||
Diluted | ||||||||||||||||
EPS from continuing operations (3) | $ | 0.46 | $ | 0.66 | $ | 0.15 | $ | (0.78 | ) | |||||||
EPS from discontinued operations | $ | 0.69 | $ | 0.55 | $ | 0.20 | $ | (0.18 | ) | |||||||
Cash dividend per common share | $ | 0.23 | $ | 0.23 | $ | 2.39 | $ | 0.14 |
(1) | Quarterly EPS amounts may not total to the full-year EPS. EPS is calculated based on weighted average shares outstanding for the period. Quarterly weighted average shares may not equal the full-year weighted average shares for the fiscal year. |
(2) | Fiscal 2016 debt extinguishment costs related to CSC's redemption of all outstanding 6.50% term notes due March 2018 (see Note 12 - "Debt" of the Notes to the consolidated financial statements). |
(3) | Quarterly amounts for fiscal 2016 have been retrospectively adjusted resulting from the adoption of ASU 2016-09. |
• | Tax analyses were prepared late in the closing process, in part due to changes in information flows related to the implementation of our new financial system; and |
• | Turnover late in the year in the tax function resulted in ineffective reviews which did not detect certain errors. |
• | People - new directors hired |
• | Process Improvement |
– | Cross-functional year-end workplan instituted |
– | Collaboration with corporate Accounting and Deloitte |
– | Prioritization of issue resolution |
• | Enabling Technology |
– | CorpTax functionality utilized to greatest extent possible to eliminate manual work and minimize risk of error |
(in millions) | Fiscal 2017 | Fiscal 2016 | ||||||
Audit Fees1 | $ | 16 | $ | 13 | ||||
Audit-Related Fees2 | 3 | 3 | ||||||
Tax Fees3 | 4 | 2 | ||||||
All Other Fees 4 | 2 | 4 | ||||||
Total | $ | 25 | $ | 22 |
1 | Includes fees associated with the audit of our consolidated annual financial statements, review of our consolidated interim financial statements, statutory audits of international subsidiaries and the audit of our internal control over financial reporting. |
2 | Consists primarily of fees for due diligence related to mergers and acquisitions, accounting consultations and consultation concerning financial accounting and reporting standards. |
3 | Consists of fees for tax compliance, tax planning, and tax advice related to mergers and acquisitions. |
4 | Consists primarily of advisory services to analyze and provide recommendations with respect to the rationalization of legal entities in fiscal 2017 and third party IT and other vendor contracts in connection with the separation of the U.S. public sector business in fiscal 2016. |
Exhibit Number | Description of Exhibit |
2.1 | Agreement and Plan of Merger, dated as of May 24, 2016, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company, Everett SpinCo, Inc. and Everett Merger Sub, Inc. (incorporated by reference to Exhibit 2.2 to Hewlett Packard Enterprise Company's Current Report on Form 8-K (filed May 26, 2016) (file no. 001-37483), as amended by the First Amendment to Agreement and Plan of Merger, dated as of November 2, 2016, by and among Computer Sciences Corporation, Hewlett Packard Enterprise Company, Everett SpinCo, Inc., New Everett Merger Sub Inc. and Everett Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Hewlett Packard Enterprise Company's Current Report on Form 8-K (filed November 2, 2016) (file no. 001-37483)), as further amended by the Second Amendment to Agreement and Plan of Merger, dated as of December 6, 2016, by and among Hewlett Packard Enterprise Company, Computer Sciences Corporation, Everett SpinCo, Inc., Everett Merger Sub Inc. and New Everett Merger Sub Inc. (incorporated by reference to Exhibit 2.3 to Amendment No. 1 to Form 10 of Everett SpinCo, Inc. (filed December 7, 2016) (file no.001-04850)) |
2.2 | Employee Matters Agreement, dated as of March 31, 2017, by and among the Company, Hewlett Packard Enterprise Company and Everett SpinCo, Inc. (incorporated by reference to Exhibit 2.1 to DXC's Current Report on Form 8-K filed April 6, 2017) (001-38033) |
2.3 | Tax Matters Agreement, dated as of March 31, 2017, by and among the Company, Hewlett Packard Enterprise Company and Everett SpinCo, Inc. (incorporated by reference to Exhibit 2.2 to DXC's Current Report on Form 8-K filed April 6, 2017) (001-38033) |
2.4 | The Master Separation and Distribution Agreement and Ancillary Agreements, dated as of November 27, 2015, between the Company and CSRA Inc. (incorporated by reference to Exhibit 2.1 to CSRA Inc.'s Current Report on Form 8-K (filed December 2, 2015) (file no.001-04850)) |
2.5 | Amended and Restated Intellectual Property Matters Agreement, dated as of February 10, 2017 between the Company and CSRA Inc. |
3.1 | Second Amended and Restated Articles of Incorporation of the Company filed with the Nevada Secretary of State on March 31, 2017 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (filed April 6, 2017) (file no.001-04850)) |
3.2 | Bylaws of the Company, effective April 1, 2017 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K (filed April 6, 2017) (file no. 001-04850)) |
3.3 | Certificate of Amendment to Section 1 of Article III of the Amended and Restated Bylaws, dated July 11, 2016 (incorporated by reference to Exhibit 3.2.1 to the Company's Current Report on Form 8-K (filed July 15, 2016) (file no.001-04850)) |
3.4 | Certificate of Amendment to Section 1 of Article III of the Amended and Restated Bylaws, dated August 10, 2016 (incorporated by reference to Exhibit 3.2.1 to the Company's Current Report on Form 8-K (filed August 12, 2016) (file no. 001-04850)) |
4.1 | Indenture dated as of March 3, 2008, for the 5.50% senior notes due 2013 and the 6.50% senior notes due 2018 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (filed September 15, 2008) (file no.001-04850)) |
4.2 | Indenture dated as of September 18, 2012, for the 2.500% senior notes due 2015 and the 4.450% senior notes due 2022 by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (filed September 19, 2012) (file no.001-04850)) |
4.3 | First Supplemental Indenture dated as of September 18, 2012, by and between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, and attaching a specimen form of the 2.500% Senior Notes due 2015 and the 4.450% Senior Notes due 2022 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (filed September 19, 2012) (file no.001-04850)) |
4.4 | 4.450% Senior Note due 2022 (in global form), dated September 18, 2012, among the Company and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K (filed September 19, 2012) (file no.001-04850)) |
10.1 | 1998 Stock Incentive Plan* (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 3, 1998) (filed August 14, 1998) (file no.001-04850)) |
10.2 | 2001 Stock Incentive Plan* (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 13, 2001) (filed June 29, 2001) (file no.001-04850)) |
10.3 | 2004 Incentive Plan* (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 9, 2004) (filed June 30, 2004) (file no.001-04850)) |
10.4 | 2007 Employee Incentive Plan* (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on July 30, 2007) (filed June 29, 2007) (file no.001-04850)) |
10.5 | 2011 Omnibus Incentive Plan*, as amended and restated effective May 14, 2013 (incorporated by reference to Appendix C to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 13, 2013) (filed June 28, 2013) (file no.001-04850)) |
10.6 | Form of Award Agreement for Employees* (incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.7 | Form of Stock Option Agreement for Employees* (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.8 | Form of Stock Option Award Agreement under the 2004 Incentive Plan* (incorporated by reference to Exhibit 10.7 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.9 | Form of International Stock Option Agreement for Employees* (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.10 | Form Stock Option Schedule for United Kingdom Employees under the 2001 Employee Incentive Plan* (incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2011) (filed August 10, 2011) (file no.001-04850)) |
10.11 | Form of Restricted Stock Agreements for Employees* (incorporated by reference to Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2005) (filed August 5, 2005) (file no.001-04850)) |
10.12 | Form of Service Based Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.10 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.13 | Form of Performance Based Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.14 | Form of Performance Based Restricted Stock Unit Award Agreement under the 2011 Omnibus Incentive Plan* (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.15 | Form of Career Shares Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010) (filed February 9, 2011) (file no.001-04850)) |
10.16 | Form of Career Shares Restricted Stock Unit Award Agreement with J. Michael Lawrie* (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.17 | Form of Career Shares Restricted Stock Unit Award Agreement with Paul N. Saleh* (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.18 | Form of Career Shares Restricted Stock Unit Award Agreement under the 2011 Omnibus Incentive Plan* (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.19 | Form of Career Shares Restricted Stock Unit Award Agreement under the 2011 Omnibus Incentive Plan* (incorporated by reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.20 | Form of International Service Based Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.14 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2011) (filed August 10, 2011) (file no.001-04850)) |
10.21 | Form of International Performance Based Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.15 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2011) (filed August 10, 2011) (file no.001-04850)) |
10.22 | Form of International Career Shares Restricted Stock Unit Agreement for Employees* (incorporated by reference to Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2011) filed August 10, 2011) (file no.001-04850)) |
10.23 | Form of Senior Management and Key Employee Severance Agreement, as amended and restated effective May 20, 2009* (incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended April 3, 2009) (filed May 29, 2009) (file no.001-04850)) |
10.24 | Employment Agreement, dated February 7, 2012, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 7, 2012) (filed February 8, 2012) (file no.001-04850)), as amended by Amendment effective as of August 25, 2016 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (filed August 25, 2016) (file no. 001-04850)) |
10.25 | Amendment effective as of March 27, 2017 to Employment Agreement dated February 7, 2012, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (filed March 28, 2017) (file no. 001-04850)) |
10.26 | Service Based Inducement Restricted Stock Unit Award Agreement, dated April 16, 2012, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2012) (filed May 29, 2012) (file no.001-04850)) |
10.27 | Fiscal Year 2013 CEO Stock Option Award Agreement, dated April 16, 2012, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2012) (filed May 29, 2012) (file no.001-04850)) |
10.28 | Fiscal Year 2014 CEO Stock Option Award Agreement, dated May 20, 2013, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013) (filed August 7, 2013) (file no.001-04850)) |
10.29 | Service Based Inducement Restricted Stock Unit Award Agreement, dated June 15, 2012, between the Company and Paul N. Saleh* (incorporated by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2012) (filed August 8, 2012) (file no.001-04850)) |
10.30 | Form of Performance Based Restricted Stock Unit Award Agreement for Employees* (incorporated by reference to Exhibit 10.26 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2012) (filed August 8, 2012) (file no. 001-04850)) |
10.31 | Form of International Performance Based Restricted Stock Unit Award Agreement for Employees* (incorporated by reference to Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 29, 2012) (filed August 8, 2012) (file no.001-04850)) |
10.32 | Deferred Compensation Plan, amended and restated effective December 31, 2012* (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 28, 2012) (filed February 6, 2013) (file no.001-04850)) |
10.33 | First Amendment to Deferred Compensation Plan* (incorporated by reference to Exhibit 10.42 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 2014) (filed May 22, 2014) (file no.001-04850)) |
10.34 | Second Amendment to Computer Sciences Corporation Deferred Compensation Plan1(incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2016 (filed November 4, 2016) (file no. 001-04850)) |
10.35 | Severance Plan for Senior Management and Key Employees, amended and restated effective October 28, 2007* (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K) (filed November 1, 2007) (file no.001-04850)) |
10.36 | First Amendment to the Severance Plan for Senior Management and Key Employees* (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 27, 2013) (filed October 31, 2013) (file no.001-04850)) |
10.37 | Form of Indemnification Agreement for officers and directors* (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K dated February 18, 2010) (filed February 22, 2010) (file no.001-04850)) |
10.38 | 2010 Non-Employee Director Stock Incentive Plan*, as amended and restated effective May 24, 2013 (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 13, 2013) (filed June 28, 2013) (file no.001-04850)) |
10.39 | 1997 Nonemployee Director Stock Incentive Plan* (incorporated by reference to Appendix A to the Company's Proxy Statement for the Annual Meeting of Stockholders held on August 11, 1997) (filed July 2, 1997) (file no.001-04850)) |
10.40 | 2006 Nonemployee Director Incentive Plan* (incorporated by reference to Appendix B to the Company's Proxy Statement for the Annual Meeting of Stockholders held on July 31, 2006) (filed June 22, 2006) (file no.001-04850)) |
10.41 | Form of Restricted Stock Unit Agreement for directors* (incorporated by reference to Exhibit 10.18 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2005) (filed August 5, 2005) (file no.001-04850)) |
10.42 | Form of Amendment to Restricted Stock Unit Agreement for directors * (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K dated December 5, 2005) (filed December 6, 2005) (file no.001-04850)) |
10.43 | Form of Restricted Stock Unit Agreement for directors pursuant to the 2010 Non-Employee Director Incentive Plan* (incorporated by reference to Exhibit 10.32 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2011) (filed August 10, 2011) (file no.001-04850)) |
10.44 | Form of Performance Stock Unit Agreement with Mr. J. Michael Lawrie* (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2014 (filed August 12, 2014) (file no.001-04850)) |
10.45 | Performance-Based Retention Award Agreement, dated December 15, 2015, between the Company and J. Michael Lawrie* (incorporated by reference to Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2016 (filed February 16, 2016) (file no.001-04850)) |
10.46 | Performance-Based Retention Award Agreement, dated December 15, 2015, between the Company and Paul N. Saleh* (incorporated by reference to Exhibit 10.8 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2016 (filed February 16, 2016) (file no.001-04850)) |
10.47 | Form of Performance-Based Retention Award Agreement, dated December 15, 2015* (incorporated by reference to Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2016 (filed February 16, 2016) (file no.001-04850)) |
10.48 | Tax Matters Agreement, dated as of November 27, 2015, between the Company and CSRA Inc. (incorporated by reference to Exhibit 10.1 to CSRA Inc.'s Current Report on Form 8-K (filed December 2, 2015) (file no.001-04850)) |
10.49 | Employee Matters Agreement, dated as of November 27, 2015, between the Company and CSRA Inc. (incorporated by reference to Exhibit 10.2 to CSRA Inc.'s Current Report on Form 8-K (filed December 2, 2015) (file no.001-04850)) |
10.50 | Real Estate Matters Agreement, dated as of November 27, 2015, between the Company and CSRA Inc. (incorporated by reference to Exhibit 10.3 to CSRA Inc.'s Current Report on Form 8-K (filed December 2, 2015) (file no.001-04850)) |
10.51 | Credit Agreement, dated as of October 11, 2013, among the Company, certain subsidiaries of the Company from time to time party thereto, the financial institutions listed therein, and Citibank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (filed October 17, 2013) (file number 001-04850)) |
10.52 | Amendment No. 1 dated as of April 21, 2016 to the Credit Agreement dated October 11, 2013, among the Company, the financial institutions listed therein and Citibank, N.A. as administrative agent (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2016 (filed August 9, 2016) (file no. 001-04850)) |
10.53 | Amendment No. 2 dated as of June 21, 2016 to the Credit Agreement dated October 11, 2013, among the Company, the financial institutions listed therein, and Citibank, N.A., as Agent (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K (filed June 21, 2016) (file no. 001-04850)) |
10.54 | Waiver and Amendment No. 3 dated Feburary 17, 2017 to the Amended and Restated Credit Agreement dated October 11, 2013, among the Company, the financial institutions listed therein, and Citibank, N.A., as Agent |
10.55 | Amended and Restated Master Loan and Security, dated April 4, 2016, by and among Bank of America, N.A., as Agent, Banc of America Leasing & Capital, LLC, as Lender, and CSC Asset Funding I LLC, as Borrower, and the Company, as Guarantor (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (filed April 7, 2016) (file no.001-04850)) |
10.56 | Second Amendment dated February 17, 2017 to the Amended and Restated Master Loan and Security, dated April 4, 2016, by and among Bank of America, N.A., as Agent, Banc of America Leasing & Capital, LLC, as Lender, and CSC Asset Funding I LLC, as Borrower, and the Company, as Guarantor |
10.57 | Dealer Agreement, dated July 24, 2015, by and between the CSC Capital Funding Limited, as issuer, the Company, as guarantor, Citibank International Limited, as arranger, and the financial institutions listed therein, as dealers (incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K (filed July 28, 2015) (file no.001-04850)) |
10.58 | Amendment Agreement dated as of December 16, 2015 to Credit Agreement dated December 18, 2013, by and among Computer Sciences Holdings (UK) Ltd., as borrower, the Company, as guarantor, and Lloyds Bank plc, as lender and agent (incorporated by reference to Exhibit 10.11 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended January 1, 2016 (filed February 16, 2016) (file no.001-04850)) |
10.59 | Credit Agreement, dated as of December 16, 2015, by and among CSC Computer Sciences UK Holdings Limited, as Borrower, the Company, as the Company, the lenders from time to time party thereto, as Lenders, Lloyds Bank PLC, as Administrative Agent, Lloyds Bank PLC and The Bank of Tokyo-Mitsubishi UFJ, LTD., as Joint Lead Arrangers, and Mizuho Bank, LTD., as Arranger (incorporated by reference to Exhibit 10.1 to the Company's Current Report of Form 8-K (filed December 22, 2015) (file no.001-04850)) |
10.60 | Amendment No. 1 dated April 22, 2016 to the Credit Agreement dated December 16, 2015, among CSC Computer Sciences UK Holdings Limited, as borrower, the Company, the lenders party thereto and Lloyds Bank plc, as administrative agent (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2016 (filed August 9, 2016) (file no. 001-04850)) |
10.61 | Waiver and Amendment No. 2 dated February 17, 2017 to the Credit Agreement dated December 16, 2015, among CSC Computer Sciences UK Holdings Limited, as borrower, the Company, the lenders party thereto and Lloyds Bank plc, as administrative agent |
10.62 | Term Loan Credit Agreement, dated March 21, 2016, by and among the Company, the financial institutions listed on Schedule I, and Bank of America, N.A. as Administrative Agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (filed March 22, 2016) (file no.001-04850)) |
10.63 | Waiver and Amendment No. 1 dated February 17, 2017 to the Term Loan Credit Agreement, dated March 21, 2016, by and among the Company, the financial institutions listed on Schedule I, and Bank of America, N.A. as Administrative Agent |
10.64 | Incremental Assumption Agreement, dated April 1, 2016, by and among Sumitomo Mitsui Banking Corporation, as Incremental Lender, Bank of America, N.A., as Agent, and the Company (incorporated by reference to Exhibit 10.76 to the Company's Annual Report on Form 10-K for the fiscal year ended April 1, 2016 (filed June 15, 2016) (file no. 001-04850)) |
10.65 | Incremental Assumption Agreement, dated as of June 15, 2016, by and among the Company, the incremental lenders party thereto and Citibank, N.A. as administrative agent (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 1, 2016 (filed August 9, 2016) (file no. 001-04850)) |
10.66 | Syndicated Facility Agreement, dated July 25, 2016, by and among CSC Australia PTY. Limited and UXC Limited, as borrowers, the Company, as guarantor, the lenders from time to time party thereto and Commonwealth Bank of Australia, as agent (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (filed July 28, 2016) (file no. 001-04850)) |
10.67 | Waiver and Amendment No. 2 dated February 17, 2017 to the Syndicated Facility Agreement Syndicated Facility Agreement, dated July 25, 2016, by and among CSC Australia PTY. Limited and UXC Limited, as borrowers, the Company, as guarantor, the lenders from time to time party thereto and Commonwealth Bank of Australia, as agent |
10.68 | Purchase and Sale Agreement dated as of December 21, 2016, among Computer Sciences Corporation, as Contributing Originator and Servicer, Alliance-One Services, Inc., CSC Agility Platform, Inc., CSC Consulting, Inc., CSC Cybertek Corporation, Mynd Corporation and PDA Software Services LLC, as Originators, and CSC Receivables LLC, as Buyer (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (filed December 23, 2016) (file no. 001-04850)) |
10.69 | Receivables Purchase Agreement dated as of December 21, 2016, among Computer Sciences Corporation, as Servicer, CSC Receivables LLC, as seller, the persons from time to time party thereto as Purchasers and group agents, PNC Bank, National Association, as Administrative Agent and PNC Capital Markets LLC, as structuring agent (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K (filed December 23, 2016) (file no. 001-04850)) |
10.70 | Performance Guaranty dated as of December 21, 2016, made by Computer Sciences Corporation, as guarantor, in favor of PNC Bank, National Association, as Administrative Agent, for the benefit of the purchasers (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K (filed December 23, 2016) (file no. 001-04850)) |
12.1 | Calculation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Combined Fixed Charges and Preference Dividends |
18.1 | Preferability Letter on Change in Accounting Principle (incorporated by reference to Exhibit 18.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2014 (filed August 12, 2014) (file number 001-04850)) |
23 | Consent of Independent Registered Public Accounting Firm |
31.1 | Section 302 Certification of the Chief Executive Officer |
31.2 | Section 302 Certification of the Chief Financial Officer |
32.1 | Section 906 Certification of Chief Executive Officer |
32.2 | Section 906 Certification of Chief Financial Officer |
99.1 | Revised Financial Information Disclosure as a result of the Company's fiscal 2014 divestitures and change in reportable segments (incorporated by reference to Exhibits 99.1 and 99.2 to the Company's Current Report on Form 8-K) (filed February 7, 2014) (file number 001-04850) |
101.INS | XBRL Instance |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation |
101.LAB | XBRL Taxonomy Extension Labels |
101.PRE | XBRL Taxonomy Extension Presentation |
*Management contract or compensatory plan or agreement |
COMPUTER SCIENCES CORPORATION | |||
Dated: | May 25, 2017 | By: | /s/ Paul N. Saleh |
Name: | Paul N. Saleh | ||
Title: | Executive Vice President and Chief Financial Officer Principal Executive Officer |
Signature | Title | Date | ||
/s/ J. Michael Lawrie | President and Chief Executive Officer | May 25, 2017 | ||
J. Michael Lawrie | (Principal Executive Officer) | |||
/s/ Paul N. Saleh | Executive Vice President and Chief Financial Officer | May 25, 2017 | ||
Paul N. Saleh | (Principal Financial Officer) | |||
/s/ Neil A. Manna | Senior Vice President, Controller and Director | May 25, 2017 | ||
Neil A. Manna | (Principal Accounting Officer) | |||
/s/ William L. Deckelman, Jr. | Director | May 25, 2017 | ||
William L. Deckelman, Jr. | ||||
/s/ H. C. Charles Diao | Director | May 25, 2017 | ||
H. C. Charles Diao |