UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): May 25, 2011
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COMPUTER SCIENCES CORPORATION
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(Exact name of Registrant as specified in its charter)
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Nevada
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1-4850
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95-2043126
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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3170 Fairview Park Drive
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22042
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Falls Church, Virginia
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(Zip Code)
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(Address of Principal Executive Offices)
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Registrant’s telephone number, including area code (703) 876-1000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Dated: May 25, 2011
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By:
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/s/ Michael J. Mancuso
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Michael J. Mancuso
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Vice President and Chief Financial Officer
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Contact
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Chris Grandis
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Media Relations Director
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Moved on Business Wire
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Corporate
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May 25, 2011
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703.641.2316
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cgrandis@csc.com
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Bryan Brady
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Vice President, Investor Relations
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Corporate
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703.641.3000
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investorrelations@csc.com
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·
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New business awards of $4.0 billion for the quarter and $14.0 billion for the year.
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·
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Pre-tax margin of 6.71% for the quarter and 6.03% for the year.
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·
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Operating margin of 8.04% for the quarter and 7.59% for the year.
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·
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Operating cash flow of $760 million for the quarter and $1,564 million for the year.
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·
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Free cash flow of $510 million for the quarter and $620 million for the full year, representing 84% of net income attributable to CSC common shareholders.
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New Business Awards
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~$17 B
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Revenue
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$16.5 B - $17.0 B
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Operating Income Margin
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8.75% - 9.25%
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Tax Rate
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32%
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EPS
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$4.70 - $4.80
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Free Cash Flow as a % of Net Income
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> 90%
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FY2011
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May 2, 2011
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Actual
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Actual
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Actual
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Guidance
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Cont Ops
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Disc Ops
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Total
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EPS (diluted)
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$4.75
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$4.51
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$0.22
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$4.73
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Quarter Ended
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% of Total Revenue
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(Dollars in millions)
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April 1, 2011
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April 2, 2010 (2)
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Fiscal 2011
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Fiscal 2010(2)
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Business Solutions & Services
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$ | 981 | $ | 971 | 23 | % | 23 | % | ||||||||
Managed Services Sector
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1,751 | 1,690 | 42 | 41 | ||||||||||||
Department of Defense
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1,122 | 1,165 | 27 | 28 | ||||||||||||
Civil agencies
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330 | 350 | 8 | 8 | ||||||||||||
Other(1)
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51 | 57 | 1 | 1 | ||||||||||||
North American Public Sector
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1,503 | 1,572 | 36 | 37 | ||||||||||||
Corporate & Eliminations
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(33 | ) | (32 | ) | (1 | ) | (1 | ) | ||||||||
Total Revenue
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$ | 4,202 | $ | 4,201 | 100 | % | 100 | % |
Twelve Months Ended
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% of Total Revenue
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(Dollars in millions)
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April 1, 2011
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April 2, 2010(2)
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Fiscal 2011
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Fiscal 2010(2)
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Business Solutions & Services
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$ | 3,570 | $ | 3,483 | 23 | % | 22 | % | ||||||||
Managed Services Sector
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6,583 | 6,451 | 41 | 41 | ||||||||||||
Department of Defense
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4,498 | 4,502 | 28 | 28 | ||||||||||||
Civil agencies
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1,300 | 1,385 | 8 | 9 | ||||||||||||
Other(1)
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204 | 208 | 1 | 1 | ||||||||||||
North American Public Sector
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6,002 | 6,095 | 37 | 38 | ||||||||||||
Corporate & Eliminations
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(113 | ) | (108 | ) | (1 | ) | (1 | ) | ||||||||
$ | 16,042 | $ | 15,921 | 100 | % | 100 | % |
(1)
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Other revenues consist of state, local and select foreign government, as well as commercial contracts performed by the North American Public Sector reporting segment (NPS).
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(2)
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Fiscal 2010 revenues have been recast from those presented in the fiscal 2010 Form 10-K and related Press Release to reflect discontinued operations of two businesses sold in fiscal 2011 and one sold in fiscal 2010.
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Quarter Ended
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Twelve Months Ended
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(In millions, except pershare amounts)
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April 1,
2011
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April 2, (1)
2010
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April 1,
2011
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April 2, (1)
2010
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Revenues
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$ | 4,202 | $ | 4,201 | $ | 16,042 | $ | 15,921 | ||||||||
Costs of services (excludes depreciation and amortization)
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3,386 | 3,292 | 12,925 | 12,618 | ||||||||||||
Selling, general and administrative
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235 | 256 | 965 | 981 | ||||||||||||
Depreciation and amortization
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276 | 273 | 1,073 | 1,095 | ||||||||||||
Interest expense
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41 | 94 | 168 | 252 | ||||||||||||
Interest income
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(12 | ) | (7 | ) | (37 | ) | (27 | ) | ||||||||
Other (income) expense
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(6 | ) | (5 | ) | (20 | ) | (20 | ) | ||||||||
Total costs and expenses
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3,920 | 3,903 | 15,074 | 14,899 | ||||||||||||
Income from continuing operations before taxes
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282 | 298 | 968 | 1,022 | ||||||||||||
Taxes on income
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120 | 34 | 243 | 192 | ||||||||||||
Income from continuing operations
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162 | 264 | 725 | 830 | ||||||||||||
Income from discontinued operations, net of taxes
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13 | - | 34 | 4 | ||||||||||||
Net income
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175 | 264 | 759 | 834 | ||||||||||||
Less:
Net income attributable to noncontrolling interest, net of tax
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4 | 5 | 19 | 17 | ||||||||||||
Net income attributable to CSC common shareholders
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$ | 171 | $ | 259 | $ | 740 | $ | 817 | ||||||||
Earnings per common share :
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Basic:
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Continuing operations
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$ | 1.02 | $ | 1.69 | $ | 4.57 | $ | 5.35 | ||||||||
Discontinued operations
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0.08 | - | 0.22 | 0.01 | ||||||||||||
$ | 1.10 | $ | 1.69 | $ | 4.79 | $ | 5.36 | |||||||||
Diluted :
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Continuing operations
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$ | 1.01 | $ | 1.66 | $ | 4.51 | $ | 5.27 | ||||||||
Discontinued operations
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0.08 | - | 0.22 | 0.01 | ||||||||||||
$ | 1.09 | $ | 1.66 | $ | 4.73 | $ | 5.28 | |||||||||
Cash dividend per common share
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$ | 0.20 | $ | - | $ | 0.70 | $ | - | ||||||||
Weighted average common shares outstanding for:
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Basic EPS
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154.817 | 153.691 | 154.488 | 152.462 | ||||||||||||
Diluted
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157.278 | 156.258 | 156.605 | 154.754 |
(1)
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Fiscal 2010 Consolidated Statements of Income has been recast from those presented in the fiscal 2010 Form 10-K and related Press Release to reflect discontinued operations of two businesses sold in fiscal 2011 and one sold in fiscal 2010.
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(Dollars in millions)
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April 1, 2011
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April 2, 2010
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Assets
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Cash and cash equivalents
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$ | 1,837 | $ | 2,784 | ||||
Receivables, net
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3,719 | 3,849 | ||||||
Prepaid expenses and other current assets
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2,001 | 1,789 | ||||||
Total current assets
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7,557 | 8,422 | ||||||
Property and equipment, net
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2,496 | 2,241 | ||||||
Outsourcing contract costs, net
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647 | 642 | ||||||
Software, net
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562 | 511 | ||||||
Goodwill
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4,038 | 3,866 | ||||||
Other assets
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820 | 773 | ||||||
Total assets
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$ | 16,120 | $ | 16,455 | ||||
Liabilities
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Short-term debt and current maturities of long-term debt
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$ | 170 | $ | 75 | ||||
Accounts payable
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517 | 409 | ||||||
Accrued payroll and related costs
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817 | 821 | ||||||
Other accrued expenses
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1,291 | 1,344 | ||||||
Deferred revenue
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987 | 1,189 | ||||||
Income taxes payable and deferred income taxes
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396 | 284 | ||||||
Total current liabilities
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4,178 | 4,122 | ||||||
Long-term debt, net
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2,409 | 3,669 | ||||||
Income tax liabilities and deferred income taxes
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511 | 550 | ||||||
Other long-term liabilities
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1,462 | 1,606 | ||||||
Total equity
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7,560 | 6,508 | ||||||
Total liabilities and equity
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$ | 16,120 | $ | 16,455 | ||||
Debt as a percentage of total capitalization
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25.4 | % | 36.5 | % |
Twelve Months Ended
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(Amounts in millions)
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April 1, 2011
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April 2, 2010
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Cash flows from operating activities:
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Net income
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$ | 759 | $ | 834 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities:
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Depreciation and amortization
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1,140 | 1,156 | ||||||
Stock based compensation
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56 | 64 | ||||||
Deferred taxes
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101 | 8 | ||||||
Gain on dispositions
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(74 | ) | (5 | ) | ||||
Provision for losses on accounts receivable
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7 | 23 | ||||||
Excess tax benefit from stock based compensation
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(6 | ) | (9 | ) | ||||
Unrealized foreign currency exchange gain
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(9 | ) | (28 | ) | ||||
Impairment losses and contract write-offs
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23 | 23 | ||||||
Cash surrender value in excess of premium paid
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(6 | ) | (5 | ) | ||||
Changes in assets and liabilities, net of effects of acquisitions
and dispositions:
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Decrease in receivables
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170 | 70 | ||||||
Increase in prepaid expenses and other current assets
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(116 | ) | (153 | ) | ||||
Decrease in accounts payable and accruals
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(234 | ) | (409 | ) | ||||
Decrease in income taxes payable and income tax liability
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(45 | ) | (135 | ) | ||||
(Decrease) increase in deferred revenue
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(204 | ) | 207 | |||||
Other operating activities, net
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2 | 2 | ||||||
Net cash provided by operating activities
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1,564 | 1,643 | ||||||
Cash flows from investing activities:
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Purchases of property and equipment
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(663 | ) | (578 | ) | ||||
Outsourcing contracts
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(138 | ) | (176 | ) | ||||
Acquisitions, net of cash acquired
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(158 | ) | (5 | ) | ||||
Business dispositions
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119 | 14 | ||||||
Software purchased or developed
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(164 | ) | (173 | ) | ||||
Proceeds from sale of property and equipment
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105 | 82 | ||||||
Other investing activities, net
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7 | 46 | ||||||
Net cash used in investing activities
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(892 | ) | (790 | ) | ||||
Cash flows from financing activities:
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Borrowings under lines of credit
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105 | 130 | ||||||
Repayments of borrowings under lines of credit
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(1,599 | ) | (137 | ) | ||||
Principal payments on long-term debt
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(92 | ) | (537 | ) | ||||
Proceeds from stock options and other common stock transactions
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73 | 100 | ||||||
Excess tax benefit from stock-based compensation
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6 | 9 | ||||||
Repurchase of common stock and acquisition of treasury stock
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(65 | ) | (3 | ) | ||||
Dividend payments
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(77 | ) | - | |||||
Other financing activities, net
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(27 | ) | (49 | ) | ||||
Net cash used in financing activities
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(1,676 | ) | (487 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents
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57 | 121 | ||||||
Net (decrease) increase in cash and cash equivalents
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(947 | ) | 487 | |||||
Cash and cash equivalents at beginning of year
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2,784 | 2,297 | ||||||
Cash and cash equivalents at end of period
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$ | 1,837 | $ | 2,784 |
Operating Income (preliminary and unaudited)
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Quarter Ended
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Twelve Months Ended
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(Amounts in millions)
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April 1,
2011
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April 2, (1)
2010
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April 1,
2011
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April 2, (1)
2010
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Operating income
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$ | 338 | $ | 425 | $ | 1,217 | $ | 1,395 | ||||||||
Corporate G&A
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(33 | ) | (45 | ) | (138 | ) | (168 | ) | ||||||||
Interest expense
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(41 | ) | (94 | ) | (168 | ) | (252 | ) | ||||||||
Interest income
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12 | 7 | 37 | 27 | ||||||||||||
Other income (expense)
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6 | 5 | 20 | 20 | ||||||||||||
Income from continuing operations before taxes
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$ | 282 | $ | 298 | $ | 968 | $ | 1,022 |
Free Cash Flow (preliminary and unaudited)
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Quarter Ended
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Twelve Months Ended
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(Amounts in millions)
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April 1,
2011
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April 2,
2010
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April 1,
2011
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April 2,
2010
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Free cash flow
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$ | 510 | $ | 951 | $ | 620 | $ | 811 | ||||||||
Net cash used in investing activities
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157 | 276 | 892 | 790 | ||||||||||||
Business acquisitions, net of cash acquired
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- | - | (158 | ) | (5 | ) | ||||||||||
Business dispositions
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65 | - | 119 | 14 | ||||||||||||
Payment on capital leases and other long-term asset financings
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28 | 10 | 91 | 33 | ||||||||||||
Net cash provided by operating activities
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$ | 760 | $ | 1,237 | $ | 1,564 | $ | 1,643 | ||||||||
Net cash used in investing activities
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$ | (157 | ) | $ | (276 | ) | $ | (892 | ) | $ | (790 | ) | ||||
Net cash used in financing activities
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$ | (413 | ) | $ | (602 | ) | $ | (1,676 | ) | $ | (487 | ) | ||||
Operating income
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$ | 338 | $ | 425 | $ | 1,217 | $ | 1,395 | ||||||||
Operating margin
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8.04 | % | 10.12 | % | 7.59 | % | 8.76 | % | ||||||||
Pre-tax margin
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6.71 | % | 7.09 | % | 6.03 | % | 6.42 | % |
(1)
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Fiscal 2010 amounts have been recast from those presented in the fiscal 2010 Form 10-K and related Press Release to reflect discontinued operations of two businesses sold in fiscal 2011 and one sold in fiscal 2010.
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