x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | 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 or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
3170 Fairview Park Drive | ||
Falls Church, Virginia | 22042 | |
(Address of principal executive offices) | (zip code) | |
Registrant's telephone number, including area code: (703) 876-1000 |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
COMPUTER SCIENCES CORPORATION | ||
TABLE OF CONTENTS | ||
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | Financial Statements (unaudited) | |
Consolidated Condensed Statements of Operations for the Quarters Ended June 28, 2013 and June 29, 2012 | ||
Consolidated Condensed Statements of Comprehensive Income (Loss) for the Quarters Ended June 28, 2013 and June 29, 2012 | ||
Consolidated Condensed Balance Sheets as of June 28, 2013 and March 29, 2013 | ||
Consolidated Condensed Statements of Cash Flows for the Quarters Ended June 28, 2013 and June 29, 2012 | ||
Consolidated Condensed Statements of Changes in Equity for the Quarters Ended June 28, 2013 and June 29, 2012 | ||
Notes to Consolidated Condensed Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
PART II. | OTHER INFORMATION | |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits |
Quarter Ended | ||||||||
(Amounts in millions, except per-share amounts) | June 28, 2013 | June 29, 2012 | ||||||
Revenues | $ | 3,260 | $ | 3,633 | ||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 2,466 | 2,977 | ||||||
Selling, general and administrative | 292 | 281 | ||||||
Depreciation and amortization | 255 | 262 | ||||||
Restructuring costs | 7 | 27 | ||||||
Interest expense | 39 | 44 | ||||||
Interest income | (4 | ) | (5 | ) | ||||
Other (income) expense, net | (1 | ) | 12 | |||||
Total costs and expenses | 3,054 | 3,598 | ||||||
Income from continuing operations before taxes | 206 | 35 | ||||||
Taxes on income | 65 | 18 | ||||||
Income from continuing operations | 141 | 17 | ||||||
Income from discontinued operations, net of taxes | 18 | 25 | ||||||
Net income | 159 | 42 | ||||||
Less: net income attributable to noncontrolling interest, net of tax | 3 | 2 | ||||||
Net income attributable to CSC common stockholders | $ | 156 | $ | 40 | ||||
Earnings per common share | ||||||||
Basic: | ||||||||
Continuing operations | $ | 0.92 | $ | 0.10 | ||||
Discontinued operations | 0.12 | 0.16 | ||||||
$ | 1.04 | $ | 0.26 | |||||
Diluted: | ||||||||
Continuing operations | $ | 0.91 | $ | 0.10 | ||||
Discontinued operations | 0.11 | 0.16 | ||||||
$ | 1.02 | $ | 0.26 | |||||
Cash dividend per common share | $ | 0.20 | $ | 0.20 |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Net income | $ | 159 | $ | 42 | ||||
Other comprehensive (loss) income, net of taxes: | ||||||||
Foreign currency translation adjustments | (84 | ) | (127 | ) | ||||
Pension and other postretirement benefit plans | 15 | 14 | ||||||
Other comprehensive (loss) income, net of taxes | (69 | ) | (113 | ) | ||||
Comprehensive income (loss) | 90 | (71 | ) | |||||
Less: comprehensive income attributable to noncontrolling interest, net of taxes | 4 | 3 | ||||||
Comprehensive income (loss) attributable to CSC common shareholders | $ | 86 | $ | (74 | ) |
As of | ||||||||
(Amounts in millions, except share and per-share data) | June 28, 2013 | March 29, 2013 | ||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 1,929 | $ | 2,054 | ||||
Receivables,net of allowance for doubtful accounts of $41 (fiscal 2014) and $48 (fiscal 2013) | 2,880 | 3,199 | ||||||
Prepaid expenses and other current assets | 551 | 420 | ||||||
Total current assets | 5,360 | 5,673 | ||||||
Property and equipment, net of accumulated depreciation of $3,443 (fiscal 2014) and $3,467 (fiscal 2013) | 2,114 | 2,184 | ||||||
Software, net of accumulated amortization of $1,576 (fiscal 2014) and $1,523 (fiscal 2013) | 611 | 611 | ||||||
Outsourcing contract costs, net of accumulated amortization of $996 (fiscal 2014) and $968 (fiscal 2013) | 487 | 505 | ||||||
Goodwill, net | 1,444 | 1,516 | ||||||
Other assets | 850 | 762 | ||||||
Total Assets | $ | 10,866 | $ | 11,251 | ||||
LIABILITIES | ||||||||
Short-term debt and current maturities of long-term debt | $ | 243 | $ | 234 | ||||
Accounts payable | 316 | 373 | ||||||
Accrued payroll and related costs | 605 | 653 | ||||||
Accrued expenses and other current liabilities | 1,255 | 1,425 | ||||||
Deferred revenue and advance contract payments | 629 | 630 | ||||||
Income taxes payable and deferred income taxes | 31 | 34 | ||||||
Total current liabilities | 3,079 | 3,349 | ||||||
Long-term debt, net of current maturities | 2,461 | 2,498 | ||||||
Income tax liabilities and deferred income taxes | 494 | 501 | ||||||
Other long-term liabilities | 1,720 | 1,743 | ||||||
EQUITY | ||||||||
Common stock, par value $1 per share; authorized 750,000,000; issued 156,924,684 (fiscal 2014) and 158,984,279 (fiscal 2013) | 157 | 159 | ||||||
Additional paid-in capital | 2,158 | 2,167 | ||||||
Earnings retained for use in business | 2,609 | 2,564 | ||||||
Accumulated other comprehensive loss | (1,424 | ) | (1,354 | ) | ||||
Less common stock in treasury, at cost, 8,960,516 (fiscal 2014) and 8,819,517 shares (fiscal 2013) | (407 | ) | (401 | ) | ||||
Total CSC stockholders’ equity | 3,093 | 3,135 | ||||||
Noncontrolling interest in subsidiaries | 19 | 25 | ||||||
Total Equity | 3,112 | 3,160 | ||||||
Total Liabilities and Equity | $ | 10,866 | $ | 11,251 |
Quarter ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Cash flows from operating activities: | ||||||||
Net income | 159 | 42 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 255 | 262 | ||||||
Stock-based compensation | 17 | 7 | ||||||
(Gain) loss on dispositions | (25 | ) | 3 | |||||
Excess tax benefit from stock based compensation | (3 | ) | — | |||||
Unrealized foreign currency exchange gain | (12 | ) | (22 | ) | ||||
Other non cash charges, net | 4 | 18 | ||||||
Changes in assets and liabilities, net of effects of acquisitions and dispositions: | ||||||||
Decrease (increase) in assets | 34 | (97 | ) | |||||
(Decrease) increase in liabilities | (216 | ) | 8 | |||||
Net cash provided by operating activities | 213 | 221 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (101 | ) | (122 | ) | ||||
Outsourcing contracts | (20 | ) | (31 | ) | ||||
Business dispositions | 56 | 2 | ||||||
Software purchased and developed | (47 | ) | (46 | ) | ||||
Other investing activities, net | 11 | 18 | ||||||
Net cash used in investing activities | (101 | ) | (179 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings under lines of credit | — | 54 | ||||||
Repayment of borrowings under lines of credit | — | (48 | ) | |||||
Principal payments on long-term debt | (60 | ) | (65 | ) | ||||
Proceeds from stock options and other common stock transactions | 16 | — | ||||||
Excess tax benefit from stock-based compensation | 3 | — | ||||||
Repurchase of common stock and acquisition of treasury stock | (127 | ) | — | |||||
Dividend payments | (30 | ) | (31 | ) | ||||
Other financing activities, net | (9 | ) | (7 | ) | ||||
Net cash used in financing activities | (207 | ) | (97 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (38 | ) | ||||
Net decrease in cash and cash equivalents | (125 | ) | (93 | ) | ||||
Cash and cash equivalents at beginning of year | 2,054 | 1,093 | ||||||
Cash and cash equivalents at end of period | $ | 1,929 | $ | 1,000 |
(Amounts in millions, except shares in thousands) | Common Stock | Additional Paid-in Capital | Earnings Retained for Use in Business | Accumulated Other Comprehensive Income (Loss) | Common Stock in Treasury | Total CSC Equity | Non- Controlling Interest | Total Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at March 29, 2013 | 158,984 | $ | 159 | $ | 2,167 | $ | 2,564 | $ | (1,354 | ) | $ | (401 | ) | $ | 3,135 | $ | 25 | $ | 3,160 | |||||||
Net income | 156 | 156 | 3 | 159 | ||||||||||||||||||||||
Other comprehensive loss | (70 | ) | (70 | ) | 1 | (69 | ) | |||||||||||||||||||
Stock-based compensation expense | 17 | 17 | 17 | |||||||||||||||||||||||
Acquisition of treasury stock | (6 | ) | (6 | ) | (6 | ) | ||||||||||||||||||||
Stock option exercises and other common stock transactions | 770 | 1 | 15 | 16 | 16 | |||||||||||||||||||||
Share repurchase program | (2,829 | ) | (3 | ) | (41 | ) | (83 | ) | (127 | ) | (127 | ) | ||||||||||||||
Cash dividends declared | (30 | ) | (30 | ) | (30 | ) | ||||||||||||||||||||
Noncontrolling interest distributions and other | 2 | 2 | (10 | ) | (8 | ) | ||||||||||||||||||||
Balance at June 28, 2013 | 156,925 | $ | 157 | $ | 2,158 | $ | 2,609 | $ | (1,424 | ) | $ | (407 | ) | $ | 3,093 | $ | 19 | $ | 3,112 | |||||||
(Amounts in millions, except shares in thousands) | Common Stock | Additional Paid-in Capital | Earnings Retained for Use in Business | Accumulated Other Comprehensive Income (Loss) | Common Stock in Treasury | Total CSC Equity | Non- Controlling Interest | Total Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||||
Balance at March 30, 2012 | 163,720 | $ | 164 | $ | 2,168 | $ | 1,930 | $ | (1,093 | ) | $ | (390 | ) | $ | 2,779 | $ | 55 | $ | 2,834 | |||||||
Net income | 40 | 40 | 2 | 42 | ||||||||||||||||||||||
Other comprehensive loss | (114 | ) | (114 | ) | 1 | (113 | ) | |||||||||||||||||||
Stock-based compensation expense | 7 | 7 | 7 | |||||||||||||||||||||||
Acquisition of treasury stock | (2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||||
Stock option exercises and other common stock transactions | 194 | (2 | ) | (2 | ) | (2 | ) | |||||||||||||||||||
Cash dividends declared | (31 | ) | (31 | ) | (31 | ) | ||||||||||||||||||||
Noncontrolling interest distributions and other | 1 | 1 | $ | (8 | ) | (7 | ) | |||||||||||||||||||
Balance at June 29, 2012 | 163,914 | $ | 164 | $ | 2,173 | $ | 1,939 | $ | (1,207 | ) | $ | (391 | ) | $ | 2,678 | $ | 50 | $ | 2,728 |
Quarter Ended | ||||||||
(Amounts in millions, except per-share data) | June 28, 2013 | June 29, 2012 | ||||||
Gross favorable | $ | 17 | $ | 9 | ||||
Gross unfavorable | (9 | ) | (28 | ) | ||||
Total net adjustments, before taxes and non-controlling interest | $ | 8 | $ | (19 | ) | |||
Impact on diluted EPS from continuing operations | $ | 0.02 | $ | (0.08 | ) |
Note 3 – | Acquisitions and Divestitures |
Quarter Ended | ||||||||
June 28, 2013 | June 29, 2012 | |||||||
Operations | ||||||||
Revenue | $ | 173 | $ | 324 | ||||
Income from discontinued operations, before taxes | 10 | 39 | ||||||
Tax expense | 4 | 14 | ||||||
Net income from discontinued operations | $ | 6 | $ | 25 | ||||
Disposal | ||||||||
Gain on disposition, before taxes | $ | 25 | $ | — | ||||
Tax expense | 13 | — | ||||||
Gain on disposition, net of taxes | $ | 12 | $ | — | ||||
Income from discontinued operations, net of taxes | $ | 18 | $ | 25 |
Note 4 – | Investigations and Out of Period Adjustments |
Increase/(Decrease) | ||||||||||||||||
(Amounts in millions) | Fiscal 2012 Adjustments | Fiscal 2013 Adjustments | Fiscal 2014 First Quarter Adjustments | Total Adjustments | ||||||||||||
Fiscal 2014 | $ | — | $ | — | $ | (9 | ) | $ | (9 | ) | ||||||
Fiscal 2013 | — | 6 | 7 | 13 | ||||||||||||
Fiscal 2012 | 79 | 7 | (3 | ) | 83 | |||||||||||
Fiscal 2011 | (29 | ) | (22 | ) | 2 | (49 | ) | |||||||||
Prior fiscal years (unaudited) | (50 | ) | 9 | 3 | (38 | ) |
• | net adjustments decreasing income from continuing operations before taxes by $13 million resulting primarily from revenues and costs in its GBS segment; |
• | net adjustments increasing income from continuing operations before taxes by $8 million resulting from the correction of payroll expenses within its GBS segment; and |
• | net adjustments increasing income from continuing operations before taxes by $14 million resulting primarily from adjustments identified by the Company late in the fiscal 2013 closing process. |
Quarter Ended June 28, 2013 | ||||||||||||
(Amounts in millions, except per-share amounts) | As Reported | Adjustments Increase/ (Decrease) | Amount Adjusted for Removal of Errors | |||||||||
Revenue | $ | 3,260 | $ | 19 | $ | 3,279 | ||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 2,466 | 26 | 2,492 | |||||||||
Selling, general and administrative | 292 | — | 292 | |||||||||
Depreciation and amortization | 255 | — | 255 | |||||||||
Restructuring costs | 7 | 2 | 9 | |||||||||
Interest expense | 39 | — | 39 | |||||||||
Other (income) expense | (1 | ) | — | (1 | ) | |||||||
Income from continuing operations before taxes | 206 | (9 | ) | 197 | ||||||||
Taxes on income | 65 | (11 | ) | 54 | ||||||||
Income from continuing operations | 141 | 2 | 143 | |||||||||
Income from discontinued operations, net of taxes | 18 | — | 18 | |||||||||
Income attributable to CSC common shareholders | 156 | 2 | 158 | |||||||||
EPS – Diluted | ||||||||||||
Continuing operations | $ | 0.91 | $ | 0.01 | $ | 0.92 | ||||||
Discontinued operations | 0.11 | — | 0.11 | |||||||||
Total | $ | 1.02 | $ | 0.01 | $ | 1.03 |
• | Accounts receivable ($1 million decrease); |
• | Prepaid expenses and other current assets ($2 million increase); |
• | Other assets ($4 million increase); |
• | Accrued payroll and related costs ($8 million decrease ) |
• | Deferred revenue ($18 million increase); and |
• | Accrued expenses and other current liabilities ($14 million decrease). |
Quarter Ended June 29, 2012 | ||||||||||||
(Amounts in millions, except per-share amounts) | As Reported | Adjustments Increase/ (Decrease) | Amount Adjusted for Removal of Errors | |||||||||
Revenue | $ | 3,633 | $ | 6 | $ | 3,639 | ||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 2,977 | 1 | 2,978 | |||||||||
Selling, general and administrative | 281 | 3 | 284 | |||||||||
Depreciation and amortization | 262 | (2 | ) | 260 | ||||||||
Restructuring costs | 27 | 5 | 32 | |||||||||
Interest expense | 44 | — | 44 | |||||||||
Other (income) expense | 12 | — | 12 | |||||||||
Income from continuing operations before taxes | 35 | (1 | ) | 34 | ||||||||
Taxes on income | 18 | 4 | 22 | |||||||||
Income from continuing operations | 17 | (5 | ) | 12 | ||||||||
Loss from discontinued operations, net of taxes | 25 | — | 25 | |||||||||
Net income attributable to CSC common shareholders | 40 | (5 | ) | 35 | ||||||||
EPS – Diluted | ||||||||||||
Continuing operations | $ | 0.10 | $ | (0.03 | ) | $ | 0.07 | |||||
Discontinued operations | 0.16 | — | 0.16 | |||||||||
Total | $ | 0.26 | $ | (0.03 | ) | $ | 0.23 |
• | Accounts receivable ($2 million increase); |
• | Prepaid expenses and other current assets ($2 million decrease); |
• | Property and equipment ($3 million decrease); |
• | Accrued payroll and related costs ($1 million decrease) |
• | Deferred revenue ($7 million increase); and |
• | Accrued expenses and other current liabilities ($10 million decrease). |
Note 5 – | Earnings Per Share |
Quarter Ended | ||||||||
(Amounts in millions, except per-share amounts) | June 28, 2013 | June 29, 2012 | ||||||
Net income attributable to CSC common shareholders | ||||||||
From continuing operations | $ | 138 | $ | 15 | ||||
From discontinued operations | 18 | 25 | ||||||
$ | 156 | $ | 40 | |||||
Common share information: | ||||||||
Weighted average common shares outstanding for basic EPS | 149.854 | 155.227 | ||||||
Dilutive effect of stock options and equity awards | 2.384 | 0.420 | ||||||
Shares for diluted earnings per share | 152.238 | 155.647 | ||||||
Earnings per share – basic and diluted: | ||||||||
Basic EPS: | ||||||||
Continuing operations | $ | 0.92 | $ | 0.10 | ||||
Discontinued operations | 0.12 | 0.16 | ||||||
Total | $ | 1.04 | $ | 0.26 | ||||
Diluted EPS: | ||||||||
Continuing operations | $ | 0.91 | $ | 0.10 | ||||
Discontinued operations | 0.11 | 0.16 | ||||||
Total | $ | 1.02 | $ | 0.26 |
Note 6 – | Fair Value |
As of June 28, 2013 | ||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||
(Amounts in millions) | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
Money market funds and money market deposit accounts | $ | 553 | $ | 553 | $ | — | $ | — | ||||||||
Time deposits | 393 | 393 | — | — | ||||||||||||
Derivative assets | 8 | — | 8 | — | ||||||||||||
Total assets | $ | 954 | $ | 946 | $ | 8 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivative liabilities | $ | 17 | $ | — | $ | 17 | $ | — | ||||||||
Total liabilities | $ | 17 | $ | — | $ | 17 | $ | — |
As of March 29, 2013 | ||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||
(Amounts in millions) | Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets: | ||||||||||||||||
Money market funds and money market deposit accounts | $ | 464 | $ | 464 | $ | — | $ | — | ||||||||
Time deposits | 393 | 393 | — | — | ||||||||||||
Short term investments | 6 | 6 | — | — | ||||||||||||
Derivative assets | 5 | — | 5 | — | ||||||||||||
Total assets | $ | 868 | $ | 863 | $ | 5 | $ | — | ||||||||
Liabilities: | ||||||||||||||||
Derivative liabilities | $ | 11 | $ | — | $ | 11 | $ | — | ||||||||
Total liabilities | $ | 11 | $ | — | $ | 11 | $ | — |
Note 7 – | Foreign Currency Derivative Instruments |
Fair Value as of | ||||||||||||||||
June 28, 2013 | March 29, 2013 | |||||||||||||||
(Amounts in millions) | Assets | Liabilities | Assets | Liabilities | ||||||||||||
Gross derivatives recognized in consolidated condensed balance sheets | $ | 8 | $ | 17 | $ | 5 | $ | 11 | ||||||||
Gross amounts not offset in the consolidated condensed balance sheets (1) | 1 | 1 | 2 | 2 | ||||||||||||
Net amount | $ | 7 | $ | 16 | $ | 3 | $ | 9 |
Note 8 – | Pension and Other Benefit Plans |
Quarter Ended | ||||||||||||||||
U.S. Plans | Non-U.S. Plans | |||||||||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | June 28, 2013 | June 29, 2012 | ||||||||||||
Service cost | $ | 2 | $ | 3 | $ | 7 | $ | 8 | ||||||||
Interest cost | 38 | 40 | 30 | 31 | ||||||||||||
Expected return on assets | (51 | ) | (40 | ) | (37 | ) | (31 | ) | ||||||||
Amortization of unrecognized net loss and other | 11 | 11 | 6 | 5 | ||||||||||||
Contractual termination benefits | — | — | 1 | 5 | ||||||||||||
Net periodic pension cost | $ | — | $ | 14 | $ | 7 | $ | 18 |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Service cost | $ | 1 | $ | 1 | ||||
Interest cost | 2 | 3 | ||||||
Expected return on assets | (1 | ) | (2 | ) | ||||
Amortization of unrecognized net loss and other | 3 | 4 | ||||||
Net provision for postretirement benefits | $ | 5 | $ | 6 |
Note 9 – | Income Taxes |
Note 10 – | Stock Incentive Plans |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Cost of services | $ | 6 | $ | 3 | ||||
Selling, general and administrative | 11 | 4 | ||||||
Total | $ | 17 | $ | 7 | ||||
Total, net of tax | $ | 11 | $ | 4 |
Quarter ended | |||||
June 28, 2013 | June 29, 2012 | ||||
Risk-free interest rate | 1.27 | % | 1.13 | % | |
Expected volatility | 34 | % | 36 | % | |
Expected term (in years) | 6.47 | 6.45 | |||
Dividend yield | 1.72 | % | 2.87 | % |
As of June 28, 2013 | ||||||||||||
Number of Option Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term | Aggregate Intrinsic Value (millions) | |||||||||
Outstanding as March 29, 2013 | 15,140,567 | $ | 43.23 | 5.45 | $ | 113 | ||||||
Granted | 2,059,857 | 44.67 | ||||||||||
Exercised | (466,283 | ) | 36.83 | 4 | ||||||||
Canceled/Forfeited | (692,297 | ) | 32.75 | |||||||||
Expired | (741,959 | ) | 51.94 | |||||||||
Outstanding as of June 28, 2013 | 15,299,885 | 43.67 | 5.86 | 56 | ||||||||
Vested and expected to vest in the future as of June 28, 2013 | 15,005,999 | 43.77 | 5.76 | 54 | ||||||||
Exercisable as of June 28, 2013 | 10,943,403 | 46.58 | 4.49 | 22 |
As of June 28, 2013 | ||||||
Number of Shares | Weighted Average Fair Value per share | |||||
Outstanding as of March 29, 2013 | 2,263,272 | $ | 31.53 | |||
Granted | 974,885 | 44.67 | ||||
Released/Issued | (302,135 | ) | 32.31 | |||
Canceled/Forfeited | (310,511 | ) | 40.32 | |||
Outstanding as of June 28, 2013 | 2,625,511 | 35.57 |
As of June 28, 2013 | ||||||
Number of Shares | Weighted Average Fair Value per share | |||||
Outstanding as of March 29, 2013 | 188,445 | $ | 39.85 | |||
Granted | — | — | ||||
Released/Issued | — | — | ||||
Canceled/Forfeited | — | — | ||||
Outstanding as of June 28, 2013 | 188,445 | 39.85 |
Note 11 – | Stockholder's Equity |
For the three months ended June 28, 2013 (Amounts in millions) | Before Tax Amount | Tax (Expense)/Benefit | Net of Tax Amount | |||||||||
Foreign currency translation adjustments | $ | (85 | ) | $ | 1 | $ | (84 | ) | ||||
Pension and other postretirement benefit plans: | ||||||||||||
Net actuarial gain/loss arising during the year (1) | 1 | — | 1 | |||||||||
Amortization of net actuarial loss (2) | 20 | (6 | ) | 14 | ||||||||
Total pension and other postretirement benefit plans | 21 | (6 | ) | 15 | ||||||||
Total other comprehensive loss | $ | (64 | ) | $ | (5 | ) | $ | (69 | ) |
(1) | Represents the result of remeasurement of pension liability associated with a non-US pension plan. |
(2) | Represents current period reclassification out of accumulated other comprehensive loss. The reclassified amounts are included in the net periodic pension cost and net periodic postretirement benefit cost of the first quarter of fiscal 2014 (see Note 8). |
For the three months ended June 29, 2012 (Amounts in millions) | Before Tax Amount | Tax (Expense)/Benefit | Net of Tax Amount | |||||||||
Foreign currency translation adjustments | $ | (128 | ) | $ | 1 | $ | (127 | ) | ||||
Pension and other postretirement benefit plans: | ||||||||||||
Amortization of net actuarial loss (1) | 19 | (5 | ) | 14 | ||||||||
Total pension and other postretirement benefit plans | 19 | (5 | ) | 14 | ||||||||
Total other comprehensive loss | $ | (109 | ) | $ | (4 | ) | $ | (113 | ) |
(1) | Represents current period reclassification out of accumulated other comprehensive loss. The reclassified amounts are included in the net periodic pension cost and net periodic postretirement benefit cost of the first quarter of fiscal 2014 (see Note 8). |
(Amounts in millions) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefit Plans | Accumulated Other Comprehensive Loss | |||||||||
Balance at March 29, 2013 | $ | 77 | $ | (1,431 | ) | $ | (1,354 | ) | ||||
Current-period other comprehensive (loss) income, net of taxes | (84 | ) | 1 | (83 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes and non-controlling interest | — | 13 | 13 | |||||||||
Balance at June 28, 2013 | $ | (7 | ) | $ | (1,417 | ) | $ | (1,424 | ) |
(Amounts in millions) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefit Plans | Accumulated Other Comprehensive Loss | |||||||||
Balance at March 30, 2012 | $ | 160 | $ | (1,253 | ) | $ | (1,093 | ) | ||||
Current-period other comprehensive loss, net of taxes | (127 | ) | — | (127 | ) | |||||||
Amounts reclassified from accumulated other comprehensive loss, net of taxes and non-controlling interest | — | 13 | 13 | |||||||||
Balance at June 29, 2012 | $ | 33 | $ | (1,240 | ) | $ | (1,207 | ) |
Note 12 – | Cash Flows |
Quarter ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Interest | $ | 16 | $ | 17 | ||||
Taxes on income, net of refunds | 21 | 32 |
Quarter ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Capital expenditures in accounts payable and accrued expenses | $ | 41 | $ | 46 | ||||
Capital expenditures through capital lease obligations | 32 | 45 |
Note 13 – | Segment Information |
• | GBS – The GBS segment comprises three units: Consulting, Industry Software & Solutions, and Applications Services. The Consulting business is a global leader in helping large organizations, public-sector entities, and local businesses innovate, transform, and create sustainable competitive advantage through a combination of industry, business process, technology, systems integration and change management expertise. Industry Software & Solutions is a leader in industry-based software, services, and business process services and outsourcing. Software solutions and process-based intellectual property power mission-critical transaction engines in insurance, banking, healthcare and life sciences. Applications Services optimizes and modernizes clients' application portfolio and information services sourcing strategy, enabling clients to capitalize on emerging services such as cloud, mobility, and big data within new commercial models such as the agile "as a Service - Economy" (aaS). |
• | GIS – GIS provides managed and virtual desktop solutions, mobile device management, unified communications and collaboration services, data center management, compute and managed storage solutions to commercial clients globally. GIS also delivers CSC's next generation Cloud offerings, including secure Infrastructure as a Service (IaaS), private Cloud solutions, CloudMail and Storage as a Service (SaaS). To provide clients with uniquely differentiated offerings and expanded market coverage, GIS also collaborates with a select number of strategic partners. This collaboration helps CSC determine the best technology, road map and opportunities to differentiate solutions, augment capabilities, and jointly deliver impactful solutions. CSC seeks to capitalize on an emerging market trend - to rebundle the IT stack on virtualized infrastructure. GIS offerings are designed for any enterprise - from national, multinational and global enterprises. The GIS segment is similar to the former Managed Services Sector (MSS), absent the applications development, testing and maintenance businesses, which are now included in Global Business Services. |
• | NPS – NPS delivers IT, mission, and operations-related services to the Department of Defense, civil agencies of the U.S. federal government, as well as other foreign, state and local government agencies. Commensurate with the Company's strategy, NPS is leveraging CSC's commercial best practices and next-generation technologies to bring scalable and more cost-effective IT solutions to government agencies that are seeking efficiency through innovation. Evolving government priorities such as: 1) IT efficiency, which includes data center consolidation and next generation cloud technologies, 2) cyber security, 3) immigration reform, 4) mission intelligence driven by big data solutions, and 5) health IT and informatics, drive demand for NPS offerings. |
(Amounts in millions) | GBS | GIS | NPS | Corporate | Eliminations | Total | ||||||||||||||||||
Quarter ended June 28, 2013 | ||||||||||||||||||||||||
Revenues | $ | 1,083 | $ | 1,150 | $ | 1,053 | $ | 4 | $ | (30 | ) | $ | 3,260 | |||||||||||
Operating income | 101 | 82 | 121 | — | — | 304 | ||||||||||||||||||
Depreciation and amortization | 41 | 174 | 37 | 3 | — | 255 | ||||||||||||||||||
Quarter ended June 29, 2012 | ||||||||||||||||||||||||
Revenues | $ | 1,278 | $ | 1,203 | $ | 1,183 | $ | 3 | $ | (34 | ) | $ | 3,633 | |||||||||||
Operating income (loss) | 66 | 16 | 93 | (29 | ) | — | 146 | |||||||||||||||||
Depreciation and amortization | 47 | 173 | 40 | 2 | — | 262 |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Operating income | $ | 304 | $ | 146 | ||||
Corporate G&A | (64 | ) | (60 | ) | ||||
Interest expense | (39 | ) | (44 | ) | ||||
Interest income | 4 | 5 | ||||||
Other income (expense), net | 1 | (12 | ) | |||||
Income from continuing operations before taxes | $ | 206 | $ | 35 |
GBS | ||||||||||||
(Amounts in millions) | As Reported | Increase/ (Decrease) | Adjusted | |||||||||
Quarter ended June 28, 2013 | ||||||||||||
Revenues | $ | 1,083 | $ | 19 | $ | 1,102 | ||||||
Operating income | 101 | 13 | 114 | |||||||||
Depreciation and amortization | 41 | — | 41 | |||||||||
Quarter ended June 29, 2012 | ||||||||||||
Revenues | $ | 1,278 | $ | 8 | $ | 1,286 | ||||||
Operating income | 66 | (3 | ) | 63 | ||||||||
Depreciation and amortization | 47 | 1 | 48 |
GIS | ||||||||||||
(Amounts in millions) | As Reported | Increase/ (Decrease) | Adjusted | |||||||||
Quarter ended June 28, 2013 | ||||||||||||
Revenues | $ | 1,150 | $ | — | $ | 1,150 | ||||||
Operating income | 82 | (3 | ) | 79 | ||||||||
Depreciation and amortization | 174 | — | 174 | |||||||||
Quarter ended June 29, 2012 | ||||||||||||
Revenues | $ | 1,203 | $ | — | $ | 1,203 | ||||||
Operating income | 16 | 1 | 17 | |||||||||
Depreciation and amortization | 173 | (3 | ) | 170 |
NPS | ||||||||||||
(Amounts in millions) | As Reported | Increase/ (Decrease) | Adjusted | |||||||||
Quarter ended June 28, 2013 | ||||||||||||
Revenues | $ | 1,053 | $ | — | $ | 1,053 | ||||||
Operating income | 121 | (1 | ) | 120 | ||||||||
Depreciation and amortization | 37 | — | 37 | |||||||||
Quarter ended June 29, 2012 | ||||||||||||
Revenues | $ | 1,183 | $ | (2 | ) | $ | 1,181 | |||||
Operating income | 93 | 3 | 96 | |||||||||
Depreciation and amortization | 40 | — | 40 |
Note 14 – | Goodwill and Other Intangible Assets |
(Amounts in millions) | GBS | GIS | NPS | Total | ||||||||||||
Goodwill, gross * | $ | 1,319 | $ | 2,149 | $ | 793 | $ | 4,261 | ||||||||
Accumulated impairment losses * | (671 | ) | (2,074 | ) | — | (2,745 | ) | |||||||||
Balance as of March 29, 2013, net | 648 | 75 | 793 | 1,516 | ||||||||||||
Deductions | (12 | ) | — | (43 | ) | (55 | ) | |||||||||
Foreign currency translation | (17 | ) | — | — | (17 | ) | ||||||||||
Goodwill, gross | 1,290 | 2,149 | 750 | 4,189 | ||||||||||||
Accumulated impairment losses | (671 | ) | (2,074 | ) | — | (2,745 | ) | |||||||||
Balance as of June 28, 2013, net | $ | 619 | $ | 75 | $ | 750 | $ | 1,444 |
As of June 28, 2013 | ||||||||||||
(Amounts in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Outsourcing contract costs | $ | 1,483 | $ | 996 | $ | 487 | ||||||
Software | 2,187 | 1,576 | 611 | |||||||||
Customer and other intangible assets | 501 | 288 | 213 | |||||||||
Total intangible assets | $ | 4,171 | $ | 2,860 | $ | 1,311 |
As of March 29, 2013 | ||||||||||||
(Amounts in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | |||||||||
Outsourcing contract costs | $ | 1,473 | $ | 968 | $ | 505 | ||||||
Software | 2,134 | 1,523 | 611 | |||||||||
Customer and other intangible assets | 512 | 281 | 231 | |||||||||
Total intangible assets | $ | 4,119 | $ | 2,772 | $ | 1,347 |
Note 15 – | Restructuring Costs |
(Amounts in millions) | Restructuring liability as of March 29, 2013 | Costs expensed in fiscal 2014 | Less: costs not affecting restructuring liability (1) | Cash paid | Other(3) | Restructuring liability as of June 28, 2013 | ||||||||||||||||||
Workforce reductions | $ | 155 | $ | 7 | $ | (1 | ) | $ | (37 | ) | $ | (1 | ) | $ | 123 | |||||||||
Facilities costs | 10 | — | — | — | — | $ | 10 | |||||||||||||||||
Other(2) | 11 | — | — | (10 | ) | — | 1 | |||||||||||||||||
$ | 176 | $ | 7 | $ | (1 | ) | $ | (47 | ) | $ | (1 | ) | $ | 134 |
(1) | Charges primarily consist of pension benefit augmentations and are recorded as a pension liability. |
(2) | Other direct costs associated with the restructuring program. |
(3) | Foreign currency translation adjustments. |
(Amounts in millions) | Restructuring liability as of March 29, 2013 | Cash paid | Other(1) | Restructuring liability as of June 28, 2013 | ||||||||||||
Workforce reductions | $ | 9 | $ | (6 | ) | $ | — | $ | 3 | |||||||
Facilities costs | 5 | — | (1 | ) | 4 | |||||||||||
Total | $ | 14 | $ | (6 | ) | $ | (1 | ) | $ | 7 |
(1) | Foreign currency translation adjustments. |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
GBS | $ | 9 | $ | 14 | ||||
GIS | — | 13 | ||||||
NPS | — | — | ||||||
Corporate | (2 | ) | — | |||||
Total | $ | 7 | $ | 27 |
Note 16 – | Contract with the U.K. National Health Service |
1. | Under contract terms existing prior to the IACCN, the NHS was committed to purchase the Lorenzo product for multiple trusts. In addition, the Company was the exclusive supplier of such software products and related services to two out of the three regions of the U.K. covered by the existing contract. Under the IACCN, the NHS is no longer subject to any trust volume commitment for the Lorenzo product (there were no changes in quantities for non-Lorenzo deployments), and the Company agreed to non-exclusive deployment rights for all products and services in those regions in which it previously enjoyed exclusivity. As a result, the individual trusts can choose third-party software vendors other than CSC to provide a software solution. CSC and the NHS have also agreed to a process for trusts which wish to take the Lorenzo products within the NME regions to obtain central funding from the U.K. Department of Health for implementation of the Lorenzo products. In addition, CSC may offer the Lorenzo solution throughout the rest of England where trusts select CSC's solutions through a separate competitive process. |
2. | The IACCN creates pricing and payment terms for the Lorenzo product and new terms under which trusts in the contract's NME region that choose the Lorenzo product can access central funds for its deployment, subject to business case justification. While the funding is provided by the NHS, there is a far greater degree of interaction with the trusts under the IACCN, as the Company works with each individual trust to build a business case and seek NHS approval and central funding to proceed. |
3. | The IACCN has not materially altered the terms relating to non-Lorenzo products. The Company will continue to provide non-Lorenzo deployment, hosting and maintenance services in accordance with contract terms in existence prior to the IACCN. The deployment of the non-Lorenzo products is expected to be completed or substantially completed by fiscal 2015. |
4. | Under the IACCN, the Lorenzo product is redefined for pricing purposes, with Lorenzo Regional Care comprising the "Base Product," consisting of seven deployment units (or modules) and the "Additional Product," consisting of three other modules. The parties agreed that six of the Base Product's modules had completed the necessary NHS |
5. | New trusts taking deployments of the Lorenzo product will receive ongoing managed services from the Company for a period of five years from the date such deployment is complete, provided deployment is complete or substantially complete by July 7, 2016. The services include hosting of the software and trust data at the Company's data center as well as support and maintenance, including regulatory updates and other changes over the term of the contract. Under contract terms existing prior to the IACCN, all services were to expire upon the end of the contract term of July 7, 2016, subject to an optional one year extension and an exit transition period. |
Note 17 – | Commitments and Contingencies |
(Amounts in millions) | Fiscal 2014 | Fiscal 2015 | Fiscal 2016 and thereafter | Total | ||||||||||||
Surety bonds | $ | 29 | $ | 1 | $ | — | $ | 30 | ||||||||
Letters of credit | 22 | 42 | 67 | 131 | ||||||||||||
Stand-by letters of credit | 24 | 51 | 12 | 87 | ||||||||||||
Total | $ | 75 | $ | 94 | $ | 79 | $ | 248 |
Note 18 – | Subsequent Events |
• | Global Business Services (GBS) – GBS is uniquely positioned to help clients understand and exploit industry trends of IT modernization and virtualization of the IT stack (which consists of hardware, software, networking, storage and computing assets). The segment comprises three units: Consulting, Industry Software & Solutions, and Applications Services. Our Consulting business is a global leader in helping large organizations, public-sector entities, and local businesses innovate, transform, and create sustainable competitive advantage through a |
• | Global Infrastructure Services (GIS) – GIS provides managed and virtual desktop solutions, mobile device management, unified communications and collaboration services, data center management, compute and managed storage solutions to commercial clients globally. GIS also delivers CSC's next generation Cloud offerings, including secure Infrastructure as a Service (IaaS), private Cloud solutions, CloudMail and Storage as a Service (SaaS). These offerings are designed to provide a rich portfolio of standardized offerings that have predictable outcomes and measurable results while reducing business risk and operating costs for clients. To provide clients with uniquely differentiated offerings and expanded market coverage, GIS also collaborates with a select number of strategic partners. This collaboration helps CSC determine the best technology, road map and opportunities to differentiate solutions, augment capabilities, and jointly deliver impactful solutions. The Company seeks to capitalize on an emerging market trend - to rebundle the IT stack on virtualized infrastructure. GIS offerings are designed for any enterprise - from national, multinational and global enterprises. The GIS segment is similar to the former Managed Services Sector (MSS), absent the applications development, testing and maintenance businesses, which are now included in Global Business Services. |
• | North American Public Sector (NPS) – NPS delivers IT, mission, and operations-related services to the Department of Defense, civil agencies of the U.S. federal government, as well as other foreign, state and local government agencies. Commensurate with the Company's strategy, NPS is leveraging our commercial best practices and next-generation technologies to bring scalable and more cost-effective IT solutions to government agencies that are seeking efficiency through innovation. This approach is designed to yield lower implementation and operational costs as well as a higher standard of delivery excellence. Evolving government priorities such as: 1) IT efficiency, which includes data center consolidation and next generation cloud technologies, 2) cyber security, 3) immigration reform, 4) mission intelligence driven by big data solutions, and 5) health IT and informatics, drive demand for NPS offerings |
• | Revenues decreased $373 million, or 10.3%, to $3,260 million, as compared to the first quarter of fiscal 2013. On a constant currency basis(1), revenues decreased $359 million, or 9.9%. |
• | Operating income(2) increased to $304 million as compared to operating income of $146 million for the first quarter of fiscal 2013. The operating income margin increased to 9.3% from last year's first quarter margin of 4.0%. |
• | Earnings before interest and taxes(3) (EBIT) increased to $241 million as compared to EBIT of $74 million for the first quarter of fiscal 2013. EBIT margin improved to 7.4% from last year's first quarter margin of 2.0%. |
• | Income from continuing operations before taxes was $206 million, compared to income from continuing operations before taxes of $35 million in the first quarter of fiscal 2013, an increase of $171 million. |
• | Income from discontinued operations, net of taxes, was $18 million, compared to $25 million in the same period of fiscal 2013, a decrease of $7 million. |
• | Net income attributable to CSC common shareholders was $156 million, an increase of $116 million from last year's first quarter. |
(1) | Selected references are made on a “constant currency basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period. Financial results on a “constant currency basis” are calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates. This approach is used for all results where the functional currency is not the U.S. dollar. |
(2) | Operating income is a non-U.S. Generally Accepted Accounting Principle (GAAP) measure used by management to assess performance at the segments and on a consolidated basis. The Company’s definition of such measure may differ from that used by other companies. CSC defines operating income as revenue less costs of services, depreciation and amortization expense, restructuring costs and segment general and administrative (G&A) expense, excluding corporate G&A. Operating margin is defined as operating income as a percentage of revenue. Management compensates for the limitations of this non-GAAP measure by also reviewing income from continuing operations before taxes, which includes costs excluded from the operating income definition such as corporate G&A, interest and other income (expense). A reconciliation of consolidated operating income to income from continuing operations before taxes is as follows: |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Operating income | $ | 304 | $ | 146 | ||||
Corporate G&A | (64 | ) | (60 | ) | ||||
Interest expense | (39 | ) | (44 | ) | ||||
Interest income | 4 | 5 | ||||||
Other income (expense), net | 1 | (12 | ) | |||||
Income from continuing operations before taxes | $ | 206 | $ | 35 |
(3) | Earnings before interest and taxes (EBIT) is a non-U.S. Generally Accepted Accounting Principle (GAAP) measure that provides useful information to investors regarding the Company's results of operations as it provides another measure of the Company's profitability, and is considered an important measure by financial analysts covering CSC and its peers. The Company’s definition of such measure may differ from that used by other companies. CSC defines EBIT as revenue less costs of services, selling, general and administrative expenses, depreciation and amortization, restructuring costs, and other income (expense). EBIT margin is defined as EBIT as a percentage of revenue. A reconciliation of EBIT to net income from continuing operations is as follows: |
Quarter Ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Earnings before interest and taxes | $ | 241 | $ | 74 | ||||
Interest expense | (39 | ) | (44 | ) | ||||
Interest income | 4 | 5 | ||||||
Taxes on income | (65 | ) | (18 | ) | ||||
Income from continuing operations | $ | 141 | $ | 17 |
• | Diluted earnings per share (EPS) was $1.02, an increase of $0.76 as compared to $0.26 for the same period in the prior fiscal year. Diluted EPS was comprised of $0.91 from continuing operations and $0.11 from discontinued operations, as compared to $0.10 and $0.16, respectively, for the same period in the prior fiscal year. |
• | The Company announced total contract awards(4)(5) of $2.8 billion, including $1.2 billion for GBS, $0.9 billion for GIS and $0.7 billion for NPS. Total contract awards for the first quarter of fiscal 2013 were $4.0 billion, including $2.1 billion for GBS, $1.1 billion for GIS and $0.8 billion for NPS. |
• | Total backlog(6) at the end of the first quarter of fiscal 2014 was $31.8 billion, a decrease of $1.4 billion as compared to the backlog at the end of the first quarter of fiscal 2013 of $33.2 billion. Of the total $31.8 billion backlog, $7.7 billion is expected to be realized as revenue in the remainder of fiscal 2014. Of the total $31.8 billion backlog, $9.1 billion is not yet funded. |
• | Days Sales Outstanding (DSO)(7) was 77 days at June 28, 2013, an improvement from 79 days at the end of the first quarter of the prior fiscal year. |
• | Debt-to-total capitalization ratio(8) was 46.5% at June 28, 2013, an increase of 0.1 percentage points from 46.4% at March 29, 2013. |
• | Cash provided by operating activities was $213 million, as compared to $221 million in the prior year. Cash used in investing activities was $101 million, as compared to $179 million in the prior year. Cash used in financing activities was $207 million, as compared to $97 million in the prior year. |
• | Free cash flow(9) of $(9) million for the first quarter of fiscal 2014 increased $16 million as compared to the $25 million outflow for the first quarter of fiscal 2013. |
(4) | The Company deployed a new global order input system at the beginning of fiscal 2014 to enhance "lead-to-order" management. This new system permits better and more comprehensive tracking of awards, and enabled the implementation of a revised methodology for reporting new bookings. Fiscal 2013 awards have been recast to be consistent for comparison purposes. |
(5) | Business awards for GIS are estimated at the time of contract signing based on then existing projections of service volumes and currency exchange rates, and include option years. Effective fiscal 2014, GBS' policy of tracking awards was made consistent with the existing GIS policy. For NPS, announced award values for competitive indefinite delivery and indefinite quantity (IDIQ) awards represent the expected contract value at the time a task order is awarded under the contract. Announced values for non-competitive IDIQ awards represent management’s estimate at the award date. CSC's business awards, for all periods presented, have been recast to exclude the awards relating to businesses that have been sold. |
(6) | Backlog represents total estimated contract value of predominantly long-term contracts, based on customer commitments that the Company believes to be firm. Backlog value is based on contract commitments, management’s judgment and assumptions about volume of services, availability of customer funding and other factors. Backlog estimates for government contracts include both the funded and unfunded portions and all of the option periods. Backlog estimates are subject to change and may be affected by factors including modifications of contracts and foreign currency movements. CSC's backlog, for all periods presented, have been recast to exclude the backlog relating to discontinued operations. |
(7) | DSO is calculated as total receivables at the fiscal period end divided by revenue-per-day. Revenue-per-day equals total revenues divided by the number of days in the fiscal period. Total receivables includes unbilled receivables but excludes income tax receivables and long-term receivables. |
(8) | Debt-to-total capitalization ratio is defined as total current and long-term debt divided by total debt and equity, including noncontrolling interest. |
(9) | Free cash flow is a non-GAAP measure and the Company's definition of such measure may differ from that of other companies. CSC defines free cash flow as equal to the sum of (1) operating cash flows, (2) investing cash flows, excluding business acquisitions, dispositions and investments (including short-term investments and purchase or sale of available for sale securities) and (3) payments on capital leases and other long-term asset financings. |
Quarter ended | ||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | ||||||
Net cash provided by operating activities | $ | 213 | $ | 221 | ||||
Net cash used in investing activities | (101 | ) | (179 | ) | ||||
Business dispositions | (56 | ) | (2 | ) | ||||
Short-term investments | (5 | ) | — | |||||
Payments on capital leases and other long-term asset financings | (60 | ) | (65 | ) | ||||
Free cash flow | $ | (9 | ) | $ | (25 | ) |
Quarter Ended | |||||||||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | Change | Percent Change | |||||||||||
GBS | 1,083 | 1,278 | (195 | ) | (15.3 | ) | |||||||||
GIS | 1,150 | 1,203 | (53 | ) | (4.4 | ) | |||||||||
NPS | $ | 1,053 | $ | 1,183 | $ | (130 | ) | (11.0 | )% | ||||||
Corporate | 4 | 3 | 1 | - | |||||||||||
Subtotal | 3,290 | 3,667 | (377 | ) | (10.3 | ) | |||||||||
Eliminations | (30 | ) | (34 | ) | 4 | - | |||||||||
Total Revenue | $ | 3,260 | $ | 3,633 | $ | (373 | ) | (10.3 | )% |
Quarter Ended | ||||||||||||
Acquisitions | Approximate Impact of Currency Fluctuations | Net Internal Growth | Total | |||||||||
GBS | — | (0.5 | ) | (14.8 | ) | (15.3 | ) | |||||
GIS | — | (0.7 | )% | (3.7 | ) | (4.4 | ) | |||||
NPS | 0.3 | % | — | (11.3 | )% | (11.0 | )% | |||||
Cumulative Net Percentage | 0.1 | % | (0.4 | )% | (10.0 | )% | (10.3 | )% |
Quarter Ended | |||||||||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012(1)(2) | Change | Percent Change | |||||||||||
Department of Defense | $ | 595 | $ | 697 | $ | (102 | ) | (14.6 | )% | ||||||
Civil Agencies | 405 | 424 | (19 | ) | (4.5 | ) | |||||||||
Other (3) | 53 | 62 | (9 | ) | (14.5 | ) | |||||||||
Total | 1,053 | $ | 1,183 | (130 | ) | (11.0 | )% |
Quarter Ended | |||||||||||||||||
Amount | Percentage of Revenue | Percentage | |||||||||||||||
(Amounts in millions) | June 28, 2013 | June 29, 2012 | June 28, 2013 | June 29, 2012 | of Revenue Change | ||||||||||||
Costs of services (excludes depreciation & amortization and restructuring costs) | $ | 2,466 | $ | 2,977 | 75.6 | % | 82.0 | % | (6.4 | )% | |||||||
Selling, general and administrative | 292 | 281 | 9.0 | 7.7 | 1.3 | ||||||||||||
Depreciation and amortization | 255 | 262 | 7.8 | 7.2 | 0.6 | ||||||||||||
Restructuring costs | 7 | 27 | 0.2 | 0.7 | (0.5 | ) | |||||||||||
Interest expense, net | 35 | 39 | 1.1 | 1.1 | — | ||||||||||||
Other (income) expense, net | (1 | ) | 12 | — | 0.3 | (0.3 | ) | ||||||||||
Total | $ | 3,054 | $ | 3,598 | 93.7 | % | 99.0 | % | (5.3 | )% |
Increase/(Decrease) | ||||||||||||||||
(Amounts in millions) | Fiscal 2012 Adjustments | Fiscal 2013 Adjustments | Fiscal 2014 First Quarter Adjustments | Total Adjustments | ||||||||||||
Fiscal 2014 | $ | — | $ | — | $ | (9 | ) | $ | (9 | ) | ||||||
Fiscal 2013 | — | 6 | 7 | 13 | ||||||||||||
Fiscal 2012 | 79 | 7 | (3 | ) | 83 | |||||||||||
Fiscal 2011 | (29 | ) | (22 | ) | 2 | (49 | ) | |||||||||
Prior fiscal years (unaudited) | (50 | ) | 9 | 3 | (38 | ) |
• | net adjustments decreasing income from continuing operations before taxes by $13 million resulting primarily from revenues and costs in its GBS segment; |
• | net adjustments increasing income from continuing operations before taxes by $8 million resulting from the correction of payroll expenses within its GBS segment; and |
• | net adjustments increasing income from continuing operations before taxes by $14 million resulting primarily from adjustments identified by the Company late in the fiscal 2013 closing process. |
Quarter Ended June 28, 2013 | ||||||||||||
(Amounts in millions, except per-share amounts) | As Reported | Adjustments Increase/ (Decrease) | Amount Adjusted for Removal of Errors | |||||||||
Revenue | $ | 3,260 | $ | 19 | $ | 3,279 | ||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 2,466 | 26 | 2,492 | |||||||||
Selling, general and administrative | 292 | — | 292 | |||||||||
Depreciation and amortization | 255 | — | 255 | |||||||||
Restructuring costs | 7 | 2 | 9 | |||||||||
Interest expense | 39 | — | 39 | |||||||||
Other (income) expense | (1 | ) | — | (1 | ) | |||||||
Income from continuing operations before taxes | 206 | (9 | ) | 197 | ||||||||
Taxes on income | 65 | (11 | ) | 54 | ||||||||
Income from continuing operations | 141 | 2 | 143 | |||||||||
Income from discontinued operations, net of taxes | 18 | — | 18 | |||||||||
Income attributable to CSC common shareholders | 156 | 2 | 158 | |||||||||
EPS – Diluted | ||||||||||||
Continuing operations | $ | 0.91 | $ | 0.01 | $ | 0.92 | ||||||
Discontinued operations | 0.11 | — | 0.11 | |||||||||
Total | $ | 1.02 | $ | 0.01 | $ | 1.03 |
• | Accounts receivable ($1 million decrease); |
• | Prepaid expenses and other current assets ($2 million increase); |
• | Other assets ($4 million increase); |
• | Accrued payroll and related costs ($8 million decrease ) |
• | Deferred revenue ($18 million increase); and |
• | Accrued expenses and other current liabilities ($14 million decrease). |
Quarter Ended June 29, 2012 | ||||||||||||
(Amounts in millions, except per-share amounts) | As Reported | Adjustments Increase/ (Decrease) | Amount Adjusted for Removal of Errors | |||||||||
Revenue | $ | 3,633 | $ | 6 | $ | 3,639 | ||||||
Costs of services (excludes depreciation and amortization and restructuring costs) | 2,977 | 1 | 2,978 | |||||||||
Selling, general and administrative | 281 | 3 | 284 | |||||||||
Depreciation and amortization | 262 | (2 | ) | 260 | ||||||||
Restructuring costs | 27 | 5 | 32 | |||||||||
Interest expense | 44 | — | 44 | |||||||||
Other (income) expense | 12 | — | 12 | |||||||||
Income from continuing operations before taxes | 35 | (1 | ) | 34 | ||||||||
Taxes on income | 18 | 4 | 22 | |||||||||
Income from continuing operations | 17 | (5 | ) | 12 | ||||||||
Loss from discontinued operations, net of taxes | 25 | — | 25 | |||||||||
Net income attributable to CSC common shareholders | 40 | (5 | ) | 35 | ||||||||
EPS – Diluted | ||||||||||||
Continuing operations | $ | 0.10 | $ | (0.03 | ) | $ | 0.07 | |||||
Discontinued operations | 0.16 | — | 0.16 | |||||||||
Total | $ | 0.26 | $ | (0.03 | ) | $ | 0.23 |
• | Accounts receivable ($2 million increase); |
• | Prepaid expenses and other current assets ($2 million decrease); |
• | Property and equipment ($3 million decrease); |
• | Accrued payroll and related costs ($1 million decrease) |
• | Deferred revenue ($7 million increase); and |
• | Accrued expenses and other current liabilities ($10 million decrease). |
Three Months Ended | ||||||||
Amounts in millions | June 28, 2013 | June 29, 2012 | ||||||
Net cash provided by operating activities | $ | 213 | $ | 221 | ||||
Net cash provided used in investing activities | (101 | ) | (179 | ) | ||||
Net cash used in financing activities | (207 | ) | (97 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | (30 | ) | (38 | ) | ||||
Net decrease in cash and cash equivalents | (125 | ) | (93 | ) | ||||
Cash and cash equivalents at beginning of year | 2,054 | 1,093 | ||||||
Cash and cash equivalents at the end of period | $ | 1,929 | $ | 1,000 |
As of | ||||||||
(Amounts in millions) | June 28, 2013 | March 29, 2013 | ||||||
Debt | $ | 2,704 | $ | 2,732 | ||||
Equity | 3,112 | 3,160 | ||||||
Total capitalization | $ | 5,816 | $ | 5,892 | ||||
Debt to total capitalization | 46.5 | % | 46.4 | % |
Rating Agency | Rating | Outlook | Short Term Ratings |
Fitch | BBB | Stable | F-3 |
Moody's | Baa2 | Stable | P-2 |
S&P | BBB | Stable | A-2 |
1. | Under contract terms existing prior to the IACCN, the NHS was committed to purchase the Lorenzo product for multiple trusts. In addition, the Company was the exclusive supplier of such software products and related services to two out of the three regions of the U.K. covered by the existing contract. Under the IACCN, the NHS is no longer subject to any trust volume commitment for the Lorenzo product (there were no changes in quantities for non-Lorenzo deployments), and the Company agreed to non-exclusive deployment rights for all products and services in those regions in which it previously enjoyed exclusivity. As a result, the individual trusts can choose third-party software vendors other than CSC to provide a software solution. CSC and the NHS have also agreed to a process for trusts which wish to take the Lorenzo products within the NME regions to obtain central funding from the U.K. Department of Health for implementation of the Lorenzo products. In addition, CSC may offer the Lorenzo solution throughout the rest of England where trusts select CSC's solutions through a separate competitive process. |
2. | The IACCN creates pricing and payment terms for the Lorenzo product and new terms under which trusts in the contract's NME region that choose the Lorenzo product can access central funds for its deployment, subject to business case justification. While the funding is provided by the NHS, there is a far greater degree of interaction with the trusts under the IACCN, as the Company works with each individual trust to build a business case and seek NHS approval and central funding to proceed. |
3. | The IACCN has not materially altered the terms relating to non-Lorenzo products. The Company will continue to provide non-Lorenzo deployment, hosting and maintenance services in accordance with contract terms in existence prior to the IACCN. The deployment of the non-Lorenzo products is expected to be completed or substantially completed by fiscal 2015. |
4. | Under the IACCN, the Lorenzo product is redefined for pricing purposes, with Lorenzo Regional Care comprising the "Base Product," consisting of seven deployment units (or modules) and the "Additional Product," consisting of three |
5. | New trusts taking deployments of the Lorenzo product will receive ongoing managed services from the Company for a period of five years from the date such deployment is complete, provided deployment is complete or substantially complete by July 7, 2016. The services include hosting of the software and trust data at the Company's data center as well as support and maintenance, including regulatory updates and other changes over the term of the contract. Under contract terms existing prior to the IACCN, all services were to expire upon the end of the contract term of July 7, 2016, subject to an optional one year extension and an exit transition period. |
(1) | pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; |
(2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorization of management and directors of the issuer; and |
(3) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer's assets that could have a material effect on the consolidated financial statements. |
Item 1A. | Risk Factors |
1. | Our business may be adversely impacted as a result of changes in demand, both globally and in individual market segments, for information technology outsourcing, business process outsourcing and consulting and systems integration services. In addition, worldwide economic weakness and uncertainty could adversely affect our revenue and expenses. |
2. | We are the subject of an ongoing SEC investigation and an SEC comment letter process, which could divert management's focus, result in substantial investigation expenses and have an adverse impact on our reputation and financial condition and results of operations. |
3. | On August 31, 2012, we entered into a binding interim agreement contract change note (IACCN) with the NHS, which amends the terms of the then current contract with the NHS and forms the basis on which we will finalize a full restatement of the current contract. Under the IACCN, the NHS will not be subject to any trust volume commitment for Lorenzo products and the Company has agreed to non-exclusive deployment rights for all products and services in those regions in which it previously enjoyed exclusivity. |
4. | Contracts with the U.S. federal government and related agencies account for a significant portion of our revenue and earnings. |
5. | Our contracts with the U.S. federal government contain provisions giving government customers certain rights that are unfavorable to us. Such provisions may materially and adversely affect our business and profitability. |
6. | Our ability to continue to develop and expand our service offerings to address emerging business demands and technological trends will impact our future growth. If we are not successful in meeting these business challenges, our results of operations and cash flows will be materially and adversely affected. |
7. | Our primary markets, technology outsourcing and consulting and systems integration, are highly competitive markets. If we are unable to compete in these highly competitive markets, our results of operations will be materially and adversely affected. |
8. | Our ability to raise additional capital for future needs will impact our ability to compete in the markets we serve. |
9. | We may be unable to identify future attractive acquisitions, which may adversely affect our growth. In addition, our ability to consummate or integrate acquisitions we consummate may materially and adversely affect our profitability if we fail to achieve anticipated revenue improvements and cost reductions. |
10. | We could suffer additional losses due to asset impairment charges. |
11. | If our customers experience financial difficulties or request out-of-scope work, we may not be able to collect our receivables, which would materially and adversely affect our profitability. |
12. | If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected. |
13. | We are defendants in pending litigation that may have a material and adverse impact on our profitability. |
14. | Our contracts with U.S. governmental agencies are subject to regulations, audits and cost adjustments by the U.S. government, which could materially and adversely affect our operations. |
15. | Our ability to provide our customers with competitive services is dependent on our ability to attract and retain qualified personnel. |
16. | Our ability to perform services for certain of our government clients is dependent on our ability to maintain necessary security clearances. |
17. | Our international operations are exposed to risks, including fluctuations in exchange rates, which may be beyond our control. |
18. | We may be exposed to negative publicity and other potential risks if we are unable to maintain effective internal controls over financial reporting. |
19. | In the course of providing services to customers, we may inadvertently infringe on the intellectual property rights of others and be exposed to claims for damages. |
20. | Our contracts generally contain provisions under which a customer may terminate the contract prior to completion. Early contract terminations may materially and adversely affect our revenues and profitability. |
21. | Our ability to compete in certain markets we serve is dependent on our ability to continue to expand our capacity in certain offshore locations. However, as our presence in these locations increases, we are exposed to risks inherent to these locations which may adversely impact our revenue and profitability. |
22. | Our performance on contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments. |
23. | Security breaches or service interruptions could expose us to liability or impair our reputation, which could cause significant financial loss. |
24. | Changes in the Company's tax rates could affect our future results. |
25. | We may be adversely affected by disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit. |
26. | Our foreign currency hedging program is subject to counterparty default risk. |
27. | We derive significant revenue and profit from contracts awarded through competitive bidding processes, which can impose substantial costs on us, and we will not achieve revenue and profit objectives if we fail to bid on such projects effectively. |
• | 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, and the risk that such protests or challenges could result in the requirement to resubmit bids, 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. |
28. | Catastrophic events or climate conditions may disrupt our business. |
Period | Total Number of Shares Purchased (1) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (2) | |||||
March 30, 2013 to April 26, 2013 | 86,512 | $48.45 | 77,097 | $626,119,163 | |||||
April 27, 2013 to May 24, 2013 | 138,726 | $44.38 | 33,000 | $624,692,404 | |||||
May 25, 2013 to June 28, 2013 | 2,744,874 | $44.69 | 2,719,016 | $503,143,431 |
(1) | The Company accepted 97,451 shares of its common stock in the quarter ended June 28, 2013, from employees in lieu of cash due to the Company in connection with the release of shares of common stock related to vested RSUs. Such shares of common stock are stated at cost and held as treasury shares to be used for general corporate purposes. |
(2) | On December 13, 2010, the Company publicly announced that its board of directors approved a new share repurchase program authorizing up to $1 billion in share repurchases of the Company’s outstanding common stock. CSC expects to implement the program through purchases made in open market transactions in compliance with Securities and Exchange Commission Rule 10b-18 and Rule 10b5-1, subject to market conditions, and applicable state and federal legal requirements. Share repurchases will be funded with available cash. The timing, volume, and nature of share repurchases will be at the discretion of management, and may be suspended or discontinued at any time. CSC’s Board has not established an end date for the repurchase program. The approximate amount for which shares may yet be purchased under this program at June 28, 2013 is $503 million. |
Exhibit Number | Description of Exhibit |
2.1 | Scheme Implementation Agreement by and among Computer Sciences Corporation, CSC Computer Sciences Australia Holdings Pty Limited, and iSOFT Group Limited (incorporated by reference to Exhibit 2 to the Company's Current Report on Form 8-K (filed on April 5, 2011) (file number 11739300)) |
3.1 | Amended and Restated Articles of Incorporation filed with the Nevada Secretary of State on August 9, 2010 (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended July 2, 2010 (filed August 11, 2010) (file number 101007138)) |
3.2 | Amended and Restated Bylaws dated as of February 7, 2012 (incorporated by reference to Exhibit 3.2 to the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2012 (filed May 29, 2012) (file number 12874585)) |
3.3 | Certificate of Amendment to the Amended and Restated Bylaws, dated August 7, 2012 (incorporated by reference to Exhibit 3.2.1 to the Company's Current Report on Form 8-K (filed August 10, 2012) (file number 121024334)) |
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 number 081071955)) |
4.2 | Indenture dated as of February 10, 2003, by and between the Company and Citibank, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K (filed February 14, 2003) (file number 03568367)) |
4.3 | First Supplemental Indenture dated as of February 14, 2003, by and between the Company and Citibank, N.A., as trustee, and attaching a specimen form of the Notes (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K (filed February 14, 2003) (file number 03568367)) |
4.4 | 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 number 121100352)) |
4.5 | 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 number 121100352)) |
10.1 | Fiscal Year 2014 CEO Stock Option Award Agreement, dated May 20, 2013, between the Company and J. Michael Lawrie |
10.2 | Career Shares Restricted Stock Unit Award Agreement, dated May 20, 2013, between the Company and J. Michael Lawrie |
10.3 | Career Shares Restricted Stock Unit Award Agreement, dated May 20, 2013, between the Company and Paul N. Saleh |
10.4 | Form of Performance Based Restricted Stock Unit Award Agreement for Employees |
10.5 | Form of Career Shares Restricted Stock Unit Award Agreement for Employees (Existing Program Participants) |
10.6 | Form of Career Shares Restricted Stock Unit Award Agreement for Employees (New Program Participants) |
10.7 | Form of Stock Option Award Agreement for Employees |
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 restructuring (incorporated by reference to Exhibits 99.01, 99.02 and 99.03 to the Company's Current Report on Form 8-K (filed on December 16, 2008) (file number 081252513)) |
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 |
(1)Management contract or compensatory plan or agreement |
COMPUTER SCIENCES CORPORATION | |||
Dated: | August 6, 2013 | By: | /s/ Thomas R. Colan |
Name: | Thomas R. Colan | ||
Title: | Vice President and Controller | ||
(Principal Accounting Officer) |
7. | Notices. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he has reviewed this Agreement and the related documents and accepts the provisions thereof. |
1. | Grant of Award. |
2. | Settlement of RSUs. |
3. | Events Altering Settlement Date of RSUs; Cancellation. |
4. | Withholding and Taxes. |
5. | Registration of Units. |
6. | Certain Corporate Transactions. |
7. | Shareholder Rights. |
8. | Assignment of Award. |
9. | Notices. |
10. | Stock Certificates. |
11. | Successors and Assigns. |
12. | Plan. |
13. | No Employment Guaranteed. |
14. | Nature of Company Restricted Stock Unit Grants. |
15. | Governing Law; Consent to Jurisdiction. |
16. | Entire Agreement; Amendment and Waivers. |
17. | Section 409A Compliance. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
18. | Definitions. |
19. | Data Privacy. |
1. | Grant of Award. |
2. | Settlement of RSUs. |
3. | Events Altering Settlement Date of RSUs; Cancellation. |
4. | Withholding and Taxes. |
5. | Registration of Units. |
6. | Certain Corporate Transactions. |
7. | Shareholder Rights. |
8. | Assignment of Award. |
9. | Notices. |
10. | Stock Certificates. |
11. | Successors and Assigns. |
12. | Plan. |
13. | No Employment Guaranteed. |
14. | Nature of Company Restricted Stock Unit Grants. |
15. | Governing Law; Consent to Jurisdiction. |
16. | Entire Agreement; Amendment and Waivers. |
17. | Section 409A Compliance. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
18. | Definitions. |
19. | Data Privacy. |
1. | Grant of Award. |
2. | Normal Settlement of RSUs. |
3. | Prorated Settlement of RSUs. |
4. | Effect of Termination of Employment; Approved Termination; Change in Control; Recoupment and Forfeiture. |
5. | Withholding and Taxes. |
6. | Recoupment and Forfeiture. |
7. | Registration of Units. |
8. | Certain Corporate Transactions. |
9. | Shareholder Rights. |
10. | Assignment of Award. |
11. | Notices. |
12. | Stock Certificates. |
13. | Successors and Assigns. |
14. | Plan. |
15. | No Employment Guaranteed. |
16. | Nature of Company Restricted Stock Unit Grants. |
17. | Governing Law; Consent to Jurisdiction. |
18. | Entire Agreement; Amendment and Waivers. |
19. | Section 409A Compliance. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
20. | Definitions. |
21. | Data Privacy. |
1. | Grant of Award. |
2. | Settlement of RSUs. |
3. | Events Altering Settlement Date of RSUs; Cancellation. |
4. | Withholding and Taxes. |
5. | Registration of Units. |
6. | Certain Corporate Transactions. |
7. | Shareholder Rights. |
8. | Assignment of Award. |
9. | Notices. |
10. | Stock Certificates. |
11. | Successors and Assigns. |
12. | Plan. |
13. | No Employment Guaranteed. |
14. | Nature of Company Restricted Stock Unit Grants. |
15. | Governing Law; Consent to Jurisdiction. |
16. | Entire Agreement; Amendment and Waivers. |
17. | Section 409A Compliance. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
18. | Definitions. |
19. | Data Privacy. |
1. | Grant of Award. |
2. | Settlement of RSUs. |
3. | Events Altering Settlement Date of RSUs; Cancellation. |
Years of Continuous Service | Age | Percentage of RSU Cancelled |
Any number of years | Younger than 55 | 100% |
Less than 5 years | Any age | 100% |
At least 5 years but less than 6 years | 55 or older | 50% |
At least 6 years but less than 7 years | 55 or older | 40% |
At least 7 years but less than 8 years | 55 or older | 30% |
At least 8 years but less than 9 years | 55 or older | 20% |
At least 9 years but less than 10 years | 55 or older | 10% |
10 or more years | 55 or older | —% |
4. | Withholding and Taxes. |
5. | Registration of Units. |
6. | Certain Corporate Transactions. |
7. | Shareholder Rights. |
8. | Assignment of Award. |
9. | Notices. |
10. | Stock Certificates. |
11. | Successors and Assigns. |
12. | Plan. |
13. | No Employment Guaranteed. |
14. | Nature of Company Restricted Stock Unit Grants. |
15. | Governing Law; Consent to Jurisdiction. |
16. | Entire Agreement; Amendment and Waivers. |
17. | Section 409A Compliance. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
18. | Definitions. |
19. | Data Privacy. |
7. | Notices. |
The Employee acknowledges receipt of the Plan and a Prospectus relating to this award, and further acknowledges that he or she has reviewed this Agreement and the related documents and accepts the provisions thereof. |
1. | I have reviewed this report on Form 10-Q of Computer Sciences Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: | August 6, 2013 | /s/ J. Michael Lawrie | ||
J. Michael Lawrie President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Computer Sciences Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a- 15(e) and 15d- (15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a- 15(f) and 15d- 15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. |
Date: | August 6, 2013 | /s/ Paul N. Saleh | ||
Paul N. Saleh Executive Vice President and Chief Financial Officer |
1. | The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Computer Sciences Corporation | |||
Dated: | August 6, 2013 | /s/ J. Michael Lawrie | |
J. Michael Lawrie President and Chief Executive Officer |
1. | The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 28, 2013 (the "Report"), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Computer Sciences Corporation | |||
Dated: | August 6, 2013 | /s/ Paul N. Saleh | |
Paul N. Saleh Executive Vice President and Chief Financial Officer |
Stock Incentive Plans
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Stock Incentive Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Incentive Plans | Stock Incentive Plans As of June 28, 2013, the Company had outstanding stock-based incentive awards issued pursuant to various shareholder-approved plans. For the quarters ended June 28, 2013 and June 29, 2012, the Company recognized stock-based compensation expense as follows:
The Company’s overall stock-based compensation granting practice has not changed significantly year over year. Adjustments for actual and expected achievement of the specified performance criteria for certain performance-based RSUs increased stock-based compensation expense recognized for the three months ended June 28, 2013 by $6 million, which is predominantly represented by participants in selling, general and administrative positions. An adjustment to reflect actual forfeiture experience for the prior fiscal year decreased stock-based compensation expense recognized for the three months ended June 28, 2013 and June 29, 2012 by $4 million and $3 million, respectively. The Company uses the Black-Scholes-Merton model in determining the fair value of stock options granted. The weighted average grant date fair values of stock options granted during the three months ended June 28, 2013 and June 29, 2012 were $13.10, and $7.03 per share, respectively. In calculating the compensation expense for its stock incentive plans, the Company used the following weighted average assumptions:
During the three months ended June 28, 2013 and June 29, 2012, the Company's actual tax benefit realized for tax deductions from exercising stock options and RSU releases was $6 million and $2 million, respectively, and an excess tax benefit of $3 million and $0 million, respectively, related to all of its stock incentive plans. Employee Incentives The Company has three stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to employees upon terms approved by the Compensation Committee of the Board of Directors. The Company issues authorized but previously unissued shares upon the exercise of stock options, the granting of restricted stock and the redemption of RSUs. As of June 28, 2013, 10,172,180 shares of CSC common stock were available for the grant of future stock options, equity awards or other stock-based incentives to employees under such stock incentive plans. Stock Options The Company’s standard vesting schedule for stock options is one-third of the total stock option award on each of the first three anniversaries of the grant date. Stock options are generally exercisable for a term of ten years from the grant date. Information concerning stock options granted under the Company's stock incentive plans is as follows:
The total intrinsic value of options exercised during the three months ended June 28, 2013 and June 29, 2012, was $4 million and $0 million, respectively. The cash received from stock options exercised during the three months ended June 28, 2013 and June 29, 2012 was $16 million and $0 million, respectively. As of June 28, 2013, there was $46 million of total unrecognized compensation expense related to unvested stock options, net of expected forfeitures. The cost is expected to be recognized over a weighted-average period of 2.34 years. Restricted Stock Units RSUs consist of equity awards with the right to receive one share of common stock of the Company issued at a price of $0. Upon the settlement date, RSUs are settled in shares of CSC common stock and dividend equivalents. If, prior to the vesting of the RSU in full, the employee's status as a full-time employee is terminated, then the RSU is automatically canceled on the employment termination date and any unvested shares are forfeited. The Company grants RSUs with service and performance-based vesting terms. Service-based RSUs, generally vest over periods of three to five years. The number of performance-based RSUs that ultimately vest is dependent upon the Company's achievement of certain specified performance criteria over a three-year period. Awards are settled for shares of CSC common stock and dividend equivalents upon the filing with the SEC of the Annual Report on Form 10-K for the last fiscal year of the performance period if the specified performance criteria is met. In fiscal 2013, performance-based RSU awards granted include the potential for accelerated vesting of 25% of the shares granted after the first and second fiscal years if certain company performance targets are met early. Compensation expense during the performance period is estimated at each reporting date using management's expectation of the probable achievement of the specified performance criteria and is adjusted to the extent the expected achievement changes. In the first quarter of fiscal 2014, shares were released due to meeting the company performance targets in fiscal year 2013. The probable achievement was also increased to the maximum payout based on management's expectation of meeting the performance criteria resulting in additional expense recognized as previously discussed. In the table below, such awards are reflected at the number of shares to be settled upon achievement of target performance measures. During the three months ended June 28, 2013, certain executives were awarded service-based RSUs for which the shares are redeemable over the 10 anniversaries following the executive’s separation from service as a full-time employee, provided the executive complies with certain non-competition covenants during the ten-year period following the executives separation of service. For the certain executives who joined the company in fiscal year 2013 and after, the awards vest at age 62, or 50% of the award partially vests at age 55 with 5 years service with an additional 10% vesting each additional year of service up to 10 years of service. Prior to fiscal year 2013, awards vested at age 65 or 55 and 10 years of service. Information concerning RSUs granted under stock incentive plans is as follows:
As of June 28, 2013, there was $83 million of total unrecognized compensation expense related to unvested RSUs, net of expected forfeitures. The unrecognized compensation expense is expected to be recognized over a weighted-average period of 2.65 years. Non-employee Director Incentives The Company has two stock incentive plans that authorize the issuance of stock options, restricted stock and other stock-based incentives to nonemployee directors upon terms approved by the Company’s Board of Directors. As of June 28, 2013, 72,400 shares of CSC common stock remained available for grant to non-employee directors as RSUs or other stock-based incentives. Generally, RSU awards to non-employee directors vest in full as of the next annual meeting of the Company’s stockholders following the date they are granted and are issued at a price of $0. Information concerning RSUs granted to nonemployee directors is as follows:
When a holder of RSUs ceases to be a director of the Company, the vested RSUs are automatically redeemed for shares of CSC common stock and dividend equivalents with respect to such shares. The number of shares to be delivered upon redemption is equal to the number of RSUs that are vested at the time the holder ceases to be a director. At the holder’s election, the RSUs may be redeemed (i) in their entirety, upon the day the holder ceases to be a director, or (ii) in substantially equal amounts upon the first five, ten or fifteen anniversaries of such termination of service. |
Acquisitions and Divestitures
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures | Acquisitions and Divestitures Fiscal 2013 Acquisition In the second quarter of fiscal 2013, CSC acquired a privately-held entity for $35 million in an all-cash transaction. The entity was acquired primarily to enhance CSC's capabilities in Big Data processing and analytics, a next-generation service offering. The purchase price was allocated to net assets acquired based on estimates of fair value at the date of acquisition: $4 million to current assets, $8 million to acquired intangible assets, $2 million to liabilities, and $25 million to goodwill. The goodwill is associated with the Company's NPS segment and is tax-deductible. The financial results of the acquired business have been included in the Company’s Consolidated Condensed Financial Statements from the date of acquisition. Pro forma financial information for this acquisition is not presented as it is not material to CSC’s consolidated results. Divestitures Discontinued Operations Fiscal 2014 On May 26, 2013, CSC entered into an agreement to sell its base operations, aviation and ranges services business unit, Applied Technology Division (ATD) within its NPS Segment, to a strategic investor. This disposition reflects CSC's ongoing service portfolio optimization initiative, and the results of ATD are presented as discontinued operations in the Consolidated Condensed Statements of Operations. As the transaction had not closed as of June 28, 2013, the assets and liabilities of ATD have been classified as held-for-sale in the Company's Consolidated Condensed Balance Sheet as follows: $144 million of current assets included within prepaid expenses and other current assets, $62 million of non-current assets including, $43 million of goodwill and $19 million other long-term assets included within other assets, $69 million of current liabilities included within accrued expenses and other current liabilities, and $37 million of non-current liabilities included within other long-term liabilities. The divestiture of ATD was completed on July 19, 2013 (see Note 18). On May 21, 2013, CSC completed the divestiture of its flood insurance-related business process outsourcing practice (flood insurance BPO) to a financial investor for cash consideration of $43 million plus a net working capital adjustment receivable of $4 million, for a pre-tax gain on disposal of $25 million, representing the excess of the net proceeds over the carrying value of the net assets of the divested business and the related transaction costs. The divested assets and liabilities included current assets of $9 million included within prepaid expenses and other current assets, $14 million of non-current assets including, $12 million of goodwill and $2 million of other long-lived assets included within other assets, and current liabilities of $1 million included within accrued expenses and other current liabilities. This business was included in CSC's GBS Segment. The divestiture reflects CSC's focus on next-generation product and service offerings, and the results of this business have been included in the Company's Consolidated Condensed Statements of Operations as discontinued operations. Fiscal 2013 During fiscal 2013, CSC completed the divestiture of three businesses within its GBS Segment: the U.S.-based credit services business, the Italian consulting and system integration business, and an enterprise systems integration business with operations in Malaysia and Singapore. These divestitures reflect the Company's ongoing service portfolio optimization initiative to focus on next-generation technology services and are presented in the Company's Consolidated Condensed Statements of Operations as discontinued operations. The Company received cash proceeds of $1,003 million for the sale of its U.S.-based credit services business of which $2 million was received in the first quarter of fiscal 2014 for a subsequent net working capital adjustment. For its sale of the enterprise system integration business, the Company received $90 million in cash and expects to receive another $14 million for net working capital and other adjustments. For the disposal of its Italian consulting and systems integration business, the Company paid $35 million (plus $8 million of cash included in the divested entity's net assets sold) but expects to receive $5 million back from the buyer for a purchase price adjustment. Both the $14 million and $5 million described above are recorded as receivables. These three divestitures resulted in a total fiscal 2013 pre-tax gain of $769 million (after-tax gain of $417 million), representing the excess of the proceeds over the carrying value of the net assets of the divested businesses, net of transaction costs of $11 million. As noted above, there was an additional $2 million pre-tax gain recorded during the first quarter of fiscal 2014. The fiscal 2013 divested assets and liabilities included current assets of $129 million, property and equipment and other long-lived assets of $11 million, goodwill of $241 million, and liabilities of $85 million. These three divestitures are reported in the Company's Consolidated Condensed Statements of Operations as income from discontinued operations, net of taxes. A summary of the results of the discontinued operations is presented below:
The tax expense for the quarters ended June 28, 2013 and June 29, 2012 approximates the U.S. federal and state statutory income tax rate applied to income before tax as the operations were located in the U.S. The primary difference between the book and tax gains on the sale of the flood insurance BPO business was the write-off of approximately $12 million of goodwill, the majority of which was not deductible for tax purposes. Other Divestiture During the fourth quarter of fiscal 2013, the Company sold Paxus, its Australian information technology staffing business unit. This divestiture did not qualify to be presented as discontinued operations because of CSC's significant continuing business relationship with the divested entity. The total consideration for this divestiture was $79 million, of which $63 million was received in cash and $16 million was recorded as a receivable at the end of fiscal 2013. Of the total receivable, the Company received, during the first quarter for fiscal 2014, cash of $10 million and offset $6 million against a current payable due to the buyer. This sale resulted in a pre-tax gain of $38 million, representing the excess of proceeds over the carrying value of the net assets divested, net of transaction costs of $3 million. The divested assets and liabilities included current assets of $41 million, property and equipment and other long-lived assets of $2 million, and liabilities of $5 million. There was no tax expense or benefit on the gain on sale of Paxus because the Company had sufficient capital losses in its Australian business unit, for which a valuation allowance had previously been provided, that completely offset the capital gain. |
Commitments and Contingencies
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Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Commitments In the normal course of business, the Company may provide certain clients, principally governmental entities, with financial performance guarantees, which are generally backed by stand-by letters of credit or surety bonds. In general, the Company would only be liable for the amounts of these guarantees in the event that nonperformance by the Company permits termination of the related contract by the Company’s client. As of June 28, 2013, the Company had $30 million of outstanding surety bonds and $131 million of outstanding letters of credit relating to these performance guarantees. The Company believes it is in compliance with its performance obligations under all service contracts for which there is a financial performance guarantee, and the ultimate liability, if any, incurred in connection with these guarantees will not have a material adverse affect on its consolidated results of operations or financial position. The Company also uses stand-by letters of credit, in lieu of cash, to support various risk management insurance policies. These letters of credit represent a contingent liability and the Company would only be liable if it defaults on its payment obligations towards these policies. As of June 28, 2013, the Company had $87 million of outstanding stand-by letters of credit. The following table summarizes the expiration of the Company’s financial guarantees and stand-by letters of credit outstanding as of June 28, 2013:
The Company generally indemnifies licensees of its proprietary software products against claims brought by third parties alleging infringement of their intellectual property rights (including rights in patents (with or without geographic limitations), copyright, trademarks and trade secrets). CSC’s indemnification of its licensees relates to costs arising from court awards, negotiated settlements and the related legal and internal costs of those licensees. The Company maintains the right, at its own costs, to modify or replace software in order to eliminate any infringement. Historically, CSC has not incurred any significant costs related to licensee software indemnification. Contingencies The Company has a contract with the NHS to develop and deploy an integrated patient records system as a part of the U.K. Government's NHS IT program. On August 31, 2012, the Company and NHS entered into a binding interim agreement contract change note, or IACCN, which amends the terms of the current contract and forms the basis on which the parties will finalize a full restatement of the contract. On March 28, 2013, the Company and the NHS signed a letter agreement that modified certain terms of the IACCN. See Note 16 for further information relating to the NHS contract and the IACCN. As previously disclosed in fiscal 2012 and fiscal 2011, the Company initiated an investigation into out of period adjustments resulting from certain accounting errors in its former MSS segment, primarily involving accounting irregularities in the Nordic region. Initially, the investigation was conducted by Company personnel, but outside Company counsel and forensic accountants retained by such counsel later assisted in the Company's investigation. On January 28, 2011, the Company was notified by the SEC's Division of Enforcement that it had commenced a formal civil investigation relating to these matters, which investigation has been expanded to other matters subsequently identified by the SEC, including matters specified in subpoenas issued to the Company from time to time by the SEC's Division of Enforcement as well as matters under investigation by the Audit Committee, as further described below. The Company is cooperating in the SEC's investigation. On May 2, 2011, the Audit Committee commenced an independent investigation into the matters relating to the MSS segment and the Nordic region, matters identified by subpoenas issued by the SEC's Division of Enforcement, and certain other accounting matters identified by the Audit Committee and retained independent counsel to represent CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with such independent investigation. Independent counsel retained forensic accountants to assist with their work. Independent counsel also represents CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with the investigation by the SEC's Division of Enforcement. The Audit Committee’s investigation was expanded to encompass (i) the Company’s operations in Australia, (ii) certain aspects of the Company’s accounting practices within its Americas Outsourcing operation, and (iii) certain of the Company’s accounting practices that involve the percentage-of-completion accounting method, including the Company’s contract with the NHS. In the course of the Audit Committee's expanded investigation, accounting errors and irregularities were identified. As a result, certain personnel have been reprimanded, suspended, terminated and/or have resigned. The Audit Committee determined in August 2012 that its independent investigation was complete. The Audit Committee instructed its independent counsel to cooperate with the SEC's Division of Enforcement by completing production of documents and providing any further information requested by the SEC's Division of Enforcement. In addition to the matters noted above, the SEC's Division of Enforcement is continuing its investigation involving its concerns with certain of the Company's prior disclosure and accounting determinations with respect to the Company's contract with NHS and the possible impact of such matters on the Company's financial statements for years prior to the Company's current fiscal year. The Company and the Audit Committee and its independent counsel are continuing to respond to SEC questions and to cooperate with the SEC's Division of Enforcement in its investigation of prior disclosures of the Company's contract with the NHS. The SEC's investigative activities are ongoing. In addition, the SEC's Division of Corporation Finance has issued comment letters to the Company requesting, among other things, additional information regarding its previously disclosed adjustments in connection with the above-referenced accounting errors, the Company's conclusions relating to the materiality of such adjustments, and the Company's analysis of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting. The SEC's Division of Corporation Finance's comment letter process is ongoing, and the Company is continuing to cooperate with that process. The investigation being conducted by the SEC's Division of Enforcement and the review of our financial disclosures by the SEC's Division of Corporation Finance are continuing and could identify other accounting errors, irregularities or other areas of review. As a result, CSC has incurred and may continue to incur significant legal and accounting expenditures. The Company is unable to predict how long the SEC's Division of Enforcement's investigation will continue or whether, at the conclusion of its investigation, the SEC will seek to impose fines or take other actions against the Company. In addition, the Company is unable to predict the timing of the completion of the SEC's Division of Corporation Finance's review of its financial disclosures or the outcome of such review. Publicity surrounding the foregoing or any enforcement action as a result of the SEC's investigation, even if ultimately resolved favorably for CSC, could have an adverse impact on the Company's reputation, business, financial condition, results of operations or cash flows. The Company is unable to estimate any possible loss or range of loss associated with these matter at this time. See Note 4 for further information. Between June 3, 2011, and July 21, 2011, four putative class action complaints were filed in the United States District Court for the Eastern District of Virginia, entitled City of Roseville Employee's Retirement System v. Computer Sciences Corporation, et al. (No. 1:11-cv-00610-TSE-IDD), Murphy v. Computer Sciences Corporation, et al. (No. 1:11-cv-00636-TSE-IDD), Kramer v. Computer Sciences Corporation, et al. (No. 1:11-cv-00751-TSE-IDD) and Goldman v. Computer Sciences Corporation, et al. (No. 1:11-cv-777-TSE-IDD). On August 29, 2011, the four actions were consolidated as In re Computer Sciences Corporation Securities Litigation (No. 1:11-cv-610-TSE-IDD) and Ontario Teachers' Pension Plan Board was appointed lead plaintiff. A consolidated class action complaint was filed by plaintiff on September 26, 2011, and names as defendants CSC, Michael W. Laphen, Michael J. Mancuso and Donald G. DeBuck. A corrected complaint was filed on October 19, 2011. The complaint alleges violations of the federal securities laws in connection with alleged misrepresentations and omissions regarding the business and operations of the Company. Specifically, the allegations arise from the Company's disclosure of the Company's investigation into certain accounting irregularities in the Nordic region and its disclosure regarding the status of the Company's agreement with the NHS. Among other things, the plaintiff seeks unspecified monetary damages. The plaintiff filed a motion for class certification with the court on September 22, 2011, and the defendants filed a motion to dismiss on October 18, 2011. A hearing was held on November 4, 2011. On August 29, 2012, the court issued a Memorandum Opinion and Order granting in part and denying in part the motion to dismiss. The court granted the motion to dismiss with respect to the plaintiff's claims in connection with alleged misrepresentations and omissions concerning the Company's operations in the Nordic Region. The court granted in part and denied in part the motion to dismiss with respect to the plaintiff's claims in connection with alleged misrepresentations and omissions concerning the Company's internal controls and the Company's contract with the NHS. The court also granted the plaintiff leave to amend its complaint by September 12, 2012, and maintained the stay of discovery until the sufficiency of the amended complaint had been decided. The court further denied plaintiff's motion for class certification without prejudice. On September 12, 2012, the plaintiff filed a notice advising the Court that it had determined not to amend its complaint and renewed its motion for class certification. On September 21, 2012, the court issued an Order setting the hearing on the motion for class certification for October 12, 2012, directing the parties to complete discovery by January 11, 2013 and scheduling the final pretrial conference for January 17, 2013. On October 9, 2012, the defendants filed their answer to the plaintiff's complaint. On October 12, 2012, the hearing on the motion for class certification was rescheduled to November 1, 2012. On October 31, 2012, the parties filed a joint motion with the court requesting that the hearing on the motion for class certification be rescheduled to a later date. On November 1, 2012, the court issued an order setting the hearing for class certification for November 15, 2012. On November 30, 2012, the court granted plaintiff's motion for class certification. On December 14, 2012, defendants filed with the Fourth Circuit a petition for permission to appeal the class certification order pursuant to Federal Rule of Civil Procedure 23(f). Plaintiff's response to the petition was filed on February 20, 2013. On March 5, 2013, the Fourth Circuit denied the petition for permission to appeal the class certification order. On December 14, 2012, the court issued an order extending the expert discovery deadline to February 25, 2013. On December 20, 2012, the court issued an order extending the fact discovery deadline to February 11, 2013 and the expert discovery deadline to March 25, 2013. On January 13, 2013, the court issued an order extending the expert discovery deadline to April 1, 2013. Motions for summary judgment were filed on March 18, 2013. On May 15, 2013, the Company entered into a stipulation and agreement of settlement with the lead plaintiff to settle all claims in the lawsuit for $97.5 million, which was accrued for as of March 29, 2013 and included in accrued expenses and other current liabilities on the Company's Consolidated Balance Sheet. As of March 29, 2013, the Company has also recorded a receivable of $45 million, which represents the amount recoverable under the Company's corporate insurance policies, and is included in receivables on the Company's Consolidated Balance Sheet. The agreement is subject to approval by the court. On May 24, 2013, the Court entered a Preliminary Approval Order Providing for Notice and Hearing in Connection with Proposed Class Action Settlement. The Preliminary Approval Order scheduled a Settlement Hearing for September 19, 2013. On September 13, 2011, a shareholder derivative action entitled Che Wu Hung v. Michael W. Laphen, et al. (CL 2011 13376) was filed in Circuit Court of Fairfax County, Virginia, against Michael W. Laphen, Michael J. Mancuso, the members of the Audit Committee and the Company as a nominal defendant asserting claims for breach of fiduciary duty and contribution and indemnification relating to alleged failure by the defendants to disclose accounting and financial irregularities in the MSS segment, primarily in the Nordic region, and the Company's performance under the NHS agreement and alleged failure to maintain effective internal controls. The plaintiff seeks damages, injunctive relief and attorneys' fees and costs. On October 24, 2011, the defendants removed the action to the United States District Court for the Eastern District of Virginia. On November 23, 2011, the plaintiff filed a motion to remand the case to state court. Argument was held on December 15, 2011. During argument the plaintiff voluntarily dismissed his complaint without prejudice to refiling the action in state court. The Court granted the plaintiff's request, dismissed the complaint without prejudice and denied the motion to remand as moot. On December 22, 2011, the plaintiff refiled his complaint in Circuit Court of Fairfax County, Virginia in a shareholder derivative action entitled Che Wu Hung v. Michael W. Laphen, et al. (CL 2011 18046). Named as defendants are Michael W. Laphen, Michael J. Mancuso, the members of the Audit Committee and the Company as a nominal defendant. The complaint asserts claims for (i) breach of fiduciary duty relating to alleged failure by the defendants to disclose accounting and financial irregularities in the MSS segment, primarily in the Nordic region, the Company's performance under the NHS agreement and alleged failure to maintain effective internal controls and (ii) corporate waste. The plaintiff seeks damages, injunctive relief and attorneys' fees and costs. On April 6, 2012, the state court stayed the action until the earlier of (i) entry of an order on the pending motion to dismiss In re Computer Sciences Corporation Securities Litigation (No. 1:11-cv-610-TSE-IDD) or (ii) July 5, 2012. On July 20, 2012, the state court renewed the stay until the earlier of (i) entry of an order on the pending motion to dismiss in In re Computer Sciences Corporation Securities Litigation or (ii) October 18, 2012. The stay expired on August 30, 2012 with the entry of the court's order in In re Computer Sciences Corporation Securities Litigation. On October 19, 2012, upon the joint motion of the parties, the state court issued an order staying the action while discovery proceeded in In re Computer Sciences Corporation Securities Litigation. The order required defendants to provide to the plaintiff certain of the discovery produced in the federal action. On May 10, 2013, the court continued the stay to May 31, 2013 upon joint motion of the parties. On June 1, 2013, the parties filed a joint motion to continue the stay. On June 28, 2013, the court denied the joint motion to continue the stay and set the matter for trial on January 6, 2014. The parties have been engaged in good faith settlement negotiations and are working towards a potential resolution of the matter. The Company is unable to estimate any possible loss or range of loss associated with this matter at this time. On May 11, 2012, a separate shareholder derivative action entitled Judy Bainto v. Michael W. Laphen et al. (No. A-12-661695-C), was filed in District Court, Clark County, Nevada, against Messrs. Laphen and Mancuso, members of the Company's Board of Directors and the Company as a nominal defendant. The complaint is substantively similar to the second Hung complaint. On or about August 1, 2012, the court granted the parties' joint motion to extend the time for defendants to respond to the complaint to sixty days after the United States District Court for the Eastern District of Virginia's entry of an order on the pending motion to dismiss the complaint in In re Computer Sciences Corporation Securities Litigation. On September 5, 2012, Defendants notified the court of the Eastern District of Virginia's ruling in In re Computer Sciences Corporation Securities Litigation. On September 11, 2012, the parties filed a joint status report proposing a schedule for the filing of an amended complaint by plaintiff and for motion to dismiss briefing. Plaintiff filed an amended complaint on September 28, 2012. Upon stipulation of the parties, the court consolidated the Bainto case and Himmel case (described below) and deemed the amended complaint filed in Bainto the operative complaint. In addition, on November 8, 2012, upon joint motion of the parties, the court issued an order staying the action while discovery proceeded in In re Computer Sciences Corporation Securities Litigation. The order required Defendants to provide to the Plaintiffs certain of the discovery produced in the federal action. A status check is set for August 15, 2013. The parties have been engaged in good faith settlement negotiations and are working towards a potential resolution of the matter. The Company is unable to estimate any possible loss or range of loss associated with this matter at this time. On October 16, 2012, a separate shareholder derivative action entitled Daniel Himmel v. Michael W. Laphen et al. (No. A-12-670190-C), was filed in District Court, Clark County, Nevada, against Messrs. Laphen and Mancuso, members of the Company's Board of Directors and the Company as a nominal defendant. The Himmel complaint is substantively similar to the Bainto complaint, but includes a claim for unjust enrichment and seeks additional injunctive relief. Upon stipulation of the parties, the court consolidated the Bainto case (describe above) and the Himmel case and deemed the amended complaint filed in Bainto the operative complaint. In addition, on November 8, 2012, upon joint motion of the parties, the court issued an order staying the action while discovery proceeded in In re Computer Sciences Corporation Securities Litigation. The order required Defendants to provide to the Plaintiffs certain of the discovery produced in the federal action. A status check is set for August 15, 2013. The parties have been engaged in good faith settlement negotiations and are working towards a potential resolution of the matter. The Company is unable to estimate any possible loss or range of loss associated with this matter at this time. On December 20, 2012, a separate shareholder derivative complaint entitled Shirley Morefield v Irving W. Bailey, II, et al, (Case No. 1:120V1468GBL/TCB) was filed in the United States District Court for the Eastern District of Virginia. The complaint names certain of CSC's current and former directors and officers as defendants and the Company as a nominal defendant. The complaint is similar to the Hung complaint but asserts only a claim for breach of fiduciary duty and alleges that the plaintiff made a demand on the CSC Board prior to commencing suit and that such demand was refused. Motions to dismiss were filed on March 18, 2013. On April 8, 2013, Plaintiff filed an amended complaint. Motions to dismiss the amended complaint were filed on April 17, 2013 and were heard on May 10, 2013. A decision is pending. The Company is unable to estimate any possible loss or range of loss associated with this matter at this time. In addition to the matters noted above, the Company is currently party to a number of disputes which involve or may involve litigation. The Company consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to such matters in the ordinary course of business. Whether any losses, damages or remedies ultimately resulting from such matters could reasonably have a material effect on the Company's business, financial condition, results of operation, or cash flows will depend on a number of variables, including, for example, the timing and amount of such losses or damages (if any) and the structure and type of any such remedies. For these reasons, it is not possible to make reasonable estimates of the amount or range of loss that could result from these other matters at this time. Company management does not, however, presently expect any of such other matters to have a material impact on the consolidated financial statements of the Company. |
Cash Flows (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
---|---|---|
Jun. 28, 2013
|
Jun. 29, 2012
|
|
Cash payments for interest and income taxes [Abstract] | ||
Interest | $ 16 | $ 17 |
Taxes on income, net of refunds | 21 | 32 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Capital expenditures in accounts payable and accrued expenses | 41 | 46 |
Capital expenditures through capital lease obligations | 32 | 45 |
Common share dividends declared, but not yet paid (non-cash) | $ 30 | $ 30 |
Stockholder's Equity
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholder's Equity | Stockholder's Equity Stock Repurchase Program In December 2010, the Company’s board of directors approved a share repurchase program authorizing up to $1 billion in share repurchases of the Company’s outstanding common stock. CSC has been implementing the program through purchases in compliance with Securities and Exchange Commission rules, market conditions and applicable federal and state legal requirements. The timing, volume, and nature of share repurchases are at the discretion of management and may be suspended or discontinued at any time. No end date was established for the repurchase program. During the first quarter of fiscal 2014, 2,829,113 shares were purchased through open market purchases for an aggregate consideration of $127 million at a weighted average price of $44.78 per share. The repurchased shares were retired immediately and included in the category of authorized but unissued shares. The excess of purchase price over par value of the common shares was allocated between additional paid-in capital and retained earnings. During the first quarter of fiscal 2013, no shares were repurchased through open market purchases. Accumulated Other Comprehensive Loss The following tables show the activity in the components of other comprehensive loss, including the respective tax effects, and reclassification adjustments for the quarters ended June 28, 2013 and July 29, 2012, respectively:
The following tables show the changes in accumulated other comprehensive loss, for the quarters ended June 28, 2013 and July 29, 2012, respectively:
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Fair Value (Textual) (Details) (USD $)
|
3 Months Ended | ||||
---|---|---|---|---|---|
Jun. 28, 2013
|
Jun. 28, 2013
Carrying amount [Member]
|
Mar. 29, 2013
Carrying amount [Member]
|
Jun. 28, 2013
Fair Value [Member]
|
Mar. 29, 2013
Fair Value [Member]
|
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Transfers between Level 1 and Level 2 | $ 0 | ||||
Impairment charges during the period | 0 | ||||
Long-term debt, excluding capital leases | 2,096,000,000 | 2,119,000,000 | 2,270,000,000 | 2,324,000,000 | |
Accounts receivable with customers involved in bankruptcy proceedings | 15,000,000 | ||||
Allowance for doubtful accounts with customers involved in bankruptcy proceedings | 10,000,000 | ||||
Other assets with customers in bankruptcy proceedings | $ 1,000,000 |
Segment Information (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Jun. 28, 2013
|
Jun. 29, 2012
|
Dec. 30, 2011
|
|
Segment Reporting Information [Line Items] | |||
Revenues | $ 3,260,000,000 | $ 3,633,000,000 | |
Operating income | 304,000,000 | 146,000,000 | |
Depreciation and amortization | 255,000,000 | 262,000,000 | |
Change in accounting estimate, reduction in operating income | 1,500,000,000 | ||
GBS [Member]
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Segment Reporting Information [Line Items] | |||
Number of Operating Segments | 3 | ||
GBS [Member] | Segment As Reported [Member]
|
|||
Segment Reporting Information [Line Items] | |||
Revenues | 1,083,000,000 | 1,278,000,000 | |
Operating income | 101,000,000 | 66,000,000 | |
Depreciation and amortization | 41,000,000 | 47,000,000 | |
GBS [Member] | Segment Out of Period Adjustments Increase (Decrease) [Member]
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|||
Segment Reporting Information [Line Items] | |||
Revenues | 19,000,000 | 8,000,000 | |
Operating income | 13,000,000 | (3,000,000) | |
Depreciation and amortization | 0 | 1,000,000 | |
GBS [Member] | Segment Adjusted [Member]
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Segment Reporting Information [Line Items] | |||
Revenues | 1,102,000,000 | 1,286,000,000 | |
Operating income | 114,000,000 | 63,000,000 | |
Depreciation and amortization | 41,000,000 | 48,000,000 | |
GIS [Member] | Segment As Reported [Member]
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Segment Reporting Information [Line Items] | |||
Revenues | 1,150,000,000 | 1,203,000,000 | |
Operating income | 82,000,000 | 16,000,000 | |
Depreciation and amortization | 174,000,000 | 173,000,000 | |
GIS [Member] | Segment Out of Period Adjustments Increase (Decrease) [Member]
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Segment Reporting Information [Line Items] | |||
Revenues | 0 | 0 | |
Operating income | (3,000,000) | 1,000,000 | |
Depreciation and amortization | 0 | (3,000,000) | |
GIS [Member] | Segment Adjusted [Member]
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|||
Segment Reporting Information [Line Items] | |||
Revenues | 1,150,000,000 | 1,203,000,000 | |
Operating income | 79,000,000 | 17,000,000 | |
Depreciation and amortization | 174,000,000 | 170,000,000 | |
NPS [Member] | Segment As Reported [Member]
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|||
Segment Reporting Information [Line Items] | |||
Revenues | 1,053,000,000 | 1,183,000,000 | |
Operating income | 121,000,000 | 93,000,000 | |
Depreciation and amortization | 37,000,000 | 40,000,000 | |
NPS [Member] | Segment Out of Period Adjustments Increase (Decrease) [Member]
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|||
Segment Reporting Information [Line Items] | |||
Revenues | 0 | (2,000,000) | |
Operating income | (1,000,000) | 3,000,000 | |
Depreciation and amortization | 0 | 0 | |
NPS [Member] | Segment Adjusted [Member]
|
|||
Segment Reporting Information [Line Items] | |||
Revenues | 1,053,000,000 | 1,181,000,000 | |
Operating income | 120,000,000 | 96,000,000 | |
Depreciation and amortization | 37,000,000 | 40,000,000 | |
Corporate [Member]
|
|||
Segment Reporting Information [Line Items] | |||
Revenues | 4,000,000 | 3,000,000 | |
Operating income | 0 | (29,000,000) | |
Depreciation and amortization | 3,000,000 | 2,000,000 | |
Eliminations [Member]
|
|||
Segment Reporting Information [Line Items] | |||
Revenues | (30,000,000) | (34,000,000) | |
Operating income | 0 | 0 | |
Depreciation and amortization | $ 0 | $ 0 |
Restructuring Costs (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Restructuring Costs [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve by Type of Cost | The composition of the restructuring liability for the Fiscal 2012 Plan as of June 28, 2013 is as follows:
The composition of the restructuring liability for the Fiscal 2013 Plan as of June 28, 2013 is as follows:
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Schedule of Restructuring and Related Costs | The composition of restructuring expenses for the first quarter of fiscal 2014 and fiscal 2013 by segment is as follows:
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Acquisitions and Divestitures (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposal Groups, Including Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures | A summary of the results of the discontinued operations is presented below:
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Basis of Presentation (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Basis of Presentation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign | The Company's income from continuing operations, before taxes and noncontrolling interest, and diluted earnings per share (EPS) from continuing operations included the following adjustments due to changes in estimated profitability on fixed price contracts accounted for under the percentage-of-completion method for the quarters presented:
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Stockholders' Equity (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Stockholders' Equity Attributable to Parent [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables show the changes in accumulated other comprehensive loss, for the quarters ended June 28, 2013 and July 29, 2012, respectively:
The following tables show the activity in the components of other comprehensive loss, including the respective tax effects, and reclassification adjustments for the quarters ended June 28, 2013 and July 29, 2012, respectively:
|
Basis of Presentation Income Before Income Tax (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 28, 2013
Businesses
|
Jun. 29, 2012
|
Dec. 30, 2011
|
Mar. 29, 2013
Businesses
|
|
Basis of Presentation [Abstract] | ||||
Number of Divestitures in Period | 2 | 3 | ||
Income (Loss) from Continuing Operations before Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract] | ||||
Gross favorable | $ 17 | $ 9 | ||
Gross unfavorable | (9) | (28) | ||
Total net adjustments, before taxes and non-controlling interest | 8 | (19) | ||
Impact on diluted EPS from continuing operations (usd per share) | $ 0.02 | $ (0.08) | ||
Unbilled recoverable amounts primarily from governments that are expected to be collected after one year | 44 | 48 | ||
Depreciation expense | $ 169 | $ 177 |
Foreign Currency Derivative Instruments (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |
---|---|---|
Jun. 28, 2013
counterparty
|
Mar. 29, 2013
|
|
Derivative [Line Items] | ||
Estimated fair value of foreign currency derivative assets | $ 8 | $ 5 |
Estimated fair value of foreign currency derivative liabilities | 17 | 11 |
Number of counterparties with concentration of credit risk | 7 | |
Maximum amount of loss, based on gross fair value, due to concentration of credit risk | 7 | |
Forward Contracts [Member]
|
||
Derivative [Line Items] | ||
Notional amount of derivatives outstanding | 893 | 993 |
Option Contracts [Member]
|
||
Derivative [Line Items] | ||
Notional amount of derivatives outstanding | $ 583 | $ 744 |
Foreign Currency Derivative Instruments - Offsetting Assets and Liabilities (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table provides information about the potential effect of such netting arrangements on the Company's derivative instruments:
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Commitments and Contingencies (Contingencies) (Details) (USD $)
In Millions, unless otherwise specified |
2 Months Ended | ||
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Mar. 29, 2013
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Jul. 21, 2011
Pending or Threatened Litigation [Member]
lawsuit
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May 15, 2013
Pending or Threatened Litigation [Member]
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Loss Contingencies [Line Items] | |||
Number of lawsuits | 4 | ||
Loss Contingency, Settlement Agreement, Consideration | $ 97.5 | ||
Loss Contingency, Related Receivable Carrying Value, Current | $ 45 |
Commitments and Contingencies (Commitments) (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 28, 2013
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Guarantor Obligations [Line Items] | |
Fiscal 2014 | $ 75 |
Fiscal 2015 | 94 |
Fiscal 2016 and thereafter | 79 |
Total | 248 |
Surety Bonds [Member]
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Guarantor Obligations [Line Items] | |
Fiscal 2014 | 29 |
Fiscal 2015 | 1 |
Fiscal 2016 and thereafter | 0 |
Total | 30 |
Letters of credit [Member]
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Guarantor Obligations [Line Items] | |
Fiscal 2014 | 22 |
Fiscal 2015 | 42 |
Fiscal 2016 and thereafter | 67 |
Total | 131 |
Standby letters of credit [Member]
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Guarantor Obligations [Line Items] | |
Guarantee obligations maximum exposure | 87 |
Fiscal 2014 | 24 |
Fiscal 2015 | 51 |
Fiscal 2016 and thereafter | 12 |
Total | $ 87 |
Investigations and Out of Period Adjustments (Narrative) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | |||||||||||||||||
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Jun. 28, 2013
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Mar. 29, 2013
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Jun. 28, 2013
Adjustments Increase [Member]
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Jun. 29, 2012
Adjustments Increase [Member]
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Jun. 28, 2013
Adjustments Decrease [Member]
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Jun. 29, 2012
Adjustments Decrease [Member]
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Jun. 28, 2013
Fiscal 2014 First Quarter Adjustments [Member]
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Jun. 28, 2013
Fiscal 2014 First Quarter Adjustments [Member]
Fiscal 2013 [Member]
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Jun. 28, 2013
Fiscal 2014 First Quarter Adjustments [Member]
Discrete Tax Benefits [Member]
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Jun. 29, 2012
Fiscal 2014 First Quarter Adjustments [Member]
Discrete Tax Benefits [Member]
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Jun. 28, 2013
Fiscal 2014 First Quarter Adjustments [Member]
GBS [Member]
Adjustments for Inappropriately Recognized Revenues and Costs [Member]
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Jun. 28, 2013
Fiscal 2014 First Quarter Adjustments [Member]
GBS [Member]
Adjustment for Understated Payroll and Related Expense [Member]
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Jun. 29, 2012
Fiscal 2014 First Quarter Adjustments [Member]
GBS and GIS Segments [Member]
Adjustments Decrease [Member]
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Jun. 29, 2012
Fiscal 2013 Adjustments [Member]
Adjustments Increase [Member]
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Jun. 29, 2012
Fiscal 2013 Adjustments [Member]
Adjustments Decrease [Member]
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Jun. 29, 2012
Fiscal 2013 Adjustments [Member]
NPS and GBS Segments [Member]
Adjustments Increase [Member]
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Jun. 29, 2012
Fiscal 2013 Adjustments [Member]
NPS and GBS Segments [Member]
Adjustments Decrease [Member]
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Jun. 29, 2012
Fiscal 2013 Adjustments [Member]
GBS and GIS Segments [Member]
Adjustments Decrease [Member]
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Quantifying Misstatement in Current Year Financial Statements [Line Items] | ||||||||||||||||||
Cumulative effect on income (loss) from continuing operations, pre tax | $ 9 | $ 14 | $ (13) | $ 8 | $ (4) | $ (16) | $ (17) | $ 5 | $ (1) | $ (2) | ||||||||
Quantifying Misstatement in Current Year Financial Statements, Amount, Net of Tax, Including Discrete Tax Benefits | 2 | |||||||||||||||||
Cumulative Quantifying Misstatement Effect of Correction Tax | (2) | 2 | ||||||||||||||||
Accounts receivable | 2 | 1 | ||||||||||||||||
Prepaid expenses | 2 | |||||||||||||||||
Prepaid expenses and other current assets | 551 | 420 | 2 | |||||||||||||||
Property and equipment | 4 | 3 | ||||||||||||||||
Increase (Decrease) in Employee Related Liabilities | 8 | 1 | ||||||||||||||||
Deferred revenue | 18 | 7 | ||||||||||||||||
Accrued expenses | $ 14 | $ 10 |
Subsequent Events
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3 Months Ended |
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Jun. 28, 2013
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 19, 2013, CSC sold its base operations, aviation and ranges services business unit, the Applied Technology Division within its NPS Segment, to a strategic investor for cash consideration of approximately $178 million. The Company expects to record a pre-tax gain on the disposal (see Note 3). On August 4, 2013, CSC entered into a strategic partnership agreement with AT&T whereby, AT&T will operate CSC's communications network; CSC will merge its Cloud business hardware infrastructure with AT&T's infrastructure; and CSC will assist AT&T and its customers with updating application products. |
Basis of Presentation
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Basis of Presentation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation Computer Sciences Corporation (CSC or the Company) has prepared the interim period unaudited Consolidated Condensed Financial Statements included herein, as of and for the quarters ended June 28, 2013 and June 29, 2012, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Condensed Financial Statements and the accompanying notes. It is recommended that these Consolidated Condensed Financial Statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 2013 (fiscal 2013). In the opinion of management, the unaudited Consolidated Condensed Financial Statements included herein reflect all adjustments necessary, including those of a normal recurring nature, to present fairly the financial position, the results of operations and the cash flows for such interim periods. The results of operations for such interim periods are not necessarily indicative of the results for the full year ending March 28, 2014 (fiscal 2014). With the beginning of fiscal 2014, the Company began operating under new reportable segments. The new reportable segments are North American Public Sector (NPS), Global Infrastructure Services (GIS) and Global Business Services (GBS) (see Note 13). All prior period segment disclosures have been recast to reflect the Company's change in reportable segments. The Consolidated Condensed Statements of Operations, of Comprehensive Income (Loss) and of Changes in Equity, along with the related notes, for the quarter ended June 29, 2012, have been recast from those presented in the previously filed Form 10-Q to reflect discontinued operations of the two businesses sold in fiscal 2014 and the three businesses sold in fiscal 2013 (see Note 3). The Consolidated Condensed Balance Sheet for the year ended March 29, 2013 has not been recast to reflect the assets and liabilities divested as a result of the two fiscal 2014 discontinued operations. The Consolidated Condensed Statements of Cash Flows for the quarters ended June 28, 2013 and June 29, 2012 include both continuing and discontinued operations. The Company's income from continuing operations, before taxes and noncontrolling interest, and diluted earnings per share (EPS) from continuing operations included the following adjustments due to changes in estimated profitability on fixed price contracts accounted for under the percentage-of-completion method for the quarters presented:
Unbilled recoverable amounts under contracts in progress do not have an allowance for credit losses, and therefore, any adjustments to unbilled recoverable amounts under contracts in progress related to credit quality would be accounted for as a reduction of revenue. Unbilled recoverable amounts under contracts in progress resulting from sales, primarily to the United States (U.S.) and other governments, that are expected to be collected after one year totaled $44 million and $48 million as of June 28, 2013 and March 29, 2013, respectively. Depreciation expense was $169 million and $177 million for the quarters ended June 28, 2013 and June 29, 2012, respectively. |
Investigations and Out of Period Adjustments
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Jun. 28, 2013
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Out of period adjustments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investigations and Out of Period Adjustments | Investigations and Out of Period Adjustments Summary of Audit Committee and SEC Investigations Related to the Out of Period Adjustments As previously disclosed, the Company initiated an investigation into out of period adjustments resulting from certain accounting errors in our former Managed Services Sector (MSS) segment, primarily involving accounting irregularities in the Nordic region. Initially, the investigation was conducted by Company personnel, but outside Company counsel and forensic accountants retained by such counsel later assisted in the Company's investigation. On January 28, 2011, the Company was notified by the SEC's Division of Enforcement that it had commenced a formal civil investigation relating to these matters, which investigation has been expanded to other matters subsequently identified by the SEC, including matters specified in subpoenas issued to the Company from time to time by the SEC's Division of Enforcement as well as matters under investigation by the Audit Committee, as further described below. The Company is cooperating in the SEC's investigation. On May 2, 2011, the Audit Committee commenced an independent investigation into the matters relating to the former MSS segment and the Nordic region, matters identified by subpoenas issued by the SEC's Division of Enforcement, and certain other accounting matters identified by the Audit Committee and retained independent counsel to represent CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with such independent investigation. Independent counsel retained forensic accountants to assist with their work. Independent counsel also represents CSC on behalf of, and under the exclusive direction of, the Audit Committee in connection with the investigation by the SEC's Division of Enforcement. The Audit Committee’s investigation was expanded to encompass (i) the Company’s operations in Australia, (ii) certain aspects of the Company’s accounting practices within its Americas Outsourcing operation, and (iii) certain of the Company’s accounting practices that involve the percentage-of-completion accounting method, including the Company’s contract with the U.K. National Health Service (NHS). In the course of the Audit Committee's expanded investigation, accounting errors and irregularities were identified. As a result, certain personnel have been reprimanded, suspended, terminated and/or have resigned. The Audit Committee determined in August 2012 that its independent investigation was complete. The Audit Committee instructed its independent counsel to cooperate with the SEC's Division of Enforcement by completing production of documents and providing any further information requested by the SEC's Division of Enforcement. In addition to the matters noted above, the SEC's Division of Enforcement is continuing its investigation involving its concerns with certain of the Company's prior disclosure and accounting determinations with respect to the Company's contract with the NHS and the possible impact of such matters on the Company's financial statements for years prior to the Company's current fiscal year. The Company and the Audit Committee and its independent counsel are continuing to respond to SEC questions and to cooperate with the SEC's Division of Enforcement in its investigation of prior disclosures of the Company's contract with the NHS. The SEC's investigative activities are ongoing. In addition, the SEC's Division of Corporation Finance has issued comment letters to the Company requesting, among other things, additional information regarding its previously disclosed adjustments in connection with the above-referenced accounting errors, the Company's conclusions relating to the materiality of such adjustments, and the Company's analysis of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting. The SEC's Division of Corporation Finance's comment letter process is ongoing, and the Company is continuing to cooperate with that process. The investigation being conducted by the SEC's Division of Enforcement and the review of our financial disclosures by the SEC's Division of Corporation Finance are continuing and could identify other accounting errors, irregularities or other areas of review. As a result, CSC has incurred and may continue to incur significant legal and accounting expenditures. The Company is unable to predict how long the SEC's Division of Enforcement's investigation will continue or whether, at the conclusion of its investigation, the SEC will seek to impose fines or take other actions against the Company. In addition, the Company is unable to predict the timing of the completion of the SEC's Division of Corporation Finance's review of its financial disclosures or the outcome of such review. Publicity surrounding the foregoing or any enforcement action as a result of the SEC's investigation, even if ultimately resolved favorably for CSC, could have an adverse impact on the Company's reputation, business, financial condition, results of operations or cash flows. Out of Period Adjustments Financial Impact Summary The rollover impact on income (loss) from continuing operations before taxes of the recorded out of period adjustments in the first three months of fiscal 2014, fiscal 2013 and fiscal 2012 is attributable to the following prior fiscal years:
See Note 13 for a summary of the effect of the pre-tax out of period adjustments on the Company's segment results for the three months ended June 28, 2013 and June 29, 2012, respectively. Fiscal 2014 Adjustments During the first quarter of fiscal 2014, the Company identified and recorded net adjustments increasing income from continuing operations, before taxes by $9 million that should have been recorded in prior fiscal years. This net impact on income from continuing operations before taxes comprised of the following:
Adjustments recorded during the first quarter of fiscal 2014 that should have been recorded in prior fiscal years decreased income from continuing operations by $2 million. The difference is attributable to the tax effect of the adjustments described above, and $2 million of tax expense related to net adjustments that should have been recorded in prior periods. The impact of out of period adjustments recorded during the first quarter of fiscal 2014 on select line items of the Consolidated Condensed Statements of Operations for the quarter ended June 28, 2013, using the rollover method, is shown below:
The out of period adjustments impacting income from continuing operations before taxes recorded by the Company in the three months ended June 28, 2013 are related to the following consolidated balance sheet line items:
The Company has determined that the impact of the consolidated out of period adjustments recorded during the first quarter of fiscal 2014 is immaterial to the consolidated results, financial position and cash flows for the first quarter of fiscal 2014 and prior years. Consequently, the cumulative effect of these adjustments was recorded during the first quarter of fiscal 2014. Fiscal 2013 Adjustments During the first quarter of fiscal 2013, the Company recorded net adjustments primarily in its NPS and GBS segments reducing income from continuing operations before taxes by $1 million that should have been recorded in prior fiscal years. The out of period adjustments recorded in the first quarter of fiscal 2013 consisted of $17 million of charges reducing income from continuing operations before taxes and $16 million of adjustments increasing income from continuing operations before taxes. These net adjustments increased income from continuing operations by $5 million. The difference is attributable to the tax effect of the adjustments described above, and a $2 million tax benefit recorded in the first quarter of fiscal 2013 but related to prior periods. During subsequent periods, the Company recorded out of period adjustments primarily in its GBS and GIS segments that should have been recorded in the first quarter of fiscal 2013. Had such adjustments been recorded in the first quarter of fiscal 2013, income from continuing operations before taxes would have decreased by $2 million, of which $4 million relates to adjustments identified during the first quarter of fiscal 2014. Had such adjustments been recorded in the first quarter of fiscal 2013, there would have been no net effect on income from continuing operations. The impact of out of period adjustments recorded during fiscal 2013 and the first quarter of fiscal 2014 on select line items of the Consolidated Condensed Statements of Operations for the quarter ended June 29, 2012, using the rollover method, is shown below:
The out of period adjustments impacting income from continuing operations before taxes recorded by the Company in the three months ended June 29, 2012 are related to the following consolidated balance sheet line items:
The Company determined that the impact of the consolidated out of period adjustments recorded in the first quarter of fiscal 2013 was immaterial to the consolidated results, financial position and cash flows for the first quarter of fiscal 2013 and prior years. Consequently, the cumulative effect of these adjustments was recorded during the first quarter of fiscal 2013. |
Recent Accounting Pronouncements
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3 Months Ended |
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Jun. 28, 2013
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Recent Accounting Pronouncements [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards During the first quarter of fiscal year 2014, the Company adopted the following Accounting Standard Updates (ASUs): In July 2013, the FASB issued ASU 2013-11, “Presentation of an Unrecognized Tax Benefits When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists”, which requires that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments in this update are consistent with CSC's existing practices and adoption of the amendments in this update did not have a material effect on CSC's Consolidated Condensed Financial Statements. In February 2013, the FASB issued ASU 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (AOCI),” which requires entities to disclose the effect of significant reclassifications out of AOCI on the respective line items in net income unless the amounts are not reclassified in their entirety to net income. For amounts that are not required to be reclassified in their entirety to net income in the same reporting period, entities are required to cross-reference other disclosures that provide additional detail about those amounts. The amendments are effective for fiscal years and interim periods within those years, beginning after December 15, 2012. The Company adopted the amendments of this update during the first quarter of fiscal 2014 and included additional disclosures in the Consolidated Condensed Financial Statements (see Note 11). In December 2011, the FASB issued ASU 2011-11, “Disclosures about Offsetting Assets and Liabilities,” which was subsequently amended in January 2013 when the FASB issued ASU 2013-01 “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”. Together, these ASUs provide guidance on disclosure of information pertaining to the offsetting (netting) of assets and liabilities in the financial statements. The amendments in these ASUs affect all entities that have financial instruments and derivative instruments that either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45, or (2) are subject to an enforceable master netting arrangement or similar agreement. ASU 2011-11 amends the existing disclosure requirements on offsetting in ASC 210-20-50 by requiring disclosures relating to gross amounts of recognized assets and liabilities, the amounts that are offset, net amounts presented in the balance sheet, and amounts subject to an enforceable master netting arrangement or similar agreement. The amendments in these updates became effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company adopted the amendments in this update during the first quarter of fiscal 2014 and included additional disclosures in the Consolidated Condensed Financial Statements (see Note 7). Standards Issued But Not Yet Effective The following ASUs were recently issued but have not yet been adopted by CSC: In February 2013, the FASB issued ASU No. 2013-04, "Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” This ASU requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this ASU also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For CSC, the amendments of this ASU will be effective in fiscal 2015. The Company is in the process of evaluating the impact of adopting the ASU on CSC's Consolidated Condensed Financial Statements. In March 2013, the FASB issued ASU No. 2013-05, Foreign Currency Matters (Topic 830): “Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity,” which resolves the diversity in practice about whether Subtopic 810-10, Consolidation - Overall, or Subtopic 830-30, Foreign Currency Matters - Translation of Financial Statements, applies to the release of the cumulative translation adjustment into net income when a parent either sells a part of or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a foreign entity. In addition, the amendments resolve the diversity in practice for the treatment of business combinations achieved in stages (i.e. step acquisitions) involving a foreign entity. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. For CSC, the amendments of this ASU will be effective in fiscal 2015. The Company is in the process of evaluating the impact of adopting the ASU on CSC's Consolidated Condensed Financial Statements. |
Acquisitions and Divestitures (Acquisitions) (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 28, 2013
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Mar. 29, 2013
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Sep. 28, 2012
Acquisition of privately held entities [Member]
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Assets acquired and liabilities assumed [Abstract] | |||
Total cash consideration paid | $ 35 | ||
Acquisition purchase price for current assets | 4 | ||
Acquisition purchase price for intangibles | 8 | ||
Acquisition purchase price for liabilities | (2) | ||
Goodwill | $ 1,444 | $ 1,516 | $ 25 |
Investigations and Out of Period Adjustments (Tables)
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Jun. 28, 2013
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Out of period adjustments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Out of period adjustments | The impact of out of period adjustments recorded during the first quarter of fiscal 2014 on select line items of the Consolidated Condensed Statements of Operations for the quarter ended June 28, 2013, using the rollover method, is shown below:
The impact of out of period adjustments recorded during fiscal 2013 and the first quarter of fiscal 2014 on select line items of the Consolidated Condensed Statements of Operations for the quarter ended June 29, 2012, using the rollover method, is shown below:
The rollover impact on income (loss) from continuing operations before taxes of the recorded out of period adjustments in the first three months of fiscal 2014, fiscal 2013 and fiscal 2012 is attributable to the following prior fiscal years:
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Pension and Other Benefit Plans (Tables)
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3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Pension And Other Benefit Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of defined benefit plans disclosures | The components of net periodic benefit cost for postretirement benefit plans, reported on a global basis, included the following:
The components of net periodic pension cost for U.S. and non-U.S. pension plans included the following components:
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Goodwill and Other Intangible Assets (Tables)
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3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 28, 2013
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in the Carrying Amount of Goodwill by Segment | The following table summarizes the changes in the carrying amount of goodwill by segment for the three months ended June 28, 2013:
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class | A summary of amortizable intangible assets is as follows:
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