Segment Information

The Company’s reportable segments are as follows:

•

Global Business Services (GBS) - GBS provides end-to-end applications services; consulting; big data services; and industry-aligned software and solutions to enterprise clients around the world. GBS manages and industrializes clients' application ecosystem through its Applications Services offering. The Company has formed a number of strategic partnerships with leading technology companies such as HCL Technologies and SAP to deliver world-class solutions to its customers. These partnerships will enable clients to modernize and move enterprise workloads to next generation cloud infrastructure, while leveraging the benefits of mobility, social networking and big data. The GBS consulting business assists clients in achieving greater value from current IT assets as well as aiding in the direction of future IT investments. GBS software and solutions include vertically-aligned solutions and process-based intellectual property. Clients include major global enterprises in the insurance, banking, healthcare, life sciences, manufacturing and a host of diversified industries. Key competitive differentiators for GBS include its global scale, depth of industry expertise, strong partnerships with leading technology companies, vendor and product independence and end-to-end capabilities. Changing business issues such as globalization, fast-developing economies, government regulation, and growing concerns around risk, security, and compliance drive demand for these GBS offerings.

•

Global Infrastructure Services (GIS) – GIS provides managed and virtual desktop solutions, unified communications and collaboration services, data center management, cloud services, cyber security, compute and managed storage solutions to commercial clients globally. GIS also delivers next-generation hybrid Cloud infrastructure solutions to clients. The company integrates public cloud offerings from Amazon Web Services, IBM, Microsoft, and VMware, with its industry-leading private cloud solution, BizCloud. The CSC Agility Platform enables enterprises to manage, monitor, and automate applications over heterogeneous and hybrid clouds. The GIS portfolio of standard offerings delivers measurable results while reducing business risk and operational costs for clients. Collaboration with key alliance partners helps CSC to determine the best technology road map for clients and opportunities to differentiate solutions, expand market reach, augment capabilities, and jointly deliver impactful solutions.

•

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 of leading the next generation of IT services, NPS is leveraging our commercial best practices and next-generation offerings to bring more cost-effective IT solutions to government agencies which 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. Demand for NPS offerings are driven by evolving government priorities such as: 1) migration to next-generation IT solutions, which includes hybrid cloud infrastructure, application modernization and orchestration, 2) mission intelligence driven by big data solutions, 3) health IT and informatics, and 4) cyber security.

Effective fiscal 2015, the Company changed its inter-company accounting policy. Previously, inter-company transactions were generally reflected as inter-company revenue. Under the new policy, inter-company transactions are now generally treated as cost transfers. The new inter-company policy has been applied retrospectively, adjusting the segment results for all prior periods presented (see Note 1). In addition, segment results for all prior periods presented have been recast to reflect the change in the Company's pension accounting policies (see Note 2).

The following table summarizes operating results by reportable segment:



(Amounts in millions)	GBS		GIS		NPS		Corporate			Eliminations		Total

Quarter ended October 3, 2014
Revenues	$	1,003	$	1,036	$	1,041	$	—		$	—	$	3,080
Operating income (loss)	130		68		160		(9		)	—		349
Depreciation and amortization	40		172		36		4			—		252

Quarter ended September 27, 2013
Revenues	$	1,022	$	1,113	$	1,052	$	—		$	—	$	3,187
Operating income (loss)	120		107		163		(29		)	—		361
Depreciation and amortization	38		169		37		4			—		248



(Amounts in millions)	GBS		GIS		NPS		Corporate			Eliminations		Total

Six months ended October 3, 2014
Revenues	$	2,091	$	2,167	$	2,059	$	—		$	—	$	6,317
Operating income (loss)	238		139		311		(35		)	—		653
Depreciation and amortization	79		366		71		8			—		524

Six months ended September 27, 2013
Revenues	$	2,076	$	2,260	$	2,105	$	—		$	—	$	6,441
Operating income (loss)	233		199		290		(29		)	—		693
Depreciation and amortization	78		343		74		7			—		502

Operating income (loss) provides useful information to the Company’s management for assessment of the Company’s performance and results of operations, and is one of the financial measures utilized to determine executive compensation. As mentioned in Note 2, in conjunction with the change in its pension accounting policies, the net actuarial gains and losses component of the net periodic pension benefit/cost are excluded from the Company’s definition of operating income and not allocated to the reportable segments; but instead recorded at the corporate level. All of the other elements of net periodic pension benefit/cost continue to be included within operating income of the Company’s reportable segments. The Company has applied the change in the allocation approach retrospectively, adjusting all prior periods.

A reconciliation of consolidated operating income to income from continuing operations before taxes is as follows:



	Quarter Ended						Six Months Ended
(Amounts in millions)	October 3, 2014			September 27, 2013			October 3, 2014			September 27, 2013
Operating income ⁽¹⁾	$	349		$	361		$	653		$	693
Corporate G&A	(67		)	(68		)	(123		)	(132		)
Pension net actuarial gains (losses)	—			—			(1		)	—
Interest expense	(36		)	(35		)	(75		)	(74		)
Interest income	5			3			10			7
Other income (expense), net	(6		)	(22		)	(5		)	(21		)
Income from continuing operations before taxes	$	245		$	239		$	459		$	473

⁽¹⁾The impact of the change in pension accounting policy was an increase in operating income of $21 million and $43 million for the second quarter and first six months ended of fiscal 2015, respectively, and an increase in operating income of $23 million and $46 million for the second quarter and first six months of fiscal 2014, respectively.

During the second quarter and the first six months of fiscal 2015 and fiscal 2014, the Company recorded certain pre-tax out of period adjustments which should have been recorded in prior fiscal periods (see Note 5). The following tables summarize the effect of the pre-tax out of period adjustments on the GBS, GIS, and NPS segment results for the quarters and six months ended October 3, 2014 and September 27, 2013, as if the adjustments had been recorded in the appropriate period:



	GBS
(Amounts in millions)	As Reported		Increase/ (Decrease)			As Adjusted
Quarter ended October 3, 2014
Revenues	$	1,003	$	—		$	1,003
Operating income	130		(1		)	129
Depreciation and amortization	40		—			40

Quarter ended September 27, 2013
Revenues	$	1,022	$	10		$	1,032
Operating income	120		19			139
Depreciation and amortization	38					38



	GBS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Six months ended October 3, 2014
Revenues	$	2,091	$	2		$	2,093
Operating income	238		6			244
Depreciation and amortization	79		(1		)	78

Six months ended September 27, 2013
Revenues	$	2,076	$	30		$	2,106
Operating income	233		29			262
Depreciation and amortization	78		1			79



	GIS
(Amounts in millions)	As Reported		Increase/ (Decrease)			As Adjusted
Quarter ended October 3, 2014
Revenues	$	1,036	$	2		$	1,038
Operating income	68		3			71
Depreciation and amortization	172		—			172

Quarter ended September 27, 2013
Revenues	$	1,113				$	1,113
Operating income	107		4			111
Depreciation and amortization	169		(1		)	168



	GIS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Six months ended October 3, 2014
Revenues	$	2,167	$	2		$	2,169
Operating income	139		3			142
Depreciation and amortization	366		—			366

Six months ended September 27, 2013
Revenues	$	2,260				$	2,260
Operating income	199		2			201
Depreciation and amortization	343		(1		)	342



	NPS
(Amounts in millions)	As Reported		Increase/ (Decrease)			As Adjusted
Quarter ended October 3, 2014
Revenues	$	1,041	$	(7	)	$	1,034
Operating income	160		(1		)	159
Depreciation and amortization	36		—			36

Quarter ended September 27, 2013
Revenues	$	1,052	$	1		$	1,053
Operating income	163		(2		)	161
Depreciation and amortization	37					37



	NPS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Six months ended October 3, 2014
Revenues	$	2,059	$	5		$	2,064
Operating income	311		(5		)	306
Depreciation and amortization	71		—			71

Six months ended September 27, 2013
Revenues	$	2,105	$	(7	)	$	2,098
Operating income	290		(1		)	289
Depreciation and amortization	74					74