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 and 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 January 2, 2015
Revenues	$	965	$	984	$	998	$	—		$	—	$	2,947
Operating income (loss)	128		72		145		(13		)	—		332
Depreciation and amortization	37		163		33		5			—		238

Quarter ended December 27, 2013
Revenues	$	1,093	$	1,145	$	990	$	—		$	—	$	3,228
Operating income (loss)	140		91		122		(15		)	—		338
Depreciation and amortization	34		177		36		4			—		251



(Amounts in millions)	GBS		GIS		NPS		Corporate			Eliminations		Total

Nine months ended January 2, 2015
Revenues	$	3,056	$	3,151	$	3,057	$	—		$	—	$	9,264
Operating income (loss)	366		211		456		(48		)	—		985
Depreciation and amortization	116		529		104		13			—		762

Nine months ended December 27, 2013
Revenues	$	3,169	$	3,405	$	3,095	$	—		$	—	$	9,669
Operating income (loss)	373		290		412		(44		)	—		1,031
Depreciation and amortization	112		520		110		11			—		753

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						Nine Months Ended
(Amounts in millions)	January 2, 2015			December 27, 2013			January 2, 2015			December 27, 2013
Operating income ⁽¹⁾	$	332		$	338		$	985		$	1,031
Corporate G&A	(59		)	(65		)	(182		)	(197		)
Pension & OPEB actuarial & settlement (losses) gains	(462		)	114			(463		)	114
SEC settlement related charges ⁽²⁾	(195		)	—			(195		)	—
Interest expense	(37		)	(38		)	(112		)	(112		)
Interest income	4			4			14			11
Other income (expense), net	(1		)	5			(6		)	(16		)
(Loss) income from continuing operations before taxes	$	(418	)	$	358		$	41		$	831

⁽¹⁾The impact of the change in pension accounting policy was an increase in operating income of $208 million and $251 million for the third quarter and first nine months of fiscal 2015, respectively, and an increase in operating income of $22 million and $68 million for the third quarter and first nine months of fiscal 2014, respectively.

⁽²⁾This item relates to the SEC investigation settlement (see Note 5).

During the third quarter and the first nine 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 nine months ended January 2, 2015 and December 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 January 2, 2015
Revenues	$	965	$	(1	)	$	964
Operating income	128		(4		)	124
Depreciation and amortization	37		—			37

Quarter ended December 27, 2013
Revenues	$	1,093	$	(6	)	$	1,087
Operating income	140		(7		)	133
Depreciation and amortization	34		—			34



	GBS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Nine months ended January 2, 2015
Revenues	$	3,056	$	3		$	3,059
Operating income	366		5			371
Depreciation and amortization	116		(1		)	115

Nine months ended December 27, 2013
Revenues	$	3,169	$	24		$	3,193
Operating income	373		22			395
Depreciation and amortization	112		1			113



	GIS
(Amounts in millions)	As Reported		Increase/ (Decrease)			As Adjusted
Quarter ended January 2, 2015
Revenues	$	984	$	—		$	984
Operating income	72		—			72
Depreciation and amortization	163		—			163

Quarter ended December 27, 2013
Revenues	$	1,145	$	(2	)	$	1,143
Operating income	91		(6		)	85
Depreciation and amortization	177		—			177



	GIS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Nine months ended January 2, 2015
Revenues	$	3,151	$	2		$	3,153
Operating income	211		3			214
Depreciation and amortization	529		—			529

Nine months ended December 27, 2013
Revenues	$	3,405	$	(2	)	$	3,403
Operating income	290		(5		)	285
Depreciation and amortization	520		(1		)	519



	NPS
(Amounts in millions)	As Reported		Increase/ (Decrease)		As Adjusted
Quarter ended January 2, 2015
Revenues	$	998	$	—	$	998
Operating income	145		—		145
Depreciation and amortization	33		—		33

Quarter ended December 27, 2013
Revenues	$	990	$	2	$	992
Operating income	122		1		123
Depreciation and amortization	36		—		36



	NPS
(Amounts in millions)	As Reported		Increase/ (Decrease)			Adjusted
Nine months ended January 2, 2015
Revenues	$	3,057	$	5		$	3,062
Operating income	456		(5		)	451
Depreciation and amortization	104		—			104

Nine months ended December 27, 2013
Revenues	$	3,095	$	(5	)	$	3,090
Operating income	412		—			412
Depreciation and amortization	110		—			110