Derivative Instruments

12 Months Ended

Apr. 01, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The following table presents the fair values of derivative instruments included on the Consolidated Balance Sheets as of April 1, 2016 and April 3, 2015:

	Derivative Assets					Derivative Liabilities
(Amounts in millions)	Balance Sheet line item	As of April 1, 2016		As of April 3, 2015		Balance Sheet line item	As of April 1, 2016		As of April 3, 2015
Derivatives designated for hedge accounting:
Interest rate	Other assets	$	—	$	18	Other long-term liabilities	$	—	$	—
Foreign Currency forward contracts	Prepaid expenses and other current assets	3		1		Accrued expenses and other current liabilities	4		3
Total fair value of derivatives designated for hedge accounting		$	3	$	19		$	4	$	3
Derivatives not designated for hedge accounting:
Foreign Currency forward contracts	Prepaid expenses and other current assets	$	12	$	1	Accrued expenses and other current liabilities	$	7	$	2
Total fair value of derivatives not designated for hedge accounting		$	12	$	1		$	7	$	2

Derivative instruments designated as hedges

Fair value hedges

Pursuant to its interest rate and risk management strategy, during the second quarter of fiscal 2014, the Company entered into multiple interest rate swap transactions to hedge the fair value of $275 million of the Company's 4.45% term notes, due 2022, which effectively converted the debt into floating interest rate debt. For accounting purposes, these interest rate swap transactions were designated as fair value hedges and qualified for the short-cut method of hedge accounting, as defined under ASC 815, “Derivatives and Hedging.” Accordingly, changes in the fair values of the interest rate swaps are reported in earnings and fully offset changes in the fair value of the hedged debt (see Note 13); therefore, no net gain or loss is recognized in the Consolidated Statements of Operations.

During fiscal 2016, the Company terminated the interest rate swaps mentioned above, which had aggregate notional values of $275 million and fair values of $23 million and derecognized the related derivative asset. The total hedge gain of $23 millionfor the termination of interest rate swaps during fiscal 2016 will be amortized into interest income over the remaining life of the debt, which is through September 2022. As of April 1, 2016, the Company had no fair value hedges.

The following table presents the pre-tax gains (losses) related to the fair value hedges and the related hedged items, for the twelve months ended April 1, 2016 and April 3, 2015, respectively:

	Derivative Instrument					Hedged Item
(Amounts in millions)	Statements of Operations line item	Gain for the Twelve Months Ended				Balance Sheet line item	(Loss) for the Twelve Months Ended
		April 1, 2016		April 3, 2015			April 1, 2016			April 3, 2015
Interest rate swaps	Other Income	$	5	$	15	Long-term debt, net of current maturities	$	(5	)	$	(15	)

Cash flow hedges

The Company has designated certain foreign currency forward contracts as cash flow hedges to reduce risks related to certain Indian Rupee denominated intercompany obligations and forecasted transactions. The notional amount of foreign currency forward contracts designated as cash flow hedges as of April 1, 2016 and April 3, 2015 was $496 million and $383 million, respectively, and the related forecasted transactions extend through March 2018. The Company did not enter into any transactions designated as cash flow hedges in fiscal 2014.

For the fiscal years ended April 1, 2016 and April 3, 2015, the Company performed an assessment at the inception of the cash flow hedge transactions and determined all critical terms of the hedging instruments and hedged items matched; therefore, there is no ineffectiveness to be recorded and all changes in the hedging instruments’ fair value are recorded in AOCI and subsequently reclassified into earnings in the period during which the hedged transactions are recognized in earnings. The Company performs an assessment of critical terms on an on-going basis throughout the hedging period.

During the fiscal years ended April 1, 2016 and April 3, 2015, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur. As of April 1, 2016, $1 million of the existing amount of losses related to the cash flow hedge reported in AOCI is expected to be reclassified into earnings within the next 12 months.

The table below presents the pre-tax gains (losses) associated with the cash flow hedges, recognized in AOCI:

(Amounts in millions)	Gain (Loss) recognized in AOCI (effective portion) for the Twelve Months Ended				Gain (Loss) reclassified into cost of services from AOCI (effective portion) for the Twelve Months Ended			Gain (Loss) recognized in Other Income (Expense) (ineffective portion) for the Twelve Months Ended
	April 1, 2016
Foreign currency forward and option contracts		$	1			$	—		$	—
	April 3, 2015
Foreign currency forward and option contracts		$	(2	)		$	—		$	—

Derivatives not designated for hedge accounting

Total return swaps

Beginning in the first quarter of fiscal 2015, the Company entered into total return swaps derivative contracts (TRS) to manage exposure to market volatility of the notional investments underlying the Company's deferred compensation obligations. For accounting purposes, these TRS are not designated as hedges, as defined under ASC 815, “Derivatives and Hedging,” and all changes in their fair value and changes in the associated deferred compensation liabilities are recorded in Costs of services and Selling, general and administrative expenses in the Company's Consolidated Statements of Operations. The TRS are entered into monthly and are settled on the last day of each fiscal month. The Company did not enter into TRS in fiscal 2014.

Foreign currency derivatives

The Company manages the exposure to fluctuations in foreign currencies by using short-term foreign currency forward and option contracts to economically hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and loans. For accounting purposes, these foreign currency option and forward contracts are not designated as hedges, as defined under ASC 815, “Derivatives and Hedging,” and all changes in their fair value are reported in current period earnings within other income (expense), net of the Company's Consolidated Statements of Operations.

The notional amount of the foreign currency forward contracts outstanding as of April 1, 2016 and April 3, 2015 was $2.2 billion and $700 million, respectively.

The following table presents the pretax amounts impacting income related to derivatives not designated for hedge accounting for the years ended April 1, 2016, April 3, 2015, and March 28, 2014 respectively:

		Twelve Months Ended
(Amounts in millions)	Statement of Operations line item	April 1, 2016			April 3, 2015			March 28, 2014
Total return swaps	Cost of services and Selling, general & administrative	$	—		$	8		$	—
Foreign currency forwards and options	Other income (expense), net	(19		)	(9		)	(15		)
Total		$	(19	)	$	(1	)	$	(15	)

Other risks

As discussed further in Note 7, the Company is exposed to the risk of losses in the event of non-performance by the counterparties to its derivative contracts. To mitigate counterparty credit risk, the Company regularly reviews its credit exposure and the creditworthiness of the counterparties. The Company also enters into enforceable master netting arrangements with some of its counterparties. However, for financial reporting purposes, it is Company policy not to offset derivative assets and liabilities despite the existence of enforceable master netting arrangements with some of its counterparties. The following table provides information about the potential effect of such netting arrangements on the Company's derivative instruments:

	Fair Value as of
	April 1, 2016				April 3, 2015
(Amounts in millions)	Assets		Liabilities		Assets		Liabilities
Gross amount of derivative instruments recognized in consolidated balance sheets	$	15	$	11	$	20	$	5
Gross amounts not offset in the consolidated balance sheets (1)	3		1		—		—
Net amount	$	12	$	10	$	20	$	5

⁽¹⁾  These amounts represent the fair value of derivative instruments subject to enforceable master netting arrangements that the Company has elected to not offset. The Company's derivative contracts do not require it to hold or post financial collateral.