EX-99.1 2 csc9302016q210-qpressrelease.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1

 
Moved on Business Wire
 
November 3, 2016

CSC Delivers Revenue Growth and Sequential Commercial Margin Expansion in Second Quarter 2017

News Release -- November 3, 2016
Q2 Earnings per Share from Continuing Operations of $0.10 includes Cumulative Impact of Certain Items of $(0.51) per Share
Q2 Non-GAAP Earnings per Share from Continuing Operations was $0.61, compared with $0.55 in prior year
Income from Continuing Operations of $21 Million includes Certain Items of $(73) Million
Consolidated Segment Commercial Operating Income of $109 Million, adjusted for Certain Items is $171 Million and Consolidated Segment Commercial Operating Margin on the same basis is 9.1%, compared with 9.9% in the prior year
Q2 Net Cash from Operating Activities of $192 Million
Adjusted Free Cash Flow of $75 Million for Q2
FY17 Non-GAAP EPS from Continuing Operations Target Remains $2.75 to $3.00

TYSONS, Va., Nov. 3, 2016 –CSC (NYSE: CSC) today reported results for the second quarter of fiscal year 2017.

“In the second quarter, CSC delivered revenue growth and sequential margin improvement as we continue to execute on our transformation strategy," said Mike Lawrie, chairman, president and CEO.  "We have integrated our recent acquisitions, and are growing our next generation offerings, such as Business Process Services.  Recent wins such as MetLife are a strong confirmation of our leadership in the insurance market and other sectors.  Today, we announced a global alliance with PwC to deliver end-to-end digital transformation solutions to our clients. Finally, we remain on track to close our proposed merger with the Enterprise Services business of Hewlett Packard Enterprise on or about April 1st.” 

Financial Highlights
Diluted earnings per share from continuing operations were $0.10 in the second quarter, compared with $0.66 in the year-ago period. Diluted earnings per share from continuing operations included $(0.13) per share of restructuring costs and $(0.38) per share of transaction and other integration-related costs.
Non-GAAP diluted earnings per share from continuing operations excluding these items were $0.61, compared with $0.55 in the prior period.
(Loss) income from continuing operations before taxes was $(1) million for the second quarter, compared with $47 million in the prior year and includes $(25) million of restructuring and $(78) million of transaction and other integration-related costs. Excluding the impact of these items, non-GAAP income from continuing operations, before taxes was $102 million compared with $95 million a year ago.
Consolidated segment adjusted commercial operating income, which includes GBS and GIS, excluding certain items, was $171 million compared with $173 million in the second quarter of fiscal 2016. Consolidated segment adjusted commercial operating margin on the same basis was 9.1% compared to 9.9% in the prior year.
Net cash provided by operating activities was $192 million in the second quarter, compared to $122 million in the prior year.
Adjusted free cash flow was $75 million in the second quarter, compared to $58 million in the prior year. During the second quarter of fiscal 2016, CSC’s net cash provided by operating activities and adjusted free cash flow included the results of its since-divested U.S. federal IT services business, CSRA.

Global Business Services
GBS revenue of $1,035 million in the quarter compares with $891 million in the year ago quarter, an increase of 16.2%. GBS revenue increased 19.2% year-over-year in constant currency. The GBS revenue increase included the contributions of our recent acquisitions. GBS consolidated segment operating margin in the quarter, excluding the impact of certain items, was 10.1% compared to 12.3% in the prior year. New business awards for GBS were $2 billion in the second quarter.

Page 1





Global Infrastructure Services
GIS revenue of $836 million in the quarter compares with $854 million in the year-ago quarter, a decrease of 2.1%. GIS revenue increased 1.1% year-over-year in constant currency. The GIS revenue increase was driven by the growth in our next generation offerings and the inclusion of our recent acquisitions. GIS consolidated segment operating margin in the quarter, excluding the impact of certain items, was 7.9% up from 7.4% in the prior year. New business awards for GIS were $0.5 billion in the second quarter.

Returning Capital to Shareholders
During the second quarter, CSC returned $20 million to shareholders consisting of common stock dividends.

CSC had 140,770,133 basic shares outstanding on September 30, 2016.

Earnings Conference Call and Webcast
CSC senior management will host a conference call and webcast today at 5 p.m. EDT. The dial-in number for domestic callers is 800-218-2154. Callers who reside outside of the United States or Canada should dial 913-981-5550. The passcode for all participants is 7167172. The webcast audio and any presentation slides will be available on CSC’s Investor Relations website.

A replay of the conference call will be available from approximately two hours after the conclusion of the call until November 15, 2016. The replay dial-in number is 888-203-1112 for domestic callers and 719-457-0820 for callers who reside outside of the United States and Canada. The replay passcode is also 7167172. A replay of this webcast will also be available on CSC’s website.

Non-GAAP Measures
In an effort to provide investors with additional information regarding the Company’s preliminary and unaudited
results as determined by U.S. generally accepted accounting principles (GAAP), the Company has also disclosed in this press release preliminary non-GAAP information and certain further adjustments thereto, which management believes provides useful information to investors, including: constant currency, consolidated segment operating income, consolidated segment commercial operating income, consolidated segment commercial operating margin, consolidated segment adjusted operating income, consolidated segment operating and adjusted operating margin, earnings before interest and taxes (EBIT), adjusted EBIT, EBIT and adjusted EBIT margin, adjusted free cash flow and non-GAAP results including non-GAAP income from continuing operations and non-GAAP diluted earnings per share from continuing operations. Reconciliations of the preliminary non-GAAP measures to the respective and most directly comparable GAAP measures, as well as the rationale for management’s use of non-GAAP measures are included below.

About CSC
CSC (NYSE: CSC) leads clients on their digital transformation journeys. The company provides innovative next-generation technology services and solutions that leverage deep industry expertise, global scale, technology independence and an extensive partner community. CSC serves leading commercial and international public sector organizations throughout the world. CSC is a Fortune 500 company and ranked among the best corporate citizens. For more information, visit the company's website at www.csc.com.

All statements in this press release and in all future press releases that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent the Company’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, many of which are outside the Company’s control. These factors could cause actual results to differ materially from such forward looking statements. For a written description of these factors, see the section titled “Risk Factors” in CSC’s Form 10-K for the fiscal year ended April 1, 2016 and any updating information in subsequent SEC filings. The Company disclaims any intention or obligation to update these forward-looking statements whether as a result of subsequent events or otherwise, except as required by law.

# # #
Contact:
Richard Adamonis, Corporate Media Relations, 862.228.3481, radamonis@csc.com
Neil DeSilva, Global M&A and Investor Relations, 703.245.9700, neildesilva@csc.com



Page 2




Note: On November 27, 2015, CSC completed the separation of CSRA. The Company’s results of operations for the second quarter and first six months of fiscal 2016 have been adjusted to reflect the separation.

Business Segment Revenues, Consolidated Segment Operating Income and Consolidated Segment Operating Margins
(preliminary and unaudited)

Revenues by Segment
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
 
% Change
 
% Change at Constant Currency(1)
Global Business Services
 
$
1,035

 
$
891

 
16.2
 %
 
19.2
%
Global Infrastructure Services
 
836

 
854

 
(2.1
)%
 
1.1
%
Total Revenues
 
$
1,871

 
$
1,745

 
7.2
 %
 
10.3
%

Revenues by Segment
 
 
 
 
 
 
 
 
 
 
Six Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
 
% Change
 
% Change at Constant Currency(1)
Global Business Services
 
$
2,084

 
$
1,810

 
15.1
 %
 
17.8
%
Global Infrastructure Services
 
1,717

 
1,739

 
(1.3
)%
 
1.4
%
Total Revenues
 
$
3,801

 
$
3,549

 
7.1
 %
 
9.7
%

(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 non-U.S. Generally Accepted Accounting Principle (GAAP) measures 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.

Consolidated Segment Operating Income and Consolidated Segment Operating Margins by Segment
 
 
 
 
 
Three Months Ended
 
 
September 30, 2016
 
October 2, 2015
(in millions)
 
Consolidated Segment Operating Income
 
Consolidated Segment Operating Margin
 
Consolidated Segment Operating Income
 
Consolidated Segment Operating Margin
Global Business Services
 
$
83

 
8.0
%
 
$
101

 
11.3
%
Global Infrastructure Services
 
26

 
3.1
%
 
64

 
7.5
%
Consolidated Segment Commercial Operating Income
 
109

 
5.8
%
 
165

 
9.5
%
Corporate
 
(11
)
 

 
(35
)
 

Total Consolidated Segment Operating Income
 
$
98

 
5.2
%
 
$
130

 
7.4
%



Page 3




 
 
Six Months Ended
 
 
September 30, 2016
 
October 2, 2015
(in millions)
 
Consolidated Segment Operating Income
 
Consolidated Segment Operating Margin
 
Consolidated Segment Operating Income
 
Consolidated Segment Operating Margin
Global Business Services
 
156

 
7.5
%
 
$
198

 
10.9
%
Global Infrastructure Services
 
22

 
1.3
%
 
117

 
6.7
%
Consolidated Segment Commercial Operating Income
 
178

 
4.7
%
 
315

 
8.9
%
Corporate
 
(28
)
 

 
(41
)
 

Total Consolidated Segment Operating Income
 
$
150

 
3.9
%
 
$
274

 
7.7
%




Page 4





Condensed Consolidated Statements of Operations
(preliminary and unaudited)

 
 
Three Months Ended
 
Six Months Ended
(in millions, except per-share amounts)
 
September 30, 2016
 
October 2, 2015
 
September 30, 2016
 
October 2, 2015
 
 
 
 
 
 
 
 
 
Revenues
 
$
1,871

 
$
1,745

 
$
3,801

 
$
3,549

 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
1,363

 
1,237

 
2,784

 
2,509

Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
293

 
269

 
598

 
540

Depreciation and amortization
 
167

 
168

 
333

 
342

Restructuring costs
 
25

 
5

 
82

 
5

Interest expense
 
29

 
29

 
54

 
59

Interest income
 
(8
)
 
(7
)
 
(18
)
 
(18
)
Other expense (income), net
 
3

 
(3
)
 
5

 
(7
)
Total costs and expenses
 
1,872

 
1,698

 
3,838

 
3,430

 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations, before taxes
 
(1
)
 
47

 
(37
)
 
119

Income tax benefit
 
(22
)
 
(46
)
 
(38
)
 
(39
)
Income from continuing operations
 
21

 
93

 
1

 
158

Income from discontinued operations, net of taxes
 

 
84

 

 
186

Net income
 
21

 
177

 
1

 
344

Less: net income attributable to noncontrolling interest, net of tax
 
6

 
6

 
7

 
10

Net income (loss) attributable to CSC common stockholders
 
$
15

 
$
171

 
$
(6
)
 
$
334

 
 
 
 
 
 
 
 
 
Earnings (loss) per common share
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.11

 
$
0.68

 
$
(0.04
)
 
$
1.14

Discontinued operations
 

 
0.56

 

 
1.28

 
 
$
0.11

 
$
1.24

 
$
(0.04
)
 
$
2.42

Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
0.10

 
$
0.66

 
$
(0.04
)
 
$
1.12

Discontinued operations
 

 
0.55

 

 
1.24

 
 
$
0.10

 
$
1.21

 
$
(0.04
)
 
$
2.36

 
 
 
 
 
 
 
 
 
Cash dividend per common share
 
$
0.14

 
$
0.23

 
$
0.28

 
$
0.46

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
   Basic EPS
 
140.53

 
138.30

 
139.76

 
138.11

   Diluted EPS
 
143.78

 
140.85

 
139.76

 
141.27



Page 5





Selected Balance Sheet Data
(preliminary and unaudited)
 
 
As of
(in millions)
 
September 30, 2016
 
April 1, 2016
 
 
 
 
 
Assets
 
 
 
 
Cash and cash equivalents
 
$
1,054

 
$
1,178

Receivables, net
 
1,893

 
1,831

Prepaid expenses and other current assets
 
379

 
403

Total current assets
 
3,326

 
3,412

 
 
 
 
 
Intangible assets, net
 
1,882

 
1,328

Goodwill
 
1,843

 
1,277

Deferred income taxes, net
 
327

 
345

Property and equipment, net
 
984

 
1,025

Other assets
 
457

 
349

Total Assets
 
$
8,819

 
$
7,736

 
 
 
 
 
Liabilities
 
 
 
 
Short-term debt and current maturities of long-term debt
 
794

 
710

Accounts payable
 
281

 
341

Accrued payroll and related costs
 
285

 
288

Accrued expenses and other current liabilities
 
787

 
720

Deferred revenue and advance contract payments
 
537

 
509

Income taxes payable
 
17

 
40

Total current liabilities
 
2,701

 
2,608

 
 
 
 
 
Long-term debt, net of current maturities
 
2,506

 
1,934

Non-current deferred revenue
 
313

 
348

Deferred tax liabilities
 
221

 
181

Non-current income tax liabilities
 
184

 
175

Other liabilities
 
569

 
458

Total Liabilities
 
6,494

 
5,704

 
 
 
 
 
Total Equity
 
2,325

 
2,032

 
 
 
 
 
Total Liabilities and Equity
 
$
8,819

 
$
7,736



Page 6





Condensed Consolidated Statements of Cash Flows
(preliminary and unaudited)

 
 
Six Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
Cash flows from operating activities:
 
 
 
 
Net income
 
$
1

 
$
344

Adjustments to reconcile net loss income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
339

 
410

Stock-based compensation
 
35

 
7

Gain on dispositions
 

 
(55
)
Unrealized foreign currency exchange loss
 
90

 
7

Other non-cash charges, net
 

 
12

Changes in assets and liabilities, net of acquisitions and dispositions:
 
 
 
 
Decrease in assets
 
64

 
176

Decrease in liabilities
 
(287
)
 
(417
)
Net cash provided by operating activities
 
242

 
484

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(143
)
 
(184
)
Payments for outsourcing contract costs
 
(49
)
 
(53
)
Software purchased and developed
 
(78
)
 
(104
)
Payments for acquisitions, net of cash acquired
 
(434
)
 
(236
)
Business dispositions
 

 
34

Proceeds from sale of assets
 
9

 
50

Other investing activities, net
 
(26
)
 
12

Net cash used in investing activities
 
(721
)
 
(481
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Borrowings of commercial paper
 
1,163

 
299

Repayments of commercial paper
 
(1,058
)
 
(84
)
Borrowings under lines of credit
 
920

 
1,310

Repayment of borrowings under lines of credit
 
(529
)
 
(1,150
)
Debt borrowings
 
107

 

Debt repayments
 
(188
)
 
(461
)
Proceeds from stock options
 
42

 
45

Taxes paid related to net share settlements of stock-based compensation awards
 
(12
)
 
(27
)
Repurchase of common stock
 

 
(118
)
Dividend payments
 
(39
)
 
(64
)
Other financing activities, net
 
(30
)
 
(6
)
Net cash provided by (used in) financing activities
 
376

 
(256
)
Effect of exchange rate changes on cash and cash equivalents
 
(21
)
 
(27
)
Net decrease in cash and cash equivalents
 
(124
)
 
(280
)
Cash and cash equivalents at beginning of year
 
1,178

 
2,098

Cash and cash equivalents at end of period
 
$
1,054

 
$
1,818



Page 7




Non-GAAP Financial Measures

We present non-GAAP financial measures of performance which are derived from the condensed consolidated financial information of CSC. These non-GAAP financial measures include consolidated segment operating income and margin, consolidated segment adjusted operating income and margin, consolidated segment commercial operating income and margin, earnings before interest and taxes (EBIT), adjusted EBIT, EBIT and adjusted EBIT margin, non-GAAP income from continuing operations before taxes, non-GAAP net income from continuing operations, non-GAAP EPS from continuing operations and adjusted free cash flow.

We present these non-GAAP financial measures to supplement financial information presented on a GAAP basis. Non-GAAP financial measures exclude certain items from GAAP which management believes are not indicative of core operating performance. These non-GAAP financial measures allow management to better understand the consolidated financial performance of the Company exclusive of corporate wide strategic decisions. Management believes that adjusting for certain items not indicative of our core operating performance provides investors with additional measures to evaluate our operating financial performance on a more comparable basis. We believe the non-GAAP measures we provide are also considered important measures used by financial analysts covering CSC and its peers.

There are limitations to the use of the non-GAAP financial measures we present. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.

Reconciliation of Non-GAAP Financial Measures

Our non-GAAP adjustments include:

Restructuring costs - Reflects restructuring costs related to workforce optimization and real estate charges.

Transaction and other integration-related costs - Reflects costs related to (1) the Separation, (2) integration planning, financing and advisory fees associated with the proposed merger with the Enterprise Services segment of HPE, and (3) acquisitions and related amortization.

Certain overhead costs - Reflects costs historically allocated to CSRA but not included in discontinued operations due to accounting rules. These costs are expected to be largely eliminated on a prospective basis.

U.S. Pension and OPEB - Reflects the impact of certain U.S. pension and other postretirement benefit (OPEB) plans historically included in CSC financial results that have been transferred to CSRA as part of the separation.

SEC settlement-related items - Reflects costs associated with certain SEC charges and settlements.

Tax adjustment - Reflects the adoption of a new accounting standard in fiscal 2016 changing excess tax benefits on stock-based compensation to be recorded as a reduction to income tax expense, the release of tax valuation allowances in certain jurisdictions, and the application of an approximate 20% tax rate for fiscal 2016 periods, which is at the low end of the prospective targeted effective tax rate range of 20% to 25% and effectively excludes the impact of discrete tax adjustments for those periods.









Reconciliation of Non-GAAP Financial Measures
(preliminary and unaudited)

Consolidated Segment Operating Income and Consolidated Segment Adjusted Operating Income

We define consolidated segment operating income as revenue less costs of services, depreciation and amortization expense, restructuring costs and segment SG&A expenses. Consolidated segment operating income excludes corporate G&A and pension and OPEB actuarial and settlement losses. A reconciliation of consolidated segment operating income and consolidated segment adjusted operating income to (loss) income from continuing operations, before taxes is as follows:
 
 
Three Months Ended
 
Six Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
 
September 30, 2016
 
October 2, 2015
Consolidated segment adjusted operating income
 
$
160

 
$
156

 
$
304

 
$
304

Restructuring costs
 
(25
)
 
(20
)
 
(82
)
 
(20
)
Transaction and integration-related costs
 
(37
)
 
(2
)
 
(72
)
 
(2
)
Certain overhead costs
 

 
(18
)
 

 
(36
)
U.S. Pension and OPEB
 

 
14

 

 
28

Consolidated segment operating income
 
98

 
130

 
150

 
274

Corporate G&A
 
(75
)
 
(64
)
 
(145
)
 
(121
)
Pension and OPEB actuarial and settlement losses
 

 

 
(1
)
 

Interest expense
 
(29
)
 
(29
)
 
(54
)
 
(59
)
Interest income
 
8

 
7

 
18

 
18

Other (expense) income, net
 
(3
)
 
3

 
(5
)
 
7

(Loss) income from continuing operations, before taxes
 
$
(1
)
 
$
47

 
$
(37
)
 
$
119

 
 
 
 
 
 
 
 
 
Consolidated segment adjusted operating margin
 
8.6
%
 
8.9
%
 
8.0
%
 
8.6
%
Consolidated segment operating margin
 
5.2
%
 
7.4
%
 
3.9
%
 
7.7
%


Page 8




Earnings Before Interest and Taxes and Adjusted Earnings Before Interest and Taxes

A reconciliation of EBIT and adjusted EBIT to net (loss) income is as follows:
 
 
Three Months Ended
 
Six Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
 
September 30, 2016
 
October 2, 2015
Adjusted EBIT
 
$
120

 
$
117

 
$
226

 
$
233

Restructuring costs
 
(25
)
 
(20
)
 
(82
)
 
(20
)
Transaction and integration-related costs
 
(75
)
 
(7
)
 
(145
)
 
(10
)
Certain overhead costs
 

 
(33
)
 

 
(66
)
U.S. Pension and OPEB
 

 
14

 

 
28

SEC settlement-related items
 

 
(2
)
 

 
(5
)
EBIT
 
$
20

 
$
69

 
$
(1
)
 
$
160

Interest expense
 
(29
)
 
(29
)
 
(54
)
 
(59
)
Interest income
 
8

 
7

 
18

 
18

Income tax benefit
 
22

 
46

 
38

 
39

(Loss) income from continuing operations
 
$
21

 
$
93

 
$
1

 
$
158

Income from discontinued operations, net of taxes
 

 
84

 

 
186

Net income
 
$
21

 
$
177

 
$
1

 
$
344

 
 
 
 
 
 
 
 
 
Adjusted EBIT margin
 
6.4
%
 
6.7
%
 
5.9
 %
 
6.6
%
EBIT margin
 
1.1
%
 
4.0
%
 
 %
 
4.5
%

Adjusted Free Cash Flow
(preliminary and unaudited)

A reconciliation of net cash provided by operating activities to adjusted free cash flow is as follows:
 
 
Three Months Ended
 
Six Months Ended
(in millions)
 
September 30, 2016
 
October 2, 2015
 
September 30, 2016
 
October 2, 2015
Net cash provided by operating activities
 
$
192

 
$
122

 
$
242

 
$
484

Net cash used in investing activities
 
(154
)
 
(397
)
 
(678
)
 
(481
)
Acquisitions, net of cash acquired
 
11

 
236

 
434

 
236

Business dispositions
 

 

 

 
(34
)
Short-term investments
 

 

 

 

Payments on capital leases and other long-term asset financings
 
(50
)
 
(42
)
 
(95
)
 
(111
)
Payments on transaction and integration-related costs
 
50

 
49

 
143

 
60

Payments on restructuring costs
 
26

 
32

 
61

 
51

SEC settlement-related payments
 

 
1

 

 
187

Sale of NPS accounts receivables
 
$

 
$
57

 
$

 
$
(176
)
Adjusted free cash flow
 
$
75

 
$
58

 
$
107

 
$
216


(1) Excludes capital expenditures financed through CSC Finco and other investments.


Page 9




Consolidated Segment Adjusted Operating Income and Consolidated Segment Adjusted Operating Margin

A reconciliation of consolidated segment operating income to consolidated segment adjusted operating income is as follows:
 
 
Three months ended September 30, 2016
(in millions)
 
Consolidated Segment Operating Income
 
Restructuring costs
 
Transaction and integration-related costs
 
Consolidated Segment Adjusted Operating Income
 
Consolidated Segment Adjusted Operating Margin
Global Business Services
 
$
83

 
$
(2
)
 
$
(20
)
 
$
105

 
10.1
%
Global Infrastructure Services
 
26

 
(23
)
 
(17
)
 
66

 
7.9
%
Total Commercial
 
109

 
(25
)
 
(37
)
 
171

 
9.1
%
Corporate
 
(11
)
 

 

 
(11
)
 

Total
 
$
98

 
$
(25
)
 
$
(37
)
 
$
160

 
8.6
%

 
 
Six months ended September 30, 2016
(in millions)
 
Consolidated Segment Operating Income
 
Restructuring costs
 
Transaction and integration-related costs
 
Consolidated Segment Adjusted Operating Income
 
Consolidated Segment Adjusted Operating Margin
Global Business Services
 
$
156

 
(22
)
 
(37
)
 
$
215

 
10.3
%
Global Infrastructure Services
 
22

 
(60
)
 
(35
)
 
117

 
6.8
%
Total Commercial
 
178

 
(82
)
 
(72
)
 
332

 
8.7
%
Corporate
 
(28
)
 

 

 
(28
)
 

Total
 
$
150

 
$
(82
)
 
$
(72
)
 
$
304

 
8.0
%

 
 
Three months ended October 2, 2015
(in millions)
 
Consolidated Segment Operating Income
 
Certain overhead costs
 
U.S. Pension and OPEB
 
Restructuring costs
 
Transaction and integration-related costs
 
Consolidated Segment Adjusted Operating Income
 
Consolidated Segment Adjusted Operating Margin
Global Business Services
 
$
101

 

 
4

 
$
(12
)
 
$
(1
)
 
$
110

 
12.3
%
Global Infrastructure Services
 
64

 

 
10

 
(8
)
 
(1
)
 
63

 
7.4
%
Total Commercial
 
165

 

 
14

 
(20
)
 
(2
)
 
173

 
9.9
%
Corporate
 
(35
)
 
(18
)
 

 

 

 
(17
)
 

Total
 
$
130

 
$
(18
)
 
$
14

 
$
(20
)
 
$
(2
)
 
$
156

 
8.9
%


Page 10




 
 
Six months ended October 2, 2015
(in millions)
 
Consolidated Segment Operating Income
 
Certain overhead costs
 
U.S. Pension and OPEB
 
Restructuring costs
 
Transaction and integration-related costs
 
Consolidated Segment Adjusted Operating Income
 
Consolidated Segment Adjusted Operating Margin
Global Business Services
 
$
198

 

 
8

 
(12
)
 
(1
)
 
$
203

 
11.2
%
Global Infrastructure Services
 
117

 

 
20

 
(8
)
 
(1
)
 
106

 
6.1
%
Total Commercial
 
315

 

 
28

 
(20
)
 
(2
)
 
309

 
8.7
%
Corporate
 
(41
)
 
(36
)
 

 

 

 
(5
)
 

Total
 
$
274

 
$
(36
)
 
$
28

 
$
(20
)
 
$
(2
)
 
$
304

 
8.6
%


Non-GAAP Results

A reconciliation of non-GAAP results to the respective most directly comparable financial measure calculated and presented in accordance with GAAP is as follows:
 
 
Three months ended September 30, 2016
(in millions, except per-share amounts)
 
As reported
 
Restructuring costs
 
Transaction and integration-related costs
 
Non-GAAP results
 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
1,363

 
$

 
$

 
$
1,363

 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization, restructuring costs and transaction costs)
 
293

 

 
(53
)
 
240

 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations, before taxes
 
(1
)
 
(25
)
 
(78
)
 
102

Income tax (benefit) expense
 
(22
)
 
(6
)
 
(24
)
 
8

Income from continuing operations
 
21

 
(19
)
 
(54
)
 
94

 
 
 
 
 
 
 
 
 
Net income
 
21

 
(19
)
 
(54
)
 
94

Less: net income attributable to noncontrolling interest, net of tax
 
6

 

 

 
6

Net income attributable to CSC common stockholders
 
$
15

 
$
(19
)
 
$
(54
)
 
$
88

 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
n/m

 
 
 
 
 
7.8
%
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
0.11

 
$
(0.14
)
 
$
(0.38
)
 
$
0.63

Diluted EPS from continuing operations
 
$
0.10

 
$
(0.13
)
 
$
(0.38
)
 
$
0.61

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
Basic EPS
 
140.53

 
140.53

 
140.53

 
140.53

Diluted EPS
 
143.78

 
143.78

 
143.78

 
143.78



Page 11




 
 
Six months ended September 30, 2016
(in millions, except per-share amounts)
 
As reported
 
Restructuring costs
 
Transaction and integration-related costs
 
Non-GAAP results
 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
2,784

 
$

 
$

 
$
2,784

 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization, restructuring costs and transaction costs)
 
598

 

 
(109
)
 
489

 
 
 
 
 
 
 
 
 
(Loss) income from continuing operations, before taxes
 
(37
)
 
(82
)
 
(148
)
 
193

Income tax (benefit) expense
 
(38
)
 
(18
)
 
(43
)
 
23

Income from continuing operations
 
1

 
(64
)
 
(105
)
 
170

 
 
 
 
 
 
 
 
 
Net income
 
1

 
(64
)
 
(105
)
 
170

Less: net income attributable to noncontrolling interest, net of tax
 
7

 

 

 
7

Net (loss) income attributable to CSC common stockholders
 
$
(6
)
 
$
(64
)
 
$
(105
)
 
$
163

 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
102.7
%
 
 
 
 
 
11.9
%
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
(0.04
)
 
$
(0.46
)
 
$
(0.75
)
 
$
1.17

Diluted EPS from continuing operations
 
$
(0.04
)
 
$
(0.45
)
 
$
(0.73
)
 
$
1.14

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
Basic EPS
 
139.76

 
139.76

 
139.76

 
139.76

Diluted EPS
 
139.76

 
143.14

 
143.14

 
143.14

 
 
Three months ended October 2, 2015
(in millions, except per-share amounts)
 
As reported
 
Certain overhead costs
 
U.S. Pension and OPEB
 
Restructuring costs
 
Transaction and integration-related costs
 
SEC settlement-related items
 
Tax adjustment
 
Non-GAAP results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
1,237

 
$
(17
)
 
$
12

 
$

 
$

 
$

 
$

 
$
1,232

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
269

 
(16
)
 
2

 

 
(7
)
 
(2
)
 

 
246

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations, before taxes
 
47

 
(33
)
 
14

 
(20
)
 
(7
)
 
(2
)
 

 
95

Income tax (benefit) expense
 
(46
)
 
(13
)
 
6

 
(6
)
 
(3
)
 
(1
)
 
(46
)
 
17

Income from continuing operations
 
93

 
(20
)
 
8

 
(14
)
 
(4
)
 
(1
)
 
46

 
78

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
177

 
(20
)
 
8

 
(14
)
 
(4
)
 
(1
)
 
46

 
162

Less: net income attributable to noncontrolling interest, net of tax
 
6

 

 

 

 

 

 

 
6

Net income attributable to CSC common stockholders
 
$
171

 
$
(20
)
 
$
8

 
$
(14
)
 
$
(4
)
 
$
(1
)
 
$
46

 
$
156

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
(97.9
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
17.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
0.68

 
$
(0.14
)
 
$
0.06

 
$
(0.10
)
 
$
(0.03
)
 
$
(0.01
)
 
$
0.33

 
$
0.56

Diluted EPS from continuing operations
 
$
0.66

 
$
(0.14
)
 
$
0.06

 
$
(0.10
)
 
$
(0.03
)
 
$
(0.01
)
 
$
0.33

 
$
0.55

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
138.30

 
138.30

 
138.30

 
138.30

 
138.30

 
138.30

 
138.30

 
138.30

Diluted EPS
 
140.85

 
140.85

 
140.85

 
140.85

 
140.85

 
140.85

 
140.85

 
140.85


Page 12




 
 
Six months ended October 2, 2015
(in millions, except per-share amounts)
 
As reported
 
Certain overhead costs
 
U.S. Pension and OPEB
 
Restructuring costs
 
Transaction and integration-related costs
 
SEC settlement-related items
 
Tax adjustment
 
Non-GAAP results
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
2,509

 
$
(34
)
 
$
24

 
$

 
$

 
$

 
$

 
$
2,499

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
540

 
(32
)
 
4

 

 
(10
)
 
(5
)
 

 
497

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations, before taxes
 
119

 
(66
)
 
28

 
(20
)
 
(10
)
 
(5
)
 

 
192

Income tax expense
 
(39
)
 
(26
)
 
11

 
(6
)
 
(4
)
 
(2
)
 
(60
)
 
48

Income from continuing operations
 
158

 
(40
)
 
17

 
(14
)
 
(6
)
 
(3
)
 
60

 
144

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
344

 
(40
)
 
17

 
(14
)
 
(6
)
 
(3
)
 
60

 
330

Less: net income attributable to noncontrolling interest, net of tax
 
10

 

 

 

 

 

 

 
10

Net income attributable to CSC common stockholders
 
$
334

 
$
(40
)
 
$
17

 
$
(14
)
 
$
(6
)
 
$
(3
)
 
$
60

 
$
320

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
(32.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
25.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS from continuing operations
 
$
1.14

 
$
(0.29
)
 
$
0.12

 
$
(0.10
)
 
$
(0.04
)
 
$
(0.02
)
 
$
0.43

 
$
1.04

Diluted EPS from continuing operations
 
$
1.12

 
$
(0.28
)
 
$
0.12

 
$
(0.10
)
 
$
(0.04
)
 
$
(0.02
)
 
$
0.42

 
$
1.02

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
138.11

 
138.11

 
138.11

 
138.11

 
138.11

 
138.11

 
138.11

 
138.11

Diluted EPS
 
141.27

 
141.27

 
141.27

 
141.27

 
141.27

 
141.27

 
141.27

 
141.27



Page 13