Derivative Instruments

12 Months Ended

Mar. 31, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The following table presents the fair values of derivative instruments included in the consolidated balance sheets:

	Derivative Assets
		As of
(in millions)	Balance Sheet Line Item	March 31, 2017		April 1, 2016
Derivatives designated for hedge accounting:
Interest rate swaps	Other assets	$	5	$	—
Foreign currency forward contracts	Prepaid expenses and other current assets	27		3
Total fair value of derivatives designated for hedge accounting		$	32	$	3
Derivatives not designated for hedge accounting:
Foreign currency forward contracts	Prepaid expenses and other current assets	$	15	$	12
Total fair value of derivatives not designated for hedge accounting		$	15	$	12

	Derivative Liabilities
		As of
(in millions)	Balance Sheet Line Item	March 31, 2017		April 1, 2016
Derivatives designated for hedge accounting:
Interest rate swaps	Other long-term liabilities	$	1	$	—
Foreign currency forward contracts	Accrued expenses and other current liabilities	—		4
Total fair value of derivatives designated for hedge accounting:		$	1	$	4
Derivatives not designated for hedge accounting:
Foreign currency forward contracts	Accrued expenses and other current liabilities	$	12	$	7
Total fair value of derivatives not designated for hedge accounting		$	12	$	7

Derivative instruments include foreign currency forward contracts and interest rate swap contracts. The fair value of foreign currency forward contracts represents the estimated amount required to settle the contracts using current market exchange rates, and is based on the period-end foreign currency exchange rates and forward points. The fair value of interest rate swaps is estimated based on valuation models that use interest rate yield curves as Level 2 inputs.

Derivatives designated for hedge accounting

Fair value hedges

During fiscal 2016, the Company terminated certain interest rate swaps related to the Company's 4.45% term notes, due 2022, 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 March 31, 2017, and April 1, 2016 the Company had no fair value hedges.

The following table presents the pre-tax gain (loss) related to the fair value hedges and the related hedged items, for fiscal 2017 and 2016, respectively:

	Derivative Instrument					Hedged Item
(in millions)	Statements of Operations Line Item	Gain for the Fiscal Years Ended				Balance Sheet Line Item	(Loss) for the Fiscal Years Ended
		March 31, 2017		April 1, 2016			March 31, 2017		April 1, 2016
Interest rate swaps	Other Income	$	—	$	5	Long-term debt, net	$	—	$	(5	)

Cash flow hedges

As of March 31, 2017, the Company had a series of interest rate swap agreements with a total notional amount of $607 million. These instruments were designated as cash flow hedges of the variability of cash outflows for interest payments on certain floating interest rate debt, which effectively converted the debt into fixed interest rate debt. As of March 31, 2017, the Company terminated certain interest rate swap agreements which had aggregate notional values of $18 million and fair values of less than $1 million and derecognized the related derivative liability. The total hedge loss of less than $1 million was recognized as interest expense in the consolidated statements of operations.

As of March 31, 2017, the Company performed both retrospective and prospective hedge effectiveness analysis for the interest rate swaps designated as cash flow hedges. The Company applied the long-haul method outlined in ASC 815 “Derivatives and Hedging", to assess retrospective and prospective effectiveness of the interest rate swaps. A quantitative effectiveness analysis assessment of the hedging relationship was performed using regression analysis. As of March 31, 2017, the Company has determined that the hedging relationship was highly effective.

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 March 31, 2017 and April 1, 2016 was $486 million and $496 million, respectively, and the related forecasted transactions extend through March 2018.

For the fiscal years ended March 31, 2017 and April 1, 2016, 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 March 31, 2017 and April 1, 2016, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur. As of March 31, 2017, $8 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:

(in millions)	Gain (Loss) Recognized in AOCI (Effective Portion) for the Fiscal Years Ended				Gain (Loss) Reclassified into Cost of Services from AOCI (Effective Portion) for the Fiscal Years Ended			Gain (Loss) Recognized in Other Income (Expense)(Ineffective Portion) for the Fiscal Years Ended
	March 31, 2017
Foreign currency forward contracts		$	(28	)		$	—		$	—
Interest rate swaps		$	(5	)		$	—		$	—
	April 1, 2016
Foreign currency forward contracts		$	1			$	—		$	—

Derivatives not designated for hedge accounting

Total return swaps

The Company manages the exposure to market volatility of the notional investments underlying its deferred compensation obligations by using total return swaps derivative contracts ("TRS"). For accounting purposes, these TRS are not designated as hedges, as defined under ASC 815 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 reset monthly and are marked-to-market on the last day of each fiscal month.

Foreign currency derivatives

The Company manages the exposure to fluctuations in foreign currencies by using short-term foreign currency forward contracts to economically hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and loans. For accounting purposes, these foreign currency forward contracts are not designated as hedges, as defined under ASC 815 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 March 31, 2017 and April 1, 2016 was $2.9 billion and $2.2 billion, respectively.

The following table presents the pretax amounts impacting income related to derivatives not designated for hedge accounting:

		Fiscal Years Ended
(in millions)	Statement of Operations Line Item	March 31, 2017			April 1, 2016		April 3, 2015
Total return swaps	Cost of services and Selling, general & administrative	$	2		$	—	$	(8	)
Foreign currency forwards	Other (income) expense, net	(84		)	19		9
Total		$	(82	)	$	19	$	1

Other risks

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
	March 31, 2017				April 1, 2016
(in millions)	Assets		Liabilities		Assets		Liabilities
Gross amount of derivative instruments recognized in consolidated balance sheets	$	47	$	13	$	15	$	11
Gross amounts not offset in the consolidated balance sheets (1)	1		2		3		1
Net amount	$	46	$	11	$	12	$	10

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⁽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.