UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2017



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No.: 1-4850



	COMPUTER SCIENCES CORPORATION
	(Exact name of Registrant as specified in its charter)



Nevada	95-2043126
(State of incorporation or organization)	(I.R.S. Employer Identification No.)

1775 Tysons Boulevard
Tysons, Virginia	22102
(Address of principal executive offices)	(zip code)

Registrant's telephone number, including area code: (703) 245-9700
Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Name of each exchange on which registered
Common Stock, $1.00 par value per share	New York Stock Exchange
Preferred Stock Purchase Rights

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d)

of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one).

Large Accelerated Filer x Accelerated Filer o

Non-accelerated Filer o (do not check if a smaller reporting company)

Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of September 30, 2016, the aggregate market value of the Registrant's stock held by non-affiliates of the Registrant was approximately $7,317,368,463.

As of May 18, 2017, 1,000 shares of Computer Sciences Corporation common stock, par value $0.01 per share, were outstanding all of which are held by parent company, DXC Technology Company.

Computer Sciences Corporation meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing portions of this Form 10-K with the reduced disclosure format specified in General Instruction I(2) of Form 10-K.

TABLE OF CONTENTS



Item		Page
	PART I

1.	Business	2
1A.	Risk Factors	5
1B.	Unresolved Staff Comments	16
2.	Properties	17
3.	Legal Proceedings	18
4.	Mine Safety Disclosures	18

	PART II

5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
6.	Selected Financial Data	21
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
7A.	Quantitative and Qualitative Disclosures about Market Risk	46
8.	Financial Statements and Supplementary Data	48
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	119
9A.	Controls and Procedures	119
9B.	Other Information	122

	PART III

10.	Directors, Executive Officers and Corporate Governance	122
11.	Executive Compensation	122
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	122
13.	Certain Relationships and Related Transactions, and Director Independence	122
14.	Principal Accountant Fees and Services	122

	PART IV

15.	Exhibits, Financial Statement Schedules	123

EXPLANATORY NOTE

As previously disclosed, effective April 1, 2017, Computer Sciences Corporation (“CSC” or the “Company”) became a wholly owned subsidiary of DXC Technology Company (“DXC”), an independent public company formed in connection with the spin-off and combination with CSC of the enterprise services business of the Hewlett Packard Enterprise Company ("HPE"). DXC common stock began regular-way trading under the symbol “DXC” on the New York Stock Exchange on April 3, 2017.

This report is the Annual Report on Form 10-K for the fiscal year ended March 31, 2017 solely of CSC and not of DXC or the Enterprise Services business of HPE (this “Annual Report”). As a result, except as otherwise specifically noted herein, the consolidated financial statements, other financial information and the business information set forth herein only relates to CSC and its subsidiaries, as of and for the three years ended March 31, 2017, which periods predate the April 1, 2017 effective date of the previously disclosed merger transaction involving CSC. This Annual Report does not include the financial results of DXC or the Enterprise Services business of HPE ("HPES") for any periods. Accordingly, unless the context otherwise requires, references herein to “CSC,” the “Company,” “we,” “us” or “our” refer only to CSC and its pre-combination subsidiaries and not to DXC, HPES or their pre-combination subsidiaries.

Beginning with the Quarterly Report on Form 10-Q for the quarter ending June 30, 2017, DXC will report on a consolidated basis, representing the combined operations of CSC and HPES and their respective subsidiaries. Because CSC is deemed the acquirer in this combination for accounting purposes under U.S. Generally Accepted Accounting Principles ("GAAP"), CSC is considered DXC's predecessor, and the historical financial statements of CSC prior to April 1, 2017 will be reflected in DXC's future quarterly annual reports as DXC's historical financial statements.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

All statements and assumptions contained in this Annual Report and in the documents incorporated by reference that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” Forward-looking statements often include words such as “anticipates,” “believes,” “estimates,” “expects,” “forecast,” “goal,” “intends,” “objective,” “plans,” “projects,” “strategy,” “target” and “will” and words and terms of similar substance in discussions of future operating or financial performance. These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved.

Forward-looking statements include, among other things, statements with respect to our financial condition, results of operations, cash flows, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, plans and objectives of management and other matters. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to:


•	the integration with DXC’s other businesses, operations and culture and the ability to operate as effectively and efficiently as expected, and the combined company's ability to successfully manage and integrate acquisitions generally;


•	the ability to realize the synergies and benefits expected to result from the Merger (defined herein) within the anticipated time frame or in the anticipated amounts;


•	other risks related to the Merger including anticipated tax treatment, unforeseen liabilities and future capital expenditures;


•	changes in governmental regulations or the adoption of new laws or regulations that may make it more difficult or expensive to operate our business;


•	changes in senior management, the loss of key employees or the ability to retain and hire key personnel and maintain relationships with key business partners;


•	business interruptions in connection with our technology systems;


•	the competitive pressures faced by our business;


•	the effects of macroeconomic and geopolitical trends and events;


•	the need to manage third-party suppliers and the effective distribution and delivery of our products and services;


•	the protection of our intellectual property assets, including intellectual property licensed from third parties;


•	the risks associated with international operations;


•	the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends;


•	the execution and performance of contracts by us and our suppliers, customers, clients and partners;


•	the resolution of pending investigations, claims and disputes; and


•	the other factors described under “Risk Factors.”

No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this Annual Report or to reflect the occurrence of unanticipated events, except as required by law.

PART I

ITEM 1. BUSINESS

Computer Sciences Corporation is a next-generation global provider of information technology services and solutions. We help lead our clients through their digital transformations to meet new business demands and customer expectations in a market of escalating complexity, interconnectivity, mobility and opportunity. CSC was founded in 1959, incorporated in the state of Nevada and was listed on the New York Stock Exchange under the symbol “CSC” prior to the Merger (as defined below).

CSC’s mission is to enable superior returns on our clients' technology investments through best-in-class vertical industry solutions, domain expertise, strategic partnerships with key technology leaders and global scale. We generally do not operate through exclusive agreements with hardware or software providers and believe this independence enables us to better identify and manage solutions specifically tailored to each client’s needs.

Current and prospective clients are changing how they purchase and consume IT services. Clients today are seeking greater operational agility from their IT services and want to benefit from the insights provided by mobility, social media and big data analytics. As they do so, they continue to seek cost efficiencies by migrating from traditional IT infrastructure to the cloud. We strive to be a trusted IT partner to our clients by addressing these requirements and providing next-generation IT services that include applications modernization, cloud infrastructure, cyber security and big data solutions.

Merger with HPES

DXC was formed by the spin-off of the Enterprise Services business of Hewlett Packard Enterprise Company on March 31, 2017 and merger of CSC with a wholly owned subsidiary of DXC on April 1, 2017 (the "Merger"). As a result of the Merger, CSC became a wholly owned subsidiary of DXC. DXC common stock began regular-way trading under the symbol “DXC” on the New York Stock Exchange on April 3, 2017.

The strategic combination of the two complementary businesses created a leading independent, end-to-end IT services company, which is expected to have annual revenues of approximately $25 billion and nearly 6,000 public and private sector enterprise clients across 70 countries. DXC will focus on leading clients on their digital transformation journeys and helping clients thrive on significant business and market changes.

Acquisitions and Divestitures

During the fiscal year ended March 31, 2017 ("fiscal 2017"), we completed the acquisition of Xchanging plc ("Xchanging"), a provider of technology-enabled business solutions to organizations in global insurance and financial services, healthcare, manufacturing, real estate and the public sector, for total cash consideration of $492 million, net of cash acquired. The acquisition expanded our market coverage in the global insurance industry.

Segments and Services

Our reportable segments are Global Business Services ("GBS") and Global Infrastructure Services ("GIS"). Geographically, we have significant operations throughout North America, Europe, Asia and Australia. Segment and geographic information is included in Note 18 - "Segment and Geographic Information" to the consolidated financial statements. For a discussion of risks associated with our foreign operations, see Part I, Item 1A "Risk Factors" of this Annual Report.

Global Business Services

GBS provides innovative technology solutions including digital applications and applications services and software, which address key business challenges within the customer’s industry. GBS strives to help clients understand and take advantage of industry trends of IT modernization and virtualization of the IT portfolio (hardware, software, networking, storage and computing assets). GBS has three primary focus areas: industry aligned next-generation software and solutions ("IS&S"); digital applications, our consulting and applications business, and big data services. Industry aligned next-generation software and solutions is centered on the insurance, banking, healthcare and life sciences industries, as well as manufacturing and other diversified industries. Activities are primarily related to vertical alignment of software solutions and process-based intellectual property that power mission-critical transaction engines, in addition to the provision of tailored business processing services. The digital applications business helps organizations innovate, transform and create sustainable competitive advantage through a combination of industry, business process, technology, systems integration and change management expertise, while optimizing and modernizing clients' business and technical environments, enabling clients to capitalize on emerging services such as cloud and mobility as well as big data within new commercial models including "as a Service." Key competitive differentiators for GBS include its global scale, solution objectivity, depth of industry expertise, strong partnerships, vendor and product independence and end-to-end solutions and 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. Contract awards are estimated at the time of contract signing based on then existing projections of service volumes and currency exchange rates and include approved option years. During fiscal 2017, GBS had contract awards of $4.9 billion compared to $4.3 billion in the fiscal year ended April 1, 2016 ("fiscal 2016").

Global Infrastructure Services

GIS provides managed and virtual desktop solutions, unified communications and collaboration services, data center management, cyber security, computed and managed storage solutions to commercial clients globally. GIS also delivers CSC's next-generation cloud offerings, including Infrastructure as a Service ("IaaS"), private cloud solutions and Storage as a Service. GIS provides a portfolio of standard offerings that have predictable outcomes and measurable results while reducing business risk and operational costs for clients. To provide clients with differentiated offerings, GIS maintains a select number of key alliance partners to make investments in developing unique offerings and go-to-market strategies. This collaboration helps us determine the best technology, develop road maps and enhance opportunities to differentiate solutions, expand market reach, augment capabilities and jointly deliver impactful solutions. During fiscal 2017, GIS had contract awards of $3.7 billion compared to $4.3 billion during fiscal 2016.

Our revenues mix by line of business was as follows:



	Fiscal Years Ended
	March 31, 2017		April 1, 2016		April 3, 2015
Global Business Services	55	%	51	%	50	%
Global Infrastructure Services	45		49		50
Total Revenues	100	%	100	%	100	%

Trademarks and Service Marks

We own or have rights to various trademarks, logos, service marks and trade names that are used in the operation of our business. We also own or have the rights to copyrights that protect the content of our products. Solely for convenience, the trademarks, service marks, trade names and copyrights referred to in this Annual Report are listed without the ™, ®

and © symbols, but such omission does not waive any rights that might be associated with the respective trademarks, service marks, trade names and copyrights included or referred to herein.

Competition

The IT and professional services markets in which we compete are not dominated by a single company or a small number of companies. A substantial number of companies offer services that overlap and are competitive with those we offer. In addition, the increased importance of offshore labor centers has brought several foreign-based firms into competition with us. Offshore IT outsourcers selling directly to end-users have captured an increasing share of the market as they compete directly with U.S. domestic suppliers of these services. We continue to increase resources in offshore locations to mitigate this market development.

More recently, the accelerating demand for multi-tenant infrastructure services, commonly referred to as cloud computing offerings, is continuing to alter the landscape of competition. New entrants to our markets are offering service models that change the decision criteria and contracting expectations of our target customers. Major competitors in this area include large and well-funded technology companies that are increasingly using social, mobile, analytics and cloud technologies to create agile new business models. Smaller and more nimble companies also continue to enter and disrupt markets with innovations in cloud computing and other areas which could emerge as significant competitors to us.

We have responded to these changing market conditions with new capabilities, partnerships and offerings that are intended to position us favorably in high-growth markets for next-generation IT services and solutions. For example, our acquisition of UXC in fiscal 2016 strengthened our next-generation delivery model. We also expanded our range of cloud-based service-management solutions through our acquisition of Fruition and Aspediens, and strategic investments in Virtual Clarity and eBecs. Our strategic partnerships with AT&T and HCL Technologies similarly enable expanded cloud, applications modernization and other next-generation technology services.

Our ability to obtain new business and retain existing business is dependent upon our ability to offer improved strategic frameworks and technical solutions, better value, quicker responses, increased flexibility, superior quality, a higher level of experience, or a combination of these factors. Management believes that our lines of business are positioned to compete effectively in the GBS and GIS markets based on our technology and systems expertise and large project management skills. Management believes that our competitive position is enhanced by the full spectrum of IT and professional services we provide including consulting, software and systems design, implementation and integration, IT and business process outsourcing and technical services delivered to a broad commercial customer base.

Employees

We have offices worldwide and as of March 31, 2017, had approximately 60,000 employees in more than 50 countries. The services we provide require proficiency in many fields, comprising but not limited to computer sciences, programming, telecommunications networks, mathematics, physics, engineering, operations research, finance, economics, statistics and business administration.

Available Information

Following the Merger, CSC is a wholly owned subsidiary of DXC. DXC’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to reports filed or furnished to the U.S. Securities and Exchange Commission, are available free of charge on DXC's website, www.dxc.technology as soon as reasonably practicable after the reports and amendments are electronically filed with or furnished to the SEC. DXC’s corporate governance guidelines, Board of Directors' committee charters (including the charters of the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee) and code of ethics entitled "Code of Business Conduct" are also available on DXC's website. CSC’s SEC filings are also available on DXC’s website. The information on DXC's website is not incorporated by reference into and is not a part of this report.


Item 1A.	RISK FACTORS

Any of the following risks could materially and adversely affect our business, financial condition and results of operations and the actual outcome of matters as to which forward-looking statements are made in this Annual Report. Additional risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, results of operations or the price of our common stock in the future. Past performance may not be a reliable indicator of future financial performance, and historical trends should not be used to anticipate results or trends in future periods. Unless the context otherwise requires, as used in this section "Risk Factors," "we," "our" and "us" refers to CSC and the combined company for periods following the consummation of the Merger.

Risks Relating to Our Business

Achieving our growth objectives may prove unsuccessful. We may be unable to identify future attractive acquisitions and strategic partnerships, which may adversely affect our growth. In addition, if we are unable to consummate acquisition or other agreements we enter into or fail to achieve anticipated revenue improvements and cost reductions, our profitability may be materially and adversely affected.

We may fail to complete strategic transactions. Closing strategic transactions is subject to uncertainties and risks, including the risk that we will be unable to satisfy conditions to closing such as regulatory and financing conditions and the absence of material adverse changes to our business. In addition, our inability to successfully integrate the operations we acquire and leverage these operations to generate substantial cost savings could have a material adverse effect on our results of operations, cash flows and financial position. In order to achieve successful acquisitions, we will need to:


•	successfully integrate the operations, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems, of acquired businesses with existing operations and systems;


•	maintain third-party relationships previously established by acquired companies;


•	attract and retain senior management and other key personnel at acquired businesses; and


•	successfully manage new business lines, as well as acquisition-related workload.

We may not be successful in meeting these challenges or any others encountered in connection with historical and future acquisitions. In addition, the anticipated benefits of one or more acquisitions may not be realized and future acquisitions could require dilutive issuances of equity securities and/or the assumption of contingent liabilities. The occurrence of any of these events could adversely affect our business, financial condition and results of operations.

We have also entered into and intend to identify and enter into additional strategic partnerships with other industry participants that will allow us to expand our business. However, we may be unable to identify attractive strategic partnership candidates or complete these partnerships on terms favorable to us. In addition, if we are unable to successfully implement our partnership strategies or our strategic partners do not fulfill their obligations or otherwise prove disadvantageous to our business, our investments in these partnerships and our anticipated business expansion could be adversely affected.

Our ability to continue to develop and expand our service offerings to address emerging business demands and technological trends may impact our future growth. If we are not successful in meeting these business challenges, our results of operations and cash flows may be materially and adversely affected.

Our ability to implement solutions for our customers, to incorporate new developments and improvements in technology that translate into productivity improvements for our customers and to develop service offerings that meet current and prospective customers' needs are critical to our success. The markets we serve are highly competitive. Our competitors may develop solutions or services that make our offerings obsolete. Our ability to develop and implement up to date solutions utilizing new technologies that meet evolving customer needs in cloud, consulting, industry software and solutions and application services markets will impact our future revenues growth and earnings.

Our ability to compete in certain markets we serve is dependent on our ability to continue to expand our capacity in certain offshore locations. However, as our presence in these locations increases, we are exposed to risks inherent to these locations which may adversely impact our revenues and profitability.

A significant portion of our application outsourcing and software development activities have been shifted to India and we plan to continue to expand our presence there and in other lower cost locations. As a result, we are exposed to the risks inherent to operating in India including (1) a highly competitive labor market for skilled workers which may result in significant increases in labor costs as well as shortages of qualified workers in the future and (2) the possibility that the U.S. federal government or the European Union may enact legislation that provides significant disincentives for customers to locate certain of their operations offshore, which would reduce the demand for the services we provide in India and may adversely impact our cost structure and profitability. In addition, India has experienced civil unrest and acts of terrorism and has been involved in confrontations with Pakistan. If India continues to experience this civil unrest or if its conflicts with Pakistan escalate, our operations in India could be adversely affected.

The Foreign Corrupt Practices Act ("FCPA") and similar anti-bribery laws in other jurisdictions prohibit U.S.-based companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. We pursue opportunities in certain parts of the world that experience government corruption and in certain circumstances, compliance with anti-bribery laws may conflict with local customs and practices. Our internal policies mandate compliance with all applicable anti-bribery laws. We require our employees, partners, subcontractors, agents and others who work for us or on our behalf to comply with the FCPA and other anti-bribery laws. There is no assurance that our policies or procedures will protect us against liability under the FCPA or other laws for actions taken by our employees, partners, subcontractors, agents and other intermediaries. If we are found to be liable for FCPA violations (either due to our own acts or our inadvertence, or due to the acts or inadvertence of others), we could suffer severe criminal or civil penalties or other sanctions, which could have a material adverse effect on our reputation, business, results of operations or cash flows. In addition, detecting, investigating and resolving actual or alleged violations of the FCPA or other anti-bribery violations is expensive and could consume significant time and attention of our senior management.

Security breaches, cyber attacks or service interruptions could expose us to liability or impair our reputation, which could cause significant financial loss.

As a provider of information technology services to customers operating in a number of regulated industries and countries, we store and process increasingly large amounts of sensitive data for our clients. At the same time, the continued occurrence of high-profile data breaches provides evidence of an external environment increasingly hostile to information security. We rely on internal and external information and technological systems to manage our operations and are exposed to risk of loss resulting from breaches in the security or other failures of these systems. We collect and store certain personal and financial information from customers and employees. Security breaches could expose us to a risk of loss of this information, regulatory scrutiny, actions and penalties, extensive contractual liability litigation, reputational harm and a loss of customer confidence that could potentially have an adverse impact on future business with current and potential customers.

Experienced computer programmers and hackers may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. Computer programmers and hackers also may be able to develop and deploy viruses, worms and other malicious software programs that attack our products or otherwise exploit any security vulnerabilities of these products. In addition, sophisticated hardware and operating system software and applications produced or procured from third parties may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with the operation of the system. The costs to eliminate or alleviate cyber or other security problems, including bugs, viruses, worms, malicious software programs and other security vulnerabilities, could be significant, and our efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential customers that may impede the combined company’s sales, manufacturing, distribution or other critical functions.

Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the algorithms that we use to protect sensitive customer transaction data. A party who is able to circumvent our security measures could misappropriate proprietary information or

cause interruption in our operations. We are required to expend capital and other resources to protect against attempted security breaches or cyber-attacks or to alleviate problems caused by successful breaches or attacks. Our security measures are designed to identify and protect against security breaches and cyber-attacks and no threat incident identified to date has resulted in a material adverse effect on us or our customers. However, our failure to detect, prevent or adequately respond to a future threat incident could subject us to liability, damage our reputation and have a material adverse effect on our business.

Increasing data privacy and information security obligations could also impose additional regulatory pressures on our customers’ businesses and indirectly, on our operations. In response, some of our customers have sought and may continue to seek, to contractually impose certain strict data privacy and information security obligations on us. Some of our customer contracts may not contractually limit our liability for the loss of confidential information. If we are unable to adequately address these concerns, our business and results of operations could suffer. Compliance with new privacy and security laws, requirements and regulations, where required or undertaken by us, may result in cost increases due to potential systems changes, the development of additional administrative processes and increased enforcement actions, fines and penalties. While we strive to comply with all applicable data protection laws and regulations as well as our own posted privacy policies, any failure or perceived failure to comply or any misappropriation, loss or other unauthorized disclosure of sensitive or confidential information may result in proceedings or actions against us by government or other entities or private lawsuits against us, including class actions, which could potentially have an adverse effect on our business, reputation and results of operations.

Portions of our infrastructure also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time. We may not be successful in implementing new systems and transitioning data, which could cause business disruptions and be more expensive, time-consuming, disruptive and resource intensive. Such disruptions could adversely impact our ability to respond to customer requests and interrupt other processes. Delayed sales, lower margins or lost customers resulting from these disruptions could reduce our revenues, increase our expenses, damage our reputation and adversely affect our stock price.

Our ability to raise additional capital for future needs may impact our ability to compete in the markets we serve.

We currently maintain investment grade credit ratings with Moody's Investors Service, Standard & Poor's Ratings Services and Fitch Rating Services. Our credit ratings are based upon information furnished by us or obtained by a rating agency from its own sources and are subject to revision, suspension or withdrawal by one or more rating agencies at any time. Rating agencies may review the ratings assigned to us due to developments that are beyond our control, including as a result of new standards requiring the agencies to reassess rating practices and methodologies. If changes in our credit ratings were to occur, it could result in higher interest costs under certain of our credit facilities. It would also cause our future borrowing costs to increase and limit our access to capital markets. Any downgrades could negatively impact the perception of the combined company by lenders and other third parties. In addition, certain of our major contracts provide customers with a right of termination in certain circumstances in the event of a rating downgrade below investment grade.

On March 6, 2017 Moody's and Fitch Ratings took ratings action in anticipation of the Merger. Moody's assigned DXC a Baa2 long-term rating with a "Stable" outlook, affirmed the Baa2 long-term rating with a "Stable" outlook for CSC and affirmed the P-2 short term rating of CSC's European Commercial Paper program. Fitch Ratings upgraded CSC and assigned both DXC and CSC a BBB+ long-term rating with a "Stable" outlook and affirmed the short-term rating for DXC and CSC at F-2. On March 13, 2017 Standard & Poor's assigned DXC a BBB long-term rating with a "Negative" outlook, removed CSC from credit watch, affirmed the BBB long-term rating with a "Negative" outlook for CSC and affirmed the short-term rating for CSC at A-2.

Our indebtedness may adversely affect our business, financial condition and results of operations, as well as our ability to meet our payment obligations under our debt.

In addition to our current total carrying debt, we will be incurring significant indebtedness as a result of the Merger. We may incur substantial additional indebtedness in the future for many reasons, including to fund acquisitions. This collective amount of debt could have important adverse consequences to us and our investors, including:


•	making it more difficult for us to satisfy our debt obligations and other ongoing business obligations, which may result in defaults;


•	experiencing events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses;


•	subjecting us to the risk of increased sensitivity to interest rate increases in our outstanding indebtedness that bears interest at variable rates and could cause our debt service obligations to increase significantly;


•	increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability for debt financing;


•	reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes;


•	limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industries in which we operate, and the overall economy;


•	placing us at a competitive disadvantage compared to any of our competitors that have less debt or are less leveraged; and


•	increasing our vulnerability to the impact of adverse economic and industry conditions.

Our ability to meet our payment and other obligations under our debt instruments depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate sufficient cash flow from operations or that current or future borrowings will be sufficient to meet our current debt obligations and other liquidity needs.

Our business may be adversely impacted as a result of changes in demand for our services, both globally and in individual market segments.

Current weakness in worldwide economic conditions and political uncertainty may adversely impact our customers' demand for our services in the markets in which we compete, including our customers' demand for consulting, industry software and solutions, application services and next-generation cloud offerings and other IT services.

Our primary markets are highly competitive. If we are unable to compete in these highly competitive markets, our results of operations may be materially and adversely affected.

Our competitors include large, technically competent and well capitalized companies, some of which have emerged as a result of industry consolidation, as well as “pure play” companies that have a single product focus. If we are unable to renew or extend our current technology contracts due to this competition, we may experience downward pressure on operating margins in our technology outsourcing contract. As a result, we may not be able to maintain our current operating margins, or achieve favorable operating margins, for technology outsourcing contracts extended or renewed in the future. Any reductions in margins will require that we effectively manage our cost structure. If we fail to effectively manage our cost structure during periods with declining margins, our results of operations may be adversely affected.

We encounter aggressive competition from numerous and varied competitors. Our competitiveness is based on factors including technology, innovation, performance, price, quality, reliability, brand, reputation, range of products and services, account relationships, customer training, service and support and security. If we are unable to compete based on such factors, our results of operations and business prospects could be harmed. CSC, together with DXC, has a large portfolio services and allocates financial, personnel and other resources across services while competing with companies that have smaller portfolios or specialize in one or more of our

service lines. As a result, we may invest less in certain business areas than our competitors do, and competitors may have greater financial, technical and marketing resources available to them compared to the resources allocated to our services. Industry consolidation may also affect competition by creating larger, more homogeneous and potentially stronger competitors in the markets in which we operate. Additionally, competitors may affect our business by entering into exclusive arrangements with existing or potential customers.

Companies with whom we have alliances in certain areas may be or become competitors in other areas. In addition, companies with whom we have alliances also may acquire or form alliances with competitors, which could reduce their business with us. If we are unable to effectively manage these complicated relationships with alliance partners, our business and results of operations could be adversely affected.

We face aggressive price competition and may have to lower prices to stay competitive, while simultaneously seeking to maintain or improve revenue and gross margin. In addition, competitors who have a greater presence in some of the lower-cost markets in which we compete, or who can obtain better pricing, more favorable contractual terms and conditions, may be able to offer lower prices than we are able to offer. Our cash flows, results of operations and financial condition may be adversely affected by these and other industry-wide pricing pressures.

If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected.

Our commercial contracts are typically awarded on a competitive basis. Our bids are based upon, among other things, the expected cost to provide the services. To generate an acceptable return on our investment in these contracts, we must be able to accurately estimate our costs to provide the services required by the contract and to complete the contracts in a timely manner. In addition, revenues from some of our contracts are recognized using the percentage-of-completion method, which requires estimates of total costs at completion, fees earned on the contract, or both. This estimation process, particularly due to the technical nature of the services being performed and the long-term nature of certain contracts, is complex and involves significant judgment. Adjustments to original estimates are often required as work progresses, experience is gained and additional information becomes known, even though the scope of the work required under the contract may not change. If we fail to accurately estimate our costs or the time required to complete a contract, the profitability of our contracts may be materially and adversely affected.

Our performance on contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments.

Our contracts are increasingly complex and, in some instances, require that we partner with other parties, including software and hardware vendors, to provide the complex solutions required by our customers. Our ability to deliver the solutions and provide the services required by our customers is dependent on our and our partners' ability to meet our customers' delivery schedules. If we or our partners fail to deliver services or products on time, our ability to complete the contract may be adversely affected, which may have a material and adverse impact on our revenues and profitability.

Our primary markets are highly competitive. Achieving our stated objectives depends on our ability to attract and retain highly skilled IT professionals and executives.

Our ability to grow and provide our customers with competitive services is partially dependent on our ability to attract and retain people with the skills, knowledge and management experience to serve our customers. As we noted above, the markets we serve are highly competitive. Competition for skilled employees in the technology outsourcing and consulting and systems integration markets is intense around the world. Our ability to expand geographically and continue to operate our existing global businesses successfully depends, in large part, on our ability to attract and retain highly skilled IT professionals and executives. The loss of personnel could impair our ability to perform under certain of our contracts, which could have a material adverse effect on our reputation, goodwill, financial position, results of operations and cash flows.

We also must manage leadership development and succession planning throughout our business. The loss of key personnel, coupled with an inability to adequately develop and train personnel and assimilate key new hires or promoted employees could adversely affect our business and results of operations.

In addition, as a result of the Merger, uncertainty around future employment opportunities, facility locations, organizational and reporting structures and other related concerns may impair our ability to attract and retain qualified personnel. If employee attrition is higher than expected due to difficulties encountered in the integration process it may adversely impact our ability to realize the anticipated benefits of the Merger. While we have put in place certain incentives designed to retain key personnel in connection with the Merger, these incentives may not be sufficient to achieve their desired purpose and only extend to a limited population that may not include personnel whose services are important to achieving key organizational objectives.

More generally, if we do not hire, train, motivate and effectively utilize employees with the right mix of skills and experience in the right geographic regions and for the right offerings to meet the needs of our clients, our financial performance could suffer. For example, if our employee utilization rate is too low, our profitability and the level of engagement of our employees could decrease. If that utilization rate is too high, it could have an adverse effect on employee engagement and attrition and the quality of the work performed, as well as our ability to staff projects. If we are unable to hire and retain a sufficient number of employees with the skills or background needed to meet current demand, we might need to redeploy existing personnel, increase our reliance on subcontractors or increase employee compensation levels, all of which could also negatively affect our profitability. In addition, if we have more employees than necessary to serve client demand with certain skill sets for certain offerings or in certain geographies, we may incur increased costs as we work to rebalance our supply of skills and resources with client demand in those geographies.

Our international operations are exposed to risks, including fluctuations in exchange rates, which may be beyond our control.

Our exposure to currencies other than the U.S. dollar may impact our results, as they are expressed in U.S. dollars. Currency variations also contribute to variations in sales of products and services in affected jurisdictions. For example, if one or more European countries were to replace the euro with another currency, sales in that country or in Europe generally may be adversely affected until stable exchange rates are established. While historically we have partially mitigated currency risk, including exposure to fluctuations in currency exchange rates, by matching costs with revenues in each currency, our exposure to fluctuations in other currencies against the U.S. dollar increases as revenue in currencies other than the U.S. dollar increase and as more of the services we provide are shifted to lower cost regions of the world. We believe that the percentage of our revenues denominated in currencies other than the U.S. dollar will continue to represent a significant portion of our revenues. Also, we believe that our ability to match revenues and expenses in each currency will decrease as more work is performed at offshore locations.

We may use forward contracts and options designated as cash flow hedges to protect against currency exchange rate risks. The effectiveness of these hedges will depend on our ability to accurately forecast future cash flows, which may be particularly difficult during periods of uncertain demand and highly volatile exchange rates. We may incur significant losses from our hedging activities due to factors such as demand volatility and currency variations. In addition, certain or all of our hedging activities may be ineffective, may expire and not be renewed or may not offset the adverse financial impact resulting from currency variations. Losses associated with hedging activities also may impact our revenues and to a lesser extent our cost of sales and financial condition.

In June 2016, the U.K. held a referendum in which British citizens voted to exit from the European Union, commonly referred to as “Brexit.” In March 2017, the UK government initiated a process to withdraw from the EU and began negotiating the terms of its separation. We face risks associated with Brexit. For example, Brexit could potentially result in restrictions on the movement of capital and the mobility of personnel between the remaining 27 EU states and the UK, in addition to volatility in currency exchange rates. Brexit also creates uncertainty in areas currently regulated by EU law, such as cross border data transfers. Brexit is also expected to lead to short and medium term uncertainty in future trade arrangements between U.K.-based operations and the various EU end markets that they serve.

Our future business and financial performance could suffer due to a variety of international factors, including:


•	ongoing instability or changes in a country’s or region’s economic or political conditions, including inflation, recession, interest rate fluctuations and actual or anticipated military or political conflicts;


•	longer collection cycles and financial instability among customers;


•	trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign competitors;


•	local labor conditions and regulations;


•	managing our geographically dispersed workforce;


•	changes in the international, national or local regulatory and legal environments;


•	differing technology standards or customer requirements;


•	difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner and


•	changes in tax laws.

Our business operations are subject to various and changing federal, state, local and foreign laws and regulations that could result in costs or sanctions that adversely affect our business and results of operations.

We operate in more than 50 countries in an increasingly complex regulatory environment. Among other things, we provide complex industry specific insurance processing in the U.K, which is regulated by authorities in the U.K. and elsewhere, such as the U.K.’s Financial Conduct Authority and Her Majesty’s Treasury and the U.S. Department of Treasury, which increases our exposure to compliance risk. For example, in February 2017 we submitted an initial notification of voluntary disclosure regarding certain possible violations of U.S. sanctions laws to the U.S. Department of Treasury, Office of Foreign Assets Control (“OFAC”) pertaining to insurance premium data and claims data processed by two partially-owned joint ventures of Xchanging, which we acquired during the first quarter of fiscal 2017. A copy of the disclosure was also provided to Her Majesty’s Treasury Office of Financial Sanctions Implementation in the U.K. Our related internal investigation is continuing, and we have undertaken to provide a full report of its findings to OFAC when completed. Our retail investment account management business in Germany is another example of a regulated business, which must maintain a banking license, is regulated by the German Federal Financial Supervisory Authority and the European Central Bank and must comply with German banking laws and regulations.

In addition, businesses in the countries in which we operate are subject to local, legal and political environments and regulations including with respect to employment, tax, statutory supervision and reporting and trade restriction. These regulations and environments are also subject to change.

Adjusting business operations to changing environments and regulations may be costly and could potentially render the particular business operations uneconomical, which may adversely affect our profitability or lead to a change in the business operations. Notwithstanding our best efforts, we may not be in compliance with all regulations in the countries in which we operate at all times and may be subject to sanctions, penalties or fines as a result. These sanctions, penalties or fines may materially and adversely impact the profitability of the combined company.

We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business.

Our Board of Directors has approved several restructuring plans to realign our cost structure due to the changing nature of our business and to achieve operating efficiencies to reduce our costs. We may not be able to obtain the costs savings and benefits that were initially anticipated in connection with our restructuring plans. Additionally, as a result of our restructuring, we may experience a loss of continuity, loss of accumulated knowledge and/or inefficiency during transitional periods. Reorganization and restructuring can require a significant amount of management and other employees' time and focus, which may divert attention from operating and growing our business. If we fail to achieve some or all of the expected benefits of restructuring, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows. For more information about our restructuring plans, see Note 19 - "Restructuring Costs" to the consolidated financial statements.

In the course of providing services to customers, we may inadvertently infringe on the intellectual property rights of others and be exposed to claims for damages.

The solutions we provide to our customers may inadvertently infringe on the intellectual property rights of third parties resulting in claims for damages against us or our customers. Our contracts generally indemnify our clients from claims for intellectual property infringement for the services and equipment we provide under the applicable contracts. The expense and time of defending against these claims may have a material and adverse impact on our profitability. Additionally, the publicity we may receive as a result of infringing intellectual property rights may damage our reputation and adversely impact our ability to develop new business.

We may be exposed to negative publicity and other potential risks if we are unable to achieve and maintain effective internal controls over financial reporting.

We are required under the Sarbanes-Oxley Act of 2002 to include a report from management on our internal controls that contains an assessment by management of the effectiveness of our internal control over financial reporting. In addition, the independent registered public accounting firm auditing our financial statements must report on the effectiveness of our internal control over financial reporting. In our Form 10-K for the fiscal year ended April 1, 2016, we reported a material weakness over the accounting, presentation, and disclosure for income taxes, including the income tax provision and related tax assets and liabilities.

Any failure to maintain effective controls or difficulties encountered in the effective improvement of our internal controls, including the remediation of the material weakness in accounting for income tax, could prevent us from timely and reliably reporting financial results and may harm our operating results. In addition, if we are unable to conclude that we have effective internal control over financial reporting or, if our independent registered public accounting firm is unable to provide an unqualified report as to the effectiveness of our internal control over financial reporting, as of each fiscal year end, we may be exposed to negative publicity, which could cause investors to lose confidence in our reported financial information. Any failure to maintain effective internal controls and any such resulting negative publicity may materially affect our business and stock price.

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. However, a control system, no matter how well conceived and operated can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There can be no assurance that all control issues or fraud will be detected. In connection with the Merger and as the combined company continues to grow its businesses, its internal controls will become more complex and will require more resources for internal controls. Additionally, the existence of any material weaknesses or significant deficiencies would require management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner. The existence of any material weakness in the combined company’s internal control over financial reporting could also result in errors in its financial statements that could require the combined company to restate its financial statements, cause it to fail to meet its reporting obligations and cause stockholders to lose confidence in its reported financial information, all of which could materially and adversely affect the combined company and the market price of its common stock.

We could suffer additional losses due to asset impairment charges.

We test our goodwill for impairment during the second quarter of every year and on an interim date should events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. If the fair value of a reporting unit is revised downward due to declines in business performance or other factors, an impairment could result and a non-cash charge could be required. We test intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This assessment of recoverability of finite-lived intangible assets could result in an impairment and a non-cash charge could be required. We acquired a substantial quantity of goodwill and other intangibles as a result of the Merger, increasing our exposure to this risk.

We also test certain equipment and deferred cost balances associated with contracts when the contract is materially underperforming or is expected to materially underperform in the future, as compared to the original bid model or budget. If the projected cash flows of a particular contract are not adequate to recover the unamortized cost balance of the asset group, the balance is adjusted in the tested period based on the contract's fair value. Either of these impairments could materially affect our reported net earnings.

We are defendants in pending litigation that may have a material and adverse impact on our profitability and liquidity.

As noted in Note 21 - "Commitments and Contingencies" to the consolidated financial statements, we are currently party to a number of disputes that involve or may involve litigation. We are not able to predict the ultimate outcome of these disputes or the actual impact of these matters on our profitability. If we agree to settle these matters or judgments are secured against us, we may incur liabilities that may have a material and adverse impact on our liquidity and earnings.

Changes in our tax rates could affect our future results.

Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or by changes in tax laws or their interpretation. We are subject to the continuous examination of our income tax returns by the IRS and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for taxes. There can be no assurance that the outcomes from these examinations will not have a material adverse effect on our financial condition and operating results.

We may be adversely impacted by disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit.

The credit markets have historically been volatile and therefore it is not possible for us to predict the ability of our clients and customers to access short-term financing and other forms of capital. If a disruption in the credit markets were to occur, it could also pose a risk to our business if customers and suppliers are unable to obtain financing to meet payment or delivery obligations to us. In addition, customers may decide to downsize, defer or cancel contracts which could negatively affect our revenues.

Our hedging program is subject to counterparty default risk.

We enter into foreign currency forward contracts and options and interest rate swaps with a number of counterparties. As a result, we are subject to the risk that the counterparty to one or more of these contracts defaults on its performance under the contract. During an economic downturn, the counterparties financial condition may deteriorate rapidly and with little notice and we may be unable to take action to protect our exposure. In the event of a counterparty default, we could incur significant losses, which may harm our business and financial condition. In the event that one or more of our counterparties becomes insolvent or files for bankruptcy, our ability to eventually recover any losses suffered as a result of a counterparty's default may be limited by the liquidity of the counterparty.

We derive significant revenues and profit from contracts awarded through competitive bidding processes, which can impose substantial costs on us and we may not achieve revenue and profit objectives if we fail to bid on these projects effectively.

We derive significant revenues and profit from government contracts that are awarded through competitive bidding processes. We expect that most of the non-U.S. government business we seek in the foreseeable future will be awarded through competitive bidding. Competitive bidding is expensive and presents a number of risks, including:


•	the substantial cost and managerial time and effort that we spend to prepare bids and proposals for contracts that may or may not be awarded to us;


•	the need to estimate accurately the resources and costs that will be required to service any contracts we are awarded, sometimes in advance of the final determination of their full scope and design;


•	the expense and delay that may arise if our competitors protest or challenge awards made to us pursuant to competitive bidding;


•	the requirement to resubmit bids protested by our competitors and in the termination, reduction, or modification of the awarded contracts; and


•	the opportunity cost of not bidding on and winning other contracts we might otherwise pursue.

If our customers experience financial difficulties or request out-of-scope work, we may not be able to collect our receivables, which would materially and adversely affect our profitability.

Over the course of a long-term contract, a customer's financial condition may decline and reduce its ability to pay its obligations. This would cause our cash collections to decrease and bad debt expense to increase. While we may resort to alternative methods to pursue claims or collect receivables, these methods are expensive and time consuming and successful collection is not guaranteed. Failure to collect our receivables or prevail on claims would have an adverse effect on our profitability and cash flows.

Risks Related to the Merger

The combined company may not realize the anticipated benefits from the Merger.

There can be no assurance that we will be able to realize the intended benefits of the Merger or that the combined company resulting from the Merger will perform as anticipated. Specifically, the Merger could cause disruptions in the combined company's business, including by disrupting operations or causing customers to delay or to defer decisions to purchase products or renew contracts or to end their relationships. Similarly, it is possible that current or prospective employees could experience uncertainty about their future roles with the combined company, which could harm our ability to attract and retain key personnel.

As previously disclosed, we expect that the Merger will produce first-year synergies for the combined company of approximately $1.0 billion, with a run rate of $1.5 billion by the end of year one. The anticipated $1.0 billion of post-closing synergies and $1.5 billion run rate at the end of year one were each calculated by estimating the expected value of harmonizing policies and benefits between CSC and HPES and supply chain and procurement benefits from expected economies of scale such as volume discounts, as well as cost synergies expected from workforce optimization such as elimination of duplicative roles and other duplicative general, administrative and overhead costs. The combined company’s success in realizing cost and revenues synergies, growth opportunities, and other financial and operating benefits as a result of the Merger, and the timing of their realization, depends on the successful integration of the combined company's business operations. Even if we successfully integrate, we cannot predict with certainty if or when these cost and revenue synergies, growth opportunities and benefits will occur, or the extent to which they actually will be achieved. For example, the benefits from the Merger may be offset by costs incurred in integrating CSC and HPES or in required capital expenditures related to the acquisition of HPES. In addition, the quantification of synergies expected to result from the Merger is based on significant estimates and assumptions that are subjective in nature and inherently uncertain. Realization of any benefits and synergies could be affected by a number of factors beyond our control, including, without limitation, general economic conditions, increased operating costs, regulatory developments and other risks. The amount of synergies actually realized, if any, and the time periods in which any such synergies are realized, could differ materially from the expected synergies, regardless of whether the two business operations are combined successfully. If the integration is unsuccessful or if the combined company is unable to realize the anticipated synergies and other benefits of the Merger, there could be a material adverse effect on the combined company’s business, financial condition and results of operations.

The integration following the Merger may present significant challenges.

There is a significant degree of difficulty inherent in the process of integrating HPES and CSC. These difficulties include:


•	integration activities while carrying on ongoing operations;


•	the challenge of integrating the business cultures of HPES and CSC, which may prove to be incompatible;


•	the challenge and cost of integrating certain information technology systems and other systems; and


•	the potential difficulty in retaining key officers and other personnel.

The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of one or more of the combined company’s businesses. Members of senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our business, service existing businesses and develop new services or strategies. In addition, certain existing contractual restrictions limit the ability to engage in certain integration activities for varying periods after the Merger. There is no assurance we will be able to manage this integration to the extent or in the time horizon anticipated, particularly given the larger scale of the HPES business in comparison to CSC's business. If senior management is not able to timely and effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer. The delay or inability to achieve anticipated integration goals could have a material adverse effect on our business, financial condition and results of operations after the Merger.

If the Merger does not qualify as a reorganization under Section 368(a) of the Code, CSC's former stockholders may incur significant tax liabilities.

The completion of the Merger was conditioned upon the receipt by HPE and CSC of opinions of counsel to the effect that, for U.S. federal income tax purposes, the Merger will qualify as a "reorganization" within the meaning of Section 368(a) of the Code (the "Merger Tax Opinions"). The parties did not seek a ruling from the IRS regarding such qualification. The Merger Tax Opinions were based on current law and relied upon various factual representations and assumptions, as well as certain undertakings made by HPE, HPES and CSC. If any of those representations or assumptions is untrue or incomplete in any material respect or any of those undertakings is not complied with, or if the facts upon which the Merger Tax Opinions are based are materially different from the actual facts that existed at the time of the Merger, the conclusions reached in the Merger Tax Opinions could be adversely affected and the Merger may not qualify for tax-free treatment. Opinions of counsel are not binding on the IRS or the courts. No assurance can be given that the IRS will not challenge the conclusions set forth in the Merger Tax Opinions or that a court would not sustain such a challenge. If the Merger were determined to be taxable, previous holders of CSC common stock would be considered to have made a taxable disposition of their shares to HPES, and such stockholders would generally recognize taxable gain or loss on their receipt of HPES common stock in the Merger.

Risk Relating to the Separation (defined below)

The Separation could result in substantial tax liability to us and former CSC stockholders that received CSRA Inc. stock in the Separation.

In connection with the spin-off by CSC of its U.S. public sector business, National Public Sector ("NPS") on November 27, 2015 (the "Separation"), CSC received an opinion of counsel substantially to the effect that, for U.S. federal income tax purposes, the Separation qualified as a tax-free transaction under Section 355 and related provisions of the Internal Revenue Code. If, notwithstanding the conclusions expressed in that opinion, the Separation were determined to be taxable, we and former CSC stockholders that received CSRA stock in the Separation could incur significant tax liabilities.

Under Section 355(e) of the Internal Revenue Code, the Separation would generally be taxable to us (but not to former CSC stockholders) if one or more persons acquire a 50% or greater interest (measured by vote or value) in the stock of CSC, directly or indirectly (including through acquisition of the combined company’s stock after the completion of the Merger), as part of a plan or series of related transactions that includes the Separation. In general, an acquisition will be presumed to be part of a plan with the Separation if the acquisition occurs within two years before or after the Separation. This presumption may, however, be rebutted based upon an analysis of the facts and circumstances related to the Separation and the particular acquisition in question.

In connection with completion of the Merger, we received an opinion of counsel to the effect that the Merger should not cause Section 355(e) of the Code to apply to the Separation or otherwise affect the qualification of the Separation as a tax-free distribution under Section 355 of the Code (the “Separation Tax Opinion”). The Separation Tax Opinion was based on current law and relied upon various factual representations and assumptions, as well as certain undertakings made by us. If any of those representations or assumptions is untrue or incomplete in any material respect or any of those undertakings is not complied with, or if the facts upon

which the Separation Tax Opinion is based are materially different from the actual facts that existed at the time of the Merger, the conclusions reached in the Separation Tax Opinion could be adversely affected and the Separation may not qualify for tax-free treatment. No assurance can be given that the IRS will not challenge the conclusions set forth in the Separation Tax Opinion or that a court would not sustain such a challenge. Further, in light of the requirements of Section 355(e) of the Code, we might determine to forgo certain transactions, including share repurchases, stock issuances, certain asset dispositions, mergers, consolidations and other strategic transactions, for some period of time following the Merger.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

As of March 31, 2017, we owned or leased numerous general office facilities, global security operations centers, strategic delivery centers and data centers around the world totalizing approximately 8.4 million square feet. Locations which house three or more of these types of usage are referred hereto as co-locations. We believe all of the properties we own or lease are well-maintained, suitable and adequate to meet our current and anticipated requirements. Upon expiration of our leases, we plan to exit low utilization and sub-scale locations to optimize our data center footprint and increase site density. As part of the expected synergies from the Merger, we plan to increase co-location and decrease our occupancy footprint by approximately 30%. Lease expiration dates range from fiscal 2018 through fiscal 2028. Our corporate headquarters is a leased facility located at 1775 Tysons Blvd, Tysons, VA 22102 and is included in the Washington, D.C. area of the square footage in the table below. The space being utilized by our GIS and GBS segments and Corporate is approximately 48%, 26% and 2%, respectively. In addition, approximately 24% is being utilized by both the GBS and GIS segments.

We have facilities in excess of our needs and have entered into various sublease agreements for our unused general office space. As a result, included in our accrued expenses, other current liabilities and other long-term liabilities are costs net of sublease income to be incurred through 2024 related to such facilities. For additional information regarding our excess space obligations, See Note 19 - "Restructuring Costs" to the consolidated financial statements.

The following tables provide a summary of properties we own and lease as of March 31, 2017:



Properties Owned	Approximate Square Footage	General Usage
Blythewood, South Carolina	456,000	Delivery Center and Office
Copenhagen, Denmark	368,000	Office
Aldershot, United Kingdom	211,000	Office
Newark, Delaware	179,000	Co-location
Norwich, Connecticut	144,000	Data Center
Meriden, Connecticut	118,000	Data Center
Shimoga, India	80,000	Delivery Center and Office
Maidstone, United Kingdom	79,000	Data Center
Petaling Jaya, Malaysia	63,000	Co-location
Jacksonville, Illinois	60,000	Office
Chesterfield, United Kingdom	51,000	Delivery Center and Office
Tunbridge Wells, United Kingdom	43,000	Data Center
Sterling, Virginia	41,000	Delivery Center and Office
Various other U.S. and foreign locations	40,000	Data Center and Office



Properties Leased	Approximate Square Footage	General Usage
India	3,061,000	Co-location
Australia & other Pacific Rim locations	649,000	Co-location
France	263,000	Data Center and Office
Texas	180,000	Co-location
Germany	176,000	Data Center and Office
Illinois	172,000	Data Center and Office
United Kingdom	130,000	Data Center and Office
Washington, D.C. area	130,000	Data Center and Office
Spain	127,000	Delivery Center and Office
Connecticut	125,000	Co-location
Sweden	119,000	Data Center and Office
China	118,000	Co-location
Colombia	106,000	Delivery Center and Office
Denmark	101,000	Delivery Center and Office
Bulgaria	101,000	Delivery Center and Office
Various other U.S. and foreign locations	923,000	Co-location

ITEM 3. LEGAL PROCEEDINGS

See Note 21 - "Commitments and Contingencies" to the consolidated financial statements under the caption “Contingencies” for information regarding legal proceedings in which we are involved.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Prior to consummation of the Merger, CSC common stock was listed and traded on the New York Stock Exchange under the ticker symbol “CSC.” CSC common stock was suspended from trading on the New York Stock Exchange effective as of the opening of trading on April 3, 2017. The New York Stock Exchange filed a Notification of Removal from Listing and/or Registration on Form 25 to delist CSC common stock and terminate the registration of such shares. CSC filed a Form 15 with the SEC on April 18, 2017 to terminate the registration of the shares of CSC common stock.

The following table shows the high and low sales prices of CSC common stock as reported on the New York Stock Exchange for the quarters indicated.



	Fiscal 2017				Fiscal 2016⁽¹⁾
Fiscal Quarter	High		Low		High		Low
1st	$	52.55	$	32.51	$	71.00	$	63.85
2nd	53.46		45.37		68.57		58.77
3rd	63.34		50.41		71.15		29.51
4th	74.92		57.06		34.49		24.27

⁽¹⁾Historical market prices do not reflect any adjustment for the impact of the Separation, which occurred during the third quarter of fiscal 2016.

CSC's common stock is currently owned by DXC and is not listed for trading on any stock exchange. As a result, there is no established public trading market for CSC's common stock.

Cash dividends declared on CSC's common stock for each quarter of fiscal 2017 and 2016 are included in Selected Quarterly Financial Data (Unaudited) in Part II, Item 8 of this Annual Report.

The graph below compares the total cumulative five-year return on our common stock through our fiscal year ended March 31, 2017 to: (i) Standard & Poor’s 500 index and (ii) Standard & Poor’s North American Technology Index⁽¹⁾. The graph assumes an initial investment of $100 on March 29, 2012 and that dividends have been reinvested.

On November 27, 2015, we completed the Separation and our stockholders received one share of CSRA common stock for every one share of our common stock held at the close of business on November 18, 2015 (the "Record Date"), as specified under the terms of the Separation agreement. In connection with the Separation, a dividend payment of $10.50 per share was made on the Record Date to our stockholders who received CSRA common stock in the distribution. The effect of the Separation is reflected in the cumulative total return as a reinvested dividend. The comparisons in the graph are required by the SEC and are based upon historical data.

CSC Total Shareholder Return

(Period Ended March 31, 2017)

The following table provides indexed returns assuming $100 was invested on March 29, 2012, with annual returns using our fiscal year-end dates.



Indexed Return Table (2012 = 100)
	Return 2013		Return 2014		Return 2015		Return 2016		Return 2017		Compound Annual Growth Rate
CSC common stock	65.81	%	105.70	%	127.03	%	181.01	%	472.74	%	41.80	%
S&P 500 Index	14.38	%	37.64	%	57.09	%	60.95	%	87.40	%	13.40	%
S&P North American Technology Index⁽¹⁾	3.80	%	30.21	%	50.61	%	66.05	%	108.79	%	15.90	%

⁽¹⁾In prior years, we used the North American Technology Services Index, which was discontinued on March 7, 2016. Accordingly, we now use the S&P North American Technology Index as a replacement for the discontinued index.

CSC meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this report with a reduced disclosure format as permitted by General Instruction I(2).

There were no issuer purchases of equity securities during the period covered by this report.

ITEM 6. SELECTED FINANCIAL DATA (UNAUDITED)



	As of
(in millions)	March 31, 2017			April 1, 2016			April 3, 2015			March 28, 2014			March 29, 2013
Total assets	$	8,663		$	7,736		$	10,221		$	11,361		$	11,210
Debt
Long-term, net of current maturities	$	2,225		$	1,934		$	1,635		$	2,207		$	2,498
Short-term	646			559			—			444			—
Current maturities	92			151			883			237			234
Total Debt	$	2,963		$	2,644		$	2,518		$	2,888		$	2,732
Stockholders’ equity	$	2,166		$	2,032		$	2,965		$	3,950		$	3,166
Net debt-to-total capitalization	33.1		%	31.4		%	8.1		%	6.5		%	11.5		%



	Fiscal Years Ended
(in millions, except per-share amounts)	2017			2016			2015			2014		2013
Revenues	$	7,607		$	7,106		$	8,117		$	8,899	$	9,533
Costs of services (excludes depreciation and amortization and restructuring costs)	5,545			5,185			6,159			6,032		7,455
Selling, general and administrative - SEC settlement related charges⁽¹⁾	—			—			197			—		—
Restructuring costs	238			23			256			74		251
Debt extinguishment costs⁽²⁾	—			95			—			—		—
(Loss) income from continuing operations, before taxes	(174		)	10			(671		)	694		(249		)
Income tax (benefit) expense	(74		)	(62		)	(464		)	174		(248		)
(Loss) income from continuing operations, net of taxes	(100		)	72			(207		)	520		(1		)
Income from discontinued operations, net of taxes	—			191			224			448		780
Net (loss) income attributable to CSC common stockholders	(123		)	251			2			947		760
(Loss) earnings per common share:
Basic:
Continuing operations	$	(0.88	)	$	0.51		$	(1.45	)	$	3.52	$	(0.01	)
Discontinued operations	—			1.31			1.46			2.89		4.92
	$	(0.88	)	$	1.82		$	0.01		$	6.41	$	4.91
Diluted:
Continuing operations	$	(0.88	)	$	0.50		$	(1.45	)	$	3.45	$	—
Discontinued operations	—			1.28			1.46			2.83		4.89
	$	(0.88	)	$	1.78		$	0.01		$	6.28	$	4.89

Cash dividend per common share	$	0.56		$	2.99		$	0.92		$	0.80	$	0.80

⁽¹⁾Fiscal 2015 charge related to the settlement of the SEC investigation (see Note 22 - "Settlement of SEC Investigation" to the consolidated financial statements).

⁽²⁾Fiscal 2016 debt extinguishment costs related to CSC's redemption of all outstanding 6.50% term notes due March 2018 (see Note 12 - "Debt" to the consolidated financial statements).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The following discussion and analysis provides information management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition for fiscal 2017. This discussion should be read in conjunction with our consolidated financial statements and associated notes included in Part II, Item 8 of this Annual Report.

The three primary objectives of this discussion are to:


1.	provide a narrative on the consolidated financial statements, as presented through the eyes of management;


2.	enhance the disclosures in the consolidated financial statements and related notes by providing context to analyze the consolidated financial statements; and


3.	provide information to assist the reader in ascertaining the predictive value of the reported financial results.

To achieve these objectives, management's discussion and analysis is presented with the following sections:

Overview - includes a description of our business and how it earns revenues and generates cash, as well as a discussion of economic and industry factors, key business drivers and key performance indicators.

Results of Operations - discusses year-over-year changes to operating results for fiscal 2015 through fiscal 2017, describing the factors affecting revenues on a consolidated and reportable segment basis, including new contracts, acquisitions and divestitures and currency impacts; describes the factors affecting changes in our major cost and expense categories and discusses our non-GAAP financial measures.

Liquidity and Capital Resources - discusses causes of changes in cash flows and describes our liquidity and available capital resources.

Off-Balance Sheet Arrangements - details our off-balance sheet arrangements.

Contractual Obligations - details our outstanding contractual obligations.

Critical Accounting Estimates - discusses our accounting estimates based on management judgments and assumptions which could have a material impact on our financial statements.

Economic and Industry Factors

Management monitors industry factors including relative market shares, growth rates, billing rates, staff utilization rates and margins as well as macroeconomic indicators such as interest rates, inflation rates and foreign currency rates. We are seeing the IT services industry being transformed by a shift in customer demand towards digital services and solutions. The ability to identify and capitalize on these market and technological changes to deliver industry-leading service offerings is a key driver of our performance.

Over the past five years we have made key acquisitions in hybrid cloud solutions, digital enterprise applications and insurance and healthcare as well as divested non-core businesses to optimize our service portfolio. We have responded to the industry trends we identified by streamlining our service offerings and implementing a strategy of selling defined solutions that require less customization. Such solutions include our portfolio of cloud-based IaaS offerings, managed applications services and a range of discrete offerings for computing, storage, mobility and networking services.

Business Drivers

Revenues in both segments are generated by providing services on a variety of contract types lasting from less than six months to ten years or more. Factors affecting revenues include our ability to successfully:


•	bid on and win new contract awards;


•	satisfy existing customers and obtain add-on business and win contract recompetes;


•	compete with respect to services offered, delivery models offered, technical ability and innovation, quality, flexibility, global reach, experience and results created; and


•	identify and integrate acquisitions and leverage them to generate new revenues.

Earnings are impacted by the above revenue factors and our ability to:


•	integrate acquisitions and eliminate redundant costs;


•	develop offshore capabilities and migrate compatible service offerings offshore;


•	control costs, particularly labor costs, subcontractor expenses and overhead costs including healthcare, pension and general and administrative costs;


•	anticipate talent needs to avoid staff shortages or excesses;


•	accurately estimate various factors incorporated in contract bids and proposals; and


•	effectively manage foreign currency fluctuations related to international operations through the use of short-term foreign currency forward and option contracts.

Cash flows are affected by the above drivers and the following factors:


•	the ability to efficiently manage capital resources and expenditures;


•	timely management of receivables and payables;


•	investment opportunities available, particularly related to business acquisitions and implementations, dispositions and large outsourcing contracts; and


•	tax obligations.

Key Performance Indicators

We manage and assess the performance of our business through various financial measures, primarily new contract wins, revenues and consolidated segment operating margins.

New contract wins: In addition to being a primary driver of future revenues, new contract wins also provide management an assessment of our ability to compete. The total level of wins tends to fluctuate from year to year depending on the timing of new or recompeted contracts, as well as numerous external factors.

Revenues: Amounts recognized as earned from contracts won in prior periods and additional work secured in the current year. Year-over-year revenues tend to vary less than new contract wins and reflect performance on both new and existing contracts. Foreign currency fluctuations also impact revenues.

Consolidated segment operating margins: Reflect performance on our contracts and ability to control its costs. While the ratios of various cost elements as a percentage of revenues can shift as a result of changes in the mix of businesses with different cost profiles, a focus on maintaining and improving overall margins leads to improved efficiencies and profitability. Although the majority of our costs are denominated in the same currency as revenues, increased use of offshore support also exposes us to additional margin fluctuations.

Results of Operations

We report our results based on a fiscal year convention that comprises four thirteen-week quarters. Every fifth year includes an additional week in the first three months of the fiscal year to prevent the fiscal year from moving from an approximate end of March date. Fiscal 2015 was the last year which included the additional week.

During fiscal 2016, we completed the Separation of NPS and merger of NPS with SRA International, Inc. to form a new publicly traded company, CSRA Inc. As a result of the Separation, the consolidated statements of operations and related financial information reflect NPS's operations as discontinued operations for fiscal 2016 and 2015.

The following table provides an analysis for select line items of the consolidated statements of operations:



	Fiscal Years Ended
(In millions, except per-share amounts)	March 31, 2017			April 1, 2016			April 3, 2015

Revenues	$	7,607		$	7,106		$	8,117

(Loss) income from continuing operations, before taxes	(174		)	10			(671		)
Income tax benefit	(74		)	(62		)	(464		)
(Loss) income from continuing operations	(100		)	72			(207		)
Income from discontinued operations, net of taxes	—			191			224
Net (loss) income	$	(100	)	$	263		$	17

Diluted (loss) earnings per share:
Continuing operations	$	(0.88	)	$	0.50		$	(1.45	)
Discontinued operations	—			1.28			1.46
	$	(0.88	)	$	1.78		$	0.01

Revenues

Revenues by segment are shown in the tables below:



	Fiscal Years Ended
	March 31, 2017				April 1, 2016				April 3, 2015
(in millions)	Amount		Percent Change		Amount		Percent Change		Amount
GBS	$	4,173	14.7	%	$	3,637	(9.9	)%	$	4,036
GIS	3,434		(1.0	)%	3,469		(15.0	)%	4,081
Total Revenues	$	7,607	7.1	%	$	7,106	(12.5	)%	$	8,117

Our fiscal 2017 revenues increased $501 million as compared to fiscal 2016. The increase was due to growth in our GBS segment and revenues from our recent acquisitions. The increase in fiscal 2017 revenues was partially offset by a decrease in revenues of $317 million caused by contracts that concluded or were renewed at lower rates and a $221 million adverse impact of foreign currency movement due to the strengthening of the U.S. dollar against the British pound.

Our fiscal 2016 revenues decreased $1.0 billion as compared to fiscal 2015. This decrease was primarily due to a reduction in revenues caused by contract terminations, conclusions and contractual price reductions of $644 million and the adverse impact of foreign currency movement of $467 million, partially offset by a $100 million increase due to acquisitions.

As a global company, historically, more than half of our revenues have been earned in currencies other than the U.S. dollar. As a result, the changes in revenues denominated in currencies other than the U.S. dollar from period to period are impacted and we expect will continue to be impacted, by fluctuations in foreign currency exchange rates. As such, the following discussion contains financial results on a constant currency basis eliminating the impact of fluctuations in foreign currency rates, thereby providing meaningful period over period comparisons of operating performance. Financial results on a constant currency basis are non-GAAP measures calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates. This information is consistent with how management views our revenues and evaluates our operating performance and trends.

The tables below indicate the percentage change in revenues due to changes in exchange rates:



Fiscal Years Ended March 31, 2017 vs. April 1, 2016	Increase at Constant Currency		Approximate Impact of Currency Fluctuations		Total
GBS	18.0	%	(3.3	)%	14.7	%
GIS	2.0	%	(3.0	)%	(1.0	)%
Cumulative Net Percentage	10.2	%	(3.1	)%	7.1	%



Fiscal Years Ended April 1, 2016 vs. April 3, 2015	Decrease at Constant Currency		Approximate Impact of Currency Fluctuations		Total
GBS	(3.8	)%	(6.1	)%	(9.9	)%
GIS	(9.6	)%	(5.4	)%	(15.0	)%
Cumulative Net Percentage	(6.7	)%	(5.8	)%	(12.5	)%

Fiscal 2017 compared with fiscal 2016

The discussion below explains the reasons for revenue changes other than as a result of foreign currency fluctuations.

Global Business Services

The $654 million, or 18.0%, constant currency increase for fiscal 2017 as compared to fiscal 2016 was driven by growth in next generation business processing services offerings, as well as contributions from our recent acquisitions, primarily within our Digital Applications business and our IS&S business where we continue to prioritize the development of our digital capabilities. Digital Applications, our consulting and applications business, increased over 38% in constant currency and IS&S increased over 26% in constant currency when compared to prior fiscal year. The increase was largely due to revenues from our recent acquisitions which we continue to integrate into our existing business and new business revenues increased $249 million. These increases were partially offset by a $274 million decrease in revenues from contracts that concluded and a $131 million decline from contracts renewed at lower rates.

Global Infrastructure Services

GIS segment constant currency revenues for fiscal 2017 increased $68 million, or 2.0%, as compared to fiscal 2016. The increase was primarily due to an increase of $243 million in revenues from new business and an increase in revenues contributed from our recent acquisitions. In addition, we recognized incremental revenues of $43 million under our segment's portion of the IP matters agreement (see note 3 - "Divestitures" to the consolidated financial statements). These increases were partially offset by decreases in revenues of $335 million from contracts that concluded, $89 million from contracts renewed with scope changes and $23 million due to price-downs. We continue to take actions to mitigate the secular headwinds facing our traditional IT outsourcing business and focus GIS on the next generation digital needs of our clients.

Fiscal 2016 compared with fiscal 2015

Global Business Services

GBS segment revenues decreased $399 million, or 9.9%, as compared to fiscal 2015. In constant currency, revenues decreased $154 million, or 3.8%, which was an improvement as compared to the fiscal 2015 revenues decrease in constant currency of 4.7%. The unfavorable foreign currency impact of $245 million, or 61.4% of the year-over-year decrease, was due to the strengthening of the U.S. dollar against most currencies. The revenue decrease in constant currency included revenues from the extra week in the first quarter of fiscal 2015, which did not recur in fiscal 2016.

Included in fiscal 2016 revenues is acquisition revenues of $65 million from the acquisition of Fruition Partners, Axon, and UXC, which were completed late in the second, third, and fourth quarters of fiscal 2016, respectively.

Global Infrastructure Services

GIS segment revenues decreased $612 million, or 15.0%, as compared to fiscal 2015. In constant currency, revenues decreased $390 million, or 9.6%, due to reduced revenues from contracts that terminated or concluded as well as an unfavorable impact from price-downs and contract restructurings. It also included revenues from the extra week in the first quarter of fiscal 2015, which did not recur in fiscal 2016. These revenue decreases were partially offset by an increase in revenues from new contracts and acquisitions. The increase in revenues due to acquisitions totaled $35 million from Fixnetix and UXC completed late in the second and fourth quarters, respectively. The unfavorable foreign currency impact of $222 million, or 36.3% of the year-over-year decrease, was due to the strengthening of the U.S. dollar against most currencies.

Costs and Expenses

Our total costs and expenses were as follows:



	Fiscal Years Ended								Percentage of Revenues
(in millions)	March 31, 2017			April 1, 2016			April 3, 2015		2017		2016		2015
Costs of services (excludes depreciation and amortization and restructuring costs)	$	5,545		$	5,185		$	6,159	72.9	%	73.0	%	76.0	%
Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs)	1,279			1,040			1,220		16.8		14.6		15.0
Selling, general and administrative - SEC settlement related charges	—			—			197		—		—		2.4
Depreciation and amortization	647			658			840		8.5		9.3		10.3
Restructuring costs	238			23			256		3.1		0.3		3.2
Separation costs	—			19			—		—		0.3		—
Interest expense, net	82			85			106		1.1		1.2		1.3
Debt extinguishment costs	—			95			—		—		1.3		—
Other (income) expense, net	(10		)	(9		)	10		(0.1	)	(0.1	)	0.1
Total costs and expenses	$	7,781		$	7,096		$	8,788	102.3	%	99.9	%	108.3	%

Costs of Services

Fiscal 2017 compared with fiscal 2016

COS as a percentage of revenues ("COS ratio") remained consistent year over year. The $360 million increase in costs of services, excluding depreciation and amortization and restructuring charges ("COS") was largely related to our acquisitions and a $31 million gain on the sale of certain intangible assets in our GIS segment during fiscal 2016 not present in the current fiscal year. This increase was offset by management's ongoing cost reduction initiatives and a year-over-year favorable change of $28 million to pension and other post-retirement benefit ("OPEB") actuarial and settlement losses associated with our defined benefit pension plans. The amount of restructuring charges, net of reversals, excluded from COS was $219 million and $7 million for fiscal 2017 and 2016, respectively.

Fiscal 2016 compared with fiscal 2015

The net reduction in COS was a result of management's cost reduction initiatives, including reduced headcount, that sought to align our cost structure with business needs. During fiscal 2016 and 2015, we recognized $100 million and $525 million, respectively, of pension and OPEB actuarial and pension settlement losses in COS. The amount of restructuring charges, net of reversals, excluded from COS was $7 million and $248 million for fiscal 2016 and 2015, respectively.

The COS ratio decreased to 73.0% for fiscal 2016 from 76.0% for fiscal 2015. The decrease in the COS ratio for fiscal 2016 was due to the reduction in revenues and the $425 million year-over-year favorable change in the recognition of actuarial and pension settlement losses. This decrease was partially offset by a gain of $31 million on the sale of certain intangible assets and other COS decreases.

Selling, General and Administrative

Fiscal 2017 compared with fiscal 2016

Selling, general and administrative expense as a percentage of revenues, excluding depreciation and amortization, SEC settlement related charges and restructuring charges ("SG&A ratio"), increased 2.2% to 16.8% for fiscal 2017 from 14.6% for fiscal 2016. The increase was due to transaction and integration costs of $305 million associated with our recent acquisitions and the Merger, an increase of $16 million in the recognition of pension and OPEB actuarial and pension settlement losses and a non-recurring settlement recovery of $16 million recorded as a reduction of selling, general and administrative expense ("SG&A") during fiscal 2016, not present in the current fiscal year. These increases were partially offset by higher revenues. During fiscal 2017 and 2016, we recognized $15 million and $(1) million, respectively, of actuarial and pension settlement losses (gains) in SG&A. The amount of restructuring charges, net of adjustments, excluded from SG&A was $19 million and $16 million for fiscal 2017 and 2016, respectively.

Fiscal 2016 compared with fiscal 2015

SG&A expense, excluding restructuring charges of $16 million and $8 million for fiscal 2016 and 2015, respectively, as a percentage of revenues, decreased slightly to 14.6% for fiscal 2016 from 15.0% for fiscal 2015. The SG&A ratio for fiscal 2016 was impacted by the year-over-year favorable change in the recognition of pension and OPEB actuarial and settlement losses. We recognized no actuarial and pension settlement losses in SG&A during fiscal 2016. Comparatively, during fiscal 2015, we recognized $59 million of actuarial and pension settlement losses in SG&A, resulting from the remeasurement of pension assets and liabilities associated with our defined benefit pension plans.

Excluding the impact of the pension adjustments described above, the SG&A ratio increased 0.3% for fiscal 2016 from fiscal 2015. The increase in the SG&A ratio was driven primarily by the reduction in revenues, which more than offset the decrease in SG&A. The lower SG&A costs during fiscal 2016 were primarily the result of management's cost reduction initiatives that sought to align our cost structure with business needs and a settlement recovery of $16 million.

Selling, General and Administrative - SEC Settlement Related Charges

During fiscal 2015, we reached an understanding with the staff of the SEC regarding a settlement of a formal civil investigation by the SEC that commenced during fiscal 2012 and covered a range of matters as previously disclosed, including certain of our prior disclosures and accounting determinations. As part of our understanding with the staff of the SEC regarding terms of the settlement, we agreed to pay a penalty of $190 million and to implement a review of our compliance policies through an independent compliance consultant. We recorded pre-tax charges of $197 million for the penalty and related expenses in fiscal 2015. See Note 22 - "Settlement of SEC Investigation" to the consolidated financial statements for additional information.

Depreciation and Amortization

Fiscal 2017 compared with fiscal 2016

Depreciation and amortization ("D&A") as a percentage of revenues decreased less than 1% to 8.5% for fiscal 2017 from 9.3% for fiscal 2016 due to an increase in revenues for the GBS segment and lower D&A within the GIS segment as a result of reduced capital expenditures from contract terminations, as well as a continued focus on capital efficiency. The decrease in the D&A ratio was partially offset by an increase in amortization related to our recent acquisitions, primarily within the GBS segment.

Fiscal 2016 compared with fiscal 2015

D&A as a percentage of revenues decreased to 9.3% for fiscal 2016 from 10.3% for fiscal 2015. The decrease in the ratio was primarily driven by lower D&A within the GIS segment as a result of lower capital expenditures and sale of contract assets to customers where contracts had concluded.

Restructuring Costs

During fiscal 2017, 2016 and 2015 we initiated certain restructuring actions across our segments. During fiscal 2017 we initiated restructuring actions in certain areas to realign our cost structure and resources to take advantage of operational efficiencies following recent acquisitions and in anticipation of the Merger. Total restructuring costs recorded, net of reversals, were largely the result of implementing workforce reductions. Under our Fiscal 2016 Plan our objective was to optimize utilization of facilities and right size overhead organizations as a result of the Separation. Our objective under our Fiscal 2015 plan was to reduce headcount in order to align resources to support business needs, accelerate efforts to optimize the workforce in high cost markets, particularly in Europe, address our labor pyramid and right-shore our labor mix.

Total restructuring costs recorded, net of reversals, during fiscal 2017, 2016 and 2015 were $238 million, $23 million and $256 million, respectively. Fiscal 2015 restructuring costs included a special restructuring charge of $241 million in the fourth quarter of fiscal 2015. The net amounts recorded included $6 million, $7 million and $3 million of pension benefit augmentations for fiscal 2017, 2016 and 2015, respectively, owed to certain employees under legal or contractual obligations. These augmentations will be paid as part of normal pension distributions over several years. The remaining liabilities under the Fiscal 2013 and Fiscal 2012 plans were paid or reversed during fiscal 2017. During fiscal 2018, as we integrate our businesses after the Merger, we plan to incur restructuring expenses of approximately $1.3 billion in fiscal 2018 and an additional $400 million in fiscal 2019.

Separation Costs

Costs associated with activities relating to the Separation of NPS during the third quarter of fiscal 2016 of $19 million were expensed when incurred. These costs were comprised primarily of third-party accounting, legal and other consulting services. There were no separation costs recorded in fiscal 2017 or fiscal 2015.

Interest Expense and Interest Income

Fiscal 2017 compared with fiscal 2016

Interest expense for fiscal 2017 was $117 million as compared to $123 million in fiscal 2016. The year-over-year decrease in interest expense was due to the fourth quarter fiscal 2016 redemption of our 6.50% term notes and lower interest rates on our existing debt.

Interest income for fiscal 2017 was $35 million as compared to $38 million in fiscal 2016. The decrease in interest income was due to lower average deposit balances in our money market funds and money market deposit accounts during fiscal 2017 as compared to the prior fiscal year.

Fiscal 2016 compared with fiscal 2015

Interest expense for fiscal 2016 was $123 million as compared to $126 million in fiscal 2015. The year-over-year decrease in interest expense for fiscal 2016 was primarily due to lower interest rates than the prior year, which more than offset the increase in borrowings. Included in interest expense for fiscal 2016 is a write-off of $2 million of deferred costs and discount related to the redemption of the 6.50% term notes due March 2018 during the fourth quarter of fiscal 2016.

Interest income for fiscal 2016 was $38 million as compared to $20 million in fiscal 2015. The increase in interest income for fiscal 2016 resulted both from higher interest rates in some of the jurisdictions where we hold balances and principally from increased payments from banks for higher compensating deposit balances in our cash management operations and notional pooling arrangements that are counterbalanced by higher overdraft fees and interest expense.

Debt Extinguishment Costs

During fiscal 2016, we redeemed all outstanding 6.50% term notes due March 2018 at par plus redemption premiums related to a make-whole provision and accrued interest. We recorded $95 million of debt extinguishment costs within the consolidated statement of operations, which consists primarily of the redemption premiums mentioned above. There were no debt extinguishment costs recorded in fiscal 2017 or fiscal 2015.

Other (Income) Expense, Net

Fiscal 2017 compared with fiscal 2016

Other (income) expense, net comprises movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, equity earnings of unconsolidated affiliates and other miscellaneous gains and losses. The $1 million year-over-year increase in other income was due to a $7 million year-over-year benefit of favorable movements in foreign currency exchange rates used to fair value our foreign currency forward contracts and the related foreign currency denominated assets and liabilities partially offset by a $6 million gain on sale of certain assets during fiscal 2016 not present in the current fiscal year.

Fiscal 2016 compared with fiscal 2015

Other (income) expense, net increased by $19 million primarily due to the $12 million benefit of favorable movements in exchange rates and the aforementioned $6 million gain on sale of assets.

Taxes

Our effective tax rate ("ETR") on income (loss) from continuing operations for fiscal 2017, 2016 and 2015 was (42.5)%, (620.0)% and (69.2)%, respectively. A reconciliation of the differences between the U.S. federal statutory rate and the ETR, as well as other information about our income tax provision, is provided in Note 11 - "Income Taxes" to the consolidated financial statements.

In fiscal 2017, the ETR was primarily impacted by:

•

A change in the valuation allowance that primarily consists of an aggregate income tax detriment for the increase in the valuation allowances on tax attributes primarily in the U.S., Germany and Luxembourg, which decreased the overall income tax benefit and decreased the ETR by $135 million and 78%, respectively. Offset by an aggregate income tax benefit related to the release of valuation allowances on tax attributes primarily in the U.K., Denmark and Japan, which increased the overall income tax benefit and increased the ETR by $75 million and 43.0%, respectively.


•	An income tax detriment for transaction costs incurred that are not deductible for tax purposes, which resulted in a decrease to the overall tax benefit and decreased the ETR by $21 million and 12.1%, respectively.


•	An income tax benefit from excess tax benefits realized from employee share-based payment awards, which resulted in an increase in the overall income tax benefit and increased the ETR by $20 million and 11.3%, respectively.

In fiscal 2016, the ETR was primarily impacted by:


•	The adoption of a new accounting standard on excess tax benefits realized from share options vested or exercised. This increased the overall income tax benefit and the ETR by $23 million and 230%, respectively.


•	An increase in the overall valuation allowance primarily due to the Separation related to state net operating losses and state tax credits. This decreased the overall income tax benefit and ETR by $27 million and 270%, respectively.


•	The release of a liability for uncertain tax positions following the closure of the U.K. tax audit for fiscal 2010 to 2012. This increased the income tax benefit by $58 million and increased the ETR by 580%.


•	Adjustments to uncertain tax positions in the U.S. that increased the overall income tax benefit by $24 million and increased the ETR by 240%, respectively.

In fiscal 2015, the ETR was primarily impacted by:


•	The non-deductible SEC settlement of $190 million, which decreased the income tax benefit and the ETR by $73 million and 10.9%, respectively.


•	Local losses on investments in Luxembourg increased the foreign rate differential and the ETR by $325 million and 48.4%, respectively, with an offsetting decrease in the ETR due to an increase in the valuation allowance of the same amount.


•	Changes in valuation allowances in certain jurisdictions, including a valuation allowance release in the U.K. The total impact of the valuation allowance release increased the income tax benefit and the ETR by $235 million and 35.0%, respectively. There was a net decrease in valuation allowances in fiscal 2015.

The Company entered into negotiations for a resolution of the fiscal 2008 through 2010 U.S. Federal audit through settlement with the IRS Office of Appeals. The IRS examined several issues for this audit that resulted in various audit adjustments. During the fourth quarter of fiscal 2016, the Company and the IRS reached an agreement in principle as to the settlement terms and the Company remeasured its uncertain tax positions. This audit cycle is now under review by the Joint Committee on Taxation. The Company has agreed to extend the statute of limitations associated with this audit through November 30, 2017.

As of March 31, 2017, we are undergoing an IRS audit for the fiscal 2011 through 2013 U.S. Federal tax returns. During the first quarter of fiscal 2018, we received a Revenue Agent’s Report, which includes proposed adjustments to previously filed tax returns. We continue to believe that our tax positions are more-likely-than-not sustainable and that we will ultimately prevail.

Income from Discontinued Operations

Income from discontinued operations, net of taxes, for fiscal 2016 and 2015, primarily reflects the results of operations of our former NPS segment. Fiscal 2015 also included the results of operations from the sale of a German software business within the GBS segment and the related $18 million net loss recorded on its disposition.

(Loss) Earnings Per Share

Fiscal 2017 compared with fiscal 2016

Diluted EPS from continuing operations in fiscal 2017 decreased $1.38 per share to $(0.88) per share primarily due to $403 million of transaction and integration related costs during the current fiscal year for the Merger and other acquisitions. In addition, restructuring costs increased $215 million as compared to the same period a year ago. These decreases were partially offset by the non-recurrence of fiscal 2016 debt extinguishment costs of $95 million.

Total diluted EPS for fiscal 2017 decreased $2.66 per share due to the reasons mentioned above for EPS from continuing operations and the lack of discontinued operations associated with the Separation of NPS during the current fiscal year.

Fiscal 2016 compared with fiscal 2015

Diluted EPS for fiscal 2016 was $1.78, which was an increase of $1.77 from fiscal 2015. Diluted EPS from continuing operations in fiscal 2016 increased $1.95 and diluted EPS from discontinued operations decreased $0.18 when compared to fiscal 2015 results.

Diluted EPS from continuing operations increased primarily due to the following items (on a pre-tax basis):


•	Favorable change in pension and OPEB actuarial and settlement losses of $485 million, or $3.43 per share;


•	Non-recurrence of fiscal 2015 special restructuring charges of $241 million, or $1.71 per share;


•	Non-recurrence of fiscal 2015 SEC settlement and related charges of $200 million, or 1.42 per share;


•	Partially offset by debt extinguishment costs of $95 million, or (0.67) per share.

Additionally, diluted EPS from continuing operations was adversely impacted by the non-recurrence of the fiscal 2015 tax benefit from the reversal of a valuation allowance of $264 million, or $(1.87) per share.

The decrease in diluted EPS from discontinued operations resulted primarily from a decrease in net income attributable to discontinued operations associated with the Separation of NPS partially offset by the non-recurrence of the fiscal 2015 loss on disposition of GBS' German software business.

Non-GAAP Financial Measures

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

We present these non-GAAP financial measures to provide investors with meaningful supplemental financial information, in addition to the financial information presented on a U.S. GAAP basis. Non-GAAP financial measures exclude certain items otherwise required by U.S. GAAP which management believes are not indicative of core operating performance. We believe these non-GAAP measures allow investors to better understand our financial performance exclusive of the impacts of corporate-wide strategic decisions. We believe that adjusting for these items provides investors with additional measures to evaluate the financial performance of our core business operations on a comparable basis from period to period. We believe the non-GAAP measures provided are also considered important measures by financial analysts covering us as equity research analysts publish estimates and research notes based on our non-GAAP commentary, including our guidance around non-GAAP EPS.

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 U.S. 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 between companies. Consolidated segment operating income and consolidated segment adjusted operating income are useful measures in evaluating the financial performance of our core segment business operations on a more comparable basis year-over-year. However, these measures could limit one’s ability to assess our financial performance by excluding corporate G&A and certain other items. To compensate for this limitation, we provide a reconciliation between these measures and income from continuing operations, before taxes, which is the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

Non-GAAP financial measures and the respective most directly comparable financial measures calculated and presented in accordance with U.S. GAAP include:



	Fiscal Years Ended
(in millions)	March 31, 2017			April 1, 2016		April 3, 2015
(Loss) income from continuing operations	$	(100	)	$	72	$	(207	)
Non-GAAP income from continuing operations	$	470		$	363	$	326
Consolidated segment operating income	$	357		$	515	$	459
Net (loss) income	$	(100	)	$	263	$	17
EBIT	$	(92	)	$	95	$	(565	)

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 integration-related costs - Reflects costs related to (1) the Separation, (2) integration planning, financing and advisory fees associated with the Merger and (3) acquisitions and related intangible amortization.


•	Certain overhead costs - Reflects certain fiscal 2016 and 2015 costs historically allocated to our former NPS segment 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 OPEB plans historically included in CSC's financial results that have been transferred to CSRA as part of the Separation.


•	Pension and OPEB actuarial and settlement losses - Reflects pension and OPEB actuarial and settlement losses from mark-to-market accounting.


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


•	Debt extinguishment costs - Reflects costs related to the fiscal 2016 redemption of all outstanding 6.50% term notes due March 2018.

•

Tax adjustment - Reflects the adoption of a new accounting standard in fiscal 2016 changing excess tax benefits on share-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.

A reconciliation of non-GAAP income from continuing operations to reported results is as follows:



	Fiscal Year Ended March 31, 2017
(in millions, except per-share amounts)	As reported			Restructuring costs			Transaction and integration-related costs			Pension and OPEB actuarial and settlement losses			Non-GAAP results
Costs of services (excludes depreciation and amortization and restructuring costs)	$	5,545		$	—		$	—		$	(72	)	$	5,473

Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs)	1,279			—			(305		)	(15		)	959

(Loss) income from continuing operations, before taxes	(174		)	(247		)	(403		)	(87		)	563
Income tax benefit	(74		)	(39		)	(111		)	(17		)	93
(Loss) income from continuing operations	(100		)	(208		)	(292		)	(70		)	470

Net (loss) income	(100		)	(208		)	(292		)	(70		)	470
Less: net income attributable to noncontrolling interest, net of tax	23			—			—			—			23
Net (loss) income attributable to CSC common stockholders	$	(123	)	$	(208	)	$	(292	)	$	(70	)	$	447

Effective Tax Rate	42.5		%										16.5		%

Basic EPS from continuing operations	$	(0.88	)	$	(1.48	)	$	(2.08	)	$	(0.50	)	$	3.18
Diluted EPS from continuing operations	$	(0.88	)	$	(1.44	)	$	(2.02	)	$	(0.49	)	$	3.10

Weighted average common shares outstanding for:
Basic EPS	140.39			140.39			140.39			140.39			140.39
Diluted EPS	140.39			144.31			144.31			144.31			144.31

* The net periodic pension cost within income from continuing operations includes $483 million of actual return on plan assets, whereas the net periodic pension cost within non-GAAP income from continuing operations includes $161 million of expected long-term return on pension assets of defined benefit plans subject to interim remeasurement.



	Fiscal Year Ended April 1, 2016
(in millions, except per-share amounts)	As reported			Certain overhead costs			U.S. pension and OPEB		Transaction and integration-related costs			Restructuring costs			Pension & OPEB actuarial & settlement losses			SEC settlement-related items			Debt extinguishment costs			Tax adjustment			Non-GAAP results
Costs of services (excludes depreciation and amortization and restructuring costs)	$	5,185		$	(41	)	$	32	$	(5	)	$	—		$	(100	)	$	—		$	—		$	—		$	5,071

Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs)	1,040			(47		)	6		(55		)	—			1			(5		)	—			—			940

Income from continuing operations, before taxes	10			(88		)	38		(95		)	(66		)	(99		)	(5		)	(100		)	—			425
Income tax (benefit) expense	(62		)	(34		)	15		(23		)	(18		)	(18		)	(2		)	(40		)	(4		)	62
Income from continuing operations	72			(54		)	23		(72		)	(48		)	(81		)	(3		)	(60		)	4			363

Net income	263			(54		)	23		(72		)	(48		)	(81		)	(3		)	(60		)	4			554
Less: net income attributable to noncontrolling interest, net of tax	12			—			—		—			—			—			—			—			—			12
Net income attributable to CSC common stockholders	$	251		$	(54	)	$	23	$	(72	)	$	(48	)	$	(81	)	$	(3	)	$	(60	)	$	4		$	542

Effective Tax Rate	(620.0		)%																								14.6		%

Basic EPS from continuing operations	$	0.51		$	(0.39	)	$	0.17	$	(0.52	)	$	(0.35	)	$	(0.59	)	$	(0.02	)	$	(0.43	)	$	0.03		$	2.63
Diluted EPS from continuing operations	$	0.50		$	(0.38	)	$	0.16	$	(0.51	)	$	(0.34	)	$	(0.57	)	$	(0.02	)	$	(0.42	)	$	0.03		$	2.57

Weighted average common shares outstanding for:
Basic EPS	138.28			138.28			138.28		138.28			138.28			138.28			138.28			138.28			138.28			138.28
Diluted EPS	141.33			141.33			141.33		141.33			141.33			141.33			141.33			141.33			141.33			141.33

* The net periodic pension cost within income from continuing operations includes $49 million of actual return on plan assets, whereas the net periodic pension cost within non-GAAP income from continuing operations includes $179 million of expected long-term return on pension assets of defined benefit plans subject to interim remeasurement.



	Fiscal Year Ended April 3, 2015
(in millions, except per-share amounts)	As reported			Certain overhead costs			U.S. Pension and OPEB		Pension and OPEB actuarial and settlement losses			SEC settlement-related items			Restructuring costs			Tax adjustment			Non-GAAP results
Costs of services (excludes depreciation and amortization and restructuring costs)	$	6,159		$	(32	)	$	43	$	(525	)	$	—		$	—		$	—		$	5,645

Selling, general and administrative (excludes depreciation and amortization, SEC settlement related charges and restructuring costs)	1,220			(72		)	8		(59		)	(3		)	—			—			1,094

(Loss) income from continuing operations, before taxes	(671		)	(104		)	51		(584		)	(200		)	(241		)	—			407
Income tax benefit	(464		)	(40		)	20		(135		)	(2		)	(50		)	(338		)	81
(Loss) income from continuing operations	(207		)	(64		)	31		(449		)	(198		)	(191		)	338			326

Net income	17			(64		)	31		(449		)	(198		)	(191		)	338			550
Less: net income attributable to noncontrolling interest, net of tax	15			—			—		—			—			—			—			15
Net income attributable to CSC common stockholders	$	2		$	(64	)	$	31	$	(449	)	$	(198	)	$	(191	)	$	338		$	535

Effective Tax Rate	69.2		%																		19.9		%

Basic EPS from continuing operations	$	(1.45	)	$	(0.45	)	$	0.22	$	(3.15	)	$	(1.39	)	$	(1.34	)	$	2.37		$	2.29
Diluted EPS from continuing operations	$	(1.45	)	$	(0.44	)	$	0.21	$	(3.08	)	$	(1.36	)	$	(1.31	)	$	2.32		$	2.24

Weighted average common shares outstanding for:
Basic EPS	142.56			142.56			142.56		142.56			142.56			142.56			142.56			142.56
Diluted EPS	142.56			145.78			145.78		145.78			145.78			145.78			145.78			145.78

* The net periodic pension cost within income from continuing operations includes $298 million of actual return on plan assets, whereas the net periodic pension cost within non-GAAP income from continuing operations includes $223 million of expected long-term return on pension assets of defined benefit plans subject to interim remeasurement.

We define consolidated segment operating income as revenues less costs of services, associated depreciation and amortization expense, restructuring costs and segment SG&A expenses. Consolidated segment operating income excludes pension and OPEB actuarial and settlement losses and corporate G&A, which is largely associated with centrally managed overhead and shared-services functions which are not controlled by segment level leadership nor directly related to our core segment business operations. Consolidated segment adjusted operating income further excludes the impacts of corporate-wide strategic decisions, such as segment related restructuring and other transaction costs. We define consolidated segment adjusted operating margin as consolidated segment adjusted operating income as a percentage of revenues. A reconciliation of consolidated segment operating income to income from continuing operations, before taxes is as follows:



	Fiscal Years Ended
(in millions)	March 31, 2017			April 1, 2016			April 3, 2015
Consolidated segment operating income	$	357		$	515		$	459
Corporate G&A	(372		)	(216		)	(230		)
Pension and OPEB actuarial and settlement losses	(87		)	(99		)	(584		)
SEC settlement related charges & other	—			—			(200		)
Separation costs	—			(19		)	—
Interest expense	(117		)	(123		)	(126		)
Interest income	35			38			20
Debt extinguishment costs	—			(95		)	—
Other income (expense), net	10			9			(10		)
(Loss) income from continuing operations, before taxes	$	(174	)	$	10		$	(671	)

Reconciliations of consolidated segment operating income to consolidated segment adjusted operating income are as follows:



	Fiscal Year Ended March 31, 2017
(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	$	305		$	(116	)	$	(77	)	$	498		11.9	%
Global Infrastructure Services	107			(131		)	(71		)	309			9.0	%
Total Commercial	412			(247		)	(148		)	807			10.6	%
Corporate and Eliminations	(55		)	—			(3		)	(52		)	—	%
Total	$	357		$	(247	)	$	(151	)	$	755		9.9	%



	Fiscal Year Ended April 1, 2016
(in millions)	Consolidated segment operating income			Certain overhead costs			U.S Pension & OPEB		Restructuring costs			Transaction and integration-related costs			Consolidated segment adjusted operating income			Consolidated segment adjusted operating margin
Global Business Services	$	381		$	—		$	11	$	(37	)	$	(16	)	$	423		11.6	%
Global Infrastructure Services	216			—			27		(28		)	(20		)	237			6.8	%
Total Commercial	597			—			38		(65		)	(36		)	660			9.3	%
Corporate and Eliminations	(82		)	(48		)	—		(1		)	(5		)	(28		)	—	%
Total	$	515		$	(48	)	$	38	$	(66	)	$	(41	)	$	632		8.9	%



	Fiscal Year Ended April 3, 2015
(in millions)	Consolidated segment operating income			Certain overhead costs			U.S. Pension and OPEB		Restructuring costs			Consolidated segment adjusted operating income			Consolidated segment adjusted operating margin
Global Business Services	$	405		$	—		$	16	$	(125	)	$	514		12.7	%
Global Infrastructure Services	162			—			35		(112		)	239			5.9	%
Total Commercial	567			—			51		(237		)	753			9.3	%
Corporate and Eliminations	(108		)	(38		)	—		(4		)	(66		)	—	%
Total	$	459		$	(38	)	$	51	$	(241	)	$	687		8.5	%

A reconciliation of adjusted EBIT and EBIT to net income is as follows:



	Fiscal Years Ended
(in millions)	March 31, 2017			April 1, 2016			April 3, 2015
Adjusted EBIT	$	627		$	503		$	513
Restructuring costs	(247		)	(66		)	(241		)
Transaction and integration-related costs	(385		)	(93		)	—
SEC settlement-related items	—			(5		)	(200		)
Pension and OPEB actuarial and settlement losses	(87		)	(99		)	(584		)
Debt extinguishment costs	—			(95		)	—
Certain overhead costs	—			(88		)	(104		)
U.S. Pension and OPEB	—			38			51
EBIT	$	(92	)	$	95		$	(565	)
Interest expense	(117		)	(123		)	(126		)
Interest income	35			38			20
Income tax benefit	74			62			464
(Loss) income from continuing operations	$	(100	)	$	72		$	(207	)
Income from discontinued operations, net of taxes	—			191			224
Net (loss) income	$	(100	)	$	263		$	17

Liquidity and Capital Resources

Cash and Cash Equivalents and Cash Flows

As of March 31, 2017, our cash and cash equivalents were $1.3 billion, of which $0.8 billion was held outside of the U.S. A substantial portion of funds can be returned to the US from funds advanced previously to fund our foreign acquisition initiatives. If additional funds held outside the U.S. are needed for our operations in the U.S., we may be required to accrue and pay U.S. taxes to repatriate these funds. However, our intent is to permanently reinvest these funds outside of the U.S. and our current plans do not demonstrate a need to repatriate these funds for our U.S. operations.

In fiscal 2017 and 2016, the U.S. dollar strengthened against most of the major world currencies, particularly the British Pound, resulting in a $60 million and $57 million, respectively, adverse effect on cash and cash equivalents. The effect of movement in foreign currency exchange rates on our net debt, which includes cash and cash equivalents, is discussed below under “Capital Resources.”

During fiscal 2017, we paid cash dividends to our stockholders of approximately $78 million in aggregate.

Cash and cash equivalents ("cash") increased $85 million year-over-year from fiscal 2016 to $1.3 billion, primarily due to cash provided by operations. The following table summarizes our cash flow activity:



	Fiscal Year Ended
(in millions)	March 31, 2017			April 1, 2016			April 3, 2015
Net cash provided by operating activities	$	978		$	802		$	1,473
Net cash used in investing activities	(926		)	(1,180		)	(536		)
Net cash provided by (used in) financing activities	93			(485		)	(1,078		)
Effect of exchange rate changes on cash and cash equivalents	(60		)	(57		)	(204		)
Net increase (decrease) in cash and cash equivalents	$	85		$	(920	)	$	(345	)
Cash and cash equivalents at beginning of year	1,178			2,098			2,443
Cash and cash equivalents at the end of period	$	1,263		$	1,178		$	2,098

Operating cash flow

Net cash provided by operating activities during fiscal 2017 increased $176 million as compared to the corresponding period of fiscal 2016. The increase was due to an increase in trade payables of $411 million, a decrease in net account receivables of $457 million, $32 million less restructuring charges compared to fiscal 2016 and a cash outflow of $190 million for SEC settlement paid in fiscal 2016 with no comparative outflow for the current year. In addition, payments received from CSRA under the amended IP matters agreement increased $35 million. The increase in operating cash flows was partially offset by a $189 million increase in transaction, integration and separation payments, an increase in the deferred purchase price receivable of $252 million and a $545 million decrease in net income adjusted for non-cash transactions from fiscal 2016.

Net cash provided by operating activities during fiscal 2016 was $802 million, which decreased $671 million as compared to fiscal 2015. This decrease was due to a decrease in accounts payable primarily due to the $249 million decline in our overall operating expenses, a payment of $190 million for the SEC settlement, lower collections of receivables of $108 million, $86 million of increased restructuring payments, $79 million of payments related to the Separation, $22 million paid for certain NPS overhead costs and a $176 million decrease from fiscal 2015 in net income adjusted for non-cash transactions. These cash flow decreases were partially offset by net proceeds of $239 million from our NPS segment receivables sales facility mentioned above.

Investing cash flow

Net cash used in investing activities during fiscal 2017 decreased $254 million to $926 million. This decrease was driven by a decline of $120 million spent on acquisitions and a decline in capital expenditures of $150 million.

Net cash used in investing activities during fiscal 2016 of $1.2 billion increased $644 million compared to fiscal 2015. The increase in outflow was primarily due to an increase of $505 million for business acquisitions, $70 million in short-term investing in Xchanging and $94 million less cash received from the sale of assets. These increases were partially offset by proceeds from business divestitures of $50 million.

Financing cash flow

Net cash provided by financing activities during fiscal 2017 was $93 million, as compared to cash used of $485 million during fiscal 2016. The decline was due primarily to certain fiscal 2016 cash outflows that did not re-occur in the current year, including a $350 million repayment of our 2.5% term notes, $313 million special cash dividend paid as part of the Separation, $95 million payment for the early extinguishment of debt and $73 million treasury stock that occurred during fiscal 2016. These declines of cash used in financing activities were partially offset by a $254 million payment of acquired debt from the acquisition of Xchanging and $85 million in net proceeds from the structured sale of the Company's U.K. campus.

Net cash used in financing activities during fiscal 2016 was $485 million, a decrease of $593 million from fiscal 2015. The decrease was primarily due to $769 million of lower share repurchases, increased net commercial paper borrowings of $558 million, increased net lines of credit borrowings of $381 million, and net of borrowings related to the Separation of NPS of $68 million. For more information about our share repurchase program see Note 14 - "Stockholders' Equity" to the

consolidated financial statements. These items were partially offset by the special cash dividend paid of $313 million as part of the Separation, as well as higher net payments on long-term debt of $941 million.

Capital Resources

See Note 21 - "Commitments and Contingencies" to the consolidated financial statements for discussion of general purpose of guarantees and commitments. The anticipated sources of funds to fulfill such commitments are listed below and under the subheading "Liquidity."



	As of
(in millions)	March 31, 2017		April 1, 2016
Short-term debt and current maturities of long-term debt	$	738	$	710
Long-term debt, net of current maturities	2,225		1,934
Total debt	$	2,963	$	2,644

The $319 million increase in total debt during fiscal 2017 was attributed primarily to the $283 million increase in borrowings under our revolving credit facility incurred to partially fund the Xchanging acquisition. For more information on our debt, see Note 12 - "Debt" to the consolidated financial statements. During the fourth quarter of fiscal 2017, we entered into various amendments to our revolving credit facility, term loans, commercial paper program and lease credit facility which, among other things, replaced CSC with DXC as the principal borrower or guarantor upon completion of the Merger. We were in compliance with all financial covenants associated with our borrowings as of March 31, 2017 and April 1, 2016.

The following table summarizes our capitalization ratios:



	As of
(in millions)	March 31, 2017			April 1, 2016
Total debt	$	2,963		$	2,644
Cash and cash equivalents	1,263			1,178
Net debt⁽¹⁾	$	1,700		$	1,466

Total debt	$	2,963		$	2,644
Equity	2,166			2,032
Total capitalization	$	5,129		$	4,676

Debt-to-total capitalization	57.8		%	56.5		%
Net debt-to-total capitalization⁽¹⁾	33.1		%	31.4		%

⁽¹⁾Net debt and Net debt-to-total capitalization are non-GAAP measures used by management to assess our ability to service our debts using only our cash and cash equivalents. We present these non-GAAP measures to assist investors in analyzing our capital structure in a more comprehensive way compared to gross debt based ratios alone.

The increase in net debt-to-total capitalization was primarily the result of a $234 million increase in net debt, predominately due to funds borrowed to acquire Xchanging which was partially offset by the increase in cash generated from our operations.

During fiscal 2017, the strengthening of the U.S. dollar resulted in an unfavorable impact to cash and cash equivalents. At the same time, the translation of our debt off shore in non-US dollar currencies, including the British Pound, resulted in a favorable effect on these foreign currency liabilit

COMPUTER SCIENCES CORP 10-K